Respondent Grinnell and family have been acquainted with, and intimate friends of, appellant for twenty-seven years, and through his corporation he had represented the appellant in numerous profitable business ventures. Appellant had the utmost confidence in Grinnell and was willing to believe, and did believe, that any business venture which he would offer or recommend would be safe and profitable.
On July 13, , Grinnell wrote the appellant the following letter:. I can get commercial paper here payable in 90 days at about 6 per cent. In response to this letter, appellant directed Grinnell to invest in the stock or rights involved here. She married in and went to live in Everett, Washington.
Her husband is a lawyer, and was in Spokane in and at several subsequent times attending to her business interests. Two quarterly dividends were sent to appellant in , but none thereafter, although she inquired of Grinnell for the subsequent dividends and was informed by him that the dividends were cumulative.
In the early part of , appellant again inquired of Grinnell about the condition of her stock or security, which inquiry was ignored. Bespondents pleaded two affirmative defenses; the statute of limitations, and laches. Appellant claims the right to rescind the contract of sale and recover the money she paid for the preferred rights on the ground that the company was without power to issue the preferred rights, and that there was misrepresentation by Grinnell, its agent, in making the sale.
There is an elaborate discussion by counsel for both sides upon the question of whether the company was without power to issue the preferred rights, so called, and whether the issue was, therefore, ultra vires. The transaction having been consummated in and the suit having been commenced in , it is contended by appellant that she had no knowledge, and no means of knowledge, of the deception and fraud upon her until within a few months before she commenced the suit, and that she was lulled into a feeling of trust and reliance by Grinnell until she was finally informed by the company in that she had not purchased preferred stock at all.
