Supreme Court of Canada
Boulter v. Stocks, (1913) 47 S.C.R. 440
Date: 1913-02-18
Wellington Boulter and Nancy Helen Boulter (Defendants) Appellants;
and
J. Laing Stocks (Plaintiff) Respondent.
1912: November 12, 13; 1913: February 18.
Present: Sir Charles Fitzpatrick C.J. and Davies, Idington, Duff and Brodeur JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.
Contract—Rescission—Sale of land—Misrepresentations—Affirmance.
B. advertised for sale his farm in Ontario, stating the contents and describing it as in first-class condition. He also stated the number of trees, old and new, in the orchard then on it. S., then in British Columbia, was shewn the advertisement and, after some correspondence in which B. reiterated the statements therein, came to Ontario and spent some time in inspecting the farm, which he finally purchased on B.’s terms and entered into possession. Shortly after he leased the orchard for ten years, and within a day or two discovered that the farm contained over forty acres less than, and the contents of the orchard were only half of, what had been represented; also that the farm was not in the condition stated, but badly overrun with noxious weeds.
He, therefore, procured the cancellation of the lease of the orchard and brought action to have the sale rescinded.
Held, that the lease of the orchard was not, under the circumstances, an affirmance of the contract for sale which would disentitle S. to rescission; that if it were an affirmance as to the orchard the subsequent discovery of the other misrepresentations would entitle him to a decree. Campbell v. Fleming (1 A. & E. 40) distinguished.
APPEAL from a decision of the Court of Appeal for Ontario affirming the judgment at the trial in favour of the plaintiff.
The material facts of this case are stated in the head-note. The defendant as to the shortage in acreage
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claimed that a parcel of thirty acres or more had been excepted from the sale as being separated from the rest of the farm and being of very little value, but he offered to convey it to the plaintiff. He also claimed that his other representations were substantially true.
Anglin K.C. for the appellants. The respondent cannot succeed unless he proves actual fraud; Bell v. Macklin; Seddon v. North Eastern Salt Co.; Angelor v. Jay; and this he has not done.
The respondent made his irrevocable election when he leased the orchard and no discovery of further facts restores his right to rescind. Campbell v. Fleming; Law v. Law, at pages 158, 159; Frye v. Milligan.
McKay K.C. for the respondent referred to Wall v. Cockerell; La Banque Jacques-Cartier v. La Banque d’Epargne.
THE CHIEF JUSTICE.—I agree that this appeal should be dismissed with costs. To what my brother Davies says I wish merely to add this. The plaintiff complains in his demand for rescission of three distinct false and fraudulent misrepresentations not in any way connected and each calculated according to the evidence to operate on his mind as an independent inducing cause. The trial judge found in his favour on all three grounds and in the Court of Appeal it is expressly held “that the learned judge’s conclusions
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are entirely justified” by the evidence. Therein lies the distinction between this case and Campbell v. Fleming so much relied on by the appellant. In that case, the contract was induced by a single representation of the vendor and the purchaser, with the knowledge of its falsity, affirmed the contract. He cannot escape if since the affirmation he discovers another particular in which the same representation departed from the truth. (Halsbury, No. 1767.)
It was argued here that the respondent had in some way elected to affirm the transaction, but there is no evidence to support any act of election after he became aware of the facts. The lease of the orchard is relied upon as evincing an intention to affirm or as a dealing with the land which precludes the respondent from seeking rescission. That lease has been cancelled and is now deposited in court, so there is no obstacle in the way of restoring the premises to the appellant free from any obligation arising out of the lease. Further assuming that the respondent elected to affirm with a knowledge of the facts concerning the orchard that was not the only discrepancy and the plaintiff was not debarred from relief on the other grounds if sufficient to justify rescission because he elected to affirm the contract with knowledge as to the orchard and as found by the trial judge in ignorance of the truth with respect to the other causes of rescission. The presumption of an intention to affirm does not arise out of an act done without knowledge of all the facts (Banque Jacques-Cartier v. Banque d’Epargne, at page 118). The plaintiff may have been willing to hold to his bargain notwithstanding the misrepresentation as to the orchard, but if to that
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were added the deficiency in the number of acres and the presence of the noxious weeds he might take a different view of his position, and this action is the best evidence of his change of mind.
DAVIES J.—At the conclusion of the argument on this appeal I was quite satisfied that the findings of fact of the trial judge, based as they were upon ample evidence and subsequently confirmed by the Court of Appeal, should not be disturbed by us.
The three matters upon which the trial judge found there had been fraudulent misrepresentations made which had induced the plaintiff (respondent) to purchase the appellants’ farm and stock and which in his opinion justified rescission of the contract, related (1), to the quantity of land in the farm; (2) to the condition of the soil of the farm; (3) to the number of apple trees in the orchard.
Mr. Anglin strongly contended that as the true facts with respect to the condition of the farm and the number of trees in the orchard were known to the plaintiff at any rate on or about the 13th June, 1911, when he executed a lease of the orchard for ten years, he had, by that solemn act made his election, affirmed the contract, and could not afterwards revoke his election.
In support of his contention he relied mainly upon the case of Campbell v. Fleming, in 18349. He submitted that assuming the representations with regard to the condition of the farm and size of the orchard to have been fraudulently made and to have induced the respondent to enter into the contract, he had, never-
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theless, after he had gained a true knowledge of the facts relating to the fraud practised upon him, elected to confirm by granting the orchard lease, and could not afterwards, on discovering a further misrepresentation with regard to the acreage, revoke his election.
In the report of the case of Campbell v. Fleming, so strongly relied upon by Mr. Anglin, it is stated that “after the purchase of the shares” (which the defendant in that case was seeking to repudiate)
was concluded, he discovered that the statements in the advertisement and many of the representations made to him in the course of the negotiation were fraudulent and that the whole scheme was a deception.
The decision of the case is based upon these facts, that the representations made to him were fraudulent and that to his knowledge “the whole scheme was a deception” With this knowledge
he formed a new company by consolidating the shares originally purchased by him with some other property and he sold the shares in the new company thereby realizing a considerable sum of money.
Having thus elected to confirm what he knew to have been a fraudulent transaction, he afterwards discovered another material fraudulent misrepresentation as having been made to him, and it was held that this discovery, though only made by him after he had made his election, did not entitle him to revoke the election he had made on the ground, as put by Patterson J., that it was merely a “new incident in the fraud.” “This,” he said,
can only be considered as strengthening the evidence of the original fraud and it cannot revive the right of repudiation which has been once waived.
Now in the case before us, I do not think the facts
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brought to the plaintiff’s knowledge from time to time as he began cultivating the land in the spring, as to the dirty condition of the soil and the presence of large quantities of noxious weeds, would of themselves be sufficient to satisfy plaintiff that the sale of the farm to him was a fraud and a deception.
The evidence was of a character, no doubt, to raise grave and serious doubts in his mind as to whether he had not been deceived in the transaction, but nothing more. Then as to the lease of the orchard. It was the day after that lease was signed that he first learned from the lessees’ expert of the shortage in the number of the apple trees. Even that important fact only caused him still more seriously to deliberate and consider his situation. It did not give him positive assurance that he had been the victim of a fraud.
When, however, the shortage in his acreage of some 46 acres was shewn to him in the month of June “his eyes were finally opened.” This, he says, “was the climax.” And he, within a very reasonable time afterwards, took steps to have the lease he had given cancelled and to express his election to rescind the contract for the purchase of the farm and stock.
Considering, as I have done, all the facts and circumstances, I am of opinion that the judgment below was right, that the principle of the decision in Campbell v. Fleming11 is not applicable to the facts of this case, that the plaintiff exercised his right of election to rescind in due time after he had found out that he had been the victim of a fraud, and that the appeal should be dismissed with costs.
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IDINGTON J.—It is to be regretted that one bearing a christian name which stands almost synonymous with fidelity to truth, should in trying to sell his farm have so far forgotten himself as to describe it in terms so flagrantly false as the evidence proves. He makes these misrepresentations not only by the advertisement he put forth for all the world to read, but also by affirming in the letter he wrote to one inquiring on behalf of respondent as a possible purchaser that the advertisement was a fair description and by reiterating some of details therein.
The learned trial judge’s findings of fact upheld by the Court of Appeal maintain the falsity of many of the material statements in these documents. And the falsity thereof invented for the purpose of inducing a purchaser to rely thereon, was clearly so fraudulent as entitled respondent on discovery thereof to a rescission of the contract unless and until he had clearly condoned the fraud.
Not content with that, after leading respondent, living in British Columbia, to believe he was buying a three hundred acre farm, to conclude a bargain therefor subject to inspection, and to come all the way thence to Ontario to inspect it, he contrived to get him to suppose he was carrying out that bargain when he signed an agreement, which on its face specified no definite acreage, but in fact only covered about two hundred and fifty-five acres.
He has a shuffling story to tell about thirty or forty acres he had across the road from his farm to which he pretends such reference was made on the respondent’s inspection as to justify this abstraction of that quantity of land from the bargain without any allowance therefor by way of reduction from the price.
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When this latter feature of his explanation is pressed on him by the learned trial judge, he says he calculated when giving him the canning factory he was giving him a good bargain.
He seemed to forget this canning factory was part of the very property he had advertised as in “A-1” state and going with the three hundred acres. And he seeks to cheapen this thirty or forty acres as comparatively worthless. Either it was part of the three hundred acres or it was not.
If it was part and so comparatively worthless, then the farm did not measure up to the standard in the description. And if it was not part then he never had intended selling more than two hundred and fifty-five acres, yet induced the respondent to buy that under the belief he had fraudulently induced, that it was three hundred acres.
Besides the attempt now made in appeal to induce us to accept these excuses and infer a mutual agreement by which respondent was to abandon this thirty or forty acres or forego in some way getting what he expected, and thus reverse the findings of fact below, we are asked as a matter of law to say that the respondent had by a lease made in May of the orchard then discovered for the first time to contain only about half the apple trees represented, he had elected to abide by his bargain and overlook all this fraud or these frauds.
The respondent had not then discovered that in truth he had only got two hundred and fifty five acres when thinking he was getting three hundred acres.
Nor had the season so advanced as to disclose to him the fine crops of weeds he might reap.
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Neither the case of Campbell v. Fleming, relied upon to uphold this contention relative to election, nor any other case deserving to be called authority, binds us to hold in face of such facts that a purchaser so induced to rely upon such fraudulent representations and contrivance of which he knew not the falsity is to be defeated in his right to rescission by calling such an incident as this lease under such circumstances an election to adopt the contract.
The appeal must be dismissed with costs.
If there is any chance of too wide a meaning being attached to the word “damages” in the third paragraph of the formal judgment of the trial judge, it can be amended though I do not deem it objectionable if used in the sense it ought to be.
DUFF J.—I think the appeal should be dismissed.
The defence upon which the appeal is based is that the respondent after knowledge of the fraud practised upon him elected not to disaffirm the sale. The act relied upon as shewing such election was the granting of a lease of the orchard for a period of seven years. I shall assume that what the respondent did in the matter of the orchard was inconsistent with an intention to disaffirm and that if the respondent had at the time he did it a knowledge of the fraud of which he had been the victim it would be sufficient evidence of an election in the sense contended for. I think the appellant has not shewn that the respondent had such knowledge. It is clear on principle that where an election is implied from conduct one essential element in the circumstances upon which the inference rests must be this. It must be shewn that at
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the time of the acts relied upon as evidencing the election the person to whom the election is imputed had a knowledge of such facts as would entitle him to impeach the transaction. In the case before us it must be shewn that Stocks was aware that the representations of the respondent were fraudulent representations—that is to say, that they had been made with such a knowledge of their falsity or with such reckless indifference upon the subject of their truth or falsity as to form a sufficient basis for an action of deceit.
At the time of the execution of the lease of the orchard Stocks knew that the number of apple trees had been grossly overstated by the appellant, and he knew also that the farm was much affected by noxious weeds. He may have had his suspicions as to Boulter’s entire honesty; but it is quite clear that the possibility of shortages in acreage had not then occurred to him and he had no suspicion that the whole transaction had been on Boulter’s part the swindle it ultimately proved to be. It would probably seem to him to be most unlikely that the misrepresentations as to the number of apple trees—so easy to expose—had been made deliberately and as to the prevalence of noxious weeds that is a matter respecting which he may well have thought some exaggeration was to be expected. I think the evidence is quite consistent with the view that his discoveries in regard to these two matters did not bring home to his mind a conviction that a fraud had been practised upon him such as would entitle him to impeach the sale. In weighing Stocks’s evidence upon this point the course of the action must be considered. The contention now advanced was not set up in the pleadings and the cross-examination in so far as it
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was directed to the conduct of Stocks, which is now relied upon seemed rather to aim at shewing that charges of fraud upon which the action was founded were the result of an afterthought. Stocks was not asked squarely at the trial to meet the objection that he had with a knowledge of his rights elected against the disaffirmance of the sale.
The appellants cite Campbell v. Fleming. Some of the expressions attributed to the learned judges who decided that case may appear to draw the line more strictly against persons complaining of fraud than Courts of Equity have done in similar cases (compare, for example, the judgment of Lord Redesdale in Murray v. Palmer); but it is quite clear that the plaintiff in Campbell v. Fleming13 had before doing what was set up as constituting an election discovered, as the report says, that the whole transaction “was a deception,” With full knowledge of his right to repudiate on that ground be had dealt with the shares as his own. The case is, therefore, clearly distinguishable from the present; and the judgments when fairly interpreted by the light of the facts do not, I think, enunciate any principle at variance with the views above expressed.
BRODEUR J.—I am of opinion to dismiss this appeal for the reasons given by the Chief Justice.
Appeal dismissed with costs.
Solicitors for the appellants: Aylesworth, Wright, Moss & Thompson.
Solicitors for the respondent: Johnson, McKay, Dodds & Grant.
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