Cupps v. Hendricks

SCHOTTKY, J.

Plaintiffs and appellants filed the instant action to rescind a written contract for the sale and purchase of a motel and furnishings located in Lake County, and for judgment in the sum of $15,000 because of respondents’ alleged fraudulent representations as to the amount of income they had earned from the operation of the motel. Respondents answered and cross-complained, praying that their title to the property be quieted. Appellants’ answer to the cross-complaint disclaimed any right, title, or interest in the property except a lien thereon in the amount, and until the return, of the benefits conferred upon respondents under the contract. The trial court found that appellants’ charges of fraud were untrue and entered judgment cancelling the contract and quieting respondents’ title to the property. A motion for a new trial was denied and plaintiffs have appealed from the judgment.

The written contract was entered into between the parties on May 24, 1950. The respondents thereby agreed to sell the real and personal property herein involved to the appellants for the sum of $60,000, of which $15,000 was to be paid upon the execution of the contract and the balance, together with 5 per cent interest on the unpaid principal, at the rate of $335 a month, commencing on June 26, 1950. It was provided that the down payment of $15,000, receipt of which was thereby acknowledged, was represented by a deed from appellants to respondents of a house in Colfax, the title to which respondents were to take subject to a deed of trust. During the pendency of this action, respondents exchanged this house for one in Oakland which they thereafter sold. Time was made the essence of the contract and it was provided that if appellants defaulted, the respondents should retain all moneys paid as rent and compensation for the use and occupancy of the premises.

The appellants took possession of the motel on June 1, 1950, and, on July 1st, made a payment of $335 to respondents. However, appellants became dissatisfied with the income realized from the operation of the motel and early in August served respondents with a notice of rescission of the contract of May 24, 1950, on the ground that they were induced to enter into it by fraud practiced upon them by respondents. Never

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theless, appellants remained in possession, and on August 21st paid respondents $165. Respondents testified that it was then agreed that instead of the $335 monthly payments provided for in the contract, the appellants would pay $1,000 on January 1, 1951, and $1,500 semiannually thereafter. This was denied by appellants who claimed they did not withdraw their rescission but were persuaded to remain by respondents’ misrepresentation that business improved in the winter and that they would be satisfied with the income. In any event, appellants made no payments after August 21st, but continued to operate the motel until January 1, 1951, when they quit the premises. The instant action was filed on January 8, 1951. Respondents retook possession of the property and on April 15th sold it for $54,000.