Telma v. Gingell

Parke, J., delivered the opinion of the Court. On November 5th, 1926, the plaintiff, Walter J. Telma, bought of J. Earl Gingell and Sadie Gingell, his wife, a lot of land that was improved by a building whose first floor was a store room, with apartments overhead. At the time of the sale the store room was occupied by the Great Atlantic and Pacific Tea Company at a rental of $65 a month, and the two apartments were under lease and yielded a monthly return of $30. The testimony on the material facts at issue is conflicting, and need not be set forth and analyzed.

It is enough to state that the plaintiff has established by the preponderance of the testimony that the plaintiff was induced to buy the improved lot by the false and fraudulent representation, made before the sale by the defendants or their agent to the plaintiff, that the store room was occupied by the Great Atlantic & Pacific Tea Company under an unrecorded lease ⁴¹³ whose term was for five years. This was a material representation of an existing fact which was peculiarly within the knowledge of the vendor, and, therefore, was one upon which the plaintiff had the right to rely. Needle v. Cover, 138 Md. 646 ; Sommerville v. Coppage, 101 Md. 519, 525 ; Kleiman v. Needle, 140 Md. 107, 112-114 ; Mignault v. Goldman, 234 Mass. 205 ; Dimmock v. Hallett, L. R. 2 Ch. 21, 28; Palmer v. Johnson, 13 Q. B. Div. 351, 357, 359. The lease to the Great Atlantic & Pacific Tea Company was executed on June 27th, 1925, and the term began on August 1st of that year and expired on the last day of the ensuing June (July), at the rental of $780, payable in twelve advance monthly installments of $65, with the privilege to the lessee of four successive renewals of the lease for one year, with the rental for every one of such renewals at the rate of $70 a month.

Before the expiration of the first year, the lessee notified the lessors that it would not renew the lease; but it held over, at the least, as tenant from month to month, paying a monthly rent of $65; and this was the relation between the lessors and lessee at the time the representation was made to the buyer. The purchaser, however, did not discover this situation until January 19th, 1927, the same day, but after, the sale had been fully consummated. The deed had been delivered and all matters relative thereto had been adjusted and paid when this discovery was made. Upon the discovery by the vendee of the fraudulent misrepresentation, the purchaser had to elect between two- rights.

He was put to the choice of repudiating or ratifying the conveyance, although the transaction had been fully completed by conveyance and payment. If he adopted the first alternative he repudiated the conveyance and sought its rescission and a restoration of his situation before the contract; but if he chose the second, he ratified the grant but could obtain damages to redress the injury inflicted by the false and fraudulent representation. These rights were inconsistent and mutually exclusive, and the discovery put the purchaser to a prompt election. Williston on Contracts, secs. 1528-1531; ⁴¹⁴ Shappirio v. Goldberg, 192 U. S. 232, 242, 243 , 48 L. Ed. 419 ; Brager v. Friedenwald, 128 Md. 8, 34 ; York Mfg.

Co. v. Hoblitzell Nat. Bank, 118 Md. 505, 512 ; Latrobe v. Dietrich, 114 Md. 8, 21 ; Bierce v. Hutchins, 205 U. S. 340 , 51 L. Ed. 828 . Upon the discovery of the misrepresentation, with the attendant circumstances which, according to the plaintiff’s testimony, made the misrepresentation a deliberate fraud, the plaintiff, silent and acquiescent, remained seised of the reversion, and on February 10th he collected $15 as the month’s rent from the tenant of one of the apartments. On February 18th, almost a month after the misrepresentation was known, the tea company, the tenant of the store room, moved out, and the plaintiff accepted from it a surrender of the term; and apportioned the rent from February 1st to the day of the removal as $39.06, upon the basis of a rent of $65 a month.

After the