Maloy v. Berkin

• Decision Date: 22 April 1891
• Citation: 11 Mont. 138
• Parties: MALOY v. BERKIN.
• Court: Montana Supreme Court

11 Mont. 138

MALOY

v.BERKIN.¹

Supreme Court of Montana.

April 22, 1891.

Appeal from district court, Jefferson county; Thommaas J.GALBRAITH, Judege.

Action by James A. Maloy against John Berkin to rescind a deed.Verdict and judgment for plaintiff.Defendant appeals.Affirmed.

Cowan & Parker and W. F. Sanders, for appellant.

B. Platt Carpenter and Thos. Joyes, for respondent.

HARWOOD, J.

This case stands for review, upon appeal from the judgment and an order overruling appellant's motion for a new trial.The object of the action was to obtain a decree of cancellation of a deed of conveyance of an undivided one fourth interest in a certain quartz lode mining claim, situate in Jefferson county, known as the “Ida Mine,” for alleged gross inadequacy of consideration paid for said property, and acts of fraud and deceit in the procurement thereof.It appears that the deed of conveyance in question was made and delivered March 22, 1890, in consideration of $1,020 paid to the grantor, and on the 25th day of that month he commenced this action for cancellation of said deed.In the complaint an offer is made to restore to defendant the sum of money paid plaintiff as such consideration, with interest thereon, or to pay the same into court for the use of defendant, or to make such dispostion thereof as the court may direct; but it is not shown by the complaint that plaintiff had, prior to the commencement of the action, tendered or offered to return to defendant said sum of money.Defendant's counsel moved the court for judgment on the pleading, on the ground that an action for cancellation of a contract cannot be lawfully commenced and maintained unless it is shown by plaintiff that he has first tendered back to defendant that which was received as consideration for the execution of the contract, and that the same does not appear in this case.The motion was overruled, and the action of the court in that respect is the first alleged error assigned by appellant.

We do not perceive why, in reason, the doctrine contended for should apply in cases of this nature.The very object and purpose of the action is to compel an undoing of what has been done; to compel a mutual restoration of each party to the position he occupied before the fraudulent transaction was consummated.Neither the relief not the right to relief is predicated upon the tender back of what was paid in procuring the contract.In this case the relief, if granted, proceeds upon the ground that some circumstances or conditions exist in relation to the parties which in law amounts to constructive fraud, or that actual fraud has been practiced in procuring the execution of the conveyance or contract.Will.Eq. Jur. 302;1 Story, Eq. Jur. § 694 et seq;2 Pom. Eq. Jur. §§ 922-928.As a matter of course, in granting such relief the court requires equity at the hands of the complaining party, as well as from the party guilty of fraud; that is, the restoration of everything of value received in the transaction.The precise point has been under consideration in numerous well-considered cases of this nature, and it has been held that a court of equity will proceed with the action for cancelation without requiring, as a condition precedent to commencing the action, that the complaining party shall have tendered back what he had received; that an offer in his complaint to restore the same is sufficient; and, if a case is made out which moves the court to grant relief, it carries into effect the maxim that he who seeks equity shall do equity.1 Story, Eq. Jur. § 693;Gould v. Bank, 86 N. Y. 75, 99 N. Y. 337, and 2 N. E. Rep. 16;Allerton v. Allerton, 50 N. Y. 670;Vail v. Reynolds, 118 N. Y. 302, 23 N. E. Rep. 301;Shuee v.Shuee, 100 Ind. 477;Hopkins v. Snedaker, 71 Ill. 449;Whelan v. Reilly, 61 Mo. 565;Thomas v. Beals, (Mass.)27 N. E. Rep. 1004.

We think the rule is sustained by the greater weight of authority as applicable in cases like the one at bar.If such were not the rule, fraud might, in its manifold resources, frequently contrive to so shape the conditions and circumstances that the defrauded party could not make an offer to restore, prior to invoking the power of the court for relief; and relief would then be denied by reason of the rule.However, the rule seems not to be applied to all cases where rescission is sought, as will be seen by consulting the cases cited supra.Where a party defrauded is so situated in respect to the subject-matter that he can return to the guilty party that which the latter parted with in the transaction, and nothing more is necessary to effect a rescission, in such case the rule seems to be that the complaining party must first restore, or offer to restore, what he received, before he can maintain his suit or defense; as, where a party has been induced through fraudulent representations to buy chattels, he may rescind the contract by a return or a tender back of such chattels, and resist payment therefor on the ground of fraud in the inducement to purchase, or recover back money or other valuable things given in payment; but it must appear that within a reasonable time after discovery of the fraud restoration or offer thereof was made.The case of Gifford v. Carvill, 29 Cal. 589, and the cases therein cited, are illustrations of that class of cases.It will be observed, however, in the illustrations brought to view, that the action or defense through which relief is sought is an action at law, or a defense to such an action.In the one case the action is to recover back money paid out in the transaction induced by fraud, or, on the other hand, a defense against an action brought to enforce the contract, which was procured through fraudulent representations.Occasionally a case will be found where the true distinction seems to have been lost sight of, and the rule requiring a return or offer to return, as a condition precedent to maintaining the action, is applied to an action in equity for cancellation, rescission, or annulment.This seems to have been done in the case of Herman v. Haffenegger, 54 Cal. 161, cited by appellant.That was an equity case for the rescission of a contract on the ground of fraud in procuring it, and for recovery of property claimed to have been parted with by the complaining party through fraudulent representations.The court denied relief on the ground that it did not appear that the plaintiff had, prior to commencing his action, returned or offered to return what he had received in the transaction.The only authority cited was Gifford v. Carvill, supra, which was not an equity action for rescission or cancellation, but was an action at law in all its attributes.The latter case was brought to enforce payment of certain promissory notes, and the defense set up was fraudulent representations made and relied upon in the sale of mining stock, for which the notes were given.Fraud, as a defense in such a case, does not belong exclusively to equity jurisdiction.We find no error in the action of the court in overruling defendant's motion for judgment on the pleadings.

This cause was tried by the court, sitting with a jury impaneled to aid in finding the facts.All other specifications of error urged by counsel for appellant relate to the admission of evidence and finding of facts.It was alleged in the complaint that one George La Point, by prearrangement, conspired with defendant to aid him in procuring a conveyance of said property from plaintiff for a grossly inadequate consideration; and that in furtherance of such design said La Point did a series of wrongful acts, and made certain false representations, specifically set out and alleged, calculated to aid, and which did aid, defendant in procuring a conveyance of said property.During the trial the court permitted plaintiff to introduce testimony tending to prove that, two days prior to making the conveyance to defendant, said La Point sought out and introduced himself to plaintiff, and inquired about his present circumstances, means of support, and intentions; and finding that he was without money, and looking for employment, told plaintiff that he(the said La Point) would furnish plaintiff money for his present expenses; told plaintiffhe ought not to seek employment; that La Point had been told plaintiff was the best prospector that could be found; and proposed that plaintiff should enter into a partnership arrangement with La Point to go prospecting for mines; and that they agreed upon such partnership arrangement; and that said La Point induced plaintiff to go about the town of Anaconda with La Point to look for, and arrange to purchase, certain supplies to use in such prospecting business; that during this time, and from the first meeting of said parties, plaintiff was encouraged by said La Point to drink extensively of intoxicating liquors furnished by the latter; that plaintiff became intoxicated, and while in that state said La Point procured a deed from plaintiff conveying to La Point one-fourth interest in said Ida mine, in consideration of $104 in money, and two promissory notes made by said La Point for $200 each, payable to plaintiff.The introduction of all such evidence, relating to the conduct of said La Point prior to the time of executing the deed of conveyance to defendant, was objected to, and exception reserved to the admission thereof, on the ground that the same was irrevelant and incompetent because defendant, Berkin, was in no way connected with said acts of La Point, and that said acts were not in any way connected with the transaction whereby defendant, Berkin, obtained the deed sought to be canceled by this action.The same objection was also urged in a motion to strike out said testimony, made at the time the plaintiff rested in the proof of his case; which motion was also overruled, and defendant excepted thereto.This testimony related to alleged acts done in the absence of defendant by one alleged...