Fields v. Brown
| Citation | 76 S.E. 8,160 N.C. 295 |
| Parties | FIELDS v. BROWN et al. |
| Decision Date | 23 October 1912 |
| Court | United States State Supreme Court of North Carolina |
Appeal from Superior Court, Moore County; Justice, Judge.
Action by W. M. Fields against W. G. Brown and another. From a judgment for defendants, plaintiff appeals. Reversed.
Where a party to a contract induced by the fraud of the other party is sued on the contract, he may set up the fraud as a defense, or as a basis of a claim for damages by way of recoupment or counterclaim.
McIver & Williams, of Sanford, and W. R. Clegg, of Carthage, for appellant.
G. W McNeill and U. L. Spence, both of Carthage, for appellees.
Plaintiff brought this action to recover possession of a bay mare mule named Nell, which he exchanged with the defendant for a bay mare, and for damages for deceit and false warranty. It was alleged in the complaint: That defendant Brown, who was the owner of the bay mare, at the time of the exchange, falsely represented to plaintiff that the mare was sound, in good condition, and possessed of fine qualities, and particularly that she was (1) sound of body and limb in every particular (2) was without defect in every respect; (3) that she would work anywhere she was hitched, to wagon, plow, buggy, or elsewhere; (4) that she was gentle and safe for ladies and children to drive; (5) that she was an all-around good horse, suitable in all particulars for the needs of the plaintiff on the farm. That the representations were false, intended to deceive, and did deceive, the plaintiff, and induced him, with other promissory representations, to make the trade. There was also a count for false warranty, upon the same grounds.
Defendant C. C. Graves demurred, because there were no allegations as to him in the complaint, and his name was not mentioned, as he avers, except in the title of the case. The demurrer was sustained, and we think erroneously so. There was an allegation that Graves and Brown were in joint possession of the mule, and, while this is denied in the answer, it must be taken as true upon demurrer. If Graves was in possession with Brown, plaintiff properly joined him in this action for the recovery of the property. Haughton v. Newberry, 69 N.C. 456; Webb v. Taylor, 80 N.C. 305; Bowen v. King, 146 N.C. 385, 59 S.E. 1044. Besides, Graves replevied the property with Brown, both giving bond with Mr. George W. McNeill as surety thereon, and taking the same from plaintiff's possession. This is some evidence, not only of Graves' possession, but of his claim to the property, and he will not now be heard under these facts to assert that he is not a proper party.
The plaintiff has elected, as he had the right to do, to sue for the mule, upon the ground that the fraud avoided the contract of exchange, and therefore that he is entitled to be restored to its possession and to have judgment for any resulting or consequential damages he has sustained by the deceit and false warranty. Pritchard v. Smith (at this term) 75 S.E. 803.
A person who has been fraudulently induced to enter into a contract has the choice of several remedies. He may repudiate the contract, and, tendering back what he has received under it, may recover what he has parted with or its value; or he may affirm the contract, keeping whatever property or advantage he has derived under it and may recover in an action of deceit the damages caused by the fraud. While his affirmance may preclude him from rescinding the contract, it does not prevent his maintaining an action of deceit.
Moreover, if sued upon the contract, he may set up the fraud as a defense, or as a basis of a claim for damages by way of recoupment or counterclaim.
And in a proper case the defrauded party may be entitled to the equitable remedies of rescission and cancellation or reformation. As a general rule, however, the defrauded party cannot both rescind and maintain an action of deceit. If he elects to rescind the contract, he may recover what he has parted with under it, but cannot recover damages for the fraud.
The latter rule as applied to a perfect rescission of the contract, is based not alone upon the principle that the party has elected his remedy, but also on the fact that he has sustained no damage. 20 Cyc. 87, 88, and 89, and notes. This rule of course, is bottomed upon the theory that he has suffered no loss that will not be fully repaired by the return to him of what he has given up. If, however, a perfect rescission does not place the injured party in statu quo, as where he has suffered damage which the rescission and the remedies based thereon cannot repair, there is no principle of law which prevents him from thereafter maintaining an action of deceit, and in such cases a recovery has uniformly been allowed. 20 Cyc. p. 89 and notes, citing Faris v. Lewis, 2 B. Mon. (Ky.) 375; Lenox v. Fuller, 39 Mich. 268; Warren v. Cole, 15 Mich. 265; 1 Bigelow on Fraud, 67. So an action for deceit in the making of false representations inducing plaintiff to sell goods to defendant has been held not necessarily inconsistent with a previous action of replevin to recover the goods. Lenox v. Fuller, 39 Mich. 268; Welch v. Seligman, 72 Hun, 138, 25 N.Y.S. 363. See, also, Dean v. Yates, 22 Ohio St. 388; 20 Cyc. p. 89, note. Since the defrauded party to the contract has the right to affirm it, retain its benefits, and also recover damages for the fraud, he may sue to enforce his rights under the contract, and at the same time maintain an action for deceit.
Where a person by the practice of fraud obtains money from another under such circumstances that he has no right to retain it, the defrauded party may waive the tort and recover the money in an action for money had and received, upon the theory of an implied promise to pay it.
A return or an offer to return what plaintiff has received under the contract induced by the fraud is not a condition precedent to his maintaining an action of deceit (if he does not disaffirm), since he is entitled to the benefit of his contract plus the damages caused by the fraud. 20 Cyc. pp. 90 and 91, and notes. See, also, May v. Loomis, 140 N.C. 350, 52 S.E. 728. The demurrer should have been overruled. The court, upon the evidence, directed a judgment of nonsuit against the plaintiff, under the statute, as to the deceit, upon the ground, as we were told at the hearing that there was no proof of any scienter. An examination of the testimony convinces us that there was evidence of the fraud and the scienter, and of every other element required to make the fraud actionable. The case in this respect is not unlike Whitmire v. Heath, 155 N.C. 304, 71 S.E. 313; Robertson v. Halton, 156 N.C. 215, 72 S.E. 316, 37 L. R. A. (N. S.) 298; Hodges v. Smith, 158 N.C. 256, 73 S.E. 807, and same case at this term, 75 S.E. 726. Upon the general subject of what is sufficient to constitute actionable fraud and deceit, see, also, Unitype Co. v. Ashcraft, 155 N.C. 63, 71 S.E. 61, Cash Register Co. v. Townsend, 137 N.C. 652, 50 S.E....
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