Dargue v. Chaput

• Court: Nebraska Supreme Court
• Writing for the Court: Heard before SIMMONS; WENKE
• Citation: Dargue v. Chaput, 88 N.W.2d 148, 166 Neb. 69 (Neb. 1958)
• Decision Date: 14 February 1958
• Docket Number: No. 34281,34281
• Parties: Donald S. DARGUE and Garnet A. Dargue, Appellees, v. Ernest CHAPUT and Angelyn Chaput, Appellants.

Page 148

88 N.W.2d 148

166 Neb. 69

Donald S. DARGUE and Garnet A. Dargue, Appellees, v. Ernest CHAPUT and Angelyn Chaput, Appellants.

No. 34281.

Supreme Court of Nebraska.

Feb. 14, 1958.

Syllabus by the Court.

1. Fraud is never presumed, but must be clearly proved in order to entitle a party to relief on the ground that it has been practiced on him.

2. Direct evidence is not essential to establish fraud. It may be inferred from circumstances; but such inference must not be guesswork or conjecture, but the rational and logical deduction from the circumstances proved.

3. The intent or good faith of the person making false statements is not in issue in such a case.

4. As between vendor and purchaser, where material facts and information are equally accessible to both and nothing is said or done which tends to impose on the purchaser or to mislead him, the failure of the vendor to disclose such facts does not amount to actionable fraud; but where such facts are known by the vendor and he knows them to be not within reach of the reasonably diligent attention, observation, and judgment of the purchaser, and they are such as would readily mislead the purchaser as to the true condition of the property, the vendor is bound to disclose such facts.

5. A principal who authorizes an agent to conduct a transaction for him, intending that the agent shall make representations to another in the course of it which the principal knows to be untrue, is liable for such misrepresentations as if he himself had made them intentionally; if, although he does not intend that the agent shall make misrepresentations, he should know that the agent will do so, the principal is liable as if he himself had made them negligently.

6. In such cases the measure of damages is generally the difference in value between the article or thing purchased if it had been as represented and its actual value.

7. A right of action for fraud may be waived. Thus, while the defrauded party may retain what he received, stand to his bargain, and recover for the loss occasioned by the fraud, he cannot do so where, having full knowledge, he does an act indicating his intention to waive the fraud.

8. It is, however, difficult and perhaps hazardous to formulate or to apply general rules as to what will constitute such a waiver, and each case in which the question arises must be considered and disposed of on its own special facts, the underlying question being one of intent.

9. Accordingly acts in affirmance of the contract amount to a waiver of the fraud only where they are done with full knowledge of the fraud and of all material facts and with the intention clearly manifested of abiding by the contract and waiving all right to recover for the deception.

Victor H. Schmidt, Papillion, for appellants.

Neely, Otis & Neely, Omaha, for appellees.

Heard before SIMMONS, C. J., and CARTER, MESSMORE, YEAGER, CHAPPELL, WENKE, and BOSLAUGH, JJ.

WENKE, Justice.

This is an appeal from the district court for Sarpy County. It involves an action instituted therein on July 24, 1956, by Donald S. Dargue and Garnet A. Dargue against Ernest Chaput and Angelyn Chaput for the purpose of rescinding a contract entered into by the plaintiffs with the defendants for the purchase of a residential property located at 8525 Bellevue Boulevard in Sarpy County, Nebraska. The grounds alleged as a basis for rescinding are that plaintiffs were induced to enter into the contract by the fraudulent misrepresentation and concealment of certain facts relating to the condition of the property purchased.

'A party who has been induced to enter into a contract by fraud has, upon its discovery, an election of remedies. He may either affirm the contract and sue for damages or disaffirm it and be reinstated to the position he was in before it was consummated.' Russo v. Williams, 160 Neb. 564, 71 N.W.2d 131, 134.

Trial was had and on January 9, 1957, the trial court rendered its decision which denied plaintiffs the rescission they had asked for. In view of the evidence adduced at that hearing the trial court was justified in doing so in view of our holding in Russo v. Williams, supra. Therein we quoted with approval the following from 66 C.J., Vendor and Purchaser, §§ 476 and 477, pp. 824 and 825: 'If the purchaser has knowledge of the grounds upon which he is entitled to rescind, an unreasonable delay upon his part, especially if accompanied by such change of circumstances as makes it impracticable for him to place the vendor in statu quo, * * * prevents him from exercising his right to rescind. Even where time is not of the essence of the contract, a purchaser may still lose his right to rescind by delaying action to a time, which, under the circumstances, is unreasonable. * * * The question whether laches exists in a particular case depends upon its own peculiar circumstances and is addressed to the sound discretion of the court, the question of the unreasonableness of the delay depending largely upon the nature of the property in the particular case.' See, also, 91 C.J.S. Vendor and Purchaser § 171.

However, the trial court did not thereupon dismiss plaintiffs' action but granted them 60 days in which to amend their pleadings to state a cause of action in fraud for damages. This was in accordance with our holding in Russo v. Williams, supra, under the principle that: "It is the practice of courts of equity, when they once have obtained jurisdiction of a case, to administer all the relief which the nature of the case and the facts demand, and to bring such relief down to the close of the litigation between the parties.' (Herrin v. Johnson Cashway Lumber Co., 153 Neb. 693, 46 N.W.2d 111.)' The plaintiffs filed a second amended petition on March 7, 1957, seeking recovery of damages because of fraud.

In their second amended petition, on which the cause was tried, the plaintiffs alleged that:

'In the showing of said premises and endeavoring to effect a sale, nothing whatsoever was said to the plaintiffs, or either of them, by defendants or by the agent of the defendants, Joseph M. Morgan, to effect that said house was built on ground incapable of supporting it, nor was there at any time prior to August 20, 1955, any evidence patent and available to the plaintiffs that the said house was not structurally sound and in good condition. Moreover, said agent agreed specifically that the house was to be finished in a manner of good workmanship. The plaintiffs believed the statements and representations of said agent as aforesaid to be true and relied upon them and as a result of the same were induced to purchase the property. * * *

'Plaintiffs further allege that the aforesaid house was constructed without there being provided adequate drainage, in the form of drainage tile or otherwise, of the front, or west, yard of the premises. As a result of this inadequacy, water has been allowed to pocket in front or to the west of the west basement wall, causing a continual settlement of the fill in front of it and exerting upon it a pressure accentuating the eastward tipping of the east wall as it settles on inadequate ground support. * * *

'Plaintiffs further allege that defendants at all times referred to had full knowledge of all the facts that lead to the ultimate conclusions: (1) That the foundation of the house rested on filled earth, or on earth of insufficient bearing value to support the load of the house in violation of good building practices, and (2) that the front, or west yard of the house was provided with inadequate drainage to the end that water was allowed to accumulate in the fill lying to the west of the west basement wall exerting a pressure upon said wall and upon the house in general to the end that it was tipped and is still being tipped to the east, all in violation of good building practices. Defendants intentionally, wilfully and fraudulently withheld and concealed said information from the plaintiffs for the express purpose of deceiving and defrauding them. * * *

'Plaintiffs further allege that had the defendants Chaput not made the representation that the house would be finished in a manner of good workmanship as aforesaid and had the plaintiffs known that the house had been built on filled ground or on ground inadequate to support it or that ground water to to (the) west would be allowed to exert an undue pressure on the west wall, they would not have purchased said premises. Plaintiffs relied upon said representations and without knowledge to do otherwise acted upon them to their damage.'

Trial was had on the action for damages. On May 27, 1957, the trial court rendered a judgment for the plaintiffs in the sum of $4,287.50 with interest at 6 percent from June 10, 1955. Defendants filed a motion for new trial and, from the overruling thereof, perfected this appeal.

Appellees, Donald S. Dargue and Garnet A. Dargue, are husband and wife. We shall herein refer to them as the Dargues and to Donald S. Dargue individually as Dargue. Appellants, Ernest Chaput and Angelyn Chaput, are husband and wife. We shall herein refer to them as the Chaputs and to Ernest Chaput as Chaput.

Sometime in 1948 the Chaputs bought a home located at 8521 Bellevue Boulevard in Sarpy County, Nebraska. This home was on 9 1/2-acre tract of wooded and pasture land lying east of and adjacent to Bellevue Boulevard. The Chaputs purchased the entire tract. Bellevue Boulevard is a surfaced street and will hereinafter be referred to as the boulevard. The Chaputs established a road across this tract. The road is located just south of their residence at 8521 Bellevue Boulevard and runs east from the boulevard. They named it Chaput Drive. The 9 1/2-acre tract extended south of Chaput Drive on the boulevard for a distance of 175 feet. In 1954 the Chaputs decided to improve the area south of Chaput Drive as it faces the boulevard and, for that purpose, divided it into two lots each 87 1/2 feet wide as the...