Summary
In Dean v. Brown, 201 Ala. 465, 78 So. 966, and McCoy v. Prince, 11 Ala. App. 388, 66 So. 950, the courts have held that a purchaser of stock, seeking to rescind the sale of same on the ground of fraud, must act promptly after actual or imputed knowledge of the fraud, and if he fails to restore or offer to restore what he has received within a reasonable time after such knowledge, he thereby elects to ratify the contract.
Summary of this case from Americanized Finance Corporation v. YarbroughOpinion
8 Div. 109.
May 9, 1918.
Appeal from Circuit Court, Morgan County; R. C. Brickell, Judge.
H. V. Cashin, of Decatur, for appellant. W. T. Lowe, of Decatur, for appellee.
By the averments of the third plea the defendant in this action of detinue attempted to set up the defense of rescission of the contract of purchase, for the purchase price of which the mortgage upon which this suit is founded was executed. This defense was available to the defendant in this action under the provisions of section 3791 of the Code of 1907. McDaniel v. Sullivan Bramlett, 144 Ala. 583, 39 So. 355.
The averments of fraudulent representations contained in said plea were sufficient. Roddam v. Brown, ante, p. 109, 77 So. 403 : § 4298, Code 1907.
In Hayes v. Woodham, 145 Ala. 597, 40 So. 511, it was said:
"An offer to return the horse in a reasonable time, if there was a breach of the warranty or a fraud practiced on the plaintiff, after the breach or fraud was discovered, is equivalent in its effect upon the remedy to an offer accepted by the seller, and the contract is rescinded. In other words, such an offer made within a reasonable time after a discovery of the fraud or breach of warranty was just as effectual to rescind the contract of exchange as if the defendant had accepted it."
And in the same case is the following quotation from Rand v. Oxford, 34 Ala. 476, here pertinent:
"When the purchaser of a chattel, for a sufficient reason, makes a tender of the property to the seller, with a view to rescission, and the seller refuses to receive it, the purchaser may abandon the property; but he is not bound to do so. He may, if he choose, retain the possession; and in that event he is considered merely the bailee of the seller, and that relation becomes at once the rule and measure of his rights and responsibilities."
See, also, Comer v. Franklin, 169 Ala. 573 [53 So. 797]; Moline Jewelry Co. v. Crew, 171 Ala. 416 [55 So. 144]; McCoy v. Prince, 11 Ala. App. 388 [66 So. 950].
We are of the opinion that plea 3 as amended met all the requirements essential to the rescission of the contract of purchase by the purchaser on account of the fraudulent representations by the seller, under the principles announced in the foregoing authorities, and that none of the assignments of demurrer were well taken. By the action of the court in sustaining the demurrer to said plea as amended the defendant was deprived of the defense there sought to be interposed; and that ruling was error, for which the judgment must be reversed.
The few remaining questions will doubtless present no difficulty upon another trial, and are therefore not necessary to be here discussed.
The judgment is reversed, and the cause remanded.
Reversed and remanded.
ANDERSON, C. J., and MAYFIELD and SOMERVILLE, JJ., concur.