Opinion
Rehearing Denied March 31, 1927.
Hearing Granted by Supreme Court May 2, 1927.
Appeal from Superior Court, City and County of San Francisco; Daniel C. Deasy, Judge.
Action by Thomas Hunt against L. M. Field, Inc. Judgment for plaintiff, and the defendant appealed. Reversed.
COUNSEL
Herbert Chamberlin, of San Francisco, for appellant.
S. T. Hogevoll, of San Francisco, for respondent.
OPINION
NOURSE, J.
Plaintiff sued for the rescission of a written contract for the sale and lease of an automobile truck. Plaintiff had judgment, from which the defendant has appealed upon a typewritten transcript.
The complaint alleges that on February 28, 1922, the defendant represented to the plaintiff: (1) That it had for sale a certain motortruck and trailer having the power to transport a load of at least four tons of lumber four times each day over the public roads from the lumber mill of the La Honda Mill Company, a distance of approximately 21½ miles, at a compensation of 15 cents per ton per mile for a period of 8 months each year for 5 consecutive years, commencing on the 1st day of April, 1922; (2) that said truck and trailer were then and there in good mechanical condition for immediate delivery; (3) that said truck and trailer carried with its sale the manufacturer’s warranty that the truck and trailer, and each of them, were properly constructed and that they were guaranteed against mechanical imperfection; (4) that if the plaintiff purchased said truck and trailer the said La Honda Mill Company would employ him to transport each day at least three truck loads of lumber, over four tons to each truck load, from their said mill at La Honda to said points of distribution in San Mateo county for a period of eight months each year, for a period of five consecutive years, commencing on the 1st day of April, 1922, for the said compensation of 15 cents per ton per mile. It was further alleged that all said representations were false and untrue; that the truck and trailer did not have the power and capacity alleged; that the defendant did not have any agreement with the La Honda Mill Company that it would employ the purchaser of said truck to transport said lumber from its mill; that the truck was not in good mechanical condition or ready for immediate delivery; that it did not carry the manufacturer’s warranty that it was properly constructed or that it was in proper mechanical condition; that defendant knew said representations were false; and that they were made with the intention of defrauding plaintiff and with the intention of inducing him to enter into the contract which was executed on March 1, 1922; that plaintiff did not discover that said representations were untrue until April 14, 1922, and that he rescinded the contract and gave notice thereof to the defendant on April 29, 1922. One thousand dollars having been paid upon the purchase price of the truck, the plaintiff demanded the cancellation of the contract and judgment for return of the money paid under it.
The defendant denied all the material allegations of the complaint, and the cause went to trial before the court with the jury sitting in an advisory capacity. The jury having returned its verdict in favor of the plaintiff, the court made its finding of fact that all the allegations of the complaint were true, and entered judgment thereon as stated.
On this appeal the appellant stresses two points which he insists are covered by well-established rules of law relating to the rescission of contracts of this character: (1) That where a party to a contract seeks to rescind it upon the grounds of false representations or fraud, it is incumbent upon him to show that he relied upon such false representations or fraud to his injury; and (2) that a party who is himself in default in such a contract may not rescind.
As pointed out in the statement of the pleadings, the respondent pleaded four specifications of false representations inducing him to enter into the contract. As to the power or capacity of the truck and trailer, it was alleged that the appellant had represented that it was capable of transporting a load of at least four tons of lumber at least three times each day from the La Honda mill for a distance of 21½ miles to points of distribution in San Mateo county at a compensation of 15 cents per ton per mile for a period of eight months each year for five consecutive years. The trial court found this allegation to be true in its entirety, though the only proof offered in support of it was that it had been represented that the truck could haul 2,000 feet of lumber from the mill to San Francisco or to Redwood City and way points. Nothing was shown as to the mileage between these points nor as to the compensation which might be received therefrom or for the period of use of the truck. Manifestly, evidence of representations that the truck was capable of making two trips a day was not proof of the allegation that it had been falsely represented to the respondent that it would make three trips a day. But aside from this the record fails to show that the respondent believed or acted upon any representation as to the power or capacity of the truck to his injury.
It was alleged that the truck and trailer were represented to be in good mechanical condition and fit for immediate delivery. This allegation was also found to be true, but the only evidence in support of it was that coming from the respondent as a witness in his own behalf to the effect that the agent of the appellant stated to him that he thought the truck was in good mechanical condition but that it would be given a general overhauling; that he, the respondent, went on numerous occasions to the appellant’s place of business and directed the making of certain repairs; that he brought his own mechanic to examine the truck, and that he specified a list of repairs to be made, and that these were undertaken by the appellant. With reference to the mechanical condition of the truck, the evidence falls far short of meeting the demands in an action of this kind that the false representations must be shown by clear and convincing proof. There is no conflict in the evidence that at the time of the execution of the contract the appellant agreed to give the truck a general overhauling-to make such repairs as were found to be necessary-that thereafter the appellant agreed to and did make other repairs at the request and under the direction of the respondent.
In reference to the representation as to a factory warranty, the only evidence in the record is found in the written contract, which reads:
"There is no warranty with this property except warranty in writing and delivered herewith, and further except the warranty of the manufacturer on a new car, which is hereby extended to lessee through lessor without obligation on the lessor’s part." (Emphasis ours.)
In reference to each of the three foregoing specifications of false representations the record fails to show any evidence tending to prove that the respondent believed any one of them or that he relied upon them to his injury. The only answer which the respondent makes to this contention of the appellant is an incorrect quotation of testimony purporting to be found on pages 35 and 36 of the transcript. Reference to the transcript, however, discloses that the testimony there found related solely to the question of the representation relating to the employment of the respondent by the La Honda Mill Company. Having failed to bring forth any proof of reliance by the respondent on any of the representations referred to in the three specifications above mentioned, the case, as to them, comes squarely within the rule found in Pomeroy’s Equity Jurisprudence, § 890, and reading:
"Another element of a fraudulent misrepresentation without which there can be no remedy, legal or equitable, is, that it must be relied upon by the party to whom it is made, and must be an immediate cause of his conduct which alters his legal relations. Unless an untrue statement is believed and acted upon it can occasion no legal injury. It is essential, therefore, that the party addressed should trust the representation, and be so thoroughly induced by it, that, judging from the ordinary experience of mankind, in the absence of it he would not, in all reasonable probability, have entered into the contract or other transaction." Spinks v. Clark, 147 Cal. 439, 444, 82 P. 45; Maxon-Nowlin Co. v. Norswing, 166 Cal. 509, 511, 137 P. 240, and other authorities too numerous to mention.
As to the alleged representation of employment of respondent by the mill company, the uncontradicted evidence is that though the appellant represented that it had the privilege of placing the owner of one of its trucks in a hauling job for the mill company, the respondent was notified by the appellant’s agents to get in touch with the mill company before the execution of the contract and to see if the job could be had. There is no evidence of any kind tending to prove the allegations of the complaint relating to the character of the work to be done for the mill company, or the compensation to be paid for the period of employment, as alleged in the complaint and found to be true by the trial court. It is in the evidence that the respondent believed the representations contained in a sign placed in the office window of the appellant to the effect that the appellant had the privilege of placing hauling jobs for the mill company to a man who would buy one of the appellant’s trucks and drive it upon the job. No other evidence was offered that the appellant believed or relied upon any other representation contained in the complaint. If the representation contained in this sign was the same as that alleged in the complaint and found to be true, the rule heretofore cited from Pomeroy would not be applicable, but it is not necessary to analyze all the evidence relating to this specification, as the case must fall upon an equally well-established rule of law in rescission that when the fraud or deceit has been discovered by a party he loses the right to rescind when he elects to stand upon the contract, to ask additional favors of the other party, to demand and receive the performance of additional conditions by the other party, or to demand full performance of the contract as executed. Schmidt v. Mesmer, 116 Cal. 267, 271, 272, 48 P. 54; Monahan v. Watson, 61 Cal.App. 417, 420, 214 P. 1001; Tucker v. Beneke, 180 Cal. 588, 594, 182 P. 299.
Here the uncontradicted evidence is that the contract was executed on March 1, 1922; that the respondent talked with the mill people on March 12; that thereafter he ordered additional repairs to be made by the appellant upon the truck; that on March 28, 1922, he definitely learned from the mill people that he could not have the hauling job; that thereafter he ordered additional repairs to be made on the truck, and on April 11, 1922, took it out for trial and returned it with instructions to have other repairs made; and that on April 15, 1922, he addressed a letter to the appellant demanding delivery of the truck or the return of the money paid. In view of the allegation in the complaint found to be true by the trial court that the respondent discovered on April 14, 1922, that the representations and warranties were false and fraudulent, his specific demand for performance in accordance with the written contract was an election to stand upon that contract, waiving the alleged oral misrepresentations, and this terminated his right to rescind.
It is conceded that at the time of the attempted rescission the plaintiff was in default as to his obligations under the contract, and the appellant insists that the respondent could not rescind because of the general rule that "the right to rescind a contract rests only with the party who is without default." Fairchild, etc., Co. v. Southern, etc., Co., 158 Cal. 264, 273, 110 P. 951, 955. But, in denying a transfer in De Bairos v. Barlin, 46 Cal.App. 665, 674, 190 P. 188, 192, the Supreme Court said:
"We know of no case which holds that such rule applies to a case where the vendee in default on payments due on the contract seeks to avoid and rescind it for fraud of the vendor in procuring its execution, or for mistake inducing its execution. Payment by the vendee, after discovery of the fraud or mistake, might tend to show a waiver thereof, and thus defeat an attempted rescission, but a refusal to pay would be entirely consistent with the right of the vendee to rescind for such cause."
Judgment reversed.
We concur: KOFORD, P. J.; STURTEVANT, J.