Natta v. Snyder

• Decision Date: 06 May 1916
• Docket Number: 20,168
• Citation: 157 P. 432,98 Kan. 102
• Parties: E. H. VAN NATTA, Appellee, v. NELLIE F. SNYDER, Appellant
• Court: Kansas Supreme Court

157 P. 432

98 Kan. 102

E. H. VAN NATTA, Appellee, v. NELLIE F. SNYDER, Appellant

No. 20,168

Supreme Court of Kansas

May 6, 1916

Decided, January, 1916.

Appeal from Republic district court; JOHN C. HOGIN, judge.

Judgment reversed and cause remanded.

SYLLABUS

SYLLABUS BY THE COURT.

1. CONTRACT--Purchase of Hotel--Contract Procured by Fraud--Contract fully Executed--Fraud Not Waived or Condoned. A woman was induced to purchase a hotel through fraudulent representations of the vendor. The contract of sale was executed on both sides, the vendee paying half the consideration in cash and executing and delivering notes secured by mortgage for the remainder. After the transaction was concluded, but on the same day, the vendee discovered the fraud. The notes were payable monthly, beginning July 1, 1913. The vendee paid ten of them, the last on October 10, 1913, and meanwhile occupied the property without complaining of the fraud. In January, 1915, the vendor brought suit to recover on the unpaid notes and to foreclose the mortgage. The vendee was without business experience and had relied entirely on the vendor, whom she regarded as a friend. She was ashamed to think the vendor had beaten her, was afraid to make him angry and antagonistic, did not know what to do that would do any good, and was ignorant of her rights until she consulted an attorney after she was sued. Held, the fraud was not waived or condoned, and a counterclaim for damages for the difference between the value of the property as it was and as it was represented to be was wrongfully disallowed.

2. SAME--Former Decision Overruled in Part. The first paragraph of the syllabus of the case of Thresher Co. v. Gruben, 6 Kan.App. 665, 50 P. 67, is overruled.

N. J. Ward, and H. H. Van Natta, both of Belleville, for the appellant.

W. D. Vance, and R. E. McTaggart, both of Belleville, for the appellee.

OPINION

BURCH, J.:

The action was one to recover on thirty promissory notes given by the defendant to the plaintiff and to foreclose a real-estate and a chattel mortgage securing the notes. The defendant interposed a counterclaim for damages for fraud practiced upon her in the transaction which gave rise to the notes and mortgages. A demurrer was sustained to her evidence, judgment was rendered against her, and she appeals.

The plaintiff sold her farm and purchased the defendant's hotel, with its furniture, fixtures and equipment. The sale was concluded and the deed was delivered on June 17, 1913. The price paid was $ 4000. The sum of $ 2000 was paid in cash. Forty notes of $ 50 each, payable one each month, beginning July 1, 1913, were given for the remainder of the price. The first ten notes were paid, the last one being paid on October 1, 1913. The suit was commenced on January 19, 1915.

The evidence was sufficient to establish fraud. The hotel stood on the east portions of two lots. The defendant was shown the property in such a way as to lead her to believe she was getting the building and all of both lots, which appeared to form and appeared to be used as a unit, known as the Brunswick hotel. The deed conveyed only the east half of the lots, the west half having previously been deeded to the plaintiff's son. The contract of sale reads as follows:

"I, E. H. Van Natta hereby agree to sell to Nellie F. Snyder the entire furniture and everything now used in carrying on the business of the Brunswick hotel at Scandia, Kansas, excepting therefrom only the articles mentioned on the other side hereof, which articles I am to take from said hotel and the same are not to be considered a part of this sale.

"This contract or memoranda is made in connection with the sale of the lots and buildings known as the Brunswick hotel, for which a valuable consideration is this day paid, viz: $ 2000.00 in cash, and a mortgage on the same for $ 2000.00, payable in 40 months from July 1, 1913."

The court seems to have been of the opinion the defendant's evidence showed as a matter of law that she had waived the fraud or was estopped from setting it up. The defendant testified that she was distantly related to the plaintiff, considered him her friend, and did not advise with any one else because she considered him just like a father to her. In the evening of the day the sale was consummated, after the defendant had paid her money, had given her notes and mortgages, and had received her deed, the plaintiff's wife told her the deed did not contain all of the two hotel lots. Soon afterwards the plaintiff's son fenced off a part of the lots. The defendant accepted the situation, paid notes as they became due, and even after the suit was commenced tried to borrow money to pay what she owed the plaintiff. She did not complain of the fraud until her answer was filed. The reason the defendant did not complain sooner was that she was ashamed to think the plaintiff had beaten her. He was very quarrelsome when crossed, she was afraid to make him angry, he said such awful things, and she did not want to make him antagonistic. She was without any business experience, did not know what to do that would do any good, and did not know what her rights were until she consulted an attorney after she was sued.

The case ought to have gone to the jury. In the beginning the defendant had two remedies, one equitable and the other legal. She could rescind the contract of sale and require return of her money and cancellation of her notes and mortgages. To avail herself of this remedy it was essential that she act promptly and tender reconveyance. She could not allow herself to be in the attitude of reaping an advantage from a contract which she repudiated, or allow the state of affairs to change so the plaintiff, acting on the assumption the contract was to stand, could not be substantially restored to his former situation. On the other hand, the defendant could affirm the contract and sue for the damages which she sustained because of the fraud. Affirmance of the contract meant that the notes and mortgages were valid obligations to be met according to their tenor. It also meant that the plaintiff should keep whatever she received, such as it was. In simply doing this she did not waive the fraud. The measure of her damages was the difference in value between the hotel property as it was and as it was represented to be, and the claim for damages could be asserted by action or by way of counterclaim at any time within the period fixed by the statute of limitations. All this is elementary law, and cases applying the doctrines stated have been collated again and again. The plaintiff cites the following statement appearing in 20 Cyc., at page 92:

"Thus where a contract of sale has been induced by fraud of the vendor, if the purchaser consummates the purchase after discovering the fraud he cannot thereafter maintain an action of deceit. These principles are not in conflict with the doctrine that the party defrauded has his election to repudiate the contract or to affirm it and sue in deceit. The question of waiver, however, is largely one of intent."

The plaintiff failed to cite the statement of principle which immediately precedes the quoted...