Mlnazek v. Libera

• Decision Date: 24 May 1901
• Citation: 83 Minn. 288,86 N.W. 100
• Parties: MLNAZEK v. LIBERA et al.
• Court: Minnesota Supreme Court

83 Minn. 288

86 N.W. 100

MLNAZEK

v.LIBERA et al.

Supreme Court of Minnesota.

May 24, 1901.

Appeal from district court, Winona county; Arthur H. Snow, Judge.

Action by John Mlnazek against Albert Libera and others. From an order overruling a demurrer to the complaint, the Standard Life & Accident Insurance Company of Detroit appeals. Affirmed.

Syllabus by the Court

1. A contract tainted with fraud is ordinarily voidable and not void, and the party fraudulently induced to enter into the same has the election of two remedies: (1) He may, upon discovering the fraud, rescind and repudiate the contract, and demand to be placed in statu quo; or (2) he may affirm the contract and treat it as valid, and recover damages for the fraud.

2. If he elect to stand by the contract and treat it as valid, he need not, as a condition precedent to his right of action to recover for the fraud, return or offer to return the consideration received by him.

3. Complaint in this action construed, and held to state a cause of action for damages resulting to plaintiff from the fraudulent procurement from him of the written contract referred to in the opinion. McLaughlin & Boyeson and Webber & Lees, for appellant.

Brown, Abbott & Somsen, for respondents.

BROWN, J.

Appeal from an order overruling a general demurrer to plaintiff's complaint. The complaint alleges substantially the following facts: Plaintiff and defendant Libera were on the 24th of July, 1894, and prior thereto, co-partners engaged in contract work under the firm name of Libera & Mlnazek. On the day named, defendant Standard Life & Accident Insurance Company issued and delivered to the co-partnership a contract of insurance, thereby indemnifying the firm against liability for injury to any of their employés caused while engaged in the course of their employment, and by which it contracted to pay to the firm all sums which they might become liable for in case of such injuries during the time stated in the policy. Subsequent to the issuance of the policy and during its life, the firm was engaged in the digging and construction of a cistern at Walnut Grove, this state, in and about which two of their employés were killed by the caving in of the walls of the cistern. Separate actions were subsequently brought by the personal representatives of the deceased laborers against the co-partnership, in which a total recovery of about $6,000 was obtained; and the judgments stand as a liability against the firm, as well as against the individual members thereof. The firm is, and was at the time of the recovery in said actions, wholly insolvent, individually and as co-partners. Prior to the commencement of this action an accounting was had between them of all firm matters, save the liability of the insurance company, and the co-partnership dissolved. There are no firm assets, other than the said policy of insurance. The complaint further alleges that defendant Libera fraudulently connived and conspired with the insurance company to cheat and defraud plaintiff out of his interests in the policy, and to that end, by false and fraudulent representations as to its contents, procured plaintiff to sign a written agreement relinquishing and releasing the company from all liability thereon in consideration of the payment of the sum of $500. The written release alleged to have been thus fraudulently obtained and entered into between the company and Libera purports to release the company from all obligations under the policy, and is signed by the firm and by each individual member. In a former action between the same parties, brought to reform this contract and to recover on the policy, which is reported in 78 Minn. 151, 80 N. W. 866, it was held that the contract, could not be reformed, because to do so would make a contract neither party intended to enter into, viz. a contract which would, in effect, release the company as to one of the firm, and render it liable as to the other. But it was further held that, because the contract could not be reformed, plaintiff was not remediless, and was entitled to every right of which he was deprived by the fraud of his co-partner and the company. The complaint in its present form was evidently drawn to meet the suggestions of the court in that...