Pearsoll v. Chapin

• Decision Date: 05 January 1863
• Parties: Pearsoll <I>versus</I> Chapin.
• Court: Pennsylvania Supreme Court

Page 9

44 Pa. 9

Pearsoll versus Chapin.

Supreme Court of Pennsylvania.

January 5, 1863.

ERROR to the Common Pleas of Elk county.

Purviance and McEnally, for plaintiff in error, who was defendant below.

Brown, Jenks, and Wilbur, with whom were Lucas, Souther, and Willis, for defendant.

The opinion of the court was delivered, January 5th 1863, by LOWRIE, C. J.

The plaintiff below purchased from the defendant a tract of land by a written contract, which was afterwards consummated by payment and conveyance, and the plaintiff alleges that, at the time of the contract, the defendant agreed orally that if the plaintiff did not find the land answering to certain representations, relative to the kind and quantity of timber on it, the defendant would take it back, and refund the price. The plaintiff sued on this agreement, but as it was made during the existence of the Act of 22d April 1856, making such oral contracts of no effect, he afterwards changed his ground, and added a count for money had and received, and went, as on a rescission of the contract for fraud, for the recovery back of the price.

The court instructed the jury that, if the sale was induced by the false and fraudulent representations of the vendor, the plaintiff had a right to recover back the price without first tendering a reconveyance, and this is the first point which we shall discuss. And, as this point appears to have had its natural clearness, dimmed by a little practical confusion of the different principles that enter into the administration of this kind of cases, we must endeavour to recover this clearness by careful discrimination.

If the court has stated this point correctly, then a defrauded vendee may recover back the price without rescinding the contract, and while retaining the title acquired by it, and perhaps without liability to return it, since the vendor cannot allege his own fraud in order to reclaim it; he may rescind for what he gave and affirm for what he got, and is thus allowed by the law to return injustice for fraud, and invited to learn the art of being duped as a mode of profitable speculation. We do not so understand the law.

If this be indeed the law of such cases, then the fraud is not corrected, but punished by this remedy. And the punishment is grossly unjust because grossly unequal, and it can be only by mere accident that it is at all proportionate to the offence. No matter how small the fraud, it forfeits the whole value contracted for, be it ten or ten thousand dollars. And, if nothing can confirm the contract in favour of the defrauder, then the other party may get all he bargained for, and afterwards recover back all he gave; in order to make the punishment as severe as possible, he may, knowing of the fraud, wait until he obtains full performance from his adversary, and then set up the fraud as a ground for rescinding the contract for all he paid under it. This is making a person who is guilty of a fraud practically an outlaw, for all his interests that are involved in the fraudulent contract. The law does not usually deal thus with any offender. It keeps its temper even in dealing with fraud, and especially in the investigation of its existence and degree.

In an action of ejectment, replevin, trover, assumpsit, or other form, for the purpose of recovering back anything, as on the rescission of a contract, the very first thing to be done after showing that the plaintiff parted with the thing in pursuance of the contract alleged, is to show that the plaintiff has rescinded the contract by doing or offering to do all that was necessary and reasonably possible to restore the parties to the condition in which they were before the contract, and then to show that he had good ground to rescind it. This is the order demanded by the very nature of the action. He is not suing for a rescission, or to obtain one, but for the results or consequences of a rescission, on the ground that he has already exercised his right to rescind, given him by the law. There is hardly a discordant thought in the reports, that these are the essential elements of a rescission, and of the action founded upon it in cases of fraud. We refer to a very few of them relating to both real and personal estate (the rule being the same as to both): 3 Met. 337; 8 Barb. Sup. Court 9; 22 Pick. 20, 546; 4 Harris 204; 12 Barb. 641; 14 Id. 594; 16 Id. 221; 23 Pick. 283; 8 Met. 550; 5 Cush. 126; 3 Wend. 236; 7 Black 501; 6 Ind. 26; 12 Ill. 336; 15 Mass. 319; 38 Maine 589; 13 B. Mon. 172; 25 Verm. 234; 30 Id. 139; 22 Ala. 249; 32 Id. 384. And the same is the usual rule where a contract is rescinded for infancy: 2 Kent 257.

We need not refer to the few sporadic cases that are incompatible with these decisions; but we may say generally that a strong misleading element in them is an undue reliance on the broadest meaning of the ambiguous word void, which is so commonly found in laws, contracts, decisions, and text-books. Deductions, founded on the broadest meaning of this word, would lead to greater errors than are found in the most erroneous cases, while those founded on its narrower and more usual meaning seldom err. When we say that any given class of contracts is void, let us be sure of the meaning of the word before we undertake to declare all the consequences that follow from its application. Observation of its use will give us its meaning.

It is usually said that fraud in procuring a contract makes it void; but in many cases it is said that it makes it only voidable: 4 Watts 88; 12 Pick 307; 2 Id. 191; 6 Grattan 268; 2 Shep. 364; 1 Doug. (Mich.) 330.

So, when a conveyance is in fraud of creditors, it is usually called void, and the statute 13 Eliz. makes it "clearly and utterly void, frustrate, and of none effect," as against the creditors; but in many cases the word voidable is designedly substituted: 1 Sid. 133; 2 Mass. 279; 2 Met. 339; 23 Mo. 168; 31 Mi. 653; 1 Manning (Mich.) 321. Chancellor Kent, 4 Com. 517, calls it "voidable, not void," and Chief Justice Spencer delivers a very able opinion to prove it so: 18 Johns. 527.

Provisions in leases are very common that, if the tenant shall not, with due promptness, perform his covenants to build, repair, insure, pay rent, and such like, the lease shall be void, or utterly null and void, to all intents and purposes, or expressions of similar import; yet these terms are very often, perhaps generally held to mean voidable, and not void: 4 B. & Ad. 664; 6 B. & Cr. 519; 4 B. & Ald. 401; 6 M. & Sel. 121. And voidable is now the usual predicate of contracts by infants.

The statute Henry 6, c. 10, makes certain forms of outlawry void, yet they can be annulled only by writ of error; and another makes certain obligations, not taken in a prescribed manner, void, yet they must be avoided by plea: 3 Co. 59 b. This means that even nullities may be only voidable in the sense that a regular adjudication is necessary to declare them void.

Other statutes make certain alienations by bishops and other ecclesiastics, and certain forms of alienation of entailed estates void, absolutely void, or utterly void, and of no effect, to all intents and purposes, yet they are void only as against the official successors, or the successors in the title: 3 Co. 59, 60; or, as some would say, voidable; the word absolutely, here, being used not as contrasted with relatively, but as equivalent to utterly.

These instances reveal the general principle that the persons intended to be wronged by a transaction are not bound by it, and also that they are not bound to reject it; they may adopt or confirm it, or agree to be bound by it; their consent, which, because of the wrong the law considered as not given, may be given after the wrong becomes known, and then, if given with the deliberation, intelligence, and freedom that the law of ratification requires, and in a form adequate to the particular kind of contract, they become willing parties to the contract, bound equally with the others. They consent to be bound by it if they elect to enforce it, and then they can no longer treat it as a nullity, for that would be to maintain a contradiction, or to justify at the same time two repugnant claims, both the nullity and validity of the contract.

Thus he who sues for damages for the fraud affirms the validity of the contract: 2 Shep. 364; 4 Denio 554; or who knowingly accepts and retains any benefit under it: 7 S. & R. 63; 7 W. & S. 125; 23 Mo. 168; or who uses the property acquired as his own after the discovery of the fraud: 13 B. Mon. 172; 22 Ala. 249; or who does any positive act forgiving the fraud, or unduly delays claiming back his property or giving up what he received: 20 Barb. 493; 7 Blackf. 501; 4 Harris 204; or accepts rent accruing after a known forfeiture of the lease: 6 B. & C. 519.

But where a conveyance is in fraud of creditors, ...