Carroll

George E. Carroll and his wife, Anne D. Carroll, brought this action against H. H. Chapman and Katherine Chapman, his wife, to secure rescission of a contract for purchase of the Hornbrook Water Company and for damages. The lower court held for the Chapmans and the Carrolls have appealed. Marilyn Dungey, executrix of the estate of H. H. Chapman, deceased, has been substituted as a defendant and respondent in place of H. H. Chapman.

Plaintiffs’ action for rescission was based on alleged fraudulent representation and concealment by the Chapmans in the following particulars; (1) that the water system consisted of all new pipe; (2) that the water company had in its possession, or under its control, an adequate water supply; (3) that there was a knowing, fraudulent concealment of an outstanding superior water right to the waters of Ranchería Creek, the primary source of water.

Defendants in their answer alleged affirmatively: “That plaintiffs were also fully informed of the nature of the water rights, if any, as alleged in paragraph VII of plaintiffs’ Complaint. That plaintiffs made independent investigation and viewed the premises on numerous occasions prior to purchasing the…