Jones v. Barnes

• Decision Date: 26 October 1914
• Docket Number: 16457
• Citation: 107 Miss. 800,66 So. 212
• Court: Mississippi Supreme Court
• Parties: JONES et al. v. BARNES

66 So. 212

107 Miss. 800

JONES et al. v. BARNES

No. 16457

Supreme Court of Mississippi

October 26, 1914

APPEAL from the chancery court of Marion county. HON. R. E. SHEEHY Chancellor.

Suit by H. A. Barnes against S. A. & B. C. Jones. From a decree for complainant, defendants appeal.

The facts are fully stated in the opinion of the court.

Plea in bar sustained. Affirmed.

R. H. &amp J. H. Thompson, for appellants.

The admitted facts in this case, we submit, entitled the defendants to a decree in their favor and require the reversal of the decree rendered against them by the court below. These facts are: Barnes, the complainant, after purchasing the stock from defendant, operated the business for one month and then sold out his interest therein for more than he paid for it; this he did after being fully advised of the company's financial condition. He did not repudiate his trade, purchased from defendants, as soon as he learned all the facts, but ratified it by selling to Oliver, and thus put it out of his power to return what he had purchased. He does not and never has offered to surrender Oliver's note for five hundred dollars, given for the excess of his selling price over the price for which he purchased, and the same unless complainant by his own negligence has allowed it to become barred, is yet a claim due him from Oliver's estate being administered in the court of bankruptcy; he has never given defendants a right to propound said claim.

In the cases of Ware v. Houghton, supra, and of Jagers v Griffin, 43 Miss. 134, it is said by our own appellate court, speaking of the general rule, presently to be mentioned, that a rescission of a contract must be sought, if at all, in a reasonable time.

To entitle a party to rescind a contract on the ground of fraud or false representations by the other party, he must do so immediately upon discovering the fraud or false representations, and if he fails to do so, but goes on with the contract after such discovery, he thereby waives his right to rescind, and cannot be relieved from his contract. See Mr. Freeman's note, 35 Am. Dec., 600, and the authorities cited.

Everybody understands that a defrauded party is permitted to rescind a contract only upon the idea that his consent to the contract was never given to the bargain as made; or rather that his consent was obtained thereto by fraud, and that fraud vitiates the consent, and therefore there was no consent.

The contract, the sale of stock by defendant Jones to complainant Barnes, even if it were procured by defendant's fraud, was not void; it was merely voidable. If it were procured by fraud, Barnes could have affirmed the contract on the one hand, or he could on the other hand have rescinded it or sued for its rescission. If he once elected, that was the end of the matter.

He could not both rescind and affirm. In this case after discovering the true condition of affairs, after discovering the fraud, if the sale were fraudulent, he sold what he had bought, at a profit, and turned over to the other the entire affairs of the company; deprived himself of all power over the property and affairs of the company, and has made no effort to restore defendants to the statu quo before the sale, and withholds the profit he made by his own of that which he purchased from defendants and has so conducted himself as to deprive not only himself but the chancery court, whose aid he invokes, of all power to restore to defendants the property which he purchased from them, or to compensate them for its loss. If a fraudulent sale, conceding for sake of argument it was fraudulent, was ever affirmed, Barnes we submit, affirmed his purchase from defendants. We ask that the decree appealed from be reversed, the injunction dissolved, complainant denied all relief, and the cause remanded solely for the allowance of damages on the injunction bond.

Whitfield & Whitfield, for appellee.

The most important consideration to which we address especially the attention of the court, is the fact shown by the evidence, overwhelmingly, that Barnes never knew, until after suit was brought upon these notes, that the corporation was insolvent; that the statement furnished to him was a tissue of falsehoods, and that all the representations made by Jones, to him which induced the purchase, were, every single one of them, absolutely false. There was nothing for him to offer to return. His notes were absolutely worthless, not worth the paper they were written on, for the reason that the consideration, the mill property, was absolutely worthless. He had received nothing, and there was nothing to return.

It is really amusing to notice the two cases which learned counsel cited in their stress. Those cases are, Ware v. Houghton, 41 Miss. 370, and Jagers v. Griffin, 43 Miss. 143, and they are cited for the single purpose of showing that one who seeks a rescission of a contract, must do so within a reasonable time.

Now, what would the court suppose are the facts in those two cases? They are both cases of attempts to avoid notes for the purchase money of slaves made in 1859 and 1861, and to overthrow the judgment of the probate court ordering the sale. The history of that old probate court is certainly familiar to this court. The irregularities and voidness of its procedure is common knowledge. But specifically, let us say that in the case of Ware v. Houghton, the rescission was not sought until 1866, when the notes were dated December 16, 1859, seven years after, and in this case the court said: "But when parties have slept on their rights for over six years; when the statute of limitation would, itself, have made their title perfect, by cutting off all remedy from those supposed to possess the superior title, they present themselves in such attitude as to have no claim to the favorable consideration of a court of justice. The rule of diligence ought to be the more stringent where the means of information are of record in the county and where the title is deduced under the judgment or decree of a court easy of access, and open at all times for examination."

In the case of Jagers v. Griffin, the notes were made in January, 1861, but the effort to rescind never occurred until after April 19, 1866, over five years. Now, let us ask the court this question. What earthly application to the facts of this case, have these two cases, where the efforts to rescind were not made until five years or seven years after, and where the facts showing the voidness of the sales attacked, were "of record, in the county, of easy access, open to examinations of all"? In this case before the court, there was no record. The facts were not easy of access. They were not open to all, and the complainant never knew the utter falsehood of the statements, on the faith of which he bought, until after the appellant had the temerity to bring suit, on their fraudulently induced notes. The cases cited are utterly irrelevant. What is aid by the learned counsel in respect to Barnes ratifying the sale, by this sale to Oliver, is a mile from the mark. When Barnes made his sale to Oliver, the evidence clearly, and overwhelmingly shows that he had no knowledge whatever, that the representation in the statement, made to him, by Sanford Jones, through Featherston, were false. He had never heard of the seven thousand dollar debt to Hawkins. He did not know that the ten dollar stumpage claim was fictitious to the extent of fully three-fourths of its value. He did not know that the corporation was then utterly insolvent, owing five times the amount of debts at least, represented, nor many other most important facts.

One cannot ratify, without complete and full knowledge of all the facts affecting the matter which he is said to ratify. Citations to this effect will be useless. The able counsel representing the appellants are surely hard bested when they can say no more for their cause than appears in their very perfunctory brief. We do not say this by way of criticism. It was not possible for counsel to write a brief in this cause which could be otherwise than perfunctory, for this appeal is most manifestly prosecuted solely for delay, and is absolutely without any merit at all. Barnes, it seems has gone to his reward since this litigation was impetrated.

OPINION

REED, J.

ON...