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93 Cal. 329

Schultz v. McLean

California Supreme Court

Decided February 9, 1892

California Supreme Court · decided 1892-02-09

<p>Findings — Construction of. —Findings should be reconciled and harmonized wherever possible, and should not be declared contradictory except where absolutely necessary.</p> <p>Id. — Misrepresentations by Agent of Grantors — Special Agency for Grantee—Ratification — Innocent Purchaser. — Where it appears that the trusted attorney and agent of the grantors made to them intentionally false representations as to the intention of the grantee in accepting the conveyance, in his capacity as their agent, and not as agent of the grantee, and that they so understood the fact, and, by means of such representations, parted with the title, the fact of a special and limited agency for the grantee, not including within its scope authority to make such representations, does not render the grantee subject to the principles of ostensible agency, or ratification of the fraudulent acts of the agent by accepting the fruits thereof; but the loss must fall upon the grantors whose accredited agent caused the loss, and not upon the innocent purchaser, who was personally without taint of fraud.</p> <p>Id.—Protection of Bona Fide Purchaser — Jurisdiction of Equity. — The riile is fundamental and inflexible that a court of equity will not allow a purchaser in good faith and for value, and without notice of fraud, to be assailed. A court of equity acts only on the conscience of the party, and if he has done nothing that taints it, no demand can attach upon it so as to give jurisdiction.</p> <p>Id.—Loss to One of Innocent Persons.—When a loss must fall upon one of two innocent persons, it must be borne by him who is the occasion of the loss, especially if there be any carelessness on his part which contributed to the misfortune.</p> <p>Id. — Fraud or Negligence of Third Party. — Where the loss to one of two innocent persons is caused by the fraud or negligence of a third person, the one who accredited him, or by whose negligence it happened, must be the sufferer.</p> <p>Id. — Fraud of Third Person upon Grantor — Agency — Innocent Grantee. — The rule that a grantor cannot question his own conveyance, upon the ground that a third party practiced a fraud upon him, not known to or participated in by the grantee, applies with equal force when the fraud is practiced by the agent of the grantor.</p> <p>Id.—Agency for Grantee — False Representation as to Agreement — Ratification of Agreement — Enforcement — Rescission. — If an agent of a grantee has made unauthorized false representations to the grantor as to an agreement of the grantee to hold the conveyance, in trust, as security, a ratification by the principal of the acts of the agent does not constitute a fraud on the part of the principal, but merely gives life to the agreement, and the grantor can only enforce it as made, and cannot rescind the conveyance.</p> <p>Id.—Accepting Eruits of Agent’s Acts —Secret Fraudulent Intent ^J}. —Ratification.—The secret, unexpressed intention of the agent of a grantee that his principal shall not perform an agreement to hold the property, in trust, as security, falsely represented by the agent to the grantor as having been made by the grantee, being no part of the means by which the conveyance was induced, a ratification of the agent’s acts, by accepting their fruits, does not involve a ratification of his secret X, fraudulent intent, so as to justify a rescission of the conveyance.</p> <p>Id.— Ratification of Unassumed Authority.—There can be no ratification of an authority which the agent did not assume to possess, and which the other party did not believe or suspect him to possess.</p> <p>Id. — Enforcement of Trust — Pleading. — A trust agreement cannot be enforced in an action to rescind a conveyance, where the pleading does not justify such relief.</p>

Good law ✅— No negative treatment on recordhow we know

Decided 1892-02-09

How this case has been cited

Cited by 42 later decisions — most recently August 1964 · most notably Burns v. Ross (1923), Richter v. Union Land & Stock Co. (1900)

3 federal appellate · 35 state decisions

9018921900191019201930194019501960decided

Later decisions citing this case, by decade. The current decade is in progress, and our corpus holds fewer opinions from the most recent years, so the latest bars are undercounted — not a real decline.

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Beatty, C. J., dissenting.

¶1I dissent. There is but slight and extremely unsatisfactory evidence to support the finding that Robinson acted as agent of McLean in and about the transfer of the lands in controversy; but it is impossible to say that said finding is totally without support in the evidence, and therefore the fact must be accepted as found, for the purposes of this appeal. This being assumed, the construction of the findings as a whole seems to me to present no difficulty. They mean that Robinson had an actual precedent authority from McLean to act for him in his interest in procuring the transfer, but that he had no actual authority to deal with Schultz and Von Bargen upon any other terms than an absolute sale and conveyance in consideration of the payment of the amount of the Haggin judgment; and that, in order to induce plaintiffs to execute and deliver their deed of conveyance, he made the unauthorized representations as found. *361It is, of course, clear from the evidence of Schultz that Robinson never assumed to be the agent of McLean in any of the negotiations preceding the transfer, but, on the contrary, acted ostensibly as the agent of the plaintiffs, and was so regarded by them. The court has found, however, upon evidence which, as I have said, appears extremely weak and unsatisfactory, but is yet sufficient in law to sustain the finding, that Robinson, while assuming to act for the vendors, was in fact acting for the vendee, and while so acting made the representations upon which they were induced to execute and deliver the deed which they were seeking to set aside. If so, the vendee cannot take and hold the benefit of the deed without being bound by all the consequences of the representations by which the plaintiffs were induced to make it. When he was informed of the conditions upon which the conveyance was made, and the representations of his agent, it may be conceded that he had the option either to keep the land on the conditions of the transfer, or to rescind the whole transaction; but since he chose to deny the agency and repudiate the representations, claiming to be the absolute owner of the land, freed of all conditions, it seems to me he made his election to stand upon that ground, and necessarily put the plaintiffs to their action to enforce the only right they had, — that of rescission; for they had no option. They could not compel McLean to keep the land upon terms to which he had never consented. They could not compel him to advance five thousand dollars which he had never consented to advance, and to sell the land and divide the net profits. They could only claim to be restored to their original position; and this, I think, they could claim on the facts found. In other words, I think they pursued their proper and only remedy in both the original and amended complaints, asking the only relief to which they were entitled.

¶2I concur in the conclusions of the court that the second amended complaint did not change the cause of action; that the statute of limitations is not a defense; *362that no formal tender of repayment of the purchase-money was necessary before commencing the suit.

¶3I think the superior court erred in admitting secondary evidence of the Haggin proposal; but whether the error was of sufficient consequence to justify a new trial it is unnecessary in this dissenting opinion to discuss. Aside from the effect of this one error, I think the judgment and order appealed from should be affirmed.

¶4Rehearing denied.

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