Breshears v. Callender

• Citation: 23 Idaho 348,131 P. 15
• Parties: FRANK BRESHEARS et al., Respondents, v. W. T. CALLENDER, Appellant
• Decision Date: 10 February 1913
• Court: United States State Supreme Court of Idaho

131 P. 15

23 Idaho 348

FRANK BRESHEARS et al., Respondents, v. W. T. CALLENDER, Appellant

Supreme Court of Idaho

February 10, 1913

FRAUD-RESCISSION OF CONTRACT-SUFFICIENCY OF COMPLAINT-ADMISSION OF EVIDENCE-INSTRUCTIONS-SUFFICIENCY OF EVIDENCE.

1. It is a general rule of law that a party defrauded in a bargain may, on discovering the fraud, either rescind the contract and demand back what has been received under it, or he may affirm the bargain and sue and recover damages for the fraud. If he elects the former course, he must not sleep on his rights, but must move promptly.

2. A party electing to rescind a contract on the ground of fraud and misrepresentation, must place the other party as nearly as pos- sible in statu quo. To do this, if he has received anything under the contract, whether it be property or securities, he must restore it. This rule however, does not apply to all cases, especially where property is worthless, and where the defrauded party has so dealt with the subject matter of the contract that it has become impossible to put the other in statu quo.

3. Where an action is brought to rescind a contract and recover what the party suing parted with or its value, and to restore what was received, and the complaint alleges that the rescission of the contract resulted from the fact that the defendant had made statements at the time the contract of exchange was made that were false and fraudulent and known to the defendant to be false and fraudulent, and that such statements were relied upon by the plaintiff, and by reason of fraud and deceit the plaintiff was induced to make the contract which resulted in the exchange of the property from one to the other, the complaint is sufficient to state a cause of action.

4. Where a complaint states that a contract was entered into by reason of certain representations made of the existence of certain facts, and the plaintiff relies upon such representations, which are the inducement which led the plaintiff to enter into said contract, and such representations are made directly affecting the subject matter of the contract and without which the contract would not have been made, then in that case the representations are material.

5. A party to a contract may testify as a witness to the fact that he would not have entered into the transaction had he known the truth or had not the representations been made, where such facts and statements are peculiarly within the knowledge of the witness.

6. The general rule in this state is that a judgment will not be reversed for the reason that an instruction does not state within its provisions all the law applicable to the facts of the case, where it appears that other instructions given in connection with the objectionable instruction state the law applicable to the facts of the case when taken into consideration with the instruction to which the objection is made, and the jury has not been misled or misdirected, when all the instructions are considered.

7. Where instructions are requested and refused, and such refusal is assigned as error upon appeal, this court will not reverse the judgment where it appears that the trial court gave to the jury instructions which state the essence and substance of the instructions offered and refused.

8. The evidence in this case examined, and held, that the plaintiffs were led to enter into and were induced to make said contract by the examination of the plaintiffs made before the contract was entered into as to the conditions and validity of the property exchanged by the terms of the contract, and that there is no evidence supporting the verdict and judgment that the plaintiffs relied wholly upon the representations alleged to have been made by defendant and that the plaintiffs were in no way misled or deceived by any statements of the defendant.

APPEAL from the District Court of the Seventh Judicial District for Canyon County. Hon. Ed. L. Bryan, Judge.

An action to recover damages and rescind a contract on account of fraud and misrepresentation. Reversed.

Judgment reversed and a new trial ordered. Costs awarded to appellant.

Finley Monroe and Rice, Thompson & Buckner, for Appellant.

The amended complaint contains no allegation that the defendant in this action anywhere represented the bonds to be good, or made any representations with reference to the security for the bonds, or any representation whatever with regard to the bonds.

There is absolutely no allegation in the amended complaint that the bonds are worthless. (Kemmerer v. Pollard, 15 Idaho 34, 96 P. 206.)

The complaint purports to contain two allegations of alleged false and fraudulent representation, but does not connect this alleged misrepresentation with any attempt by defendant to boost the value of the bonds, and these allegations standing alone, are therefore immaterial. (Crooks v. Eldridge & Higgins Co., 64 Ohio St. 195, 60 N.E. 203.)

The complaint does not show why the plaintiffs acted upon such representation without investigating for themselves, nor does it show that the defendant made any effort to induce plaintiffs to forbear inquiry concerning the property. ( Brown v. Bledsoc, 1 Idaho 746; Page v. Parker, 43 N.H. 363, 80 Am. Dec. 172.)

The court erred in permitting plaintiff Campbell to testify to what defendant said with reference to the interest coming due Feb. 1, 1910, over the objection of the defendant, for the reason that it had reference to a promise merely, and something that would take place in the future, and was not a statement as to present facts. (Ray County Sav. Bank v. Hutton, 224 Mo. 42, 123 S.W. 47; Pollard v. McKenney, 69 Neb. 742, 96 N.W. 679, 101 N.W. 9; Beard v. Bliley, 3 Colo. App. 479, 34 P. 271.)

The misrepresentation must be material, that is, it must relate to some matter so substantial and important as to influence the action of the party to whom the representation is made. ( Allison v. Jack, 76 Iowa 205, 40 N.W. 811; Furneaux v. Webb, 33 Tex. Civ. App. 560, 77 S.W. 828; Davis v. Davis, 97 Mich. 419, 56 N.W. 774; Dingle v. Trask, 7 Colo. App. 16, 42 P. 186; Palmer v. Bell, 85 Me. 352, 27 A. 250; Dawe v. Morris, 149 Mass. 188, 14 Am. St. 404, 21 N.E. 313, 4 L. R. A. 158; 14 Am. & Eng. Ency. of Law, 59.)

W. A. Stone and E. J. Dockery, for Respondents.

Testimony of plaintiff that he would not have entered into the transaction had he known the truth or had not the representations been made is competent, as being the statement of a fact peculiarly within the knowledge of the witness and hardly susceptible of proof in any other way. (20 Cyc. 117; Browning v. Nat. Capitol Bank, 13 App. Cas. (D. C.) 1; Mann v. Taylor, 78 Iowa 355, 43 N.W. 220; Stubly v. Beachboard, 68 Mich. 401, 36 N.W. 192.)

The defendant made positive assertions of material matters which proved to be untrue, with the intent that plaintiffs should rely upon them, but now seeks to avoid the responsibility for his wrong by the plea that plaintiffs did not prove he knew them to be false. (Cooley on Torts, 500, 501.)

STEWART, J. Sullivan, J., concurs.

OPINION

STEWART, J.

This action was instituted in the district court of Canyon county by plaintiffs, respondents here, for the recovery of $ 3,600, alleged to be the value of a certain German coach horse stallion which plaintiffs traded to the defendant for six first mortgage bonds of the Easter Gold Mining & Milling Company, Ltd., of the part value of $ 500 each, with interest coupons attached representing interest at the rate of ten per cent per annum payable annually on the 1st day of February of each year.

The action is based upon a transaction occurring on or about the 15th day of January, 1910, and it is alleged in the amended complaint that the defendant represented that the coupons of 1908 and 1909 had been promptly paid by the company, and that the interest due on said bonds upon February 1, 1910, would be promptly paid, and that such statements made by the defendant were false, and that interest due on said bonds on February 1, 1908, and February 1, 1909, had not been paid, and said statements were so made by the defendant with the purpose and intent to deceive and mislead the plaintiffs; that the plaintiffs relied upon the truth of such representations and statements and believed the same to be true, and sold and exchanged the horse and took as payment therefor the said six bonds of the Easter Gold Mining & Milling Company; that said statements were made to plaintiffs by the defendant in order to influence and induce the plaintiffs to purchase the said six bonds of the company and to give in exchange therefor the said horse; and that after the interest on said bonds for the year ending February 1, 1910, had become due and payable, and plaintiffs had presented the said coupons representing the interest due on said bonds for said year for payment to the treasurer of the company, the payment of said interest coupons was by said treasurer refused, and said treasurer has ever since said date failed and refused to pay the same; that said horse so exchanged by plaintiffs to the defendant in the purchase of said bonds was of the reasonable value of $ 3,600, and by reason of the false and fraudulent representations of the defendant as to the fact that interest on said bonds due February 1, 1908, and February 1, 1909, had been promptly paid, and by reason of the purchase of said bonds by giving in exchange therefor the said horse, plaintiffs had been damaged in the sum of $ 3,600, and that said damage was occasioned by said false and fraudulent representations; that plaintiffs bring the said bonds with interest coupons attached thereto into court, and offer to return and deliver the said property to the defendant.

The amended complaint upon...