§ 590. 591. 592. 593. 594. 595. CHAPTER XXXIII WAIVER, ESTOPPEL, AND RATIFICATION Waiver of Right to Rescind. Knowledge of Rights Essential to Valid Waiver. Contemporary Knowledge of Fraud, Mistake, or Defect. Recognition of Contract as Subsisting. Accepting and Retaining Benefits. 596. Waiver of Right to Rescind by Acts or Assertions of Owner ship. 597. Same; Contracts for Sale of Land. 598. Same; Sale of Property or Offer to Sell. 599. Same; Use, Change of Condition, Impairment, or Destruc tion of Subject. 600. Same; Possession or Use for Purpose of Testing. 601. Making Payments. 602. Obtaining Indulgence or Extension of Time. 603. Demand or Acceptance of Payment or Security. 604. Same; Waiver of Default or Delay in Payment. 605. Permitting Continuance of Work Under Contract. 606. Acceptance of Partial, Faulty, or Insufficient Performance. 607. Laches as Importing Waiver. 610. Ratification of Voidable Deed or Contract. 611. Same; Intention to Ratify. 612. 613. Affirmance by Suing on Contract. Compromise, Settlement, or Further Negotiations. 614. Effect of Waiver or Ratification. 615. Evidence; Question for Jury. § 590. Waiver of Right to Rescind.-The right to rescind a contract, whether on the ground of fraud or for any other sufficient reason, may be waived, and such waiver will not only prevent the party from thereafter maintaining any proceedings for the rescission of the contract, but will also debar him from interposing the same facts in defense to an action upon it.1 A waiver, by any party fully aware 1 Byrne Mill Co. v. Robertson, 149 Ala. 273, 42 South. 1008; Scarce v. Indiana & I. C. R. Co., 17 Ind. 193; Key v. Dent, 6 Md. 142; Holmes v. Huizenga, 160 Mich. 344, 125 N. W. 419; Davis v. Germaine, 1 Mont. 210; McNaught v. Equitable Life Assur. Soc., 136 App. Div. 774, 121 N. Y. Supp. 447; Merchants' Trust Co. v. Potter, 24 Pa. Super. Ct. 510; Long v. Dunlap, 87 S. C. 8, 68 S. E. 801; Freeman v. Duncan (Tex. Civ. App.) 138 S. W. 1060; Jenness v. Simpson, 84 Vt. 127, 78 Atl. 886. of the facts and of his rights in the premises, may be effected by express words or declarations, or by any acts or conduct which unequivocally show his intention not to insist upon the fraud or other ground of rescission, or to abide by the contract notwithstanding such grounds.2 Thus, where a vendee sues his vendor for rescission of the contract of sale, on the ground that the defendant cannot make a good title, but states in his complaint that, "notwithstanding this, plaintiff hereby offers, if defendant can make him a good, marketable title to said real estate, to carry out and complete said contract," and it is found that defendant can now make a marketable title, the plaintiff will be held to have waived his right to rescind. So where a party, after discovering the falsity of the representations by which he has been induced to act, conducts himself with. reference thereto as though the contract were still in force and binding on him, he will be held to have waived all right to relief by reason of the misrepresentations.* And a waiver of self-executing provisions for forfeiture in a contract for the sale of land may be accomplished by an express agreement or by unequivocal acts affording reasonable and proper inducement to the purchaser to neglect strict and punctual compliance with the terms of the contract in reliance thereon." Waiver of a right to rescind may also be inferred from the mere silence of the party, where the circumstances were such as to impose on him the duty of prompt and explicit disaffirmance if he meant to rescind." And a right to rescind or terminate the contract, expressly reserved to one of the parties in the contract itself, may be waived in the same manner and with the same effect." And so, under an agreement to rescind a contract at a future 2 Seeley v. Seeley-Howe-Le Van Co., 130 Iowa, 626, 105 N. W. 380, 114 Am. St. Rep. 452; City Light, Power, Ice & Storage Co. v. St. Mary's Mach. Co., 170 Mo. App. 224, 156 S. W. 83; Loftis v. Pacific Mut. Life Ins. Co., 38 Utah, 532, 114 Pac. 134. 3 Hyde v. Heller, 10 Wash. 586, 39 Pac. 249. 4 Stockham v. Adams, 96 Ill. App. 152. 5 Maffet v. Oregon & C. R. Co., 46 Or. 443, 80 Pac. 489. 6 Stockham v. Adams, 96 Ill. App. 152. And see J. I. Case Thresh ing Mach. Co. v. Puls, 158 Ill. App. 1. 7 Heald v. Wright, 75 Ill. 17. day if certain things are not done, either party may, if so disposed, waive whatever advantage he has under the agreement, and, with the express or implied consent of the other, stand upon the terms of the original contract. Moreover, a waiver of the right to rescind may be made conditional. Thus, a buyer may waive his right of rescission on breach of the seller's contract, or may waive it conditionally, and on nonperformance of the condition may then rescind or resort to an action for damages. And where a contract for the sale of land is made binding on the heirs and personal representatives of the parties, a right to forfeit the contract may be waived by the executor of the deceased vendor.10 § 591. Knowledge of Rights Essential to Valid Waiver. No one can be bound by a waiver of his rights unless such waiver is distinctly made with full knowledge of the rights which he intends to waive, and the fact that he knows his rights and intends to waive them must plainly appear.11 Hence there can be no waiver of the right to rescind a contract unless made by a party who is fully informed of the facts on which his right of rescission may be based.12 8 Echols v. Butler, 28 Miss. 114. 9 Simrall v. American Multigraph Sales Co., 172 Mo. App. 384, 158 S. W. 437. 10 Williams v. Haddock, 78 Hun, 429, 29 N. Y. Supp. 199. 11 Fitzgerald v. Frankel, 109 Va. 603, 64 S. E. 941; Wilson v. Car'penter's Adm'r, 91 Va. 183, 21 S. E. 243, 50 Am. St. Rep. 824; Smith v. Miller, 98 Va. 535, 37 S. E. 10. 12 Southern Loan & Trust Co. v. Gissendaner, 4 Ala. App. 523, 58 South. 737; Davis Sewing Mach. Co. v. Crutchfield, 117 Ga. 873, 45 S. E. 228; McLean v. Clark, 47 Ga. 24; Felt v. Bell, 205 Ill. 213, 68 N. E. 794; Williams v. Hamilton, 104 Iowa, 423, 73 N. W. 1029, 65 Am. St. Rep. 475; Circle v. Potter, 83 Kan. 363, 111 Pac. 479; Kenyon Realty Co. v. National Deposit Bank, 140 Ky. 133, 130 S. W. 965, 31 L. R. A. (N. S.) 169; Pratt v. Philbrook, 41 Me. 132; Ft. Payne Coal & Iron Co. v. Webster, 163 Mass. 134, 39 N. E 786; Boulware v. Crohn, 122 Mo. App. 571, 99 S. W. 796; Putney v. Schmidt, 16 N. M. 400, 120 Pac. 720; Peuchen v. Behrend, 71 App. Div. 619, 75 N. Y. Supp. 831; Cohen v. Ellis, 16 Abb. N. C. (N. Y.) 320; Liland v. Tweto, 19 N. D. 551, 125 N. W. 1032; Grewing v. Minneapolis Threshing Mach. Co., 12 S. D. 127, 80 N. W. 176; Adams v. A. A. Paton & Co. (Tex. Civ. App.) 173 S. W. 546; University of Virginia v. Snyder, 100 Va. 567, 42 S. E. 337; Broddus v. McCall, 3 Call (Va.) 546; Tolley v. Poteet, 62 W. Va. 231, 57 S. E. 811. 14 In the absence of such knowledge, a contract cannot be held to have been affirmed, or a right to rescind it waived, by the act of the party in suing on the contract and recovering judgment,13 or proving a claim on the contract in a court of bankruptcy, or taking notes in settlement of a claim founded on the contract.15 And where a sale of a specific quantity of merchandise requires delivery in successive shipments of stipulated amounts, each shipment to be paid for on delivery, the acceptance by the buyer of a cargo in ignorance of a default of the seller as to subsequent shipments will not prevent him from rescinding the contract.16 So, the retention of money paid under a contract, after discovery of fraud on the part of the other parties, does not constitute a ratification of the contract where it is unknown which party furnished the money. And a grantor cannot be held to have ratified an absolute conveyance so long as he believes that the grantee does not intend to claim the property as his own but is willing to reconvey on repayment of advances made by him.18 17 Acts of waiver or ratification after discovery of some out of a number of fraudulent acts will not preclude a rescission upon the discovery of other acts of fraud which, in and of themselves, are sufficient ground for rescission.1o But at the same time, to make a waiver effectual, it is not necessary that the party should have knowledge of all the incidents of the fraud which was practised upon him or of all the evidence by which it may be established. "The duty of rescinding arises immediately upon acquiring knowledge of the substantial and material facts constituting the fraud. It is not requisite that the defrauded party should be acquainted with all the evidence constituting the fraud before the duty to act by way of rescission arises. When he has evidence sufficient to reasonably actuate him to rescind the 13 Kraus v. Thompson, 30 Minn. 64, 14 N. W. 266, 44 Am. Rep. 182. 14 Parmlee v. Adolph, 28 Ohio St. 10. 15 Gallipolis Furniture Co. v. Symmes, 19 Ohio Cir. Ct. R. 659. 16 Norrington v. Wright (C. C.) 5 Fed. 768. 17 McClure v. Ullman, 102 Mo. App. 697, 77 S. W. 325. 18 Wager v. Reid, 3 Thomp. & C. (N. Y.) 332. 19 Stetler v. Fowler, 62 Wash. 345, 113 Pac. 1096, 114 Pac. 879. BLACK RESC.-87 contract, and on which he has once acted, no subsequent discovery of cumulative evidence can operate to excuse a waiver of the fraud, if one has in the mean time occurred, or to revive a once lost right of rescission." 20 Moreover, notice of acts and circumstances such as to put a man of ordinary intelligence and prudence upon inquiry is equivalent to knowledge of fraud necessary to a waiver of the fraud.21 "There must be knowledge of facts which will enable the party to take effectual action. Nothing short of this will do. But he may not willfully shut his eyes to what he might readily and ought to have known." 22 § 592. Contemporary Knowledge of Fraud, Mistake, or Defect.-One who enters into a contract or makes a conveyance with knowledge at the time that he is being defrauded, or that a mistake exists, or that there is a defect in quantity or quality in the property contracted for, or with knowledge of any other fact which would release him from the contract, will be held to have waived the same and cannot thereafter set it up as a ground for rescission.23 And so, if he knows that it will be impossible for the other party to fulfill his part of the contract, he cannot allege a subsequent nonperformance as ground for rescinding.24 Thus, one cannot rescind an agreement for the erection for him of a building with certain lumber to be furnished by the other party, because of defects in the lumber which he knew to exist when the contract was made.25 So, where a married woman joined with her husband in a contract to convey timber land, believing at the time that the contract was only to convey the standing timber, but on the 20 Richardson v. Lowe, 149 Fed. 625, 79 C. C. A. 317; Wilson v. Hundley, 96 Va. 96, 30 S. E. 492, 70 Am. St. Rep. 837; Munich ReInsurance Co. v. United Surety Co., 113 Md. 200, 77 Atl. 579; Bach v. Tuch, 126 N. Y. 53, 26 N. E. 1019. 21 Whitney v. Bissell, 75 Or. 28, 146 Pac. 141, L. R. A. 1915D, 257. 22 Pence v. Langdon, 99 U. S. 581, 25 L. Ed. 420. 23 Stager v. Crabtree, 177 Ill. 59, 52 N. E. 378; Dellinger v. Gillespie, 118 N. C. 737, 24 S. E. 538; Hart's Ex'rs v. Edwards, 2 Bailey (S. C.) 306; Dickenson v. Farley, 84 Va. 240, 4 S. E. 375; Hutton v. Dewing, 42 W. Va. 691, 26 S. E. 197. 24 Kokomo Straw Board Co. v. Inman, 58 Hun, 603, 11 N. Y. Supp. 25 Scales v. Wiley, 68 Vt. 39, 33 Atl. 771. |