Gatling v. Newell
| Decision Date | 14 December 1857 |
| Citation | 9 Ind. 543 |
| Parties | Gatling v. Newell and Another |
| Court | Indiana Supreme Court |
From the Montgomery Circuit Court.
The judgment is reversed with costs. Cause remanded.
Oliver H. Smith and Jonathan A. Liston, for appellant. [3]
Joseph E. McDonald and Hugh O'Neal, for appellee. [4]
This was a suit under the new code of practice, by Newell and Beach against Gatling, to obtain the rescission of an executed written contract. An answer was filed, to which there was a reply. Evidence was heard, and judgment of rescission rendered. The evidence was all properly placed upon the record, and an appeal taken to this Court.
The case has been most elaborately argued, and a great many questions presented.
The first is one of parties. The written articles were all between Newell and Beach and Gatling. The evidence, however clearly discloses that another person, to-wit, William J. Peaslee, Esq., was interested with Newell and Beach, in the contract. This fact is insisted upon here, as a ground of reversing the judgment below. We do not see how it can be made available for that purpose. The statute is explicit on the subject. Sections 50, 54 and 63, of the practice act, provide for the addition of new parties, and the mode of making it. And they provide that, if the objection as to parties is not taken by pleading, it shall be deemed to be waived. 2 R. S. pp. 38, 39, 41. Sufficient of parties are before the Court to enable it to render a proper judgment.
Another question relates to the practice to be pursued by this Court in adjudicating the cause. Under the old system, the suit would have been upon the chancery side of the Court, and in reviewing it here, the Court would have weighed the evidence, and determined it upon its merits. But the statutory provisions regulating the new, consolidated system of practice, have erased almost all the the features of a chancery trial, and substituted those of a legal one, in which this Court accepts the verdict of the jury as generally conclusive upon the facts. The evidence upon the trial is now oral, does not necessarily go upon the record, and the trial is by jury. It would seem to have been the intention that all trials should be as at law. This Court has uniformly acted upon this construction of the statute, since the new code came into force. McVicker v. Pratt, 5 Ind. 450; Linn v. Barkey, 7 Ind. 69; Wright v. Field, 7 Ind. 376, and numerous other unreported cases [1]. We regard the question of practice as thus settled, and no longer open for discussion. It will, therefore, at once occur to counsel, that their very able argument here cannot have that influence in the decision touching the merits of the cause, that it might have had, had it been addressed to the jury below. It was here addressed to the facts.
Having disposed of these preliminary points, we are prepared to advance to those upon which the determination of the case must depend. The suit, as has been said, was to procure the rescission of an executed, written contract--a contract for the purchase and sale of the right to use and vend Gatling's Wheat Drill in certain territories. The ground of the suit, was alleged fraudulent representations, by which the contract was induced.
A contract may be rescinded for such cause. If, accompanying a contract, there be an express warranty, a party may have remedy for a breach thereof by suit upon the warranty. Cutler v. Cox, 2 Blackf. 178; Wynn v. Hiday, 2 Blackf. 123; House v. Fort, 4 Blackf. 293.
So, for false representations in a contract, or as to character for pecuniary responsibility, there may be an action of deceit; but in this action, a scienter must be averred and proved.
The party must have known, or had good reason to know, that the representations were false. Hopper v. Sisk, 1 Ind. 176; State Bank v. Hamilton, 2 Ind. 457; Stanley v. Norris, 4 Blackf. 353; Humphreys v. Comline, 8 Blackf. 516.
In a sale by sample, the articles sold must, on delivery, correspond with the sample, or they may be rejected. Chit. on Cont. 463.
And where the question in a suit is as to the terms of a contract, as to what the contract really is, which purports to be in writing, parol evidence of prior and contemporaneous statements is inadmissible.
But a contract may be rescinded for some false and fraudulent representations constituting the inducement to it, and this equally, whether the party making the representations knew them to be false or not. Smith v. Richards, 13 Pet. 26; Shaeffer v. Sleade, 7 Blackf. 178. And in a suit to procure such rescission, parol evidence of such prior and contemporaneous representations is admissible.
It is not, however, every erroneous representation that will entitle a party to such rescission. The representation must be as to a fact, or facts, and go to a material matter. It must be one on which the party to whom it is made has a right to, and does rely. If it be mere matter of opinion, or exaggerated, general representation of quality, capacity, or usefulness, or be as to a matter equally open to the knowledge of both parties, or be one not relied on, the representation, though untrue, will not vitiate the contract. Especially will such be the case, where the parties stand mentally upon equal footing, and in no fiduciary relation. The law will not relieve a man, thus circumstanced, for voluntarily neglecting to exercise common sense and judgment, if he has them. Foley v. Cowgill, 5 Blackf. 18; President, etc., of Connersville v. Wadleigh, 7 Blackf. 102; Port v. Williams, 6 Ind. 219; Humphreys v. Comline, supra; Morgan v. Snapp, 7 Ind. 537; May v. Johnson, 3 Ind. 449; Seeright v. Fletcher, 6 Blackf. 380.
Examples of the character of the representations which will entitle, they being false, to a rescission of a contract, are given in Smith v. Richards, and Shaeffer v. Sleade, supra. And see Newell v. Gatling, 7 Ind. 147; McCormick v. Malin, 5 Blackf. 509; Marshall v. Billingsly, 7 Ind. 250; Peter v. Wright, 9 Ind. 183.
The next question presenting itself is, were such representations made in this case?
That they were alleged in the complaint, has already been decided by this court. Newell v. Gatling, supra. And that they were proved, relied upon, and not waived, the jury, or Court acting as such, that tried the case below, has determined. Whether that determination was such an one as this Court would come to on the evidence, it is not necessary that we should say. It is enough that there is some evidence tending to its justification. Cahill v. Vanlaningham, 7 Ind. 540; McVicker v. Pratt, supra; Nagle v. Hornberger, 6 Ind. 69; Rapp v. Grayson, 2 Blackf. 130 [2].
But we are here met with the objection that the contract could not be rescinded on account of lapse of time, and because the parties could not be placed in statu quo.
It is well settled, that a party who would rescind a contract on the ground of fraud, must offer to do so in a reasonable time after the fraud is discovered. Cain v. Guthrie, 8 Blackf. 409, and cases cited. See Dart v. McQuilty, 6 Ind. 391. But who is to determine the question of reasonable time? Is it one of law, or fact? Where there are no facts involved but the simple one of the length of time elapsed, it is a question of law. But where disputed facts, involving questions of excuse, of time of discovery of the fraud, etc., as in this case, are to be passed upon, the question, like that of due diligence in the prosecution upon an assigned promissory note, is a mixed one of law and fact, and is for the jury. Holbrook v. Burt, 22 Pick. 546; Kingsley v. Wallis, 14 Me. 57; Kelsey v. Ross, 6 Blackf. 536. It has here been passed upon by them, and we cannot disturb the finding.
But on a rescission, it is the general rule that the parties must be placed in statu quo, which is translated to mean, in the identical situation in which they were on entering into the contract. Peters v. Gooch, 4 Blackf. 515. To the same effect, see Rinker v. Sharp, 5 Blackf. 185; Chance v. Board, etc., 5 Blackf. 441; McCormick v. Malin supra, on p. 533; Barber v. Lyon, 8 Blackf. 215; Osborn v. Dodd, 8 Blackf. 467; Snyder v. Norris, 6 Blackf. 33; Buell v. Tate, 7 Blackf. 55; Shaeffer v. Sleade, supra; Brumfield v. Palmer, 7 Blackf. 227; Calhoun v. Davis, 2 Ind. 532 Puett v. State Bank, 4 Ind. 45; Cooley v. Harper, 4 Ind. 454; Reed v. Rudman, 5 Ind. 409; Warren v. Carey, 5 Ind. 319; Wallace v. McVey, 6 Ind. 300. In other words, the contract must be rescinded in toto, if at all. It cannot be rescinded in part, and continued in existence in part. It cannot be rescinded for the purpose of reclaiming what was given upon it, and treated as in force to recover damages for its breach. If it is rescinded, it is as if it had never existed. And though its rescission cannot leave the parties, in every respect, as they were at the making of the contract, yet as to it, they may be so--that is, as not being contracting parties, nor under any liabilities on account of having been such. See Withers v. Greene, 9 How. 213, opinion of Mr. Justice Nelson, in app. p. 661; Junkins v. Simpson, 14 Me. 364: Rinker v. Sharp, 5 Blackf. 185.
But the fact that the parties cannot be put precisely in statu quo as to the subject-matter of the contract, will not preclude a decree for the rescission of a contract. If it would, an executed contract never could be rescinded by the decree of a Court; for the parties never could be thus placed--
1. As to time.
The party who has been defrauded by false representations, is not bound to offer to rescind till a reasonable time after he discovers the fraud. All the authorities hold that he may do so then. But, meanwhile, time has not stood still--has not waited--and on the rescission of a...
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