Turner v. Jarboe

• Decision Date: 06 April 1940
• Docket Number: 34354.
• Parties: TURNER v. JARBOE et al.
• Court: Kansas Supreme Court

100 P.2d 675

151 Kan. 587

TURNER v. JARBOE et al.

No. 34354.

Supreme Court of Kansas

April 6, 1940

Syllabus by the Court.

If trial court's ruling on demurrer was correct, trial court's reasons for its ruling were unimportant.

Where one has been induced by fraud to enter into a contract, he may have the contract rescinded and recover the property of which he was defrauded, or he may recover damages for loss sustained.

The right to rescind a contract on ground of fraud must be exercised promptly, or an action to rescind is not maintainable.

Action to rescind contract for exchange of realty and personalty on ground of fraud was barred by "laches" and by two-year limitations, where not brought until more than two years after plaintiff took possession of the property which she received in the exchange, and where, on the day that she took possession, she had notice that some of the representations allegedly made to her were false, and that she did not get all that she had bargained for. Gen.St.1935 60-306, subd. 3.

In determining whether action to rescind contract for exchange of realty and personalty on ground of fraud was barred by two-year limitations, the date of the filing of amended petition seeking only rescission would be taken, rather than date of demurrable petition in which plaintiff had misjoined cause of action for rescission and cause of action for damages. Gen.St.1935, 60-306, subd. 3.

When a plaintiff has been induced by fraudulent misrepresentations to make a contract for the exchange of real and personal properties, she has a choice of two remedies, one for rescission and cancellation of the contract and to recover the property of which she was defrauded, and another for damages for the loss she has sustained. Her right of rescission must be exercised promptly, otherwise such an action is not maintainable. In the circumstances stated in the opinion plaintiff's election to sue for rescission which was not effectively exercised until the filing of her third amended petition, two years, two months and three days after the fraudulent contract was consummated, was too late and her action was barred by laches as well as by the statute of limitations.

ALLEN J., dissenting.

Appeal from District Court, Wyandotte County, Division No. 4; C. A Miller, Judge.

Action by Maude Turner against Holly Jarboe and others to rescind a contract for the exchange of certain realty and personalty, on ground of fraud. From an adverse judgment, the plaintiff appeals.

Judgment affirmed.

David F. Carson, of Kansas City, George P. Norton, of Kansas City, Mo., and Carl W. Fincke, of Kansas City, for the appellant.

J. H. Brady and N. E. Snyder, both of Kansas City, for the appellees.

DAWSON Chief Justice.

This is the second appearance of this case in this court. Turner v. Jarboe, 145 Kan. 202, 64 P.2d 26. In the former appeal we had to consider the sufficiency of plaintiff's petition in which the plaintiff, Mrs. Maude Turner, alleged that through false and fraudulent representations of the defendant, Mrs. Harriet Jarboe, on which she relied, she was induced to exchange certain real estate and personal property for a hotel property and its furnishings in Kansas City, Missouri.

Summarizing the contents of plaintiff's original petition, which she filed on June 10, 1935, it was alleged that on December 20, 1934, the contract for the exchange of properties was effected; that on January 5, 1935, plaintiff took possession of the Missouri property known as the Hollywood Hotel, a three-story structure of 39 rooms together with its furnishings; that the hotel property and the condition of the business thereat was greatly inferior to the representations which the defendant Mrs. Jarboe had made to plaintiff and on which plaintiff had relied in making the contract of exchange; that plaintiff tendered to defendant a deed and bill of sale to the hotel property, and plaintiff asked--"That all of said transactions, conveyances and written instruments be surrendered, cancelled and held for naught, and that said defendants, Holly Jarboe and Harriet Jarboe should be required to pay the expenses of this suit including a reasonable attorneys' fee for and on account of the wilful, malicious, false and fraudulent statements hereinbefore alleged to have been made by them, and that the plaintiff has been compelled to and has paid out since the transfers above mentioned and before she discovered the fraud that had been practiced upon her, the sum of $1409.58, or in all that plaintiff have a judgment against said defendants, Holly Jarboe and Harriet Jarboe and Leo McShane for the sum of $3.500.00."

Plaintiff also alleged that she had been compelled to make certain expenditures for which she claimed the right of recovery. Her petition closed with a prayer for judgment for $4,500, and that the deeds executed by her to Mrs. Jarboe be cancelled and that she be required to reconvey to plaintiff the properties she had received in the contract of exchange.

The action was begun on June 10, 1935. Plaintiff's petition was met by a demurrer which the trial court overruled, and on appeal that judgment was reversed,--this court holding that the petition was drawn on two inconsistent theories,--one for rescission and another for damages. Section 2 of our syllabus reads: "A petition in an action for rescission of an exchange of property on the ground of fraud contained allegations of damages because of the fraud and included a prayer for a money judgment therefor. Held, these allegations and that portion of the prayer should have been stricken from the petition on motion, and if that were not done a demurrer to the petition should have been sustained."

When the cause was remanded to the district court, plaintiff filed a third amended petition on March 8, 1937, which in large measure conformed to her first petition except that so much thereof as tended to plead a cause of action for a money judgment for damages was eliminated.

To this petition defendants answered with a general denial, invoked the statute of limitations, pleaded laches, and--

"Further answering the defendants state that immediately following the execution of said written contract, *** plaintiff went into possession of the property conveyed to her by these defendants pursuant to said written contract; that plaintiff proceeded to operate said hotel property, collect rents, conduct said business, and perform all other conditions required of her to be performed by said written contract until after June 10, 1935, when the original petition was filed in this action, and if any of the grounds upon which plaintiff bases this action existed, all of which these defendants deny, the express agreement, conduct and action of plaintiff in entering into possession of said premises, operating said business, collecting and retaining the rents from said hotel and all other acts and conduct consistent with an affirmance of said contract, until after the time her original petition was filed in this action on June 10, 1935, constitute a waiver thereof and the plaintiff is now barred and estopped from maintaining this action.

"Further answering these defendants state that the plaintiff cannot now make good the claimed tender contained in paragraph 9 of her third amended petition for the reason that she does not now have title to either the real or personal property mentioned therein."

Plaintiff filed a reply in which among other allegations, she alleged that--"She is not guilty of laches and has not waived any of her rights herein for the reason that she did not discover the fraud that had been committed upon her, *** nor did she know nor learn of the real value of the property, which had been misrepresented to her, and which was the property defendants traded to her as a part of the consideration for the deeds that they obtained from her to the property she seeks to recover by her petition herein, and she did not know and did not learn of the exact situation until about the time she filed this suit, and that as soon as she did learn of the fraud that had been committed upon her, as soon as she could thereafter do so, she brought an action to set aside the conveyances executed by her and tendered back to the defendants all that she had received from them."

On these issues the cause was tried.

Plaintiff testified when she was negotiating for the hotel she was not permitted to see but a few rooms and was assured by defendant that the furniture in all the rooms was in good shape, that the hotel was full of good paying tenants who had been there a long time and that there was a list of tenants waiting for vacancies, that the income of the hotel was $1,000 per month, and that the property which was mortgaged for $16,000 was worth $23,000, and that plaintiff relied on these representations when she made the contract of exchange.

Plaintiff further testified that she took possession of the hotel on the evening of January 5, 1935, and discovered that two truck loads of the furniture in the hotel had not belonged to defendant and had been taken out. She also discovered that the hotel furniture was in had shape, not as it had been represented. Within two weeks about one-third of the tenants moved out, and there was no waiting list. She te...