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Swenson v. Raumin8/18/1998
), this Court construed the statutory phrase, "discovering the facts which entitle him to rescind," as meaning "notice of facts and circumstances which would put a person of ordinary prudence and intelligence on inquiry is, in the eyes of the law, equivalent to knowledge of all of the facts a reasonable diligent inquiry would disclose." In interpreting the statutory phrase, "aware of his right to rescind," the Court said:
We believe a party after acquiring knowledge of the facts has a responsibility to promptly find out, if not known, what legal rights result from them. Failure to do so may militate against the party. We also believe that once a party has the facts, the party is required to find out what legal significance results. The same concept which applies after a party acquires information indicating that certain facts may exist to find out if they do and what they are, applies to this matter. The party, in effect, has a two-fold responsibility to find out what the facts actually are and then find out what legal rights result from those facts, if the party is not aware of the resulting legal rights. Failure to do so will be construed against the party.
Berg, 322 N.W.2d at 453. Although the timeliness of a decision to rescind is generally a question of fact subject to the circumstances of each particular case, see Check Control, Inc. v. Shepherd, 462 N.W.2d 644, 648 (N.D. 1990), the circumstances may be such as to make the question one of law for the court to decide. See Lindemann, 336 N.W.2d at 116.
[ ] The party seeking rescission has the burden of proving reasonable diligence to promptly rescind upon discovering facts entitling the party to rescind, as well as proving an offer to restore to the other contracting party everything of value received under the contract. See, e.g., Vermilyea v. BDL Enterprises, Inc., 462 N.W.2d 885, 889 (S.D. 1990). The only evidence presented by the Swensons in opposition to the summary judgment motion was an affidavit of Sally Swenson which stated in pertinent part:
2. There are many disputed questions of fact concerning her husband's signing of the Release, and his lack of understanding of the terms of the Release.
3. My husband feared he would lose his job if he did not sign the Release; there are disputed questions of fact concerning this economic stress placed upon my husband.
4. My husband lacks the education to understand the Release document; he completed only the first six elementary grades in school.
5. There was a mutual mistake of facts at the time the Release was signed; all parties believed that Peter had a fractured hip only, requiring no operation, while in fact he had also a fractured spine which required a serious operation.
6. There are disputed questions of fact as to whether or not the Release was intended to cover unknown injuries.
[ ] While these allegations address the merits of the rescission action, nothing the Swensons presented to the trial court addresses the reasonable diligence requirements for a rescission action. Nor does the record show an offer to restore the value Peter Swenson received under the settlement agreement, a "condition precedent" to maintaining a rescission action. Volk v. Volk, 121 N.W.2d 701, 706 (N.D. 1963). Peter Swenson knew of further medical complications in May 1986, and underwent major spinal surgery in October 1986, just a few months after signing the settlement agreement. At that time, Peter Swenson knew or should have known the actual facts, and then should have found out what legal rights result from those facts. See Berg. Peter Swenson did not do so.
[ ] All of the facts the Swensons
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