Sec 287

A party who seeks to rescind on ground of fraud must give notice within reasonable time of his intention.7 If he resist the contract on this ground, and if he set up the fraud as a defence, this, if it goes to the whole case, is a sufficient disavowal to amount to a notice of rescission.8 A suit to annul the contract on account of fraud is a sufficient rescission,9 and so is the plea of fraud to a suit on the contract.1 But the notice must not be ambiguous, and should imply a determination to contest the contract as invalidated by the fraud.8 A sale to another party is notice, and the second purchaser will be protected against the first, when the first purchase was fraudulent.3 As the plea of fraud imports an avoidance of the contract, it is necessary, to support it, to show some act of avoidance, as the return of the goods, or other circumstances showing the repudiation of the contract.4 Hence, in an action by a company against a shareholder on calls, a plea alleging that he was induced by fraud to take shares is not sufficient; repudiation as far as possible should be alleged.5

Party rescinding: should give notice.

1 Hammond v. Pennock, 61 N. Y. 145.

2 Lord Cranworth, in Western Bk. of Scotland v. Addie, L. R. 1 Sc. & D. 164.

3 Lindsay Petroleum Co. v. Hurd, L. R. 5 P. C. 240; King v. King, 1 M. & K. 442; Met. R. R. Co. v. Defries, L. R. 2Q. B. D. 189.

4 Per cur. in Clough v. R. R., L. R. 7 Ex. 35; adopted by the court in Morrison v. Ins. Co., L. R. 8 Ex. 204.

5 Supra, sec 235; infra, sec 340.

6 Infra, sec 353.

7 Herrin v. Libby, 36 Me. 350; Mas-son v. Bovet, 1 Denio, 69; Morrow v. Rees, 69 Penn. St. 368; Moral School v. Harrison, 74 Ind. 93.

8 Clough v. R. R., L. R. 7 Ex. 36; see Dawes v. Harness, L. R. 10 C. P. 166.

9 Reese River Co. v. Smith, L. R. 4 H. L. 73.

Sec 288

A contract impeachable for fraud may be ratified by the party injured, after a knowledge of the fraud, accepting of any benefit under it;6 or by in any way acting upon it after such knowledge of the fraud;7

Ratification may be by conduct.

1 Clough v. R. R., L. R. 7 Ex. 35; Morrison v. Ins. Co., L. R. 8 Ex. 205.

8 Ashley's case, L: R. 9 Eq. 263; McNiell's case, L. R. 10 Eq. 503; see Pawle's case, L. R. 4 Ch. 497; May-nard v. Eaton, L. R. 9 Ch. 414. In Nevada a notice of rescission is not void because given on Sunday. Pence v. Langdon, 99 U. S. 598.

3 Whitney v. Roberts, 22 111. 381. Where an engine was to be delivered at P. for the use of a particular railroad, and the engine was taken by the purchaser on trial, and found not to correspond to the warranty, it was held sufficient rescission of the contract to give notice of the non-acceptance of the engine to the vendor at P., that being his place of business, without sending back and tendering the engine there. Starr v. Torrey, 2 Zab. 190.

4 Deposit Ass. Co. v. Ayscough, 6 E. & B. 761; Bwlch-y-Plwm Mining Co. v. Baynes, L. R. 2 Ex. 324; Dawes v. Harness, L. R. 10 C. P. 166.

5 Deposit Ass. Co. v. Ayscough, 6 E. & B. 761.

6 Briggs ex parte, L. R. 1 Eq. 483; Blackburn p. Smith, L. R. 2 Ex. 783; Schooley v. R. R., L. R. 9 Eq. 266, n.; Scholefield v. Templer, 4 De G. & J. 429; Oakes v. Turquand, L. R. 2 H. L. 346: Selway v. Fogg, 5 M. & W. 83; Ogilvie v. Ins. Co., 22 How. 380; Mas-son p. Bovet, 1 Denio, 69; Joselyn v. Cowee, 52 N. Y. 90; Seal v. Duffy, 4 Barr, 274; Mecke v. Ins. Co., 8 Philada. 6; Filby v. Miller, 25 Penn. St. 264; Crane v. Kildorf, 91 111. 567; Jackson v. Jackson, 47 Ga. 99; Davis v. Evans, 62 Ala. 401; Evans v. Foreman, 60 Mo. 449. That successors are barred by their predecessors' laches, see Skottowe v. Williams, 3 D. F, G. 535. As to ratification in other cases see sec 58 et seq.

7 Campbell v. Fleming, 1 A. & E. 40; Gray v. Fowler, L. R. 8 Ex. 249: Sharpley v. R. R., L. R. 2 Ch. D. 663; Clough v. R. R., 7 Ex. 34; Selway 9. Fogg, 5 M. & W. 83; Blydeuburgh v. Welsh, Baldw. 331; Northrop v. Bush-nell, 38 Conn. 498; People v. Stephens, 71 N. Y. 527; Moffat v. Winslow, 7 Paige, 124; Mecke v. Ins. Co., 8 Phila.

or by laches which affect the position of others holding under the contested title;1 or by bringing suit for the purchase money on a contract of sale, or in other way suing to enforce the contract;2 or by making a compromise or other settlement as to the alleged imposition;3 or by acting under a contract for work and labor after the imposition was known;4 or, generally, by continuing freely to deal with the party defrauding after the fraud was discovered.5 But the mere transient and temporary use of an article the plaintiff was fraudulently "induced to take, does not preclude him from rescinding.6 - In any view, a party is not estopped by an affirmance before discovery of the fraud.7 - As has been already noticed,8 it was at one time held in Pennsylvania that a fraudulent contract is not susceptible of ratification.9 This, however, except as to frauds which involve a crime, is now overruled.10 "Where the fraud is of such a character as to involve a crime, the ratification of the act from which it sprung is opposed to public policy, and, hence, cannot be permitted; but where the transaction is contrary only to good faith and fair dealing, where it affects individual interests and nothing else, ratification is allowable."11

6; Rogers v. Higgins, 57 111. 244; Knuckolls v. Lea, 10 Humph. 577; Thweatt v. McLeod, 56 Ala. 375; Bobb v. Woodward, 50 Mo. 95.

1 Badger v. Badger, 2 Wal. 87; Wil-loughby 9. Moulton, 47 N. H. 208; Weaver v. Carpenter, 42 Iowa, 343.

2 Ferguson v. Carrington, 9 B. & C. 59; Gray v. Fowler, L. R. 8 Ex. 249; Dibblee v. Sheldon, 10 Blatch. 178; Bank of Beloit v. Beale, 34 N. Y. 473; Coleman v. Oil Co., 51 Penn. St. 77; Reed v. McGrew, 5 Ohio, 375; Wald's Pollock, 507.

3 Vigers v. Pike, 8 Cl. & F. 562; Hough v. Richardson, 3 Story, R. 695.

4 Saratoga R. R. v. Row, 24 Wend. 74.

5 Story's Eq. Jur. 12th ed. sec 203 a; Vigers v. Pike, 8 Cl. & F. 562; Dingley v. Robinson, 5 Greenl. 127; Duncan v. McCullough, 4 S. & R. 483; Adams v. Shelley, 10 Ala. 478; People v. Stephens, 71 N. Y. 527.

6 Matteson v. Holt, 45 Vt. 336; Yeates v. Pryor, 6 Eng. (Ark.) 58.

7 Doggett v. Emerson, 3 Story, 740; Pratt v. Phillbrook, 41 Me. 132; Mac-kinley v. McGregor, 3 Whart. R. 369; Pierce v. Wilson, 34 Ala. 596; and cases cited in prior notes to this section.

8 Supra, sec 283.

9 McHugh v. Schuylkill, 67 Penn. St. 391. As to distinction between "void" and "voidable" see supra, sec 28.

10 Shisler v. Vandike, 92 Penn. St. 447.

11 Ibid. 449, Gordon, J.

Sec 289 When fraud is successfully concealed, no length of time, no matter how great, will preclude relief to a party who has been thus kept in ignorance of the true state of facts.1 Mere non-discovery of the facts, however, will not prevent the running of the statute " unless the relation of the parties is such that it was the duty of the party complained of to make the disclosure."2 And where there is a discovery of the fraud, the disaffirmance should be prompt.3 Reasonable time, however, will be allowed to a party, after discovery of a fraud, to assure himself of its reality.4 "Lapse of time without rescinding will furnish evidence that he has determined to affirm the contract; and where the lapse of time is great, it probably would in practice be treated as conclusive evidence to show that he has so determined."5 " But in every case, if an argument against relief which otherwise would be just is founded on mere delay, the validity of that defence must be tried upon principles substantially equitable. Two circumstances always important in such cases are, the length of the delay, and the nature of the acts done during the interval which might affect either party, and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy."6 Hence, where a shareholder applies to have his contract to take shares rescinded on account of fraud, while the application will be refused if dilatory,7 " it is difficult to lay down any general rule as to the time within which objections of this character should be made the ground of repudiation of shares after they once have been discovered; in every case attention must be paid to circumstances."1 In any view a party will not be permitted, after notice, to remain quiet and wait until the question of success is determined. "Although it is the undoubted duty of the court to relieve persons who have been deceived by false representations, it is equally the duty of the court to be careful that, in its anxiety to correct frauds, it does not enable persons who have joined others in speculations, to convert their speculations into certainties at the expense of those with whom they are joined."2 Unless the circumstances be such as properly to lead to an inference of assent, acquiescence is not to be imputed.3 What has been said with regard to rescission on ground of fraud applies to rescission on ground of non-performance of conditions precedent by the other side.4

Mere lapse of time does not estop.

1 See supra, sec 284; infra, sec 603, 716, 747, 752; Wright's case, L. R. 7 Ch. 55; Charter v. Trevelyan, 11 Cl. & F. 714; Michoud v. Girod, 4 How. 561; Nealon v. Henry, 131 Mass. 153; Ralf v. Eberly, 23 Iowa, 467; Cock v. Van Etten, 12 Minn. 522.

2 Bisph. Eq. sec 203; Meader v. Norton, 11 Wal. 443; Veazie v. Williams, 3 Story R. 611; Hough v. Richardson, 3 Story R. 695; Callis v. Waddy, 2 Munf. 511; Humphreys v. Mattoon,43 Iowa, 556; Wilson v. Ivey, 32 Miss. 233; see infra, sec 752.

3 Ibid.; Gates v. Bliss, 43 Vt. 299; Bulkley v. Morgan, 46 Conn. 393; Masson v. Bovet, 1 Denio, 69; Fisher v. Wilson, 18 Ind. 133; Williams v. Ket-chum, 21 Wis. 432; Moore v. Holt, 3 Ten. Ch. 248; Noble v. Noble, 26 Ark. 317.

4 Partridge v. Usborne, 5 Russ. 195; Torrance v. Bolton, L. R. 8 Ch. App. 118; Doggett v. Emerson, 3 Story R. 740; Story on Cont. sec 622.

5 Per cur. in Clough v. R. R., L. R. 7 Ex. 35, adopted in Morrison v. Ins. Co., L. R. 8 Ex. 204.

6 Lindsay Pet. Co. v. Hurd, L. R. 5 P. C. 240, adopted Leake, 2d ed. 393.

7 Venezuela R. R. v. Kisch, L. R. 2 H. L. 99; Heyman v. R. R., L. R. 7 Eq. 154.