It is not necessary, in order to make the election conclusive, that the party electing shall be acquainted with all the evidence which may tend to prove the fraud. It is sufficient if he has knowledge of all the material facts showing the actual perpetration of fraud upon him.10 And it has been said that the question of waiver is largely one of intent.11 But the doctrine that any act in affirmance of a contract after discovery of fraud, defeats the right of rescission, is not necessarily applicable to an action for damages founded in fraud.12
A purchaser is not estopped from rescinding a contract of sale for fraud, by a recital therein that no representations have been made for the purpose of inducing the sale.13 A clause which provides that "no verbal agreements affecting the validity of this contract will be recognized," does not obviate the results of fraud, for fraud is not an agreement. It is an imposture practiced by one upon another. It may be used as an inducement to enter into an agreement.14 Where a tenant sues for damages sustained by reason of the false representations of the landlord, an agreement that the landlord should not be liable for any damages caused by or arising from any source whatsoever in or about the premises, is not a waiver of damages caused to the tenant by the fraud of the landlord.15
7 Equitable Co-operative Foundry Co. v. Hersee, 103 N. Y. 25 (1886).
8 Conrow v. Little, 115 N. T. 387 (1889); Robb v. Vos, 155 U. S. 16 (1894); Crook v. First Nat. Bk., 83 Wise. 31 (1892). And see Johnson Co. v. Mo. Pac. Ry. Co., 126 Mo. 344.
9 Blumenfeld v. Stine, 42 Misc. 413 (N. T. 1904).
10 Bach v. Tnch, 126 N. Y. 53 (1891) ; E. Bement & Sons v. La Dow, 66 Fed. Rep. 195 (1895).
11 Pryor v. Foster, 130 N. Y. 177 (1892).
12 N. Y. Land Imp. v. Chapman, 118 N. Y. 295 (1889); Pryor v. Foster, 130 N. Y. 171 (1892).
13 Bridger v. Goldsmith, 143 N. Y. 424 (1894).
"It is elementary that a person who has been induced by fraudulent representations to become the purchaser of property has, upon the discovery of the fraud, three remedies open to him, either of which he may elect: First, he may rescind the contract absolutely, and sue to recover the consideration, in which case he must first restore or offer to restore the property; second, he may bring action to rescind; third, he may retain what he has received, and bring an action at law to recover the damages sustained,16 in which case the measure of his recovery is the difference between the value of the article sold and what it should be according to the representations.17 In Krumm v. Beach, 96 N. Y. 398 (1884), it was held that where a party seeks the third remedy, whether the representations relate to the title or to matters collateral to the land, the measure of the damages is full indemnity to the injured party, - the entire amount of his loss occasioned by the fraud."18
14 Searsdale Pub. Co. v. Carter, 63 Misc. 275 (N. Y. 1909); U. S. Gypsum Co. v. Shields. 100 S. W. 724 (Tex. 1908).
15 Rlumenfelil v. Wagner. 63 Mise. 69 (N. Y. 1909).
16 .Judd v. Walker. 114 S. W. 979 (Mo. 1908); Modlin v. Railroad, 145 N. C. 223 (1907): Mlnazek v. Libera. 83 Minn. 288 (1901); St. John v. Hendrickson, 81 Ind. 350 (1882)
17 Citing Vail v. Reynolds. 118 N. Y. 297 (1889).
18 Grosjean v. Galloway, 64 App. Div. 547 (N. Y. 1901). As to proof of fraud at law and in equity, see Sec. 320 infra.