Kruse v. Bush

• Decision Date: 11 September 1917
• Citation: 85 Or. 394,167 P. 308
• Parties: KRUSE v. BUSH ET AL.
• Court: Oregon Supreme Court

167 P. 308

85 Or. 394

KRUSE v. BUSH ET AL.

Supreme Court of Oregon

September 11, 1917

Department 2.

Appeal from Circuit Court, Multnomah County; George N. Davis, Judge.

Action for money had and received by M. Kruse against H. P. Bush and another. Judgment for plaintiff, and defendants appeal. Affirmed.

This is an action for money had and received, brought by plaintiff in her own right and as assignee of Mrs. D. E. Tanna. The first count in the amended complaint alleges the execution of two contracts by plaintiff with the defendant Borthwick for the purchase of two tracts of land in Multnomah county, and that the execution of these contracts by plaintiff was induced by fraudulent representations made by the defendant Bush, as agent of the defendant Borthwick. The falsity of the representations is averred, and it is charged that on discovering the alleged fraud plaintiff notified defendants of her election to rescind, tendering a quitclaim deed to the property. This quitclaim was deposited in court on the bringing of the action. Plaintiff prays for judgment for the amounts which she has paid on account of the purchase price.

The second count is similar in purport. It alleges a contract entered into by D. E. Tanna with the defendant Borthwick for the purchase of a tract of land in the same neighborhood induced by the same representations. It is alleged that Mrs Tanna elected to rescind, quitclaimed the property to defendants, and assigned her right of action to plaintiff.

The defendants demurred separately to the counts in the amended complaint. This demurrer was overruled, and the defendants then answered. The answer admits the marketing of the property by the defendant Borthwick, the refusal of the defendants to treat the contracts as rescinded, and to pay plaintiff the sums demanded. It also admits the assignment of Mrs. Tanna's claim to plaintiff. The other allegations of the amended complaint are denied.

A judgment was entered in favor of plaintiff on a verdict recovered by her, and defendants appeal.

Charles E. Lenon, of Portland (Clinton A. Ambrose, of Portland, on the brief), for appellants. B. G. Skulason, of Portland (Walter Hayes and Clark, Skulason & Clark, all of Portland on the brief), for respondent.

McCAMANT J. (after stating the facts as above).

The defendants challenge the right of plaintiff to maintain her action for money had and received, claiming that rescission is an equitable remedy, and that plaintiff has no remedy at law except an action for damages. This contention is reserved by the demurrer to the amended complaint and by motions for a nonsuit and for a directed verdict; exceptions being taken to the denial of these motions. It is said in 39 Cyc. 1253, with reference to contracts for the purchase of real estate, that:

"Fraud renders the contract voidable at the option of the injured party and entitles him to rescission of the same at law so long as it is executory."

The contracts with which we are concerned were executory. The quitclaims were required only because plaintiff and her assignor had recorded their contracts.

In 39 Cyc. 1997, it is said:

"One who has been induced by fraudulent representations to become the purchaser of property has, upon the discovery of the fraud, three remedies open to him, either of which he may elect: He may rescind the contract absolutely and sue in an action at law to recover the consideration parted with upon the fraudulent contract; he may bring an action in equity to rescind the contract, and in that action have full relief; lastly, he may retain what he has received and bring an action at law to recover the damages sustained."

Plaintiff in this case has elected to pursue the first of these remedies. Her right to do so is recognized by Warvelle on Vendors, § 918; Mael v. Stutsman, 60 Or. 66, 69, 117 P. 1093; Koehler v. Dennison, 72 Or. 362, 366, 143 P. 649; T. B. Potter Co. v. Breitling, 79 Or. 293, 305, 155 P. 179.

Defendants also claim that plaintiff has no remedy so long as she and her assignor have not paid all the purchase price called for by their contracts and the defendants are still willing to consummate the sales. None of the authorities cited by defendants on this branch of their contention were cases involving fraud. In the absence of fraud or some other ground for rescission, the vendee cannot escape the obligations he has assumed in the contract of purchase, nor can he recover back the purchase money which he has paid. But the rule is otherwise when the vendee is entitled to rescind Livesley v. Muckle, 46 Or. 420, 423, 80 P. 901; Jeffreys v. Weekly, 81 Or. 140, 158 P. 522. If plaintiff and her assignor were to disaffirm the contracts it was necessary for them to act promptly on discovery of the fraud. The continued payment of the installments called for by the contracts would have been evidence of a ratification of the contracts, and would probably have defeated the remedy here invoked: T. B. Potter Co. v....