Hickman v. Sawyer

• Decision Date: 26 May 1914
• Docket Number: 1190.
• Citation: 216 F. 281
• Parties: HICKMAN v. SAWYER et al.
• Court: U.S. Court of Appeals — Fourth Circuit

216 F. 281

HICKMAN v. SAWYER et al.

No. 1190.

United States Court of Appeals, Fourth Circuit.

May 26, 1914

De Witt C. Wilson, of La Fayette, Ind., and I. M. Meekins, of Elizabeth City, N.C. (Wilson & Quinn, of La Fayette, Ind., on the brief), for plaintiff in error.

W. M Bond, of Edenton, N.C., and E. F. Aydlett, of Elizabeth City N.C., for defendants in error.

Before PRITCHARD and WOODS, Circuit Judges, and ROSE, District Judge.

WOODS Circuit Judge.

The controversy arises out of a contract made April 14, 1908, for the sale of a stallion by J. Crouch & Son, an Indiana partnership, to the defendants, citizens of North Carolina under the name of the Columbia German Coach Horse Company. The contract of sale contained a guaranty on the part of the sellers that the stallion would be a 'satisfactory sure breeder' provided he should be kept in sound and healthy condition and should have proper care and exercise; and it was stipulated by the sellers:

'If the said stallion should fail to be a satisfactory sure breeder with the above treatment, then same shall be returned to us at La Fayette, Indiana, in as sound and healthy condition as he now is and in as good flesh by June 1, 1909, and we agree thereupon to take the said stallion back and to give the said company another stallion in his place.'

The contract on the part of the buyers recited the necessity of improving the stock of the country, and contained an agreement by the defendants as subscribers to the association to take shares aggregating $3,000, each of the par value of $300, and when all the shares were sold to give their three joint notes to J. Crouch & Son for $1,000 each, payable November 1, 1909, November 1, 1910, and November 1, 1911, with interest at the rate of 6 per cent. The notes were given April 13, 1908; and after they fell due this action on them was brought December 12, 1911, by the plaintiff, Hickman, claiming to be an indorsee and holder for value without notice. After the testimony was taken the District Judge submitted to the jury the following issues, to which the jury responded as indicated:

'1. Was the execution by D. C. Sawyer, L. S. Spruill, J. G. Brickhouse, W. M. Brickhouse, Charles Roughton, H. H. Phelps, W. R. Spruill, H. T. Davenport, and J. W. Cahoon of the notes sued upon procured by fraud and misrepresentation as alleged? Ans. Yes.

'2. Was the execution by defendants J. R. Parrisher, Benjamin Spruill, W. F. Owens, W. C. Alexander, and E. P. Cahoon of the notes sued upon procured by fraud and misrepresentation as alleged? Ans. Yes.

'3. Was the Merchants' National Bank an innocent purchaser before maturity for value and without notice of Exhibits A and B? Ans. Yes.

'4. Is the plaintiff, Hickman, a purchaser for value of the notes marked Exhibits A and B? Ans. No.

'5. Was plaintiff, Hickman, an innocent purchaser for value and without notice of the note marked Exhibit C? Ans. No.

'6. What amount, if anything, is due the plaintiff by defendants on the notes sued on? Ans. . . . '

Upon these findings the District Judge entered judgment for the defendants. It is unnecessary to set out the assignments of error in detail, as the case turns on the question whether the District Judge should have directed a verdict for the plaintiff instead of submitting issues to the jury, and whether he should have given judgment for the plaintiff on the findings of the jury, or should have granted a new trial.

1. Laying aside for the moment the claim of the plaintiff that he is a purchaser for value without notice, we consider whether there was any evidence of fraud upon the part of J. Crouch & Son in the contract of sale and the taking of the notes. Some of the defendants testified that McLean, who was the agent of Crouch & Son in the transaction, read the notes to them as if each maker would be liable only to the extent of the par value of the stock subscribed by him, and also indicated in the reading that Combs, who was a horse dealer in Columbia, had signed the notes and become liable along with the others; and Spruill, one of the defendants, testified that he could not write nor read writing, though he signed the notes with his own hand. There was no evidence that McLean knew that Spruill could not read writing, nor does it appear that the notes and contract were written and not printed. The defendants had abundant opportunity to examine the papers, and it was their duty to do so. A court cannot grant relief to one who in the full possession of all his faculties signs a written or printed contract, on the ground that he carelessly failed to even read the paper or make any examination of it, depending upon the statements of someone else as to its contents.

It is true that relief has been granted when persons exercising reasonable diligence have been mislead into signing a paper which had been cunningly substituted for the contract they intended to sign. But this is not a case of that sort. Having every opportunity of seeing and reading the papers, the defendants signed without reading them, and they cannot now be allowed to say by parol that they intended to sign something different, and thus impeach their written contract. Upton v. Tribilcock, 91 U.S. 45, 23 L.Ed. 203; Dellinger v. Gillespie, 118 N.C. 737, 24 S.E. 538; Boyden v. Clarke, 109 N.C. 669, 14 S.E. 52.

2. If the proof of the failure of the horse to come up to the guaranty as a satisfactory and sure breeder stood alone, it would not be sufficient to protect the defendants against their contract of purchase, because they specially agreed that if the guaranty should fail they would take another stallion from the sellers in place of the one purchased. And it appears that after discovery of the failure of the guaranty they elected to keep the horse without claiming another, and finally sold him for their own benefit. It is well established that, when the parties agree upon the remedy which one of them is to have in case of a breach of the contract by the other, that remedy is exclusive. This rule was applied in the following cases similar to this: Walters v. Akers (Ky.) 101 S.W. 1179; Oltmanns v. Poland (Tex. Civ. App.) 142 S.W. 653; Nave v. Powell, 52 Ind.App. 496, 96 N.E. 395; Crouch v. Leake (Ark.) 157 S.W. 390; Sturtevant Mill Co. v. Kingland Brick Co., 74 N.J.Law, 492, 70 A. 732; Bomberger, Wright & Co. v. Griener, 18 Iowa, 477; Chas. Hackley Co. v. Kennedy, 152 N.C. 196, 67 S.E. 488; Ancrum v. Camden Water, etc., Co., 82 S.C. 284, 64 S.E. 151, 21 L.R.A. (N.S.) 1029.

It is true that the remedy in this case is inadequate almost to the point of absurdity, since there was no stipulation whatever as to the quality of the other stallion that was to be given in exchange. But a court cannot on the ground of improvidence substitute other remedies for that which the party himself has contracted to accept.

3. But the failure of consideration does not stand alone. The deception in the procurement of the contract which we now point out, and which was relied on by defendants, not only vitiates the contract in its inception, but projects itself into the entire transaction, attaching itself to the failure of consideration and magnifying it into evidence of fraud. The evidence is clear and undisputed that the defendants went into the purchase because of their faith in Combs as a dealer in horses and their reliance on the representation of McLean, the agent of the seller, and of Combs himself that he was joining in the purchase and incurring a common pecuniary risk. In order to deceive the defendants into the belief that Combs had faith in the enterprise and had joined in the venture, and that he would be stimulated to make the business a success, McLean and Combs not only led the defendants into that belief by false oral statements, but, to make sure of the deception, resorted to this artful trick: Combs gave his check for $300 as if in payment of his share of the purchase money of the horse; McLean had the check cashed and then paid the money back to Combs after entering a credit of $100 on each note as if Combs had made that payment on it. Fraud has assumed no more odious form than this. The bargain between McLean and Combs was not only corrupt, but was a breach of trust on the part of Combs participated in by the sellers of the horse. Combs had entered into a partnership with the defendants, thus assuming to them a trust relation which required on his part the utmost good faith and disinterested effort for the common good; and he was corrupted by the agent proposing to sell to the association to act in the sellers' interest by inducing the association to make the purchase. For such a nefarious bargain between the seller and one pretending to act in association with the buyers, the buyers may avoid the entire contract. The authorities on this subject are so numerous that only a few are cited. Empire State Ins. Co. v. American Central Ins. Co., 138 N.Y. 446, 34 N.E. 200; Truslow v. Parkersburg, etc., R. Co., 61 W.Va. 628, 57 S.E. 51; De Buesche v. Alt, L.R. 8 Chan. Div. 315; Emmons v. Alvord, 177 Mass. 466, 59 N.E. 126; 31 Cyc. 1572.

It is true that if the buyer would rescind he must return the article purchased as soon as the fraud is discovered, but if the article has been disposed of, or for any other reason the return has become impossible before discovery of the fraud, the buyer may sue for damages for the imposition or may set them up as a counterclaim in an action brought by the seller for the purchase money. The usual measure of damages in such case would be the difference between the real value of the article purchased and the purchase price. May v. Loomis, 140 N.C. 350, 52 S.E. 728; 35 Cyc. 149.

In this case there was no proof whatever that the defendants knew of the...