Manget v. Cunningham

• Decision Date: 27 February 1928
• Docket Number: 6039.
• Parties: MANGET v. CUNNINGHAM et al.
• Court: Georgia Supreme Court

142 S.E. 543

166 Ga. 71

MANGET v. CUNNINGHAM et al.

No. 6039.

Supreme Court of Georgia

February 27, 1928

Syllabus by the Court.

Where a vendee entered into a contract for the purchase of land by reason of a fraud alleged to have been perpetrated upon him by the vendor's agents who negotiated the sale, the fraud consisting in misrepresentations as to the rental which the property was bringing and the amount of an incumbrance upon it, whereby the vendee was deceived as to its value and was thereby induced to pay a higher price than he would otherwise have paid, and where, after the discovery of the fraud, and with full knowledge of all the facts, the parties to the original contract of purchase entered into a new contract by which the vendee agreed to pay to the vendor for the property $3,000 more than the vendor had paid therefor, and the vendee received from the vendor her deed for a consideration amounting to $3,000 more than the vendor paid therefor, such consideration being less than the consideration under the initial contract, and in the deed the vendee assumed the payment of outstanding incumbrances upon the property amounting to $14,500, the vendee is not entitled to recover damages against the vendor, or to have the trade canceled, on account of the fraud perpetrated upon him by the agents of the seller when he entered into the initial contract of purchase.

(a) In these circumstances it does not concern the vendee whether the consideration of the outstanding incumbrances upon the property was fictitious or not.

(b) The evidence did not authorize a finding that any part of the consideration of these incumbrances was fictitious.

A contract for the purchase of land may be rescinded at the instance of the party defrauded; but in order to rescind he must promptly, upon discovery of the fraud, restore or offer to restore to the other party whatever he received by virtue of the contract, if it be of any value.

(a) If the vendee who claims to be defrauded waits an unreasonably long time to tender back the subject of the contract, the other party may well assume an abandonment of the effort to rescind.

(b) Generally, one who seeks rescission of a contract on the ground of fraud must restore or offer to restore the consideration therefor, as a condition precedent to bringing the action.

(c) Rescission of a contract must go to the whole; there can be no rescission of a contract in part.

(d) When a vendee is induced to enter into a contract for the purchase of land by fraud of the vendor, when the vendee discovers the fraud he has an election of remedies. One of such remedies is to rescind the contract, and another is to affirm the contract and sue for damages for the fraud.

(e) Where the vendee, after discovery of the alleged fraud and with full knowledge of all the facts, instituted a proceeding to recover damages which he alleged he sustained by reason of this fraud, and sought to have these damages set off against the amount of purchase money due by him on the land, and to have canceled deeds to the property, securing loans which he had assumed as part of the purchase money, and as clouds upon his title, to the extent of the damages so sustained, he cannot afterwards have canceled the contract of purchase and the deeds executed to carry it out.

Where a purchaser of land agrees, as a part of the purchase price to be paid, to discharge an existing mortgage on the property in the absence of fraud he will not be heard to deny the validity or amount of the mortgage debt.

The court did not err in overruling the demurrer of the plaintiff to the intervention of the receiver.

The grounds of the motion for new trial show no cause for reversal, and are not of such character as require discussion.

Under the pleadings and the evidence, a verdict was demanded in favor of the interveners against the plaintiff, and the court did not err in directing the jury to return that verdict.

Error from Superior Court, Fulton County; G. H. Howard, Judge.

Petition by John A. Manget against R. B. Cunningham, in which Mrs Pearl Treadwell and another filed interventions and in which defendant named filed a cross-action against plaintiff and intervener named. Judgment for defendant and interveners plaintiff's motion for new trial was overruled, and plaintiff brings error. Affirmed.

Purchaser of property claiming to be defrauded, if waiting unreasonable time before tendering back subject of contract, may be assumed to have abandoned effort to rescind (Civ.Code 1910, § 4305).

The petition of John A. Manget against R. B. Cunningham, filed on May 30, 1925, alleged that on March 10, 1923, petitioner bought two tracts of land in the city of Atlanta from Mrs. Pearl Treadwell for the sum of $18,000, a part of which purchase price was assumption by petitioner of two loans against said property totaling $14,500; that whereas the loan deeds recited the loans to have been $14,500, they totaled in fact the sum of half that amount, or $7,250, as petitioner afterwards learned; that petitioner has paid defendant $1,015 interest on said loans; that Mrs. Treadwell and her agents induced petitioner to buy the property by falsely representing its value, representing in fact that a loan had been extended upon it in twice the actual sum loaned; that any sum petitioner might pay defendant above $7,250 and interest on said loan deeds would belong to Mrs. Treadwell; that the defendant is threatening suit against Mrs. Treadwell to foreclose the loan deeds in the sum of $14,500 with interest, because of an alleged default in payment of interest, whereas he is not entitled to foreclose for any sum greater than he actually loaned; that petitioner offered, on May 26, 1925, to pay defendant $7,250 with $126.88 interest, but defendant refused to accept the tender or to cancel the loan deeds; that petitioner still offers said tender to be made into court, subject to cancellation of the loan deeds and cessation of interest as of the above date of tender; and that equity is petitioner's only remedy. He prays that the defendant be enjoined from foreclosing the loan deeds for any greater amount than $7,250 principal and $126.88 interest; that defendant be required to accept said tender and satisfy said deeds so far as defendant is concerned, and deliver them to petitioner; that said loan deeds be canceled of record as a cloud upon petitioner's title; and for general relief. Copies of the conveyances involved were attached to the petition. The defendant answered on July 23, 1925, denying that the actual loan was half what was represented, and all allegations of fraud and misrepresentation and the various claims to equitable relief.

Mrs. Treadwell intervened on September 18, 1925, setting up that she was the widow of B. H. Treadwell, after whose death there was set apart to her as a year's support the sum of $7,500 out of his estate; that her husband's estate was insolvent, a receiver had been appointed, but there was no money in his hands to pay said year's support, which remained as a claim of highest priority; that petitioner bought the lands and assumed the loans set up by him, but Cunningham had an interest in only half the face of said loans, the other half being the property of her husband during his life, and after his death the property of his estate which became insolvent; that on March 16, 1923, Cunningham executed and delivered to her husband, then living, a quitclaim deed to half of said loans and said lands, which was recorded on May 28, 1925. She prayed to have said loan deeds foreclosed and half the proceeds paid to the defendant and the other half to intervener on her year's support, and further that, if half of said proceeds did not make half the face of the loans, she have judgment against plaintiff for enough to make half the face of the loans.

Cunningham on June 12, 1926, filed a cross-action against Manget and Mrs. Treadwell, setting up that the estate of B. H. Treadwell owned an undivided half interest in said loans, the loan deeds for which were signed by Mrs. Treadwell; that notes were given by Mrs. Treadwell, one for $12,500 and another for $2,000, corresponding to the two loan deeds which secured them, and that attached to each note were interest coupon notes signed by her as maker, and all payable to Cunningham that said notes matured February 26, 1926, and were therefore past due; that on March 16, 1923, Cunningham by quitclaim deed conveyed to B. H. Treadwell an undivided half interest in said notes and loan deeds; and that Cunningham owned a half interest in said loan deeds and either the estate of B. H. Treadwell or Mrs. Treadwell owned the other half. He prayed for a judgment against Mrs. Treadwell as maker, and Manget on his assumption, in the sum of $14,500 principal, with interest and costs. Charles B. Shelton, as receiver of the estate of B. H. Treadwell, intervened on June 15, 1926, alleging that he and Cunningham had notified Mrs. Treadwell and Manget of their intention to sue them on said notes for principal, interest, and attorney's fees; and that he filed said intervention and cross-action for the reason that the case was in equity, and to avoid a multiplicity of suits. He prayed to be made a party; that he be allowed to foreclose the two loans; that he have judgment against Mrs. Treadwell and Manget for $14,500, with interest and 10 per cent. attorney's fees and costs; and that an undivided half interest in said judgment be declared a special lien upon said real estate. Mrs. Treadwell on July 3, 1926, answered this intervention, denying the right of the receiver to any attorney's fees; and setting up that Cunningham had sued separately, and that she was entitled to a personal judgment against Manget for the full...