Citizens' St. R. Co. v. Horton

• Decision Date: 02 November 1897
• Citation: 48 N.E. 22,18 Ind.App. 335
• Parties: CITIZENS' ST. R. CO. v. HORTON.
• Court: Indiana Appellate Court

18 Ind.App. 335

48 N.E. 22

CITIZENS' ST. R. CO.

v.HORTON.

Appellate Court of Indiana.

Nov. 2, 1897.

Appeal from superior court, Marion county; P. W. Bartholomew, Judge.

Action by Lula May Horton against the Citizens' Street-Railroad Company. From a judgment in favor of plaintiff, defendant appeals. Reversed.

Miller, Winter & Elam, Will H. Latta, and A. L. Mason, for appellant. F. W. Cady, Bailey & Myrick, and John M. Bailey, for appellee.

COMSTOCK, J.

This action was brought to recover damages for personal injuries to appellee, caused by the alleged negligence of appellant as a common carrier. The complaint is in two paragraphs, filed at different dates. Before the second paragraph was filed, defendant filed a dismissal of the case signed by the appellee. Upon motion of appellee this written dismissal was stricken from the files, to which ruling appellant excepted. The two paragraphs differ chiefly in that the second states more in detail the facts than the first. A demurrer to each paragraph was overruled, and to each the appellant filed an answer in two paragraphs. The first is a general denial. The second alleges that after the filing of this suit on the 6th day of March, 1895, said appellant and said appellee entered into a contract of settlement and compromise of all the matters in dispute in this cause, and that upon payment to the said appellee of the sum of $150, paid at the time mentioned, the said appellee executed and delivered to this appellant her certain release, quietus, and quitclaim, a copy of which was hereto attached, and marked “Exhibit A,” wherefore defendant prayed that the cause be dismissed, and for all other proper relief. Appellee replied to the second paragraph of answer, admitting that she executed the release or receipt attached to the second paragraph of defendant's answer, and marked “Exhibit A,” but that she was induced to execute the same by reason of false and fraudulent representations of appellant's agents at a time when she was sick under the care of a physician, and under the influence of opiates administered to her by her physician for the purpose of alleviating the pain and suffering of plaintiff, and while she was wholly unfit and wholly incompetent to transact any business of any kind or character, which condition was known to the said agents of appellant. The answer sets out the representations which she claims were false, and were made by said agents. A demurrer to the reply was overruled, and exception taken. The trial resulted in a judgment for appellee. The court overruled appellant's and sustained appellee's motion for judgment, and rendered judgment in her favor for $900. The appellant filed a motion for a new trial, which was overruled. The assignment of errors challenges the rulings of the court upon the demurrers, upon the motion for judgment, upon the motion for a new trial, and upon the motion to strike the dismissal of plaintiff from the files.

The controlling question on this appeal is: “Was it necessary for appellee to pay or tender back to appellant the sum of money ($150) paid to her by appellant as the consideration for the alleged settlement of the action, before she could proceed any further?” Appellant contends for the affirmative of this proposition, and that the demurrer to the reply should have been sustained for the reason that it does not allege an avoidance of the contract of settlement set up in the second paragraph of answer. Appellee contends that the tender back or repayment of the money paid as the consideration of the settlement was not necessary before proceeding with the action. It is the law in Indiana that defective contracts are either void or voidable. Contracts made with persons after they have been adjudged insane are absolutely void. The adjudication has no less force before than after the appointment of a guardian. Redden v. Baker, 86 Ind. 191. Contracts with infants, weak-minded people, married women under certain circumstances; contracts induced by fraud, mistake, misrepresentations, and deceit,-are voidable only. They may be avoided by the maker or his representative. Ashmead v. Reynolds, 127 Ind. 441, 26 N. E. 80. A contract entered into under the conditions set up in the reply has been declared, under numerous decisions of the supreme court of this state, to be voidable. See vide, Keller v. Insurance Co., 28 Ind. 170;Boyer v. Berryman, 123 Ind. 451, 24 N. E. 249;Peck v. Vinson, 124 Ind. 121, 24 N. E. 726;McMillan v. William Deering & Co., 139 Ind. 70, 38 N. E. 398, and decisions therein cited. When a party has entered into a voidable contract, and wishes to be restored to the rights he possessed before the contract was executed, he must promptly disaffirm the contract. 2 Pom. Eq. Jur. § 897, upon the subject of disaffirmance, reads as follows: “All these considerations as to the nature of the misrepresentations require great punctuality and promptness of action by the deceived party upon his discovery of the fraud. The person who has been misled is required, as soon as he learns the truth, with all reasonable diligence to disaffirm the contract or abandon the transaction, and give the other party an opportunity of rescinding it, and of restoring both of them to their original position. He is not allowed to go on and derive all possible benefits from the transaction, and then claim to be relieved from his own obligations by a rescission or a refusal to perform on his own part. If, after discovering the untruth of the representations, he conducts himself with reference to the transaction as though it were still subsisting and binding, he thereby waives all benefit and relief from misrepresentations.” These principles have been applied by the supreme court of this state to voidable contracts. Parks v. Railroad Co., 23 Ind. 567;Patten v. Stewart, 24 Ind. 332;Hanna v. Shields, 34 Ind. 84;De Ford v. Urbain, 48 Ind. 219.

In Heaton v. Knowlton, 53 Ind. 357, a promissory note had been procured by false and fraudulent representations. It was held that the party defrauded could not rely on the fraud as a defense in an action on the note if, as the consideration of the note, he received anything of value which he did not restore or offer to restore. The court, speaking by Buskirk, J., said: “The conclusion at which we have arrived renders it unnecessary for us to decide whether the representations found by the jury to have been made amounted to such a fraud as would vitiate the contract. Conceding that the contract was procured by false and fraudulent representations, the party defrauded cannot rely upon such fraud as a defense unless he has rescinded the contract, and offered to restore whatever of value he has received. A party cannot repudiate a contract on the ground of fraud, and at the same time retain the benefits derived from it, but must, when he discovers the fraud, restore or offer to restore to the other party what he received; and, failing to do this, he affirms the contract. When the consideration received is of any value to either party, its return must be tendered before the party can sustain an action for rescission of the contract, or successfully defend an action based upon such contract. A party to a contract cannot treat it as good in part and void in part, but he must affirm it or avoid it as a whole; nor can a contract, either for mistake or fraud, be rescinded in part and affirmed in part, but must be rescinded in toto or not at all,”-citing Shaw v. Barnhart, 17 Ind. 183; Shepherd v. Fisher, Id. 229; McGuire v. Callahan, 19 Ind. 128; Johnson v. Houghton, Id. 359; Love v. Oldham, 22 Ind. 51;Cain v. Guthrie, 8 Blackf. 409;Fisher v. Wilson, 18 Ind. 133;Stewart v. Ludwick, 29 Ind. 230;Johnson v. Cookerly, 33 Ind. 151;Joest v. Williams, 42 Ind. 565. We think it may be regarded as settled in this state that a party claiming to be defrauded into the signing of a contract and agreement, and having received something of value for the execution of the alleged contract, cannot ignore the same, and proceed in the assertion of his original rights as if such contract had not been made, without disaffirming such contract, and substantially restoring or offering to restore the status quo. Mining Co. v. Casteel, 68 Ind. 476;Cates v. Bales, 78 Ind. 285;Johnson v. Culver, 116 Ind. 278, 19 N. E. 129;Insurance Co. v. Howard, 111 Ind. 544, 13 N. E. 103;Thompson v. Peck, 115 Ind. 512, 18 N. E. 16;Westhafer v. Patterson, 120 Ind. 459, 22 N. E. 414;Insurance Soc. v. Girton, 124 Ind. 217, 24 N. E. 984;Insurance Co. v. McRichards, 121 Ind. 121, 22 N. E. 875;Railway Co. v. Herr, 135 Ind. 591, 35 N. E. 556;Protective Union v. James, 8 Ind. App. 449, 35 N. E. 919. This principle applies equally to a case of contract made in settlement of contractual disputes and the adjustment of rights growing out of torts. There is no better reason why parties having a defense to an antecedent tort shall not make settlement of such defense than if such defense grew out of a contract. Nor is there any better reason why in the one case having made an agreement of settlement, and having received something of value in consideration for the same, either party should be permitted to repudiate the settlement and stand upon his antecedent rights without restoring the status quo in one case than in the other. A large proportion of controversies arise between individuals having a choice of actions either to waive the tort and sue in contract or sue in tort. In Railway Co. v. Herr, supra,-an action for a personal injury by appellee against appellant,-a contract of settlement had been made, and the court held a reply to an answer setting up such settlement, which failed to show a rescission and restoration of status quo, bad. While the word “fraud” is not used in the pleading, it was agreed that the alleged settlement was made and receipt procured from the appellee when he was non compos mentis, and when the appellant well knew that he was...