Land Finance Corporation v. Sherwin Electric Co

• Decision Date: 08 May 1929
• Parties: LAND FINANCE CORPORATION v. SHERWIN ELECTRIC CO
• Court: Vermont Supreme Court

146 A. 72

102 Vt. 73

LAND FINANCE CORPORATION v. SHERWIN ELECTRIC CO

Supreme Court of Vermont

May 8, 1929

February Term, 1929.

Principal and Agent---Principal's Liability for Fraud of Agent in Procuring Contract---Bills and Notes---Fraud---Admissibility of Evidence Not Showing Actionable Fraud To Characterize Entire Transaction---General Rule as to Admissibility of Evidence Where Fraud Is Issue---Evidence of Similar Fraudulent Dealings by Party with Others---Pleading---Amendment to Defendant's Answer at Close of Plaintiff's Argument---G. L 1795---Discretion---Remedies of Person Induced To Execute Contract by Fraud---Sales---Rescission---Right To Impose Condition as to Return of Money Paid---Contracts---Defense of Fraud as Rendering Rule Relating to Readiness and Willingness To Perform Inapplicable---Instructions---Duty of Court To Charge on All Essential Issues.

1. Provision in contract, executed by company's agent, that "only the written conditions appearing hereon in reference to this order are binding on the company," held to protect company against any contractural obligations not contained therein, but not from consequences of its agent's fraudulent representations concerning subject-matter thereof made to induce defendant to enter into contract.

2. In action on trade acceptances, which were executed pursuant to a contract alleged by defendant to have been induced by fraudulent representations, while some of representations detailed by witness did not constitute actionable fraud, held that evidence respecting them was admissible to characterize transactions as a whole.

3. When fraud is issue, evidence necessarily takes wide range, and may embrace all facts and circumstances which go to make up transaction, disclose its true character, explain acts of parties, and throw light on their objects and intentions.

4. In action on trade acceptances, which were executed pursuant to a contract procured and executed on behalf of plaintiff by its agent, alleged by defendant to have been induced by fraudulent representations, evidence that other persons had made like contracts with such agent, at about same time respecting which his representations and subsequent attitude of principal were in all essential particulars similar to dealings with defendant, held admissible.

5. In such action, allowing defendant, at close of plaintiff's opening argument to jury, to amend its answer by adding, in effect, that representations made by plaintiff through its agent to obtain trade acceptances was part of a fraudulent scheme to defraud merchants, and that dealings with defendant were part of such scheme, held not abuse of discretion and without error, plaintiff under circumstances of case not being put to disadvantage and allowance of amendment being in accord with spirit of G. L. 1795.

6. When defendant discovered fraud inducing contract, it had right to rescind contract and recover back what it had paid, or resist action for contract price, or stand on contract and recover damages suffered by fraud, or recoup them in action brought against it in contract.

7. Where contract relating to dishwashing machines to be shipped by plaintiff to defendant was claimed by defendant to have been induced by false representations, not only as to character of machines, but, as part of fraudulent scheme, by plaintiff's promise to send its salesmen to dispose of machines for defendant within a certain time, held that defendant was not bound to rescind when machines, upon being received, were found not to be as represented, but might wait until it became apparent that company did not intend to perform its agreement to send salesman, which was climax of fraudulent scheme, nothing in Acts of 1921, No 171, 48, 49, and 69, subdv. III, affecting this right.

8. Where company shipped certain dishwashing machines to defendant under contract procured by false representations one part of fraudulent scheme being company's promise to send its salesmen within certain time to sell machines, and, after defendant had paid one of several trade acceptances given under said contract when it became due, upon it becoming apparent that company did not intend to perform its agreement, defendant had right, under Acts 1921, No. 171, 69, subdv. IV, in offering to return machines, to impose as a condition that amount paid be returned.

9. Where timely offer of rescission was made by defendant, upon basis that dishwashing machines shipped to him by plaintiffs under contract procured by fraudulent representation, and on which defendant had made one payment, would be returned upon condition that amount paid be returned, and plaintiff declined offer, defendant was not then required to return machines, but under Acts 1921, No. 171, 69, subdv. IV, had right to retain them as security for repayment of such part of price thereof as had been paid.

10. Rule that one who seeks damage from another for latter's failure to perform his contract must be ready and willing on his part to perform, is not applicable where defense is not failure to perform contract, but that because of fraud there was no contract.

11. Where evidence made question of rescission of contract an essential issue, failure of court to charge concerning it was error even in absence of any request, and general exception to court's failure to give any instructions respecting question of rescission was sufficient to raise question under circumstances.

ACTION OF CONTRACT on two trade acceptances. Pleas, general issue and fraud in procuring acceptances. Trial by jury at the September Term, 1928, Chittenden County, Buttles, J., presiding. Verdict and judgment for defendant. The plaintiff excepted. The opinion states the case. Reversed and remanded.

Reversed and remanded.

Max L. Powell and Guy M. Page for the plaintiff.

Charles F. Black and Robert W. Ready for the defendant.

Present: WATSON, C. J., POWERS, SLACK, and MOULTON, JJ.

OPINION

SLACK

This is an action of contract on two trade acceptances drawn by the Autocrat Sales & Distributing Corporation on the defendant, and accepted by it, payable to the order of the drawer, and indorsed by it to plaintiff before maturity. The defense now relied upon is fraud in procuring the acceptances. Trial was by jury, resulting in a verdict and judgment for the defendant.

On April 18, 1925, the defendant entered into a "Special Agency Agreement," in writing, with the Autocrat Sales & Distributing Corporation, hereafter called the Company, for the term of one year, and ordered from it seven dishwashing machines to be delivered at earliest convenience. The only description of the machines in the agreement is:

"2 Autocrat Dishwashing Machines Model B' (Com.)

5 " " " " A' (Dom.)"

Under this agreement defendant was to furnish a list of names for mailing and advertising. The Company agreed to furnish free advertising and supplies, and "by special effort, to sell or cause to sell, goods listed above (the machines in question) within sixty days from arrival of shipment, or * * * * * * take back at prices shown thereon and in accordance with the period of this Agency Agreement any of such goods remaining unsold." At the bottom of the instrument was the following: "Only the written conditions appearing hereon in reference to this order are binding on the Company." The agreement is signed by the Company only by its salesman, J. M. McElroy. It contains no provision respecting the manner or terms of payment for the machines. The acceptances, of which there were three, were on separate pieces of paper. They were drawn and accepted at the time the agency agreement was executed and were payable 60, 90, and 120 days after date, respectively.

In compliance with its agreement, defendant sent the Company a mailing list April 23, 1925. Defendant received the machines May 22, uncrated one of them and displayed it in its show window, and started newspaper advertising. June 2, it wrote the Company asking for advertising matter and inquired when it expected to start its sales campaign. The Company replied the next day that it had sent the advertising matter and that "within a week or so our demonstration and resales man will be with you to carry out our resales plan." Defendant never received the advertising matter nor did the Company send a salesman. The first acceptance was paid when due. Shortly thereafter, the date not appearing defendant wired the Company: "Dishwashing machines arrived May 22--You have cashed our trade acceptance without making any effort to sell the machines. Our bank will refuse further trade acceptances until you sell enough to cover acceptance used and next one due. We have done our part why not do yours." Defendant received no reply to this telegram, and June 24 wired the Company: "Courtesy of a reply to our telegram would be appreciated." The day following the Company wired that failure to reply to first telegram was an oversight, and wrote that delay in sending salesman was due to the fact that they were tied up elsewhere and that: "We confidently expect to have our man visit you and help you dispose of the machines on hand very soon." No one was sent, however. The second acceptance fell due July 17 and was protested. July 22, the day following the expiration of the time within which the Company agreed to sell or cause to sell the machines, defendant wrote the Company among other things as follows: "The sixty days in which you agreed to dispose of these machines has expired and you have not lived up to your contract in any way. * * * * We are not going to keep these machines in attempt to merchandise them ourselves. * * * * * In order to close this matter without further litigation we suggest that you return, to us, the amount of the first trade...