Hills v. Campbell

Landlord and Tenant—Eight to Rescind Contracts—Fraud—Waiver. 1. Where a tenant was induced to lease an apartment house and purchase the furniture therein by fraud and false representations, and paid rent after full knowledge of the fraud, she waived her right to rescind. [When, how and by whom right of rescission may be exercised, see note in 50 Am. Dec. 672.]

From Multnomah: Henry E. McGinn, Judge. Suit by Nancy A. Hills against Floyd J. Campbell to rescind a contract. From a decree dismissing tbe complaint and granting defendant the affirmative relief prayed for in his answer, plaintiff appealed. Statement by Mr. Justice Benson. This is a suit to rescind a contract involving the alleged purchase of the furniture in an apartment house, and a lease of the building. The complaint alleges that the defendant was the owner of both, and that he induced her to enter into the contract by certain false and fraudulent representations as follows: (1) That the premises were free from bedbugs and other vermin; (2) that all of the 23 apartments were then filled with reliable tenants; (3) that the previous tenant had been taking in from $500 to $600 from the rentals of such apartments; (4) that the plumbing was adequate and in good repair; (5) that the fuel for heating the building would not cost more than $30 in any one month and that by covering the pipes and boilers with asbestos the cost could be materially reduced; (6) that the previous tenant was clearing at the time of the sale, more than $250 per month and that plaintiff conld clear at least $350 per month on an average; (7) that the furniture and other personal property in the building were worth more than $1,600 and that if plaintiff would pay him $1,600 therefor he would execute to her a valid bill of sale thereof, and replace any and all articles named in the inventory thereof which should be found missing; that he would advise, counsel and assist plaintiff in the management of the house, so that it should be a successful venture; that plaintiff was ignorant of and without experience in the management of an apartment house and so informed defendant; that all the representations made by defendant were false and fraudulent and made with the intent to deceive plaintiff and that she relied upon them and was’ injured thereby. These allegations are followed by averments to the effect that the house was so infested with bedbugs as to render it valueless; that the fuel cost was greatly in excess of the amount represented; that many of the tenants were nonpaying “dummies”; that plaintiff refused to give her a bill of sale of the personal property, failed to cover the heating plant with asbestos and failed to fix the plumbing. It is asserted that many articles enumerated in the bill of sale were never delivered; that she was deceived into signing a lease containing terms to which she had not assented; and that she was fraudulently misled into executing a note and mortgage upon the furniture purporting to secure the payment of the monthly installments of rent. After reciting various items of damage, the complaint contains the following averments as to rescission: “That plaintiff as soon as she learned that said statements and assertions made by defendant to her were . false and untrue demanded of the defendant the repayment of the money that she had paid and the damages that she had sustained, and offered to return to defendant all the said personal property in said ‘Winston Apartments’ and offered to surrender up the possession of said ‘Winston Apartments’ to the defendant. But the defendant refused to repay the plaintiff the said money she paid him, or the damages that she had sustained and refused to receive the return of said personal property or receive the surrender of the possession of the said ‘Winston Apartments.’ ” After denying all the allegations of the complaint, except the contract of leasing, the answer alleges.that the personal property referred to was never owned by defendant, and was never sold by him, but was purchased by plaintiff from the former tenants, the Chrudinskys, from whom she received a bill of sale. Then follow the necessary allegations for affirmative relief upon the issue of rent due and the foreclosure of the chattel mortgage given to secure the same. Upon the trial, there was a decree dismissing plaintiff’s complaint and granting the relief prayed for by defendant. Plaintiff appeals.