Romanoff Mining Co. v. Cameron

Romanoff Mining Co. v. Cameron. Bill in Equity to foreclose Mortgage. 1. Equity pleading; not error for chancellor to render decree declaring vendor’s iieh oh 'a till filed' to foreclose a' mortgage. Wliere a bill is filed to foreclose a mortgage given, to secure the payment of the balance due upon the purchase money of lands conta'ned in the mortgage, if it should be ascertained that although the mortgage sought to he foreclosed was invalid, but the complainant was entitled to the purchase money, it is not improper for the chancellor to render a decree under a prayer for general relief,, declaring a vendor’s lien upon the lands described in the mortgage in favor of the complainants. 2. Rescission of contract at instance of purchaser on ground of fraud; must he promptly made; waiver of right of laches. The right to rescind a contract because of fraud or fraudulent representations, in order to be available must be asserted with reasonable diligence and promptness, after the ascertainment of the truth; and where a vendee who knowing of the false and fraudulent representations on the part of the vendor makes no offer to rescind the sale on- that account until several years afterwards, when the vendor files a bill to foreclose a mortgage given to secure the payment of the balance of the purchase money, the vendor’s right to, rescind is lost by such delay. Appeal .from the Chancery Court of Tallapoosa. Heard before the'Hon. Richard B. Kelly. The bill in this case was filed by the appellee, H., J. Cameron, against the appellant, the Romanoff ‘Mining Company. It was averred in the bill that the complainant sold to the defendant a specifically described tract of land for which the defendant made a. cash payment of a part of the purchase money, and for the balance executed four several notes of $15-,000. each, and to secure the payment of said notes, _ executed a mortgage upon said lands; that the defendant had made default in the payment- of the notes, and. the prayer of the bill was that said mortgage be. foreclosed. There iva-s. also a prayer for general relief. The respondent filed an ansAver which Avas asked to be taken as a cross bill, and averred therein that the lands described in the bill and which were sold by the complainant to. the defendant were represented to the defendant to be. very rich in. gold ore,. and they were purchased by the defendant, for the purpose of mining and milling gold therefrom; that the representations made by the 'complainant to the defendant induced them to purchase said l'ands, and that the defendant relied upon such representations; hut that sa-d representations were false, in that said lands did not contain gold ore in any appreciable quantity and were valueless to the defendant; that the defendant had expended large sums of money in trying to develop gold mines, but had found that said lands did not contain gold ore in sufficient quantities to justify the defend,ant mining it. It was further averred in said answer that the representations as to the 'lands containing gold ore were knowingly false on the part of the complainant and were made for the purpose of deceiving the defendant and inducing him to make said purchase. The prayer of the cross bill was that the notes anc .the mortgage be' declared void and delivered up and cancelled. On the submission of the cause on the pleadings and proof, the chancellor rendered a decree which was as follows: “Upon consideration it is ordered that the complainant is entitled to the. relief prayed for in his said bill and that the respondent is not entitled to the relief prayed for in its said cross bill and that said cross bill is hereby dismissed. It is therefore ordered and decreed that complainant has a lien upon the land mentioned in the bill with the appurtenances thereon for the purchase money now due, including principal and interest, which is now foreclosed, . and as the amount due complainant is easily computed the court now makes the calucation without referring it to the register,, and find the amount due the complainant to be the sum of fifty-two- thousand, three hundred dollars.” There then follows directions to the register as’ to how to- proceed to- sell the said lands. From this decree the respondent appeals, and assigns the rendition thereof as error. Sorrell & Sorrell, for appellants-, cited Young v. A.rnts, 86 Ala. 116; Ansley v. Bank of Piedmont, 113 Ala. 167; Bailey v. Jordan, 32 Ala. 50; Orendorf v. ■Ta-lhnan, 90 Ala. Ill; Bullock v. Tuttle, 90 Ala. 135. W. M. Lackey, contra. The complainants in. the cross hill do not come'within the rule in the cases decided by this court for rescinding a contract, even if the pleadings entitled them to such relief. The party ashing to rescind a contract must promptly disavow the contract and offer to rescind and put the other party in statu quo.- — Ansley v. Bank, 113 Ala. 467; Lockicood v. Fitts, 90 Ala. 150; Allgood v. Bank, 115 Ala. 418. [MAJORITY — TYSON, J.] TYSON, J. It inay be conceded that the mortgage sought to be foreclosed by the. bill was invalid and yet, the decree of the chancellor • declaring a vendor’s lien in favor of the complainant under .the general prayer for relief, upon the facts averred, was .entirely correct, unless the defenses set up in the answer and cross-bill can be held to bar the recovery. — Joseph v. Decatur Land, Imp. & F. Co., 102 Ala. 346. Only one of these defenses is insisted upon here. It is the one predicated upon misrepresentations inducing the respondent to purchase the lands. If it be conceded that this defense is properly alleged in answer, which is made •a cross-bill, and that, the evidence is clear and convincing on that point, yet, after respondent obtained knowledge of the fraud or became informed of facts and circumstances from which such knowledge would be imputed to it, a delay in instituting judicial proceedings for relief will be regarded as an acquiesence and is a bar to any equitable remedy. This upon the principle that “the. person who has been misled is required, as soon as he learns the truth, with all reasonable diligence to disaffirm the contract or abandon the transaction and give the other party an opportunity of rescinding it, and of restoring both of them 'to their-original position. He is not allowed to* go on and derive all possible benefits from the transaction and then claim, to be relieved from his own obligations by a rescission or a refusal to perform on his own part. If after discovering the untruth of the representations, he conducts himself with reference to the transaction as though it were still subsisting and binding, he thereby waives all benefit of and relief from the misrepresentations.” — 2 Pom. Eq. Jur., §§ 897, 917; Allgood v. Bank of Piedmont, 115 Ala. 418, and cases there cited. We have but to apply this principle to the facts of this case 'to see that the respondent waived any and all benefits of and relief from the misrepresentations, if they were in fact made and relied upon as an inducement to the purchase. On this point the facts are undisputed, that after the respondent acquired the deed in January, 1899, to the land, it, by and through its officers and agents, went immediately into the possession of the property and began mining ore from it. The evidence shows further, ¿s said by counsel for appellant, that after six months spent in developing it at a cost of over $16,000 “in a vain attempt to find gold in paying quantities,” the respondent only found the amount of $194. This result, it would seem, would be sufficient without more, to have convinced the respondents that the representations, which are claimed to have been made and acted upon, were false, and imposed upon it the duty of repudiating the transaction and of not conducting itself with reference to it as though it. was subsisting and binding. But this it did not do. It continued to use the property as its own and as was stated by appellant’s counsel placed upon it all modern improvements, including a chlorinating plant, at an additional cost of $15,000 and with this improved machinery another effort was made to find gold in paying quantities, only to result in failure. Furthermore, after acquiring all this knowledge, in a practical way, that the ores did not possess the gold bearing qualities, which it is contended the complainant represented them to possess and which it is asserted induced the purchase, the respondent remained ,in..possession of the property exercising.acts of ownership over it .and dealing with it as its own until it was dispossessed by.the complainant in July, 1900. . And it was not until the. answer and cross-bill was filed (December 6,. 1900) in the cause, that any attempt was made to disaffirm the purchase or to abandon the transaction. Of course, this attempt can he of no avail, since, after knowledge of the falsity of the representations, the respondent elected to treat the purchase as binding and efficacious. Affirmed.