Warren v. Cole

• Decision Date: 03 April 1867
• Citation: 15 Mich. 265
• Court: Michigan Supreme Court
• Parties: Henry Warren v. Hiram F. Cole and another

15 Mich. 265

Henry Warren v. Hiram F. Cole and another

Supreme Court of Michigan

April 3, 1867

Heard January 12, 1867 [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material]

Error to Lenawee circuit.

This was an action to recover damages for an alleged deceit practiced by plaintiff in error upon defendant in error, in the sale of two patent rights for the making of soap. Judgment was rendered for the plaintiff below. The facts are sufficiently stated in the opinion.

The following are the assignments of error covered by the opinion:

1. That the court erred in charging and instructing the jury that if the fraud was proved on the part of the defendant to be a gross one or aggravated, they will be justified in imposing exemplary or punitive damages.

2. That the court erred in charging and instructing the jury that they might also, in estimating the plaintiff's damages, take into consideration his expenses of carrying on and prosecuting his suit, including counsel fees.

3. That the court erred in refusing to instruct and charge the jury, as requested by the defendant's counsel, that if the jury believed from the evidence that the plaintiffs had disaffirmed the contract, that then the plaintiffs could not recover in this form of action; and also erred in charging and instructing the jury that unless such disaffirmance was acceded to or acted upon by the defendant, or the consideration money restored on request, any act of disaffirmance in evidence in this case, on the part of the plaintiffs, would not preclude the plaintiffs from maintaining this action.

4. That the court erred in refusing to charge and instruct the jury, as requested by the counsel for the defendant, that the conveyance of the 17th October, 1863, conveyed to the plaintiffs all the rights of the defendant to his patent of February 9th, 1864, to the washing and jelly soap for the county of Cuyahoga, and invested the plaintiffs with all the rights they would have had if the patent had been granted before the sale to the plaintiffs.

Judgment reversed, with costs, and a new trial granted.

C. A. Stacy, for plaintiff in error:

1. In all cases of contract where fraud is charged or has been committed, the contract is voidable, at the election of the injured party: 1 Doug. 330.

a. If the defrauded party elects to affirm the contract, he is bound by it in all respects. If he elects to rescind it, from that moment it becomes void, and neither party can maintain any rights under it: 4 Mich. 508; 2 Parsons on Con., 780.

b. The party defrauded must rescind as soon as circumstances permit after the discovery of the fraud: 1 Denio 69; 24 Wend. 74.

c. Generally an offer to return the property received is as effectual as actually returning it: 5 Black. 225; 9 Porter 420.

d. When, instead of paying money for an article, one delivers some other article in exchange, if the one of whom he purchases be guilty of fraud, he may return, or offer to return, the whole consideration which he received, and maintain trover for the chattels he gave; otherwise, his remedy is by action on the case for the deceit, and not trover for the consideration: 4 Mass. 502; 3 Esp. 83; Sedg. on Dam., 562; 3 Hill 333; 8 Barb. 9, 18; 1 Hill 484; 4 Denio 584.

2. The court erred in charging the jury that they might, in addition to punitive or exemplary damages, also, in estimating the plaintiff's damages, take into consideration his expenses of carrying on and prosecuting his suit, including counsel fees.

In the theory of the law, the taxed costs are full indemnity for the expenses of a suit: 13 M. and W., 47; 5 Wend. 535; 23 Id. 425; 11 Pick. 378; 4 Black. 277; 13 How. 363.

This erroneous direction in cases where, like this, the jury had the right to give compensatory damages, will require the court to reverse the judgment, as they can not assume that the intention of the jury was to give vindictive damages rather than compensatory: Sedg. on Dam., 529, 563; 3 Sandf. 628; 8 Wend. 505.

3. The court erred in charging the jury that in this case the plaintiff could recover punitory or vindictive damages.

If the defendant was guilty, he was also liable to a criminal prosecution and punishment, and if damages as a punishment, over and above the actual damages sustained, could be given by the jury in the civil action, then the defendant might be twice punished for the same offense: 4 Cush. 273; 4 Denio 461; 4 Taunt. 355; 21 Pick. 378; 2 Green. Ev., title, Damages.

4. The sale of the patent right and the conveyance of 17th October, 1863, we claim conveyed not only all the right to the patent then issued, but to the patent for washing soap issued February 9th, 1864; it contains a warranty, and, by force of the warranty, conveys not only the right he had obtained under the patent of 1861, but also all he acquired under the patent of 1864.

5. The charge of the court upon the rights acquired by the plaintiffs by the sale not only misled the jury upon that point, but also ignored the testimony tending to show an offer in the spring of 1864, by Warren, to convey to plaintiffs the right for Cuyahoga county, to the patent of July 9th, 1864.

A. L. Millerd, for defendant in error:

It is settled by the verdict of the jury that the defendant (below), by means of a false and fraudulent representation to the plaintiffs that he had a patent for two kinds of soap, when he had a patent for but one, induced them to purchase the right for the county of Cuyahoga, and to pay him therefor the sum of fifteen hundred dollars.

Upon the discovery of the fraud, the plaintiffs (below) offered to reconvey to him, and demanded of him to restore the purchase price which he had obtained from them. This he refused, and this action was brought in the court below to recover damages for the deceit.

1. Fraud or deceit, accompanied with damages, is a good ground of action: 2 Hill. on Torts, 146.

It is no objection to the plaintiffs' right of recovery that they repudiated the contract on the discovery of the fraud.

If they had failed to do this, it might have been construed to be a waiver of the fraud, and an acquiescence in the performance of the contract by the defendant: 2 Kent's Com. (3d ed.), 480.

It has been made a question whether a purchaser did not waive his right to damages by acting in affirmance of the contract after discovering the fraud, though the courts have decided that he did not: 1 Hill 484; 2 Hill. on Torts, 150.

But when was it ever decided, or even suggested, before, that he waived it by disaffirming the contract.

It may be true that we could not sue upon the contract, after repudiating it. A party can not both affirm and disaffirm a contract. But this action is not upon the contract, but for the fraud.

It is settled, too, that a vendor may, on discovering the fraud and returning or offering to return what he has received, recover back what he has paid. But it does not follow that this is his only remedy. He has two remedies. He may either recover back the whole consideration that he has paid, in an action for money had and received, or may bring his action for the fraud and recover the damages: 4 Wend. 488; 4 Mass. 502; 1 Doug. 330, 347.

In the former case he must first return or offer to return what he has received; in the latter it is decided that this is not a necessary prerequisite. It may or may not be done. In the former case the party, if he recovers anything, recovers specifically the consideration paid; in the latter he recovers his damages, which may or may not be the full amount of the consideration.

2. There was no error in the charge of the court as to the rule of damages.

The court charged that the measure of damages would be the difference in value between the right acquired by the plaintiffs by the purchase and what would have been the value of the right or rights as they were fraudulently represented to be by the defendant.

This was in accordance with the request of the defendant's counsel, and no exception was taken to it by either party.

He also charged that if the fraud was a gross one, or aggravated, the jury would be justified in imposing exemplary or punitive damages, and might take into consideration the plaintiff's expenses of carrying on the suit, including counsel fees.

Exemplary damages may be given in a case of gross or aggravated fraud: Sedg. on Dam. (3d ed.), 36, 59, 476-492, 665-672; 4 Strobh. 34; 10 N. H., 130; 29 Conn. 496; 11 Mich. 105, 548.

And in such a case the jury may properly take into consideration the probable expense of the litigation, including counsel fees: Sedg. on Dam., 99, 100, 658; 15 Conn. 225; 24 Id. 392; 1 Baldwin 138; 17 Ala. 833.

3. There was no error in the charge of the court upon the request of the defendant (below) as to the effect of the deed of 17th October, 1863, conveying the right for Cuyahoga county to the plaintiffs; at least, none of which the plaintiffs in error can complain.

This deed was made before the patent for the washing soap was issued. There was not even an application for a patent on that then pending. The original application for that had been withdrawn, and the subsequent one, on which the patent finally issued, was not filed until after the date of the deed.

The deed by its terms is a conveyance of the right for Cuyahoga county in the patent already granted, which was for the hard soap, and makes no reference to the washing soap.

How it could operate to convey title to another improvement, and to a patent subsequently applied for and obtained, to which...