I'm sorry this happened to you. As a lesson to all out there who may be reading this ALWAYS have a vehicle inspected prior to making a purchase and if for some reason there is no vehicle that fits the description of the one you want locally, still make sure to go see it in person before buying it.
This could be an expensive lesson for you. Typically, there is a reason that someone sells something like a car on the net, as it is MUCH easier to trick someone that way.
With a little bit of luck, you may be able to show through ads what was promised and through repair records, what was delivered. Unfortunately, you will have to sue this seller, assuming no refund is coming, in TN, which also can be a hassle for someone in CA.
Maybe a local atty in TN could help? Look for one here: http://www.naca.net
Good luck with it.
Disclaimer: The materials provided below are informational and should not be relied upon as legal advice.
I believe your description brings up two different issues. You will be hard pressed to find a 1959 vehicle whose engine has never been rebuilt. In fact, many such vehicle engines would have been rebuilt more than once over a 53 year period. So, simply saying the engine has been rebuilt does not tell you how many times this engine has been rebuilt, when was the last time it was rebuilt, and how many miles it has been driven since the rebuild. If you believe the engine had never been rebuilt, you have a case for misrepresentation/fraud, but I am not sure what your damages would be. On the other hand, if this dealer provided you a warranty that the vehicle is mechanically sound, and in fact the vehicle was not, you have a case for breach of warranty and you can sue the dealer for your damages. You should review your paperwork (including purchase agreement, advertisements, etc.) with your attorney to protect your legal rights.