RESCISSION OF CONTRACTS. The ab rogation or annulling of contracts.
It may take place by mutual consent; Ans. Contr. 258; and this consent may be inferred from acts; 4 Mann. & G. 898; Goodrich v. Laffiin, 1 Pick. (Mass.) 57; Quincy v. Tilton, 5 Greenl. (Me.) 277; Flegal v. Hoover, 156 Pa. 276, 27 Atl. 162. It may take place as the act of one party, in consequence of a failure to perform by the others; 2 C. B. 905; War dens of Church of St. Louis v. Kirwan, 9 La. Ann. 31; Cunningham v. R. Co., 63 Hun 439, 18 N. Y. Supp. COO; White v. Hand, 76 Ga. 3; not so, ordinarily, where the failure is but partial; 4 Ad. & E. 599; 1 M. & W. 231; on account of fraud, even though partially exe cuted; Pierce v. Wood, 23 N. H. 519. Mis representations not a part of the same trans action are no cause for rescinding the con tract; Barnett v. Barnett, 83 Va. 504, 2 S. E. 733.
A contract cannot, in general, be rescinded by one party unless both parties can be placed in the same situation and can stand upon the same terms as existed when the contract was made; 1 M. & W. 231; Norton v. Young, 3 Greenl. (Me.) 30; Pittsburgh & N. A. Turnpike Co. v. Com., 2 Watts (Pa.) 433; Bell v. Keepers, 39 Kan. 105, 17 Pac.
785 ; Fairbanks, Morse & Co. v. Walker, 76 Kan. 903, 92• Pac. 1129, 17 L. R. A. (N. S.) 558. He must, upon the discovery of the fraud, announce his purpose and adhere to it. If he treat the property as his own, his right is lost ; he has a reasonable time in which to make his election ; Shappirio v. Goldberg, 192 U. S. 232, 24 Sup. Ct. 259, 48 L. Ed. 419.
The right may be waived by mere lapse of time ; Veazie v. Williams, 3 Story 612, Fed. Cas. No. 16,907 ; see 6 Cl. & F. 234 ; or other circumstances ; 9 B. & C. 59 ; Whitney v. Al laire, 4 Den. (N. Y.) 554 ; Kimball v. Cun ningham, 4 Mass. 502, 3 Am. Dec. 230.
The purpose to rescind, if on the ground of fraud, must be announced promptly, uncondi tionally and unevasively, upon the discovery of the fraud ; Blank v. Aronson, 187 Fed. 241, 109 C. C. A. 327 ; there must be no vacillation of purpose ; Richardson v. Lowe, 149 Fed. 625, 79 C. C. A. 317.
In case of a conditional sale or exchange, the party desiring to rescind must return or tender a return of all the property re ceived by him under the terms of the sale or exchange, and within a reasonable time; Young v. 1 Marv. (Del.) 156, 40 Atl. 719, where it was held that the question as to what is a reasonable time is for the court un der the circumstances of each case; it is said that the question is for the jury ; Clark v. Steel Works, 53 Fed. 494, 3 C. C. A. 600.
If a party means to rescind a contract because of the failure of the other party to perform, he should give a clear notice of his intention to do so, unless the contract itself dispenses with such notice, or unless notice becomes unnecessary by reason of the con duct of the parties ; Hennessy v. Bacon, 137
U. S. 78, 11 Sup. Ct. 17, 34 L. Ed. 605.
The equity for the rescission and cancella tion of agreements, deeds, and other instru ments arises when a transaction is vitiated by illegality or fraud, or by reason of its having been carried on in ignorance or mis take of facts material to its operation ; Bisp. Eq. 31; U. S. v. Tel. Co., 128 U. S. 315, 9 Sup. Ct. 90, 32 L. Ed. 450. The of equity is exercised upon the principle of guita timet; that is, for fear that such agree ments, securities, deeds, and other instru ments may be vexatiously or injuriously used against the party seeking relief, when the evidence to impeach them may be lost ; or that tire'y may throw a cloud or suspicion over his interest or title; or where he has a defence good in equity which cannot be made available at law. The cases in which this relief will be granted on account of misrep resentation and fraud may be divided into four classes : first, where there is actual fraud in the party defendant in which the party plaintiff has not participated; Smith v. Richards, 13 Pet. (U.. S.) 26, 10 L. Ed. 42 ; secondly, where there is constructive fraud against public policy and the party plaintiff does not appear to have participated therein; thirdly, where there is a fraud against public policy and the party plaintiff has par ticipated therein, but public policy would be defeated by allowing it to stand ; fourthly, where there is a constructive fraud by both parties,-that is, where both parties are tin delicto, but not in part delicto; see 2 Story, Eq. Jur. § 694; Horton v. Moyers, 25 Ga. 89 ; Smith v. Elliott's Adm'r, 1 Pat. .& H. (Va.) 307; Bisph. Eq. § 31. The court will decree that a deed or other solemn instrument shall be delivered up and cancelled, not only when it is voidable on account of fraud, but also when it is absolutely void, unless its in validity appears upon the face of it, so that it may be defeated at any time by a defence at law ; 2 Story, Eq. Jur. § 698 ; Field v. Holbrook, 6 Duer. (N. Y.) 597. To rescind an executed contract for alleged false represen tations, fraud must be made clearly to ap pear, and it must be shown that the com plainant has been injured and deceived there by ; Union R. Co. v. Duel, 124 U. S. 173, 8 Sup. Ct. 433, 31 L. Ed. 417.