Blaul v. Wandel
| Decision Date | 15 February 1908 |
| Citation | 114 N.W. 899,137 Iowa 301 |
| Court | Iowa Supreme Court |
| Parties | JOHN BLAUL & SONS v. WANDEL (ROBY, INTERVENER). |
OPINION TEXT STARTS HERE
Appeal from District Court, Van Buren County; Robert Sloan, Judge.
Action in replevin for the possession of 227 bags of flour of a particular description, sold by plaintiffs to defendant in a transaction which plaintiffs sought to rescind on the ground of fraud. An equitable issue, raised by intervener with reference to the reformation of a chattel mortgage under which he claimed the right to the flour, having been determined in his favor, the issues as to plaintiffs' right to rescind were tried to a jury, and, from a judgment against the plaintiffs on a verdict in defendant's favor, the plaintiffs appeal. Reversed.W. L. Cooper, John J. Seerley, and Robt. R. McBeth, for appellants.
Wherry & Walker, for appellees.
To a proposition made by defendant to plaintiffs, with reference to the purchase of a small car load of Eaco flour and feed, containing the statement “I have a car bought of the Alton Milling Co., but it ain't giving good satisfaction; if I can buy Eaco I won't let them ship this load,” plaintiffs replied: “We have your favor, and will ship you a car of flour, 250 bags of Eaco at $4.00 per barrel, upon the terms and conditions you name;” and a car load of flour and feed was thereupon shipped by plaintiffs to defendant, and received by the latter. Subsequently, when plaintiffs discovered that defendant had, prior to the giving of this order, placed a mortgage on his stock in favor of intervener, which mortgage was recorded after the flour was shipped and accepted by defendant, they instituted this action in replevin, claiming the right to rescind the sale on the ground of fraud, and under the writ seized 227 bags of flour. There were various allegations of fraud in the plaintiffs' petition and amendments, but the questions which we deem most important for determination are, first, as to whether the promise to cancel a previous order for flour from the Alton Milling Company, which promise was not performed by the defendant, constituted fraud; and, second, whether the court erred in its instructions to the jury with reference to the measure of damage.
1. It is elementary that the mere failure to perform an executory agreement which is part of the consideration or inducement to the making of a contract of sale will not per se constitute such fraud as to authorize the subsequent rescission of the contract by the other party. Van Vechten v. Smith, 59 Iowa, 173, 13 N. W. 94;State Bank of Ind. v. Mentzer, 125 Iowa, 101, 100 N. W. 69;State Bank of Ind. v. Gates, 114 Iowa, 323, 86 N. W. 311;Chicago, T. & M. C. R. Co. v. Titterington, 84 Tex. 218, 19 S. W. 472, 31 Am. St. Rep. 39. Of course, if it can be shown that when the inducing promise was made and a sale consummated in reliance thereon the buyer had a secret intention not to perform the obligation which he undertook to perform in the future, then this secret intention not to perform,in itself, constitutes such fraud as to warrant a rescission if the promise was relied on by the seller, and was a material inducement to the making of the sale. Cox Shoe Co. v. Adams, 105 Iowa, 402, 75 N. W. 316;Swift v. Rounds, 19 R. I. 527, 35 Atl. 45, 33 L. R. A. 561, 61 Am. St. Rep. 791;Donaldson v. Farwell, 93 U. S. 631, 23 L. Ed. 993. But the fraud relied upon must have existed at the time of the sale; it cannot consist in a subsequent failure to perform an executory agreement. Kearney Mill. & E. Co. v. Union Pac. R. Co., 97 Iowa, 719, 66 N. W. 1059, 59 Am. St. Rep. 434. The mere failure to perform an executory agreement which is a part of the consideration of or inducement to the sale is not in itself proof of fraud existing at the time of the sale. Theusen v. Bryan, 113 Iowa, 496, 503, 85 N. W. 802;Starr v. Stevensen, 91 Iowa, 684, 60 N. W. 217. Counsel for appellants insist that the failure of defendant to countermand his order to the Alton Milling Company, resulting in his receiving a car load of flour from that company about the same time that he received the flour shipped to him by appellants, established a fraudulent purpose, and that a verdict should have been directed for the appellants. But this cannot be so in the absence of proof that the defendant entertained the fraudulent purpose not to countermand the order given to the Alton Milling Company at the time of the purchase of the flour from the appellants. The language relied upon, found in Pollard v. McKenney, 69 Neb. 742, 96 N. W. 679, 101 N. W. 9, is not applicable here. That was a case in which plaintiff was seeking to establish a constructive trust upon land by reason of a promise alleged to have been fraudulent that the defendant as grantee of the plaintiff would hold the land for plaintiff's benefit, and the court finds constructive fraud to have existed in the intention not to perform the promise at the time it was made. What is further said in the case with reference to a presumption of fraud arising from the failure to comply with such a promise is expressly announced by way of dictum, but, whether dictum or not, it has no application to this case. That was an equitable action to enforce a parol trust in land, and in such case it has perhaps with propriety been said that the grantee taking absolute title with such a parol agreement violates his agreement and trust when he attempts to make other use of the property than that for which he accepted and agreed to hold it. This is an action at law based on an attempted rescission on account of fraud in the purchase of property sold and delivered to the defendant, and we find no authority supporting the rule of evidence contended for by counsel for appellants--that the failure to perform an executory agreement in itself shows that such agreement was made with the secret intent not to perform it. If the rule contended for by counsel were recognized, then the seller could make out a case for rescission wherever goods have been sold on credit and the buyer has not subsequently paid in accordance with his promise. We have frequently held that while a false representation as to financial standing relied upon by the seller may be sufficient ground for rescission, although the buyer...
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