Heth v. Oxendale

• Decision Date: 01 April 1927
• Docket Number: No. 15.,15.
• Parties: HETH et ux. v. OXENDALE et ux.
• Court: Michigan Supreme Court

238 Mich. 236

213 N.W. 133

HETH et ux.

v.OXENDALE et ux.

No. 15.

Supreme Court of Michigan.

April 1, 1927.

Appeal from Circuit Court, Ingham County, in Chancery; Charles B. Collingwood, Judge.

Bill by Myron H. Heth and wife against William A. Oxendale and wife. From a decree for plaintiffs, defendants appeal. Decree modified, and, as modified, affirmed.

Argued before the Entire Bench.

L. B. Gardner, of Lansing, for appellants.

Eldred & Gemuend, of Ionia, for appellees.

CLARK, J.

Plaintiffs, husband and wife, elderly, of no considerable business experience, except farming, resided on a farm near Ionia. The record indicates that they are kind, simple, and credulous. Mr. Heth was in poor health.

Defendant William A. Oxendale is a real estate dealer and speculator. The other defendant is his wife. By chance he learned that plaintiffs had a piece of land for sale. The land was conveyed to defendants in exchange for a house and some lots in Lansing. Plaintiffs engaged Mr. Oxendale to look after the Lansing property, collect rents, pay taxes, etc., which he did. Defendants entertained plaintiffs, and visited at their home. Plaintiffs became fond of them-trusted them. The Lansing property was not productive. Mr. Oxendale went to plaintiffs' home, ‘* * * and he wanted to trade for the lots here. He said that the war was over, and the Lansing property wasn't the best at that time, and he wanted us to trade for something different, and we told him that we didn't know anything about stocks; we didn't want it; and then he asked us how we would trade for a good mortgage. And we told him, if the mortgage was good and all right, we was willing to trade, and he told us he had two mortgages, but this one was the best. He told us this was a gilt-edged mortgage, and those fellows would pay it in a year or two at the outside. I told him that's what we wanted, we couldn't look after the property, and his health was poor, and he could not look after it.'

The mortgage in question was conceived in fraud. It was in the sum of $8,000, ran to Mr. Oxendale, covered a poor and seemingly abandoned hotel in the village of Fowler, of comparatively small value, and the purported mortgagors had stipulated that they were ‘bound only so far as the real estate covered by this mortgage.’ Relying on, and deceived by, Mr. Oxendale's representations as to the mortgage, plaintiffs entered into an agreement with defendants by which they were to have a one-half interest in the mortgage in exchange for their Lansing property, worth about $4,000. This agreement, neither witnessed nor acknowledged, signed by all of the parties on May 1, 1920, is executory.

Pursuant thereto, plaintiffs gave to defendants a warranty deed of the Lansing property, but they have not received, nor have they sought, a formal assignment of a one-half interest in the mortgage. Of Mr. Oxendale's giving the executory agreement to Mr. Heth, we quote:

‘* * * He said, ‘Here is your mortgage.’ I said, ‘That is a funny mortgage,’ and he says, ‘It is all right between you and I.’'

And so it stood until the following spring, when Mr. Heth first saw the property in Fowler, and plaintiffs first discovered the fraud.

Within about a year afte May 1, 1920, defendants disposed of the Lansing property, except one lot, which they had at time of hearing. Mr. Heth attempted several times to see Mr. Oxendale, but did not do so. Nothing more was done until February 12, 1923, when a notice of rescission was served on Mr. Oxendale. On February 20, 1923, the bill of complaint was filed seeking rescission, praying restoration of the Lansing property, and in the alternative a money decree. Plaintiffs had money decree for $3,700. Defendants have appealed. The studied fraud is manifest, and requires no discussion.

The principal defense is laches. But this defense will not be permitted to defeat the right to rescind, unless it would be inequitable to deny it. Davis v. Louisville Trust Co. (C. C. A.) 181 F. 10, 30 L. R. A. (N. S.) 1011.

Lapse of time without rescinding is evidence of affirmation of the contract, and the evidence may be treated as conclusive where the lapse is unreasonable. 13 C. J. 617, and cases cited. Especially is this true where during the time conditions have changed so that rescission would be prejudicial of the other party. Walker v. Schultz, 175 Mich. 280, 141 N. W. 543. But the evidence of lapse of time should be considered with the other facts and circumstances of the case in reaching a determination on such defense. Cornell v. Crane, 113 Mich. 460, 71 N. W. 878. The delay here is great, but it does not appear that defendants have been prejudiced by it. The disparity between what plaintiffs gave and what they got is so great that it is improbable that they would abide the transaction. Their inexperience and simplicity and their relations with defendants should be noted. Despite the lapse of time we conclude that on the peculiar facts and circumstances of the case it would be inequitable to sustain the defense of laches.

It is urged that there can be no rescission because plaintiffs neither restored, nor offered to restore, what they had received. They have received nothing but the paper...