Marten v. Paul O. Burns Wine Co.

Citations

• 99 Cal. 355
• 33 P. 1107
• 1893 Cal. LEXIS 668

Syllabus

<p>Contracts—Purchase of Stock of Corporation—Fraud—Rescission —Restoration of Dividend.—A rescission of a contract of purchase of the stock of a corporation, upon the ground that the purchase was induced by false and fraudulent representations as to the profits of its business and value of its stock, can not be made without an offer to return or account for a dividend upon the stock received by the purchaser from the corporation.</p> <p>Id.—Ratification of Contract—Discovert of Fraud—Subsequent Action as Stockholder—Payment of Assessment. —Where the purchaser of the stock upon the day of his alleged discovery of the facts constituting the fraud of the vendor in inducing the purchase, voted in a stockholders’ meeting for the levy of an assessment upon the capital stock, and subsequent to that day attended another stockholders’ meeting, and afterwards paid the assessment upon his stock without objection, such action is in effect an affirmance and ratification of the contract after full knowledge of the fraud.</p> <p>Id.—Delay in Offer to Rescind—Mandatory Statute.—Subdivision 1 of section 1699 of the Civil Code, providing that the party rescinding a contract must do so “promptly upon discovering the facts which entitle him to rescind, if he is free from duress, menace, undue influence, or disability, and is aware of his right to rescind,” is mandatory as to the promptitude required, except as to the eases therein enumerated, and others where a sufficient showing is made in excuse of the delay, and where there is no excuse therefor, a delay of three months in an offer to rescind a purchase of stock, after discovery of the facts constituting fraud in the purchase, is sufficient to prevent a rescission.</p> <p>Id.—Improper Demand fob Return of Assessment Paid.—A demand by the purchaser of the stock as a condition of rescission that the vendor of the stock should return to the purchaser the amount of the assessment, which he voted for and voluntarily paid with full knowl