I.L. Corse & Company v. Minnesota Grain Company
| Decision Date | 10 March 1905 |
| Docket Number | 14,150 - (157) |
| Citation | 102 N.W. 728,94 Minn. 331 |
| Parties | I.L. CORSE & COMPANY v. MINNESOTA GRAIN COMPANY and Others |
| Court | Minnesota Supreme Court |
Action in the district court for Hennepin county against defendants Minnesota Grain Company, Nils O. Werner and Carl A. Werner to rescind on the ground of fraud certain contracts and agreements entered into between plaintiff and defendant grain company, and to recover from defendants the sum of $10,000 paid by plaintiff under such contracts. Thereafter, pursuant to an order of court, plaintiff elected to proceed with the case as an action at law for the recovery of $10,000 with interest from September 8, 1902. The case was tried before Elliott, J., and a jury, which rendered a verdict in favor of plaintiff against defendant grain company for the sum demanded. From an order denying a motion for judgment notwithstanding the verdict or for a new trial, defendant Minnesota Grain Company appealed. Affirmed.
False Representations.
Action to recover the consideration paid by the plaintiff to the defendant on a contract which it was induced to make by reason of the alleged false representations of the defendant.
Remedies of Person Deceived.
A party who has been induced to enter into a contract by the false representations of another may affirm the contract and sue for the damages sustained, or sue in equity for a rescission of the contract by the court, or rescind by his own act and sue for what he parted with by reason of the fraud.
Rescission.
When he seeks to rescind by his own act, he must restore or offer to restore to the other party whatever of value he received from him by virtue of the contract. In such case it is sufficient for the defrauded party to make a fair offer to return what he received, and demand what he parted with; and, if his offer and demand be refused, a strict and technical tender is not essential, but it is sufficient if proof of such offer and demand be made on the trial, with restoration in such practicable way as the court may direct.
Evidence.
Rule applied, and evidence held sufficient to sustain a finding of the jury to the effect that the alleged representations were made and relied upon; that the plaintiff offered to restore to the defendant what it had received by the contract, and to place the defendant in statu quo; and, further, that the plaintiff did not affirm the contract, but rescinded it.
Expert Witness.
The qualification of a witness to testify as an expert is a question largely within the discretion of the trial court. The discretion was not abused in this case.
Charge to Jury.
The instructions of the trial court to the jury, taken as a whole, were free from reversible error.
Interest.
Where a party receives the money of another by mistake, without fraud, interest does not run upon it until he is put in default by a demand; but, if he obtains the money by his own fraud, he is chargeable with interest from the time of obtaining it.
John Lind & A. Ueland and Cohen, Atwater & Shaw, for appellant.
This action, being for the recovery of the consideration paid by plaintiff, cannot be maintained, because plaintiff has not complied with the conditions precedent to such an action. Gould v. Cayuga, 86 N.Y. 75, 84; Vail v. Reynolds, 118 N.Y. 297; Gifford v. Carvill, 29 Cal. 589; Luddington v. Patton, 111 Wis. 208; Bostwick v. Mutual, 116 Wis. 392; 1 Beach, Eq. Jur. § 67; Knappen v. Freeman, 47 Minn. 491; Nelson v. Carlson, 54 Minn. 90. In an action at law proceeding on a previous rescission, an actual profert of the money or things to be returned is essential as a condition precedent to the cause of action. Buchenau v. Horney, 12 Ill. 336; Holmes v. Holmes, 12 Barb, 137, 144; Pearsoll v. Chapin, 44 Pa. St. 9; Beetem v. Burkholder, 69 Pa. St. 249; Tisdale v. Buckmore, 33 Me. 461, 463; Wilbur v. Flood, 16 Mich. 40, 45; Byard v. Holms, 33 N.J.L. 119; Bostwick v. Mutual, supra. Plaintiff failed to proffer before suit either a reassignment of the mortgages and other securities or a return of the other property and rights received from the defendant. Hunt, Tend. § 234; Pinney v. Jorgenson, 27 Minn. 26; Deering Harvester Co. v. Hamilton, 80 Minn. 162. The notice does not offer a reconveyance, but simply a "return" of the specified securities and other documents. This is not a rescission. Ahrens v. Adler, 33 Cal. 608; Jeffers v. Forbes, 28 Kan. 174. Defendant's answer denying the tender and the offer alleged in the complaint did not waive the performance by plaintiff of the conditions precedent to the action. Plano Mnfg. Co. v. Northern Pac. Ele. Co., 51 Minn. 167; Jumiska v. Andrews, 87 Minn. 515; Luddington v. Patton, supra; Peoples v. Crosby, 57 Neb. 282; Parr v. Johnson, 37 Minn. 457; Dunn v. Hunt, 63 Minn. 484; La Plant v. Firemen's Ins. Co., 68 Minn. 82.
Plaintiff did not offer to put the defendant in statu quo and was in fact unable to do so except in a court of equity. That it was not entitled to interest is clear. Interest by way of damages is allowed only on account of some default. Schrepfer v. Rockford Ins. Co., 77 Minn. 291.
Plaintiff affirmed the contract by its conduct. Parsons v. McKinley, 56 Minn. 464; Grymes v. Sanders, 93 U.S. 55.
The alleged representations gave the plaintiff no right to rescind. To make a contract voidable, the misrepresentation must, of course, be acted upon by the party to whom it is made. 2 Pomeroy, Eq. Jur. § 893. There is nothing in the record to support a claim that Carl A. Werner had any authority, real or apparent, as respects the disposition of the account and securities in question. Browning v. Hinkle, 48 Minn. 544; Whitney v. Wagener, 84 Minn. 211.
There was error in permitting the jury to find for the plaintiff on Hogan's misrepresentations, because in fact there was no conspiracy and no authority on his part to make any representations. Nicolay v. Mallery, 62 Minn. 119.
There was error in permitting the jury to find for plaintiff on account of the alleged representations made by Carl Werner, because there was no conspiracy and no authority on his part, and because if this were not so, the charge is in the disjunctive at several points, permitting the jury to find a verdict for the plaintiff if they believed that Carl Werner had made even a trivial and nonactionable statement. Browning v. Hinkle, supra; Whitney v. Wagener, supra; Cook, Stockh. § 726.
There was error in permitting a verdict for interest from September 8, 1902, because no cause of action had then accrued, and defendant was not in default. Schrepfer v. Rockford Ins. Co., supra.
W. S. Dwinnell and V. J. Welch, for respondent.
Action to recover the sum of $10,000 paid by the plaintiff to the defendant for an assignment of an account for that amount due by a third party to the defendant. The complaint alleged in effect that September 8, 1902, the plaintiff was induced by the false representations of the defendant, upon which it relied, to purchase an account, with the securities collateral thereto, which the defendant had against Annie G. Hogan, and to pay the defendant therefor the sum of $10,000, and to take assignments and transfers of the account and the collateral securities from the defendant; that the representations which related to the solvency of the debtor and the value of the securities were untrue, to the knowledge of the defendant; and, further, that the plaintiff had no knowledge of the falsity of such representations until shortly before the commencement of this action, when it duly offered and tendered to the defendant the return of the account and securities, and demanded the repayment of the consideration given therefor. The complaint demanded judgment that, upon the delivery to the defendant of the account and securities, the contract between the parties be rescinded, and that the plaintiff recover the sum paid to the defendant, with interest.
The answer denied all of the allegations of fraud in the complaint, and those relating to the offer to return the account and securities, and alleged, in effect, that the plaintiff purchased the account and securities on its own investigations as to the solvency of the debtor and the value of the securities; that it affirmed the contract of sale before the commencement of this action. The answer alleged other facts not here necessary to be specifically referred to. The reply confessed and avoided or denied the allegations of new matter alleged in the answer.
The cause was placed by the plaintiff on the jury calendar of the district court for trial at the January, 1904, term of the court. The plaintiff, on motion of the defendant, was required to elect whether it would proceed with the case as an action at law, or one in equity for rescission. The plaintiff thereupon elected to treat the cause as an action at law for the recovery of the consideration paid, and by consent of both parties the prayer of the complaint for judgment was amended accordingly. The jury returned a verdict in favor of the plaintiff for $10,000, and interest from September 8, 1902. The defendant appealed from an order denying its motion for judgment notwithstanding the verdict or for a new trial.
1. The defendant's claims, as to the facts, are, briefly stated, that there was no evidence to sustain a finding by the jury that the plaintiff rescinded the contract before the commencement of the action, in that there was no proffer of a reassignment of the account and collateral securities, or offer or ability to put the defendant in statu quo; that the plaintiff did not rely upon the alleged false representations, but acted upon its own investigation; and, further, that it affirmed the contract by its conduct.
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