Appeal, No. 207, March T., 1963, from order of Court of Common Pleas of Butler County, June T., 1961, No. 9, in case of James M. Sixsmith and Highway Sand & Gravel Co., Inc. v. Harold M. Martsolf and Anna M. Martsolf, his wife, Vincent J. Laughlin et al. Order affirmed.
A. R. Cingolani, Jr., with him Floyd L. Arbogast, Jr., and Cingolani and Cingolani, for appellants.
Lee C. McCandless, for appellees.
Before Musmanno, Jones, Cohen, Eagen, O'brien and Roberts, JJ.
OPINION BY MR. JUSTICE EAGEN
This is an appeal from an order in the court below, sustaining preliminary objections to the complaint in an action in equity and dismissing the action.
On April 9, 1959, the plaintiff, James M. Sixsmith, entered into a written contract to purchase the entire assets and business of the Highway Sand and Gravel Company, Inc., a Pennsylvania Corporation engaged in the production and sale of sand and gravel. The purchase consideration was the payment of $80,000 in cash and the delivery of a judgment note in the sum of $15,000,*fn1 executed by the "new" Highway Sand and Gravel Company, Inc., in favor of Harold M. Martsolf, as an individual, who was president of the corporation at the time of sale and executed the contract on its behalf. At
the time of the execution of the contract, the stock of the corporation was entirely owned by the defendants, Harold M. Martsolf and his wife, Anna M. Martsolf; and Vincent J. Laughlin and his wife, Margaret M. Laughlin.
The complaint alleges, that during the negotiations, Harold M. Martsolf, acting on behalf of himself and the other defendants, prepared and delivered to the plaintiff, James M. Sixsmith, a prospectus on the nature of the business; that statements therein as to the production capacity of the plant, the wage scale paid to the employees, and the prevailing prices received for the material sold were falsely stated. It also alleged that during the negotiations Harold M. Martsolf made other statements and representations as to the operation and facilities of the business which were false, and which fraudulently induced James M. Sixsmith to enter the contract to purchase.
The complaint requested the court to reform the contract, (in what manner is not specified), and to enjoin the defendant, Harold M. Martsolf, from enforcing payment of the note given as part of the purchase consideration.
If the action were intended to effect a rescission of the contract, (the complaint and brief indicate no such intention), the action instituted on May 17, 1961, more than 25 months after the sale was consummated, is legally too late for this purpose. A contract secured by fraud is voidable only at the option of the injured party, who must act promptly on the discovery of the fraud or the right to rescind is waived: Hilliard v. Wood Carving Co., 173 Pa. 1, 34 A. 231 (1896); Kinter v. Commonwealth Tr. Co., 274 Pa. 436, 118 A. 392 (1922); ...