Campbell v. Title Guarantee & Trust Co.

California Court of Appeal Mar 3, 1932 No. Docket No. 8218.Published

Before: Spence

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Holding. The court held that the plaintiff was not entitled to rescission of the real estate contract because she failed to rescind promptly upon discovering the alleged fraud and was in default under the contract at the time of the attempted rescission. Furthermore, the contract's integration clause precluded the plaintiff from relying on oral representations regarding the property's size.

Issues

Whether a nine-month delay in seeking rescission after discovering alleged fraud constitutes prompt action under Civil Code section 1691.
Whether a party in default under a contract containing a 'time is of the essence' clause may rescind the contract.
Whether a party may recover damages for fraud based on oral representations when the written contract contains an integration clause.

Disposition. reversed

Quotations verified verbatim against the opinion

“Under the terms of that section the party entitled thereto must rescind promptly upon discovering the fraud.”

“In the absence of allegations showing unusual circumstances excusing such delay her complaint was insufficient for it affirmatively appeared that she failed to act promptly and was therefore not entitled to rescind.”

“She would not be entitled, in any event, to rescission for the added reason that she was admittedly in default at the time she attempted to rescind.”

SPENCE, J.

Plaintiff broughtthis action seeking rescission of a contract to purchase real estate and the return of money paid thereunder. The cause was tried by the court sitting without a jury and from a judgment in favor of plaintiff, defendant appeals.

The property was located in the city of Burbank and was known as lot 14 in tract' No. 9748, as shown on the official map of said tract recorded in the office of the county recorder of the county of Los Angeles on January 7, 1927. The legal title thereto was vested in defendant and the Realty Service Corporation was its selling agent. The written agreement for the purchase of this lot designated it by lot number with reference to the recorded map. Said agreement was signed by plaintiff and defendant on January 31, 1927. It contained the following provisions, which we will number to facilitate reference thereto:

(1) “It is expressly understood and agreed that time is of the essence of this agreement, and in the event of the failure of the Buyer to comply with all or any of the terms or conditions hereof in the manner and within the time herein specified, the same shall become null and void as fully as if it had never been made, and the Seller shall be released from all obligation in law or equity to convey said premises, and the Buyer shall forfeit all right thereto and to all moneys theretofore paid under this agreement ...”

(2) “It is understood that this instrument contains the entire agreement between the parties, and the Buyer agrees that the Seller has not, and that no agent of the Seller has made any representation or promise with respect to, or affecting said property or this contract not expressly contained herein.”

[376]

Plaintiff made the payments due under said contract up to October 30, 1927, and then defaulted. On May 16, 1928, plaintiff served a purported notice of rescission and thereafter brought this action. Plaintiff claimed the right to rescind solely by reason of alleged fraud consisting of an alleged misrepresentation by the salesman of the selling agent respecting the size of the lot. She alleged in her amended complaint that the lot had been represented to be a 54-foot lot, while in truth and in fact it was only a 40-foot lot; that she did not discover the falsity of the representation until August 17,

Campbell v. Title Guarantee & Trust Co.

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SPENCE, J.

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