Bushey v. Coffman

• Decision Date: 12 November 1921
• Docket Number: 22,727
• Citation: 109 Kan. 652,201 P. 1103
• Parties: ALLEN H. BUSHEY, Appellant, v. GEORGE M. COFFMAN, Appellee
• Court: Kansas Supreme Court

201 P. 1103

109 Kan. 652

ALLEN H. BUSHEY, Appellant, v. GEORGE M. COFFMAN, Appellee

No. 22,727

Supreme Court of Kansas

November 12, 1921

Decided July, 1921.

Appeal from Labette district court; ELMER C. CLARK, judge.

Judgment reversed and cause remanded.

SYLLABUS

SYLLABUS BY THE COURT.

1. PLEADINGS--Duty of Court to Interpret Pleadings and Define the Issues to the Jury. It is the duty of a court to interpret the pleadings and instruct the jury as to the issues presented by them, and an instruction leaving to the jury the question of whether the action is one for the recovery of damages because of the fraud of the defendant in inducing the plaintiff to enter into a contract, or one for a rescission of the contract and restoration of property or its value, is erroneous.

2. SAME -- Contract -- Fraud -- Petition States Election by Plaintiff to Affirm Contract and Demand Damages for Fraud. The petition examined, and it is held to state an election by the plaintiff to affirm the contract in question, retain what had been received under it, and to demand damages sustained by reason of the alleged fraud.

3. CONTRACT -- Fraudulent Representations -- Fraud Discovered After Contract Partly Performed--Election to Complete Contract and Claim Damages for the Fraud. A party induced by fraudulent representations to enter into a contract which has been partly performed before the discovery of the fraud, does not waive the fraud by an election to affirm the contract complete its performance and retain what was received under it, and is not precluded from recovering damages sustained by reason of the fraud because of delay if his action is begun within the period fixed by the statute of limitations.

4. NOTES--Financial Responsibility of Makers--Opinion Evidence Competent But Not Conclusive. No error was committed in giving an instruction to the effect that the testimony of bankers and business men as to the financial responsibility of the signers of notes was not conclusive but was to be considered in connection with the other evidence in the case, direct and circumstantial, and given the weight and force to which it was justly entitled.

5. SAME -- Fraudulent Representations of Value of Bank Stock and Assets--Value Must Be Determined as of Date of Sale. An instruction advising the jury that the value of the bank stock and assets was to be determined as of the date of the sale, and that evidence of its worth or worthlessness at any other time could only be considered so far as it threw light as to its value on the day the sale was made, is held to be without error.

6. SAME--Notes Belonging to Bank--Opinion of Bank Commissioner as to Their Value Not Conclusive. An instruction that evidence of the fact that the state bank commissioner required the charging off of certain notes as worthless would not be conclusive on the question of their value if upon all the evidence the jury should find that the signers of the notes were solvent, and that the notes were good and collectible, was not incorrect.

John Madden, C. E. Cooper, both of Wichita, S. Harrison White, of Denver, Colo., and Fred A. Sabin, of La Junta, Colo., for the appellant.

W. D. Atkinson, of Parsons, W. R. Cline, of Erie, T. R. Evans, and H. P. Farrelly, both of Chanute, for the appellee.

OPINION

JOHNSTON, C. J.:

This case was here before upon an appeal from a ruling sustaining a demurrer to plaintiff's evidence. It was then determined that the uncontradicted evidence of the plaintiff was sufficient to overcome the demurrer and the judgment was therefore reversed. (Bushey v. Coffman, 103 Kan. 209, 173 P. 341.) Upon a remand of the case for another trial, the defendant with leave of the court filed an amended answer alleging that the plaintiff had waived any claim he may have had for damages by taking charge of the bank and operating it for many months without complaint, and by purchasing additional shares of stock long after the purchase of the controlling interest in the bank, and further that by failing to tender a return of the stock he was estopped to complain of the acts of the defendant. On the second trial a vast volume of conflicting evidence was received as to the representations made in the negotiations and as to the character and value of notes and other assets of the bank at the time of the transfer of the stock to the plaintiff. While evidence was offered tending to show misrepresentations as to the condition of the bank and the value of its assets, there was abundant evidence that the defendant acted fairly and honestly in the negotiation, and in the transfer of his stock in the bank. Because of the conflict in the evidence the instructions given by the court in the submission of the issues to the jury were of vital importance.

Complaint is made of several instructions and particularly of one relating to the remedies available to a defrauded party. It may be said that plaintiff's petition was in two counts, the first of which charged that the sale of the bank stock was procured through the misrepresentation and fraud of the defendant, and for his loss and damage he asked judgment for $ 23,700. The second count was for a rescission of a contract for the purchase of certain real estate and water rights for $ 2,500, obtained under duress, and asking that a promissory note executed by plaintiff and delivered to defendant for $ 2,500, in payment of the property, be canceled. In this connection the plaintiff tendered a deed of the property acquired under the purchase. On the second count the verdict of the jury was in favor of the plaintiff and thereon judgment canceling the note was rendered. Of this part of the judgment there is no complaint. Upon the first count the verdict and judgment were in favor of the defendant and the present review is confined to the rulings and judgment upon that count.

The contention of the plaintiff is that the court erred in defining the issues and submitting the case to the jury. Instead of treating the count as an action for the recovery of damages sustained by reason of the fraud, it is claimed that the court confused the issues and misled the jury by submitting an instruction relating to the rescission of the contract. The first count was a charge of fraud and a demand for the recovery of the loss and damage sustained by reason of the fraud. There was no averment by plaintiff of a purpose to disaffirm or rescind the contract, no tender of that which had been received under it, nor of the taking of the steps essential to a rescission. The averments of the petition all tended to show that plaintiff had elected to retain what he had received under the contract which had been executed and to sue for the damages sustained by reason of the deceit and fraud of the defendant. On the former appeal the first count was regarded and treated as a cause of action for damages and not of rescission. (Bushey v. Coffman, supra.) When the pleader reached the second count he made it very plain that plaintiff was asking for a rescission and restoration. The instruction complained of did not interpret the pleading and define the issue submitted, but left the jury to determine what remedy had been chosen by plaintiff and presented in the petition.

In instruction 31 the trial court referred in general terms to the several courses open to one who has been induced to enter into a contract through the fraud of another. First, that he may elect to rescind and be restored to his former position; second, that he may affirm the contract retain the property received under it, and recover his damages for any loss sustained because of the fraud; and third, he may waive the fraud and take such action as will estop him from asserting fraud and claiming a recovery on account of it. The instruction proceeds--

"If plaintiff desired to rescind the contract between himself and the defendant, and recover the consideration paid by him for the bank stock then it was obligatory upon him, the plaintiff, to return or offer to return the bank stock to the defendant...