The opinion
John A. Fogleman, Justice, dissenting. I dissent from that part of the decision of this case which permits the recovery of premiums by Dr. Owens. The basis of my disagreement with the majority is the unreasonable and unexplained delay on his part in asserting his rights. He had full knowledge of all the facts and circumstances giving rise to his cause of action at the time of his receipt of appellee’s letter of February 27, 1959. This is further evidenced by his own letter of March 4, 1959, in which he demanded a cash settlement and advised of his intention to try to collect from appellee. On March 20, 1959, Owens advised appellee that if he did not have a reasonable settlement offer in fifteen days, he would be forced to turn the matter over to his attorney. Yet, no suit was filed until December 18, 1964, well over five years later. During this time he continued to pay premiums annually, usually complaining about the situation at the time of each remittance. He periodically threatened suit. During this time appellee did nothing whatsoever to discourage appellant from bringing suit.
Whatever label may have been applied to the cause of action, it is for the rescission of a contract. Appellee specifically pleaded the statute of limitations and laches. I agree with the majority that the possible bar of the statute of limitations is no longer in issue, not having been listed as a point on which appellee relies or argued in its brief. Appellee does however, urge the defense of laches here. Regardless of the label given this defense, it relates to the staleness of appellants’ demand on which appellants, not appellee, sought equitable relief. In equity a stale demand is a form of laches. Sullivant v. Sullivant, 239 Ark. 953 , 396 S. W. 2d 279 .
This court considered the effect of lapse of time in Davis v. Tarwater, 15 Ark. 286 , wherein rescission of a contract for the sale of lands was sought more than ten years after the date of the contract and more than five years after the discovery of the fraud alleged.'In holding that a court of equity would refuse relief because of lapse of time where no excuse or explanation was offered for the delay, the court said that where one was guilty of negligence and slept on his rights, the best interests of society required that causes of action should not be deferred an unreasonable time. This court said that the objection that the claim is stale can be made at the hearing, or that the court might deny relief on its own motion when such a case is disclosed. It then said:
“Lapse of time is not founded upon statutory provisions, though the statute may be referred to at fixing a reasonable time for its operation. The rule is applied by Courts on a broad view of all the circumstances of the case. And even in case where the demand is not barred by positive limitation, Courts of Equity refuse to interfere after a considerable lapse of time, from considerations of public policy and from the difficulty of doing entire justice. Nothing can call a Court of chancery into activity, but conscience, good faith, and reasonable diligence, and where these are wanting, the Court is passive and does nothing.”
The principle was recognized and applied in Jones v. Gregg, 226 Ark. 595 , 293 S. W. 2d 545 , where this court held that an action to rescind a contract because of the failure of a seller for a period a little over two years to obtain a release of a vendor’s lien which encumbered certain property sold to a buyer not to be timely. The court said:
“While the law gave them the right to rescind the agreement upon the failure of the appellants to comply with their part of the contract, this was only one of their remedies, and they were not required to exercise it. The law does require, however, that in order to rescind a contract, the rescission itself must be made within a reasonable time after the facts, giving rise to the right of rescission arise or become known; and, unless such right to rescission is exercised within reasonable time after the discovery of the facts justifying the rescission, the party otherwise entitled to rescind will be deemed to have waived this right. ’ ’
Later, in Koolvent Aluminum Awning Co. of Arkansas v. Johnson, 231 Ark. 517 , 331 S. W. 2d 265 , the failure of a service station operator to assert a right to rescind for more than one year after work was completed on the installation of a canopy in front of his station was held to be an unreasonable delay amounting to a waiver of his right to rescind. It appeared that the operator complained that the materials used were not fireproof and of inferior grade, and that the canopy leaked, while the work progressed. There the operator had told workmen of the contractor to “tear it down and put it in the junkpile. ’ ’ With respect to this contention of the operator, this, court said:
“ ***If this statement could be considered as notice to the seller of his election to rescind it must fail for the want of adhering to it since he permitted appellant to perform work on the contract after the statement without protest. The record reveals no affirmative act toward rescission was done by appellee until his answer was filed to the lawsuit which was more than a year after the work was completed. We hold that failure to assert the right to rescind for this period was an unreasonable delay which amounted to a waiver of the right to rescind, hence, the trial court was in error in decreeing rescission. ’ ’
There are other cases wherein the failure to act promptly in seeking relief from contracts, that have application here, even though the matter of rescission may not have been the actual issue involved. Among them are:
Grayson-McLeod Lumber Co. v. Slack-Kress Tie and Stave Co., 102 Ark. 79 , 143 S. W. 581 , Avhere it was said that it was the duty of one who discovered an apparent breach of a contract to insist upon a forfeiture at once if he intended to do so and that permitting the continued performance of the contract Avaived the breach.
New York Life Ins. Co. v. Adams, 151 Ark. 123 , 235 S. W. 412 , Wherein it was held that an insurance company like a policyholder, waives the right to rescind a contract of insurance by failure to take advantage thereof Avithin a reasonable time after discovery of the facts constituting grounds for rescission.
In Newsum Auto Tire Vulcanizing Co. v. Shoemaker, 173 Ark. 872 , 294 S. W. 11 , the failure to seek to rescind a release obtained by false representations and fraud for a period of more than two years after discovering the circumstances was held to be such an unnecessary delay as. to constitute acquiescence and con-donation of the fraud and a waiver of the right to rescind.
This is the basis of appellee’s contention Avith reference to the defense of laches and I cannot agree that cases cited in its brief are inapplicable simply because they relate to failure of a policyholder to act promptly to reject an insurance policy not conforming to the agreement of the parties. The principle is the same and appellee appropriately argued this, in my opinion. Remmel v. Griffin, 81 Ark. 269 , 99 S. W. 70 , cited by appellee, is also cited by this court as authority for the holding in New York Life Ins. Co. v. Adams, 151 Ark. 123 , 235 S. W. 412 . Retention of a policy for more than three months was held to be such an unreasonable delay as would constitute a bar as a matter of laAv in Carrigan v. Nichols, 148 Ark. 336 , 230 S. W. 9 . Delay of four months in bringing suit after obtaining actual knowledge of the contents of the policy was held to bar rescission in Smith v. Smith, 86 Ark. 284 , 110 S. W. 1038 . Delay of one year in repudiating a lease after lessee learned that he was induced to enter into it by fraudulent representations was held to he so unreasonable as to constitute waiver in La Vasque v. Beeson, 164 Ark. 95 , 261 S. W. 49 . [New York Life Ins. Co. v. Adams, supra, was cited as authority.] These cases were appropriately cited by appellee.
I would reverse on cross-appeal.