Counsel for appellants in his petition for rehearing complains that the court has failed to pass upon one of the vital questions in the case.
It is true that the point was made in appellants' brief that Montgomery had condoned the alleged fraud of McLaury by *Page 92 seeking favors of him after discovery of the fraud, thus bringing the case within the principle of Schmidt v. Mesmer, 116 Cal. 267. The facts of this case, however, are so utterly dissimilar to the facts in Schmidt v. Mesmer that the decision in that case has no application.
The so-called favors solicited by Montgomery were these: He called upon McLaury to refund water assessments which had accrued prior to the exchange of properties, and which he had been compelled to pay. He accepted a new deed tendered by McLaury for the perfection of his water-right. He wrote to McLaury to say that he should require an additional five hundred dollars, which he claimed McLaury had offered to advance him on the security of his mortgage of the Riverside lands.
But, according to his testimony and the findings of the court, all this was prior to the discovery of the fraud that had been practiced upon him.
The court found that owing to sickness and absence Montgomery did not discover the falsity of McLaury's representations until shortly before the commencement of the action (January 11, 1900). This finding sustained by the testimony of Montgomery that he first made the discovery when he commenced plowing the land the last of October, or beginning of November, 1899. His request for the loan was made October 15, 1899, and was refused. McLaury's answer to his request, which was by letter, gives an excuse for his refusal, which clearly shows that he had promised the loan. We quote as follows: —
"Dear Sir: — I have received your favor of October 15. In speaking of your needs when I was at Riverside you said your son had offered to let you have as much as $1,000 in case you needed it and that you would not need a loan of $500, concerning which we talked before you went away, therefore I had made no preparations to let you have any more money and as crops are here this year I scarcely see how I could spare it at all."
The whole basis of the point made by counsel, therefore, resolves itself into this: That before Montgomery discovered the fraud he solicited a loan that had been promised at the time of the exchange of lands, — and solicited it in vain, — and *Page 93 that at an earlier date he had accepted a deed which McLaury tendered in fulfillment of his obligation to convey the water-right, and demanded and received repayment of an assessment which it was McLaury's duty to have paid.
A comparison of these facts with the facts of Schmidt v.Mesmer, 116 Cal. 267, will demonstrate the utter dissimilarity of the cases.
In his petition for a rehearing counsel cites the case ofKingman Co. v. Stoddard, 85 Fed. Rep. 740. That is a well-considered case, and shows even more clearly than Schmidt v.Mesmer how totally inapplicable to this case is the principle which it decides.
The principle decided is simply this: That if the vendee of property discovers that he has been defrauded before he has paid the purchase price, and with that knowledge accepts a conveyance, he cannot refuse to pay; and if he has paid cannot maintain an action for deceit.
It is contended, however, that because when Montgomery saw the land in March, 1899, he could see that in some respects it fell short of McLaury's description and aroused Lis suspicions, he was then put upon notice of all that he could have discovered by a prompt investigation; and, consequently, that he is charged with knowledge as of that date of all that he subsequently discovered.
This would perhaps be true if the action was based upon rescission, but this doctrine of relation does not apply in an action for deceit, or a suit in equity based upon affirmance of the contract.
Rehearing denied.
Shaw, J., Angellotti, J., and Van Dyke, J., concurred. *Page 94