Tollett v. Montgomery Real Estate & Ins. Co.

• Decision Date: 11 January 1940
• Docket Number: 6 Div. 601.
• Citation: 193 So. 127,238 Ala. 617
• Court: Alabama Supreme Court
• Parties: TOLLETT v. MONTGOMERY REAL ESTATE & INS. CO.

193 So. 127

238 Ala. 617

TOLLETT v. MONTGOMERY REAL ESTATE & INS. CO.

6 Div. 601.

Supreme Court of Alabama

January 11, 1940

Appeal from Circuit Court, Jefferson County; E. M. Creel, Judge.

Bill to rescind a transaction of exchange of real property as for deceit and for damages by Maude L. Tollett against Thomas T Ellis, Montgomery Real Estate & Insurance Company and H. D Self. From a decree sustaining the demurrer of respondent Montgomery Real Estate & Insurance Company to the bill complainant appeals.

Reversed and rendered.

Barber & Barber, of Birmingham, for appellant.

Cabaniss & Johnston, Newton DeBardeleben, and K. E. Cooper, all of Birmingham, for appellee.

FOSTER Justice.

The question in this case is whether the bill in equity filed by appellant contains an equitable right against Montgomery Real Estate and Insurance Company, whose demurrer was sustained, and the bill dismissed as to it. We will refer to it as appellee.

The bill alleges that complainant lived in Birmingham, and owned forty acres of land in Chilton County, Alabama; that appellee was a real estate broker in Birmingham, and had in its employ Thomas T. Ellis as a salesman; that she listed for sale with appellee, acting by Ellis in the line and scope of his authority, said forty acres of land; that Ellis personally owned a piece of city property; that she did not know that he was the owner of it, but that through fraudulent representations he induced her to deed him the land in exchange for the city property; that in doing so he was acting in the line and scope of his employment by appellee.

The bill undertakes to set out a complete story in chronological order, entering with great detail into a statement of evidential facts on which the charge of fraud is based. It is not necessary to rehearse them here.

Upon the basis of that fraud the bill seeks a rescission of the transaction, offering to do equity, and seeks a personal judgment against both appellee and Ellis as for deceit in procuring the transaction, and also for damages to her farm by Ellis and his privies, resulting from waste while they have had it.

Appellee has no interest shown by the bill in the controversy insofar as a rescission is concerned. But its contention is that it is not shown by any allegation in the bill that it is liable for damages in either aspect in which it is claimed in the bill.

The controversy with Ellis and his privies both for a rescission and for damages is not involved on this appeal. But the question is whether appellee is liable in damages on account of such alleged fraud by its agent in the line and scope of his authority.

The claim for damages for deceit is not consistent with the prayer for a cancellation of the deeds, which is but a rescission. The defrauded seller may either affirm the sale and sue for the deceit, or may disaffirm and recover the property sold. Day v. Broyles, 222 Ala. 508, 133 So. 269; Southern Bldg. & Loan Ass'n v. Argo, 224 Ala. 611, 141 So. 545; Southern Land Development Co. v. Meyer, 230 Ala. 40, 159 So. 245.

When he sues for deceit he is thereby standing on the contract. Moore v. Oneonta Motor Co., 223 Ala. 510, 137 So. 301; Southern Bldg. & Loan Ass'n v. Bryant, 225 Ala. 527, 144 So. 367; Brasher v. First National Bank, 232 Ala. 340, 168 So. 42.

In a suit in equity for the cancellation of instruments, the parties will be given complete relief consistent with the theory of cancellation. Smith & Sons v. Securities Co., 198 Ala. 493, 73 So. 892; 12 Corpus Juris Secundum, Cancellation of Instruments, § 79, p. 1083, text and note 74.

When a vendor exercises the right to rescind the sale and cancel the deed for fraud, he may recover in the same suit just claims for waste due to the negligence or willful conduct of the purchaser or his privies. 66 Corpus Juris 798, § 422, and page 843, § 513. Such claims are consistent with the theory of cancellation and rescission. It is but a method of making the vendor whole. But to rescind and get the property back, and also recover damages for deceit would do more than make her whole, and, therefore, the court gives an election of remedies under such circumstances. So that the only possible claim of appellant for damages consistent with her claim for rescission is that of waste, which is included in the allegations and prayer.

But do the facts show a liability by appellee for the waste committed by Ellis after he had fraudulently acquired the land from complainant? Having elected in this suit, so far as it is concerned, to cancel and rescind for the fraud and recover the land and damages for the waste, the inquiry is whether the waste is so related to the fraud committed by the alleged agent of appellee as to be its proximate result. When the transaction was closed, and the deeds passed and possession given, the fraud, if any, which induced it created a condition which came to a rest. The waste which followed is not a proximate result of the fraud, unless the act of Ellis in committing it was such as is the natural probable consequence of the fraudulent transaction or should have been contemplated. Sloss-Sheffield Steel & Iron Co. v. Wilkes, 236 Ala. 173, 181 So. 276.

Either contingency is sufficient: that the result was (1) the natural and probable consequence of the wrongful act, or was (2) reasonably to have been contemplated. Birmingham Water Works Co. v. Martini, 2 Ala.App. 652, 56 So. 830; 15 Ala.Dig. 313, Negligence, + 56(1); Alabama Power Co. v. Curry, 228 Ala. 444, 153 So. 634; Morgan Hill Paving Co. v. Fonville, 218 Ala. 566 (16 and 17), 119 So. 610; Smith v. Alabama Water Service Co., 225 Ala. 510, 143 So. 893, 895; Louisville & Nashville R. Co. v. Maddox, 236 Ala. 594, 183 So. 849, 118 A.L.R. 1318.

But the waste committed by Ellis, if any, before the transaction was closed and done in and about his agency, and in the scope of his employment was chargeable to appellee.

In this case, it is alleged that by the fraudulent act of appellee, acting by its authorized agent, the land of appellant came into the possession of Ellis.

The fraud may be the proximate cause of the result, though it is not proximate in time, if it is proximate in efficiency. Its efficiency in that respect may be preserved although other causes may have sprung up which have not impaired its efficiency. Lanasa Fruit Steamship & I. Co. v. Universal Ins. Co., 302 U.S. 556, 58 S.Ct. 371, 82 L.Ed. 422.

If, through the fraud of appellee acting by its agent with due authority, the duty to use due care not to commit waste was imposed on Ellis, though the want of such care producing the waste was the most immediate cause of it, appellee should not be held without the pale of proximate causation, since its act in creating the duty on the part of Ellis served to continue the efficiency of the fraud into a failure of performance of the duty. If as a creature of the fraud, Ellis was in possession of the land imposed thereby with a duty to use due care not to cause waste, the failure to exercise such care is a proximate result of the duty thus imposed. One who produces the duty is ordinarily proximately responsible for such breach as may naturally follow. This result would be different if the duty to use due care did not naturally follow from the alleged fraud.

It is claimed that the allegations in the bill as to the authority of Ellis as agent merely express the conclusion of the pleader. That is probably true in respect to the commission of the waste. While the agency in that connection is alleged the facts show that as to it, appellee had no business interest; that Ellis individually, and not as agent for appellee, claimed and had possession of the land. But in negotiating the transaction, and in making the false representations, the bill alleges that Ellis was the agent for and employed by appellee, and acting as such within the line and scope of his agency. That is not merely the conclusion of the pleader within the rule declared in National Park Bank v. Louisville & Nashville R. Co., 199 Ala. 192 (9), at page 206, 74...