McLean v. Southwestern Cas. Ins. Co. of Oklahoma
| Decision Date | 30 November 1915 |
| Docket Number | 5435. |
| Citation | 159 P. 660,61 Okla. 79,1915 OK 987 |
| Parties | MCLEAN v. SOUTHWESTERN CASUALTY INS. CO. OF OKLAHOMA ET AL. [a1] |
| Court | Oklahoma Supreme Court |
Rehearing Denied Aug. 29, 1916.
Syllabus by the Court.
The effect of evidence introduced to show that a written contract was induced and obtained by material false and fraudulent representations is not to contradict or vary the terms of the written contract, but to show that the party signing the contract was imposed upon, and that fraud was practiced in obtaining his signature thereto; and such evidence is always admissible to show that contracts have been fraudulently obtained. No exact rule can be laid down by which every case of fraud can be tested; but the court must determine, under the broad principles of equity, whether or not what was done in each particular case amounts to cognizable fraud.
There is a wide distinction between the nonperformance of a promise and a promise made mala fide, and without any intention at the time of making it to perform it. And while ordinarily a statement upon which fraud may be predicated must be of an existing fact, yet if a promise is made to be performed in the future, as an inducement to obtain a contract, if the intention not to perform the promise be shown to have existed at the time the promise was made, such false promise constitutes cognizable fraud.
Where a corporation arms persons with blank contracts to take stock subscriptions for the company, and they obtain subscriptions through false and fraudulent representations, and promises to do certain things, it is immaterial whether they were authorized by the company to make these representations and promises or not. If the company accepts the benefits of their misrepresentations, it must also bear the burdens of the same; and if the company is unwilling to be bound by their misrepresentations, it must surrender the benefits obtained under them.
Commissioners' Opinion, Division No. 2. Error from Superior Court, Oklahoma County; Edward Dewes Oldfield, Judge.
Action by George D. McLean against the Southwestern Casualty Insurance Company of Oklahoma and another. Judgment for defendants, and plaintiff brings error. Reversed and remanded.
Stuart Cruce & Cruce and Gilbert & Bond, all of Oklahoma City, for plaintiff in error.
Ledbetter Stuart & Bell, of Oklahoma City, for defendants in error.
This action was commenced in the superior court of Oklahoma county by the plaintiff in error, as plaintiff, against the defendants in error, as defendants, to rescind a certain contract and recover the sum of $1,375, alleged to have been obtained under said contract. The ground alleged for rescission is that the contract was induced and obtained by fraud. The facts material to the issues before us are: That the defendant company the Southwestern Casualty Insurance Company of Oklahoma had, prior to March 7, 1910, been duly incorporated as an accident and casualty company, and was perfecting its organization by the sale of stock, and through its agents sold to the plaintiff, who was a physician, $5,000 worth of stock, under the promise and agreement that if he would take the stock the company would employ him as its medical examiner at an agreed salary of $1,500 per year. That plaintiff paid $1,375 in cash on said subscription, and gave his notes for the deferred payments. The plaintiff alleges further that the sole inducement and consideration prompting him to purchase this stock was the agreement to employ him at the stipulated salary as medical examiner, that after obtaining his subscription and the cash payments the defendants refused to employ him, and that the representation of the intention of the defendant to employ him as its medical examiner was false, and known to the defendant to be false at the time of making same, and was made without any intention on the part of the defendant of performing the same, and that it was through no fault of his that he was not employed; that he had never received any stock of the company; and asks for a rescission of the contract, and the return of the $1,375 paid. The defendants answered by general denial, and alleged that if any promise or contract to employ the plaintiff at a salary of $1,500 per year was made, it was made without the authority of the company, and was therefore not binding upon the company. Plaintiff filed a reply, denying all affirmative allegations in the defendant's answer. The cause came on for trial to the court and a jury. The testimony of the plaintiff fully sustains the allegations of his petition. On cross-examination the defendant produced, and introduced, in evidence, among other documents as part of its cross-examination, the contract of stock subscription, which is as follows:
At the close of plaintiff's evidence defendant demurred to the evidence on the ground that it sought to vary the terms of a written contract, and because the allegations of fraud were insufficient to raise the issue of fraud, sufficient to go to the jury. The demurrer was sustained, and judgment rendered for defendants, and the plaintiff appeals to this court.
There are a number of assignments of error, but the decisive question in the case is whether or not the allegations and evidence of the plaintiff sufficiently raised the question of fraud to go to the jury. We think they did. The defendants argue that:
"The written contract entered into by plaintiff is clear and explicit, and expressly forbids any agreement or conditions other than those printed therein being binding on the company, and that the plaintiff is a physician of high standing, and thorough education, and was capable of reading and understanding the contract signed, and therefore should be bound by the written contract signed by him,"
--and cite McNinch v. Northwest Thresher Co., 23 Okl. 386 100 P. 524, 138 Am. St. Rep. 803, and other cases to the same effect, in support of their contention. But the rule of law in these cases is not applicable, where the party alleges and proves that he was induced, by material, false, and fraudulent representations, to enter into a contract which he would not have entered into but for such false and fraudulent representations. The purpose and effect of the evidence introduced in the case at bar is not to contradict or vary the terms of the written contract, but to show that the plaintiff was imposed upon, and that fraud was practiced in obtaining his signature thereto. Fraud vitiates everything it touches, and a contract obtained thereby is voidable. And evidence is always admissible to show that contracts have been fraudulently obtained. In Cooper v. Ft. Smith & Western Ry. Co., 23 Okl. 139, 99 P. 785, ...
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