Fairbanks Morse & Co. v. Dees

• Decision Date: 27 June 1929
• Docket Number: 1 Div. 557.
• Court: Alabama Supreme Court
• Parties: FAIRBANKS MORSE & CO. v. DEES ET AL.

126 So. 624

220 Ala. 41

FAIRBANKS MORSE & CO. v. DEES ET AL.

1 Div. 557.

Supreme Court of Alabama

June 27, 1929

Certiorari to Court of Appeals.

Action for deceit, by C. H. Dees and another against Fairbanks Morse & Co. Judgment for plaintiffs was reversed by the Court of Appeals (126 So. 622), and plaintiffs bring certiorari. Writ awarded.

See Fairbanks Morse & Co. v. Dees (1 Div. 583), 126 So 621.

R. P Roach, of Mobile, for appellants.

Smiths Young & Johnston, of Mobile, for appellee.

FOSTER J.

A defrauded purchaser must elect whether he will affirm the fraudulent transaction or rescind it. The right to sue for deceit is based upon the assumption that the contract is to stand (Williston on Sales, § 648; Coleman v. Night Commander Lighting Co., 218 Ala. 196, 118 So. 377; Thompson v. Fourth Nat. Bank, 214 Ala. 452, 108 So 69), so that the purchaser need not restore the property to the seller as a condition to its prosecution (2 Williston on Sales, § 646; Maxwell v. Sherman, 172 Ala. 626, 55 So. 520; Byars v. Sanders, 215 Ala. 561, 112 So. 127; Kilby L. & M. Works v. Lacey, 12 Ala. App. 464, 67 So. 754).

The view is stated on high authority that, though the contract is executory, the purchaser with knowledge of the fraud, may affirm the contract and perform it without losing his right to recover damages for deceit in the sale. 2 Williston on Sales, 646, p. 1620; 27 R. C. L. 381, § 83. This principle, however, is subject to certain qualifications which are stated in the following Alabama cases: Gilmer v. Ware, 19 Ala. 252; McGar v. Williams, 26 Ala. 469, 62 Am. Dec. 739; Thweatt v. McLeod, 56 Ala. 375; Pollock v. Pope, 209 Ala. 195, 95 So. 894.

An examination of the opinion in Gilmer v. Ware, supra, will disclose that the result follows from the fact that the property (in controversy) was bid off at auction sale, the price was not paid, the purchaser was informed of the fraud, and with this knowledge elected to proceed with the purchase, and then paid the purchase money. It is said: "Under such circumstances he cannot be said to have been defrauded, since his conduct amounts to a distinct admission that he was not deceived, and the circumstances of the alleged deceit or fraud become incorporated into, and formed part of his purchase, which he concludes or consummates with a knowledge of them."

In the case of McGar v. Williams, supra, written by Chilton, C.J., who was also the author of the opinion in Gilmer v. Ware, supra (but the former opinion does not seem to have been cited in the later cases on the subject), in referring to Gilmer v. Ware, supra, the opinion states:

"Here, the fraud (if any) and injury were consummated before the payment; and to hold the payment to be a bar, would give it the effect of releasing a right of action which had already accrued. In that case, however, the contract, so far as the purchaser was concerned, was inchoate; and being fully advised of the fraudulent circumstances, before he completed the contract by complying with his bid, the purchaser could not have been deceived, but elected to take the property as it was by paying for it; thus, as it were, incorporating the alleged fraudulent circumstances into the contract. The payment in this case, if made with a full knowledge of the defects or leaks in the roof, is, at most, but evidence to be weighed by the jury, tending to show that no false or fraudulent representation was made to the plaintiff's injury. It cannot operate as an estoppel in pais, nor as a release or waiver of an existing cause of action. Huckabee v. Albritton, 10 Ala. 657."

This case is quoted in an annotation in L. R. A. 1918A, 112, where the author states the same conclusion.

In the case of Thweatt v. McLeod, supra, the purchaser with full knowledge of the fraud, and before payment of the purchase money, made a new contract with the vendor, whereby there was an extension of time, and a change made as to the purchase price, and the court said: "In this transaction, the appellant must have intended an affirmance of the original contract, or he intended to lull the vendor into security-into reliance on it, and into the belief that he designed its performance; thereby obtaining the benefit of an extension of the time of payment, while secretly intending after he had realized the benefit, to impeach the contract for a misrepresentation of which he had abstained from complaining. To suppose the last was his intention, is the imputation to him of an intentional deception, more offensive...