Purdy v. Bullard

California Supreme Court Jul 1, 1871 No. No. 2,257Published

Before: Rhodes

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Holding. The court held that the plaintiffs failed to state a cause of action for rescission because they did not allege that the security received was inadequate to cover the loss, and because they failed to offer to rescind the entire contract.

Issues

Whether the plaintiffs sufficiently alleged injury resulting from the defendant's fraudulent representations to justify rescission.
Whether a party may rescind only a portion of an entire, non-severable contract.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The plaintiffs are not entitled to rescind the contract, unless they have been injured by reason of their reliance on those representations.”

“The security will be presumed to be adequate until the contrary is shown”

“The general rule is that a contract cannot be rescinded in part.”

Synopsis

Rescission of Contract.—A party to a contract is not entitled to a judgment rescinding the same, on the ground of fraudulent representations, unless he has been injured by reason of his reliance on such representations.

Complaint in Action to Rescind Contract.—In an action to rescind a sale of real estate, on the ground of fraudulent representations, security, averred in the complaint to have been given for the purchase nfoney, will be presumed to be adequate unless the contrary is expressly averred.

Rescinding Part of a Contract.—Where a contract is not severable, and there are good grounds for its rescission, one party is not at liberty to rescind one part ofuit, and leave the residue in full force. P. proposed to sell to B. a hotel, and to effect the sale, P. deeded the property to C., who paid him part of the purchase money, and C. contracted with B. to give him a deed when he was repaid the money thus advanced. B. then gave P. security for the remainder of the purchase money, and assigned his contract with C. to S. Held-, that the whole matter constituted one entire contract.

Mortgage in Equity—Offer to Refund Money.—Where P. contracts with B. to sell him his hotel, and, to effect the sale, executes to C. a conveyance thereof, upon C. advancing to P. part of the purchase money, and C. gives B. a contract for a deed when the money he has advanced is repaid, and B. gives P. security for the balance, as between the parties, the sale and . conveyance will be deemed, in equity,'mortgage to secure the payment by B. to C. of the sum advanced; and in such case a complaint, to set aside the contract for fraudulent representations of B., must aver an offer to refund C. his money.

By the Court, Rhodes, C. J.: The leading facts stated in the complaint are as follows: The plaintiffs proposed to sell, and Bullard, one of the defendants, to.buy, the blew York Hotel, at Petaluma, with the furniture, bedding, etc., for nine thousand dollars, to be paid in the following manner: The plaintiffs were to convey to one Cobb the hotel and furniture, and Cobb was to pay the plaintiffs five thousand dollars, and to execute to Bullard a contract to convey to him the property on his paying to Cobb the five thousand dollars, with interest. The agreements, up to this point, were executed by the respective parties. The remaining four thousand dollars were to be paid as follows: Bullard represented that he was the owner of a certain farm, which was of the value of four thousand dollars; that he had bargained the farm to one Barlow for over three thousand dollars; that Barlow was to pay him in hand three thousand dollars, or giye him his (Barlow’s) note for that sum, with one Henman as surety; and that he was expecting Barlow daily to come to Petaluma to pay the money or give.the note. This sum of money was to be paid to the plaintiffs, or the note last mentioned was to be assigned to them. Bullard was also to execute to them his [447]promissory note, with one Hill as surety, for the sum of one thousand dollars. Bullard represented that Barlow was prevented by the rain from coming to Petaluma, and Bullard, iii order to secure to the plaintiffs the payment of the sum of three thousand dollars, to be paid by Barlow, or the assignment of the note of Barlow and Denman, conveyed to one of the plaintiffs the farm, and gave him a bill of sale of seven cows and all the farming utensils on the farm. It is alleged that Bullard neither paid the three thousand dollars, nor assigned the note of Barlow and Denman, nor made the note for one thousand dollars, nor paid that sum of money.

It. is alleged that Bullard’s representations, that he owned the farm, that the farm was of the value of four thousand dollars, that he had bargained the same to Barlow for a sum exceeding three thousand dollars, were false, and were made for the purpose of defrauding the plaintiffs, and that the plaintiffs believed those representations, and, relying on them, entered into the agreements above mentioned. The contract which was executed by Cobb to Bullard was assigned to Sullivan, who took it, with notice of all the facts relating to the whole transaction.

The plaintiffs seek to rescind the sale of' the hotel property, on the ground of the false and fraudulent representations of Bullard. General demurrers to the complaint were interposed by-the defendants; and the demurrers being sustained, and the plaintiffs declining to ■ amend the complaint, judgment was rendered for the defendants. The fraudulent representations of Bullard, assuming that they are actionable, bear only on the matter of the payment of the sum of three thousand dollars. The plaintiffs are not entitled to rescind the contract, unless they have been injured by reason of their reliance on those representations. They accepted a conveyance of the farm, and a sale of the cows and farming utensils, as security for the performance of Bullard’s agreement- to pay that sum, or assign the note of Barlow and

Purdy v. Bullard

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