Wheeler v. Wilkin

• Decision Date: 08 June 1936
• Docket Number: 13634.
• Citation: 58 P.2d 1223,98 Colo. 568
• Parties: WHEELER v. WILKIN.
• Court: Colorado Supreme Court

58 P.2d 1223

98 Colo. 568

WHEELER v. WILKIN.

No. 13634.

Supreme Court of Colorado, En Banc.

June 8, 1936

Error to District Court, City and County of Denver; Otto Bock Judge.

Action by Florence G. Wheeler against Frank J. Wilkin. Judgment of dismissal was entered, and the plaintiff brings error.

Reversed and remanded for new trial.

HOLLAND J., dissenting.

J. F. Schneider and Charles H. Haines, both of Denver, for plaintiff in error.

John H Reddin, of Denver, for defendant in error.

BUTLER Justice.

Florence G. Wheeler sued Frank J. Wilkin on a contract. At the close of plaintiff's case, defendant moved for a nonsuit. The court granted the motion and dismissed the case. The plaintiff seeks a reversal of the judgment of dismissal.

1. One of the contentions of defendant in support of the judgment is that plaintiff previously sued defendant in tort for the same transaction, namely, for inducing her by false representations to purchase stock in a corporation; that that action was dismissed without prejudice to the right of plaintiff to bring another suit based upon the same cause of action; that she thereupon brought the present suit; that, having elected to sue in tort, she thereby waived her right to sue on contract; that the former suit, therefore, is a bar to the present suit. We cannot uphold the contention. The premise is wrong. The former suit was not in tort. In that suit plaintiff alleged, in substance, that defendant, by false representations, induced plaintiff to purchase 30 shares of corporate stock and pay $3,000 therefor; that, promptly upon discovering the fraud, plaintiff tendered back the stock and demanded the return of the purchase price, which demand defendant refused; that defendant, however, admitted his liability and agreed to pay interest on the amount until the repayment of the principal, and that, if the officers of the company failed to repurchase the stock within one year, defendant would repurchase it at that time at par; and that, in inducing the purchase of the stock, defendant was guilty of malice, fraud, and willful deceit. She demanded judgment for the $3,000, with interest, for a body execution, and for such other, further, and different relief as to the court might seem proper. The complaint stated a good cause of action for money had and received, and that is an action on contract.

Upon discovery of the fraud, plaintiff had the right either to affirm the contract and sue for damages, or to rescind the contract and sue for the return of the money paid. Springhetti v. Hahnewald, 54 Colo. 383, 131 P. 266. The former would be an action in tort (deceit); the latter, an action on contract (assumpsit for money had and received). Where one has received money which in equity and good conscience he ought to pay over to another, the law creates a promise to pay, and, if he refuses to pay, an action in assumpsit for money had and received will lie. Springhetti v. Hahnewald, supra; Johnson v. National Sugar Mfg. Co., 88 Colo. 404, 297 P. 995; Spencer v. Brundage, 69 Colo. 520, 194 P. 1104; Ph. Zang Brewing Co. v. Bernheim, 7 Colo.App. 528, 44 P. 380; 2 R.C.L. pp. 778, 780, 782, 788.

The allegation that defendant was guilty of malice, fraud, and willful deceit and the prayer for a body execution did not convert that action into a tort action. A body execution may issue in actions 'founded upon tort.' C.L. § 5964. That does not mean in tort actions only. If an action grows out of a tort, it is 'founded upon tort' within the meaning of the statute. Defendant committed a tort when, by false representations, he induced plaintiff to purchase and pay for the stock. That tort gave plaintiff the right to rescind the contract and sue, as she did, in assumpsit for the return of the money she paid. In that manner plaintiff's right of action grew out of the tort, or, as the statute has it, was founded upon tort. In such case a body execution may issue, regardless of the form of the action; that is to say, regardless of whether the action is in tort for damages or in assumpsit for money had and received. Springhetti v. Hahnewald, supra.

2. It is contended that the complaint herein does not state facts sufficient to constitute a cause of action. The complaint alleges, in substance, that on August 26, 1925, defendant represented to plaintiff that he (defendant) was vice president of a hotel company, a Florida corporation; that the hotel was supported and backed financially by the citizens and merchants of Fort Pierce, Fla.; that he only needed plaintiff's subscription 'to put the project over'; that a bond had been arranged for from a bonding company or companies with which to cause the completion of the project; that at that time defendant offered to sell to plaintiff 30 shares of stock in the company for $3,000; that said representations were false and fraudulent, as defendant then well knew; that he made the same for the purpose of defrauding plaintiff; that, relying upon the representations and believing the same to be true, plaintiff paid defendant $3,000 and received the 30 shares of stock; and that, upon discovering the falsity of the representations, plaintiff tendered the stock back to defendant and demanded a return of the money paid by plaintiff to him. Plaintiff further alleges that on April 1, 1926, she believed in good faith that she had a right of action against defendant to recover the $3,000 paid by her to him; that she notified defendant that an action would be brought for misrepresenting the stock, whereupon defendant promised that, if plaintiff would forbear suing him, he (the defendant), in consideration oo such forbearance, would pay to plaintiff the said $3,000 within one year, with interest at 8 per cent. per annum until paid; that plaintiff relied upon such promise and, so relying, refrained from suing defendant; that, beginning March 21, 1927, and ending April 16, 1928, defendant made periodical payments of interest, aggregating $240; that plaintiff demanded payment of the balance due on principal and interest, but that no part thereof has been paid.

1. It is said that plaintiff does not allege that she accepted defendant's offer and agreed to forbear. It was not necessary for plaintiff to agree to forbear; it was sufficient that, in reliance upon defendant's request and promise, she did forbear to sue. It was the case of defendant's making an offer of a promise for an act (forbearance), and the only acceptance of the offer that was necessary was the performance of the act. Marshall v. Old, 14 Colo.App. 32, 59 P. 217; 6 R.C.L. p. 607.

(2) Counsel for defendant says that the complaint fails to state facts sufficient to constitute a valid claim against defendant based upon fraud, hence fails to show that there was anything to forbear, and therefore that the alleged forbearance was no consideration for defendant's promise to pay.

(a) Counsel says that the alleged representations were not of a past or existing fact, but opinions or trade talk. At least one representation is not open to that objection; namely, that a bond had been arranged for from a bonding company with which to cause the completion of the project.

(b) It is objected that it is not alleged that defendant falsely represented the matters set forth. Considering the substance of the allegations, rather than their form, we conclude that the complaint is not open to this objection.

(c) Another objection urged is that the complaint does not state positively that plaintiff relied upon the representations, but merely alleges 'that relying upon such false and fraudulent representations,' she bought the stock. In support of his position, counsel cites Kilpatrick v. Miller, 55 Colo. 419, 135 P. 780, 782. There an allegation was 'that plaintiff would not have entered into the contract and advanced the money except in reliance upon the representations of the defendant.' The court remarked: 'This is a mere recital and not an allegation that he relied upon the representations made at the time by the defendant.' As that was not the basis of the decision (see 55 Colo. 419, at page 424, 135 P. 780), the language was dictum. The complaint also contained the allegations that, 'acting and relying upon' these representations of the defendant, the plaintiff entered into the contract, and that, 'acting upon the believing' the representations to be true, the plaintiff advanced the money. The court did not criticize these allegations as insufficient. Judge Denison, in this excellent work on Code Pleading in Colorado, p. 143, note 1, comments thus upon the allegation first quoted above from the Kilpatrick Case: 'The above quotation is as positive and precise as the...