Arendt v. McConnell

HAVEN, J.

This action was brought for the purpose of obtaining a decree annulling an agreement of exchange between plaintiff and defendant. Plaintiff and one Edward A. Lesser were the owners in common of a certain tract of land in the county of Tulare. They jointly agreed with the defendant McConnell to exchange the above referred to tract of land for 3,250 shares each of the preferred and common capital stock of the Consolidated Concessions Company, and certain other considerations hereinafter referred to. The agreement was consummated by the execution and delivery to McConnell of a deed of the real property and the. delivery by McConnell to the plaintiff and Lessef o.f certificates for the required number of shares of the capital stock of the corporation referred to. Plaintiff alleged in his complaint that the defendant made certain false representations to him with regard to the value of said stock and the assets and indebtedness of the corporation which had issued such stock; that plaintiff believed said statements were true, and relied upon them, and by reason thereof was induced to enter into the agreement of exchange; that he later discovered that the assets and affairs of the corporation were not as represented by the defendant; that defendant knew the said representations were false, and that if plainth’

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[513]

had known the same he would not have entered into the agreement of exchange; that upon the discovery of the falsity of said statements plaintiff rescinded the agreement and so notified the defendant, and then and there tendered and offered to return to the defendant the 1,625 shares of the corporate stock which he had received as his portion of the consideration exchanged for the deed of the land; that the said shares of stock constituted everything of value which he had received in the exchange; that the defendant had refused to comply with plaintiff’s demand for rescission, and that the title of the real property still stood in the name of defendant. The prayer was for a decree canceling, annulling, and setting aside the agreement of exchange; requiring defendant to account for the rents, issues, and profits of the real property; and, further, requiring him to execute and deliver to plaintiff a deed for his undivided interest in the real property; and for the recovery of damages. The findings of the trial court were all in favor of the defendant, and expressly negatived the making of any false or fraudulent representations by him, or the reliance by plaintiff on any such representations.