Greenberg v. Du Bain Realty Corp.

WASTE, C. J.

Plaintiff bought two lots from defendant corporation Du Bain Realty Corp., through Stoll and Boyd, salesmen for the realty corporation, agent for Ambassador Park Syndicate, in 1923. According to his complaint, he did and performed everything of him required to be done under and in pursuance of the terms of the agreement and contract for the purchase of the lots, and was not in default.

[629]

He gave notice of rescission in February, 1932, and brought this action upon refusal of the defendants to restore his money. The trial court sustained a demurrer to the third amended complaint, and the District Court of Appeal affirmed the judgment entered thereon for defendants. It held that plaintiff’s claim of fraudulent representations of the agent is not tenable in view of a stipulation in the contract entered into limiting the agent’s authority, under the doctrine of

Gridley

v.

Tilson,

202 Cal. 748 [262 Pac. 322] ; and also that plaintiff’s right to rescind was barred by laches and by the statute of limitations.

The case was taken over by this court in order to eliminate the language dealing with the

Gridley

v.

Tilson

rule, which is now limited, in view of the decisions of this court in

Speck

v.

Wylie,

1 Cal. (2d) 625 [36 Pac. (2d) 618, 95 A. L. R. 760], and

Lozier

v.

Janss Investment Co., 1

Cal. (2d) 666 [36 Pac. (2d) 620], which were handed down after the opinion in this case was filed by the District Court of Appeal. In these later cases the rule is now firmly-established that a rescission of contract may be had against even an innocent principal because of unauthorized misrepresentations by his agent, even though the rescinding party had notice of the agent’s lack of authority. In those decisions, we endeavored to, and believe we did, make it clear that the basis for our conclusion is the equitable rule against unjust enrichment. As stated by the author of the concurring opinion in the Wylie case: ‘