Rumsey v. Shaw

Citations

• 25 Pa. Super. 386
• 1904 Pa. Super. LEXIS 76

Syllabus

<p>Contract — Sale—Misrepresentation—Auction—Charge 0} court.</p> <p>In an action to recover a balance of purchase money due for an option on the stock of a corporation, where the defendant sets up misrepresentations by the plaintiff as to the amount of net earnings of the corporation, and there is no allegation of misrepresentations as to the physical plant of the company, it is error for the court to instruct the jury that they might infer from the fact that defendant had inspected the plant, or from information conveyed to him, that he had a full knowledge concerning the plant including its income, and if they did so infer, the defense set up could not be sustained.</p> <p>Sale — Rescission—Fraud—Damages—Equitable defense.</p> <p>If it is not possible for a vendee to restore the conditions which had existed at the time of his contract of purchase, when he discovers that he has been the victim of misrepresentations, he may, without a formal rescission of the contract, have compensation in damages for the injury as an equitable defense to an action on the contract, or to be recovered in a suit for them.</p> <p>When a party relies upon a rescission of a contract he must show that he elected to rescind with reasonable promptness upon discovery of the fraud, and must tender a return of the property or security which was the subject-matter of the contract. When, however, the thing, the consideration of which is sought to be recovered back, is entirely worthless, there is no duty to return it.</p> <p>Wfhere in an action to recover a balance of the purchase price of an option on the stock of a corporation, the defendant sets up as a defense false representations made by the plaintiff as to the net earnings of the company, and it appears that the defendant shortly before the expiration of the option secured a new option, and within a reasonable time ascertained that the representations as to the first option were false and by this time the first option had expired, he can