Union Central Life Insurance Company v. Schidler

• Decision Date: 16 January 1892
• Docket Number: 15,326
• Citation: 29 N.E. 1071,130 Ind. 214
• Parties: The Union Central Life Insurance Company v. Schidler
• Court: Indiana Supreme Court

29 N.E. 1071

130 Ind. 214

The Union Central Life Insurance Company v. Schidler

No. 15,326

Supreme Court of Indiana

January 16, 1892

From the Steuben Circuit Court.

The judgment is reversed.

J. A Woodhull, W. M. Brown and F. S. Roby, for appellant.

J. I Best, D. R. Best and E. A. Bratton, for appellee.

Miller J. Mcbride, J., took no part in the decision of this case.

OPINION

Miller, J.

The assignment of errors calls in question the ruling of the court in overruling the demurrers to the second paragraph of the answer to the amended first paragraph of complaint, and to the amended third paragraph of answer to the second paragraph of complaint.

The causes of action stated in each paragraph of complaint are substantially alike, and state, in substance, that Admiral J. Schidler, the son of the appellee, fraudulently obtained from the appellant a loan of $ 1,750 by misrepresenting the location, quality, condition and value of a tract of land upon which a mortgage was executed to secure a note for the loaned money; that the appellee conveyed the land to his son in order to enable him to obtain the loan, and conspired and confederated with him to procure from the appellant a loan of money and not to repay it, and that after the loan was made the appellee received and used the major portion of the money; that, the note not having been paid, the mortgage was foreclosed, and the land sold for the sum of $ 500, its full value, and an execution for the residue of the judgment was returned nulla bona.

The character of the representations, and of the participation of the appellee in the fraud, is such that no question can arise as to their materiality.

The second paragraph of the answer to the amended first paragraph of complaint avers, in substance, that, after default had been made in the payment of the loaned money, the appellant brought an action against the son, and recovered a judgment for the full amount of the damages that it had sustained by reason of the loaning of the money, and that the said damages are the identical damages sought to be recovered in the paragraph of complaint to which this paragraph is directed, and denies the averments of fraud alleged against the appellee.

The third paragraph of answer to the second paragraph of complaint avers that the appellant, after default in payment of the note, brought an action against the son upon the note, and recovered a judgment against him for the full amount of its damages, and caused an execution to issue thereon against him.

The appellee contends that if it be conceded that he was liable for the money fraudulently obtained by his son, the facts which created such liability constituted a single cause of action, for the enforcement of which the appellant had several remedies; that it had the right to repudiate the transaction and recover back its money as upon a rescission of the contract; or it had the right to affirm the contract, and bring an action in tort against the father and son jointly, or against either severally; or, upon failure of the son to pay the debt, to bring an action against him upon his contract; that, the appellant having affirmed his contract, its remedy was either to recover its damages in an action upon the contract or in tort; but that it could not do both.

We are unable to agree with the appellee in this contention. We know of no rule of law that would prevent the application, to this transaction, of the ordinary rule that a defrauded party may affirm the contract by retaining that which he has received and suing for the damages he has sustained by reason of the fraud. If the appellant had the right to retain the note and mortgage, the right to collect them by suit or otherwise is implied as an ordinary and necessary incident to such ownership.

It follows that an action on the contract and one predicated on the fraud are not inconsistent, and that both may be prosecuted concurrently, and recovery in the one will not bar a recovery in the other.

When the fraud charged in the complaint was perpetrated, and the tort-feasors had thereby procured the loan, a cause of action was immediately created in favor of the defrauded party, and they were entitled to a recovery on account of the wrong for some amount, the damages being unliquidated and dependent upon the extent of the injury. Afterward, when default was made in the payment of the note, a cause of action was created in favor of the holder of the note, for a recovery against the maker, for damages for its non-payment, the amount of the recovery being fixed by the terms of the contract. These two causes of action neither accrued at the same time nor were predicated upon the same defalcation or wrong.

In the case of Wanzer v. De Baun, 1 E. D. Smith 261, the plaintiff had recovered a...