goods at the seller's place of business merely to express a willingness or make & proposal to return the goods, or simply to give notice to the seller that he holds the goods subject to his order, or to request him to come and take them back. If he would rescind the contract, he must return or tender back the goods to the seller at the place of delivery, unless on making the offer so to do he is relieved of the obligation by a refusal to receive them if tendered. An offer to return, where it is refused, answers the same purpose as an actual return, provided the property is retained for the benefit of the seller whenever he may choose to receive it. Where the breach of warranty is set up in bar of an action for the price and not in recoupment or as a counterclaim. it must be alleged that a return of the property was tendered or that it was worthless." 575. Effect of Continued Use of Property.-Where the article is one which must be used before its quality can be ascertained, this not being apparent from examination, it is the right of the buyer to make use of the property or such portion thereof as may be actually necessary to determine the quality, and such use does not affect the right to reject for failure to comply with the contract in that respect. On the other hand if, after knowledge of the breach of warranty as to quality, the buyer continues to use and consume the goods received by him, but not in order to make a proper test as to quality, he waives his right to rescind and return the amount unconsumed. It is no excuse for the continued use and consumption that it is required by the exigencies of the buyer's business,10 and it is also immaterial that the buyer, while continuing to use and consume the property, made objections to the quality; 11 and the fact that the further use or consumption of the goods, after knowledge of defects in quality, was for the purpose of establishing evidence of their defective quality will not prevent such use from constituting a waiver of the right to return.12 The right to pia Brewing Co., 64 Wash. 461, 117 Note: 8 L.R.A. (N.S.) 728. right the not to rescind is based on fraud, and Contract of sale is severable and entire. See infra, par. 649. 115 N. W. 325, 129 A. S. R. 670. Mundt v. Simpkins, 81 Neb. 1, 5. 6. Gale Sulky Harrow Mfg. Co. v. City Glass Co. v. Friedlander, 84 Wis. 53, 54 N. W. 28, 36 A. S. R. 895, 21 L.R.A. 135; Fox v. Wilkinson, 133 Wis. 337, 113 N. W. 669, 14 L.R.A. (N.S.) 1107. Notes: 36 L.R.A. (N.S.) 468; L.R.A. Stark, 45 Kan. 606, 26 Pac. 8, 23 A. 1916F 481. S. R. 7. 739. Eastern Granite Roofing Co. v. 10. Note: 36 L.R.A. (N.S.) 469. Chapman, 140 Ala. 440, 37 So. 199, 64 Wash. 461, 117 Pac. 241, 36 L.R A. 103 8. S. R. 58. Notes: 36 L.R.A. (N.S.) 469. See Supra, par. 259 et seq., as to what constitutes acceptance generally. 9 15 U (N.S.) 467. Note: 36 L.R.A. (N.S.) 468. 12. Cream City Glass Co. v. Friedlander, 84 Wis. 53, 54 N. W. 28, 36 Lyon v. Bertram, 20 How. 149, A. S. R. 895, 21 L.R.A. 135. rescind is also lost, as a general rule, by a resale by the buyer of a part of the property, after knowledge of the breach of the warranty, as this precludes the return of all the property.1 13 576. Effect of Injury to or Deterioration of Property.-It is generally held that a rescission cannot be had where the property, while in the possession of the buyer, has been damaged to such an extent that the parties cannot be placed in statu quo, especially where such injury is due to the negligence of the buyer. 14 Thus where an automobile is sold with warranty, the buyer cannot rescind for a breach after the car has been damaged while in his hands through negligent driving. 15 But it has been held that if the seller warrants that a vehicle will carry a certain load, and on being subject to such load one of the springs breaks, the fact that the spring is so broken does not defeat the right to return the vehicle and rescind the contract.16 So, where a stallion was sold with warranty as to breeding qualities, the fact that the animal had deteriorated in condition after the time of the sale, due to the further development of a disease with which he was then afflicted, has been held not to deprive the buyer of the privilege given him to return the animal if not as warranted, though the warranty also required the animal to be returned in "as sound and healthy condition" as he was at the time of the sale.17 Also where the right to return was expressly given in the contract of sale if the horse sold did not come up to the warranty, it has been held that the fact that it was accidentally injured without fault on the part of the buyer did not deprive him of the right of return.18 577. Qualification of Rule as to Complete Restoration.-Where the article is such that it must be used or partly consumed before the quality can be ascertained, it not being apparent from examination, it is the right of the buyer to make use of the property or such portion thereof as may be necessary to determine the quality; and such use does not deprive him of his right to rescind for breach of the warranty.19 And where a commodity is sold to be resold by the buyer, in the course of his business, and the defect in the quality could not be expected to be ascertained until the commodity reached the hands of the ultimate consumer, it has been held that the fact that by reason of such resale the buyer is unable to return all of the goods does not 13. Continental Jewelry Co. v. Pugh, 16. Smith . Hale, 158 Mass. 178, 168 Ala. 295, 53 So. 324, Ann. Cas. 33 N. E. 493, 35 A. S. R. 485. 1912A 657. 14. Burnley v. Shinn, 80 Wash. 240, 141 Pac. 326, Ann. Cas. 1916B 96. Notes: 3 L.R.A. (N.S.) 678; Ann. Cas. 1916B 97. 15. Burnley v. Shinn, 80 Wash. 240, 141 Pac. 326, Ann. Cas. 1916B 96. 17. Rosenthal v. Rambo, 165 Ind. 584, 76 N. E. 404, 3 L.R.A. (N.S.) 678. 18. Head v. Tattersall, L. R. 7 Exch. 7, 14, 41 L. J. Exch. 4, 25 L. T. 631, 20 W. R. 115, 6 Eng. Rul. Cas. 566. 19. Note: 36 L.R.A. (N.S.) 469. deprive him of the right to rescind on the return of the amount remaining in his hands with an offer to account for the proceeds of the amount sold.20 If the goods are wholly worthless, the buyer is not obliged to return them, or to offer to return them, before he can sue to recover back the price, or defend against an action for the price,1 but to bring a case within this exception it is not sufficient that the property is valueless to the buyer or for the particular purpose for which it was bought; it must be intrinsically of no value. Where there has been a total or partial payment by the buyer of the purchase price, it has been held that the buyer may qualify his otherwise unconditional tender back by a retention of possession until the seller makes restitution of what he has received, thus holding the property as security. And where the seller refuses to accept the buyer's offer to return, it has been held that the buyer may resell the property on account of the seller, without affecting his right to recover the price if paid, or avoid liability for the price if unpaid.* XVI. FRAUD Fraud of Buyer 578. Nondisclosure or Misrepresentation of Facts Affecting Value.Ordinarily where there is no relation of trust or confidence between the parties, there is no obligation on the part of the buyer of a chattel to disclose to the seller matters affecting the value of the property, and his failure to do so is not such a fraud as will authorize the seller in rescinding the contract. So it has been held that a purchaser of the right to mine is not bound to disclose his knowledge of minerals on the land, of the value of which the vendor was ignorant, although he 6 of the deposit, and however justly the moralist may censure address sometimes resorted to by men of keen business habits to effect advantageous contracts, misrepresentations by the buyer as to the value, market price, or quantity of a commodity in market, when correct information on those subjects is equally within the power of knew the 283 Thon 264. the Bunch v. Weil, 72 Ark. 343, 80 seller 2. Chap 103 Ky 997. 3. Continental Jewelry Co. v. Pugh, 168 Ala. 295, 53 So. 324, Ann. Cas. 1912A 657. 4. Note: 27 L.R.A. (N.S.) 932. As to resale on rescission for fraud of the seller, see infra, par. 651. 5. Laidlaw v. Organ, 2 Wheat. 178, 4 U. S. (L. ed.) 214; Mactiers v. Frith, 6 Wend. (N. Y.) 103, 21 Am. Dec. 262. Note: 15 Am. Dec. 108. 6. Harris v. Tyson, 24 Pa. St. 347, 64 Am. Dec. 661. both contracting parties with equal diligence, do not in contemplation of law constitute fraud. It has been said that the extent of supply and demand relative to an article of commerce, on which its value principally depends, is in a great measure a matter of opinion, on which different minds may form different conclusions; and that to deprive the better informed, more enterprising, and more cautious party of the benefit of his contract, on account of representations, of the correctness of which the other party ought to judge for himself, would tend more to encourage ignorance, sloth, and recklessness than to repress dishonesty.8 So a misrepresentation by the buyer as to the market price of the commodity in a nearby market has been held no ground for the seller's rescission of the contract, as he should not have relied thereon." Though a sale is induced by the fraud of the buyer, it is voidable only at the option of the seller, and therefore third persons cannot interpose such objection.10 579. Inadequacy of Price; Relation of Trust or Confidence.— Ordinarily mere inadequacy of price independent of other circumstances is not ground for setting aside a sale between parties standing on equal grounds and dealing with each other without any imposition or oppression.11 Where, however, the parties stand in a trust or quasi trust relation, a court of equity will not permit such relation to be made the opportunity for the enrichment of the fiduciary at the expense of the cestui que trust, and where a person in a position of trust or confidence purchases from his cestui que trust, he must make a full disclosure of all the pertinent facts, and unless this is done a court of equity will very readily grant relief.12 Thus, though the authorities are not in accord and the contrary seems the better view, it has been held that there is a quasi confidential relation between the managing officers of a corporation and the stockholders so as to require such officers to disclose to a stockholder, from whom they purchase stock, material matter affecting the value of the stock.18 The 7. Foley v. Cowgill, 5 Blackf. (Ind.) 18, 32 Am. Dec. 49; Bell v. Byerson, 11 Ia. 233, 77 Am. Dec. 142; Graffenstein v. Epstein, 23 Kan. 443, 33 Am. Rep. 171 (misrepresentation by wool buyer to farmers of market price of wool). 8. Foley v. Cowgill, 5 Blackf. (Ind.) 18, 32 Am. Dec. 49. 9. Bell v. Byerson, 11 Ia. 233, Am. Dec. 142. 77 Holdship, 2 Watts (Pa.) 104, 26 Am. Dec. 107; Harris v. Tyson, 24 Pa. St. 347, 64 Am. Dec. 661. 12. McDonough v. Williams, 77 Ark. 261, 92 S. W. 783, 7 Ann. Cas. 276, 8 L.R.A. (N.S.) 452; Stewart v. Harris, 69 Kan. 498, 77 Pac. 277, 105 A. S. R. 178, 2 Ann. Cas. 873, 66 L.R.A. 261. See such titles as EXECUTORS AND ADMINISTRATORS, vol. 11, p. 365 et seq.; GUARDIAN AND WARD, vol. 12, p. 1169 et seq.; HUSBAND AND WIFE, vol. 13, p. 1366 et seq.; PARENT AND CHILD, vol. 20, p. 590 et seq.; TRUSTS. 13. Stewart v. Harris, 69 Kan. 498, 77 Pac. 277, 105 A. S. R. 178, 2 Ann. existence of a mere relation of friendship between the parties is not such a confidential relation as will move a court of equity to set aside a sale for the mere failure of the buyer to disclose his knowledge of the actual worth of the property.14 A very anxious protection is extended by equity to persons selling expectant interests, although they do not stand in the relation of expectant heirs, and trivial circumstances, added to gross inadequacy of price, may be sufficient to set aside such sales.15 580. Representations as to Financial Condition Generally.-The most frequent fraud for which the seller is allowed to rescind the sale arises out of the buyer's insolvency or failing circumstances at the time of the sale. It has been laid down as a general rule that, to authorize disaffirmance of a sale on account of the insolvency of the buyer at the time of the sale, the concurrence of three facts must be shown: (1) The purchaser must have been insolvent, or in failing circumstances; (2) he must have had at the time a preconceived intention not to pay for the goods, or no reasonable expectation of being able to do so; (3) there must have been on his part an intentional concealment of these facts, or a fraudulent representation in reference to them.16 If the buyer knowingly misrepresents his financial condition and thus induces the seller to sell to him on credit, there is no doubt of the seller's right to rescind the sale and recover the subject In this sense representation as to one's financial condition matter.17 Cas. 873 and note, 66 L.R.A. 261. 81; Silvey v. Tift, 123 Ga. 804, 51 S. See CORPORATIONS, Vol. 7, pp. 459-461. E. 748, I L.R.A. (N.S.) 386; Reid v. 14. Hemingway V. 390, 44 Am. Rep. 243. McKinney v. Pinckard, 2 Leigh Howe-Le Van Co., 130 Ĭa. 626, 105 149, 21 Am. Dec. 601. As to N. W. 380, 114 A. S. R. 452; Atlas Coleman, 49 Cowduroy, 79 Ia. 169, 44 N. W. 351, 18 A. S. R. 359; Seeley v. Seeley Conn. 15. (Va.) the sale by an heir or distributee of his Shoe Co. v. Bechard, 102 Me. 197, 66 expectancy, see DESCENT AND DIS- Atl. 390, 10 L.R.A. (N.S.) 245; CourtTRIBUTION, vol. 9, p. 133 et seq. 16. ney v. William Knabe, etc., Mfg. Co., Legrand v. Eufaula Nat. Bank, 97 Md. 499, 55 Atl. 614, 99 A. S. R. 81 Ala. 123, 1 So. 460, 60 Am. Rep. 456; Buffington v. Gerrish, 15 Mass. Pelham v. Chattahoochee Grocery 156, 8 Am. Dec. 97; Schloss v. Feltus, 146 Ala. 216, 41 So. 12, 119 A. 96 Mich. 619, 103 Mich. 525, 55 N. W. 19, 8 L.R.A. (N.S.) 448; Skinner 1010, 61 N. W. 797, 36 L.R.A. 164; 140 Co.. S. R. V. Michigan Hoop Co., 119 Mich. 467, Skinner v. Michigan Hoop Co., 119 78 N Not 507 11 W. 547, 75 A. S. R. 413. Montgomery v. Bucyrus Mach. Mich. 467, 78 N. W. 547, 75 A. S. R. Works, 92 U. S. 257, 23 U. S. (L. ed.) Y. 552, 40 N. E. 206, 27 L.R.A. 757; 656 196 1033 = 52 Browning v. DeFord, 178 U. S. Meyerhoff v. Daniels, 173 Pa. St. 555, 34 Atl. 298, 51 A. S. R. 782; Hodgeden v. Hubbard, 18 Vt. 504, 46 Am. Ark. 30, 11 S. W. 960, 4 L.R.A. Dec. 167; Woonsocket Rubber Co. v. 413 = Truxton v. Fait, etc., Co., 1 Penn. Loewenberg, 17 Wash. 29, 48 Pac. 785, (Del.) 484, 42 Atl. 431, 73 A. S. R. 61 A. S. R. 902; Hart v. Moulton, 104 |