Willis v. Fowler

• Decision Date: 17 June 1931
• Citation: 102 Fla. 35,136 So. 358
• Parties: WILLIS v. FOWLER et al.
• Court: Florida Supreme Court

136 So. 358

102 Fla. 35

WILLIS v. FOWLER et al.

Florida Supreme Court

June 17, 1931

En Banc.

Suit by Holman Willis against Mrs. M. C. Fowler, a free dealer, and others. From an order sustaining a demurrer and dismissing complainant's bill, and from orders sustaining exceptions to bill and canceling a lispendens, complainant appeals.

Order dismissing the bill reversed, and, in other respects, the orders affirmed.

ELLIS J., dissenting.

Syllabus by the Court.

SYLLABUS

Equity has jurisdiction to decree rescission of a parol contract where the usual grounds necessary to be shown to entitle a party to rescission are made to appear, and the contract is not illegal or void on account of being contrary to statute or public policy.

Rescission and cancellation in equity usually go together, but, in so far as the physical cancellation of a written instrument is concerned, they are not inseparable. While a decree for rescission alone might amount to a judicial annulment of the contract, whether oral or written, yet, in its strictest sense, actual cancellation would ordinarily apply only to written instruments.

Rescission without actual cancellation may be granted where the decree of rescission will sufficiently protect the complainant's right, and cancellation of the instrument or contract involved is unnecessary, or for some reason improper, as where the instrument is voidable as to the complainant, but valid as to the other parties thereto.

In a case where a court of equity would be justified in declaring rescinded and void a parol agreement and requiring each party to restore to the other that which had been received by reason of the agreement thus abrogated, the decree of rescission would generally afford the complainant all necessary protection, there being no written evidence of the contract which could be vexatiously used against him.

Good pleading requires that a bill in equity to rescind a contract should set out among other things the agreement, the parties thereto, and the time, place, and circumstances of its execution, and whether it was a parol or written contract. The substance, at least, of the contract should be alleged in the bill, and, if it was a written contract, a copy thereof should either be incorporated in the bill or attached as an exhibit thereto. The bill should also show with reasonable certainty what consideration complainant had given ahd what he had received, if any, under the contract, and that he had seasonably returned or offered to return the same after discovering the fraud upon which his demand for rescission and the return to him of what he had paid on the contract is based.

The general rule is that, where rescission is prayed on the ground that the execution of the contract was procured by false representations as to material facts, the complainant must show that he was both deceived and injured by such representations.

When fiduciary relations exist between the parties, or when the defendant, as a part of the transaction, was inviting the complainant to enter into fiduciary relations with the defendant, the defendant is in duty bound to act in the utmost good faith with the complainant. The fact of invited confidence necessarily carries with it the superlative degree of frankness and square dealing. Thus where the bill alleged that the defendant invited the complainant to purchase with herself and another party each a one-tenth interest in a land purchase contract, each on the same basis of $6,666.67 each and the complainant paid the defendant that amount, when, as a matter of fact, the defendant had already purchased all three shares at $2,500 per share, these allegations show injury to the complainant to the extent of the difference between $2,500 and $6,666.67, as under the circumstances the defendant had no right to take from the complainant anything in excess of what she was paying herself.

Whether the parties to a particular contract have thereby created as between themselves the relation of joint adventurers is dependent upon their intention, which is to be determined in accordance with the ordinary rule governing the interpretation of contracts.

A joint adventure is very similar to a partnership, the chief distinction being that where a partnership is ordinarily formed for the transaction of a general business of a particular kind, a joint adventure is usually, but not necessarily, limited to a single transaction, though the business of conducting it to a successful termination may continue for a considerable period of time. The joint adventurers are entitled to share in the profits, and must also share the losses, if any, which result.

Where one party proposes to another that they each purchase shares in a joint adventure already formed by other parties, which transaction, if carried through, would have made them joint adventurers, the nature of the proposal invited confidence and trust and requires on the proposer's part entire fairness and good faith and the truthful disclosure of the actual amount at which the then owners were willing to sell their shares in the joint adventure.

It is well settled that, where one person occupies towards another the position of a joint purchaser, it becomes his duty fully and honestly to disclose the true purchase price of the property to be acquired, and he lays himself open to an action for fraud if he misrepresents the matter and induces his associate to contribute more than his share of the actual consideration paid.

While the general rule is that representations in regard to values are regarded as mere expressions of opinion on which the purchaser has no right to rely, and which afford no grounds for rescission, where the parties are dealing at arm's length and on equal terms, this rule is qualified in cases where fiduciary relations or a relation of trust and confidence is established, which requires between the parties the exercise of the utmost good faith and the disclosure of the actual facts by him who has possession of exclusive or greatly superior knowledge of the price or value of the subject-matter.

Where there is a full, adequate, and complete remedy at law, and the bill presents no independent equity, and the only relief sought, or which can appropriately be granted, is one for which the law provides an adequate and complete remedy resort to a court of equity is unnecessary and improper. Some substantial ground of equitable jurisdiction must be both alleged and proven before a mere money decree will be granted.

The fact that complainant could have maintained a suit at law for damages for deceit, or for money had and received, would not preclude him from seeking rescission and restoration in equity, if he had sufficiently alleged facts which show that the legal remedy would not be full and complete.

There is in a certain sense a concurrent jurisdiction of law and equity in cases of contracts procured by fraud, affording the injured party an election of remedies. Yet, if the remedy which the law affords is adequate to the case, equity may not interfere to enforce the rescission of a contract. But if the injury caused by allowing the contract to stand would be irreparable, or if no proceeding at law would afford full and adequate relief, or if complete justice can be done only by rescinding a fraudulent transaction and restoring the parties to their former position in such effectual fashion as only equity can accomplish, then the jurisdiction of equity is clear and undoubted, and the injured party may resort thereto although he has some remedy, though an inadequate one, at law, which he could have pursued had he elected to do so.

While a court of law may award damages for the deceit or fraud by which a party was induced to enter into a contract, or may in proper cases entertain an action for money had and received to recover the consideration thus fraudulently obtained, it cannot rescind a contract or cancel a written instrument.

An action for admages for deceit recognizes the existence of the contract, but an action for money had and received is generally in disaffirmance of the contract.

An action for money had and received has been likened to a bill in equity and may generally be proved by any legal evidence showing that defendant is in possession of money of the plaintiff, which in equity and good conscience he ought to pay over.

Since the prime object of rescission and cancellation is to undo the original transaction and restore the former status complainant in his bill should ordinarily offer to restore to the defendant the property or consideration which he may have received under the contract, describing the same with reasonable certainty; and furthermore, he should show that he is able to make such restoration, or allege facts from which his ability to do so may be fairly inferred. The power of the court of equity to rescind and cancel a contract, while well recognized, is somewhat exceptional in its nature, and a bill invoking the exercise of this power should be clear and explicit in its allegations of facts showing the requisite equitable grounds for the relief prayed. Where the bill leaves any essential matter doubtful, and the trial court sustains a demurrer thereto, the appellate court will not reverse such ruling.

A creditor's bill may usually be filed only by a creditor who has reduced his claim to judgment, or has instituted a suit in a proper court of law for its collection. To bring a case within the exception to this general rule which was made in Claflin v. Ambrose, 37 Fla. 78, 19 So. 628, the case made by the bill must be one of exclusive equity jurisdiction. Appeal from Circuit Court, Hillsborough County; F. M. Robles, judge.

COUNSEL

Henry E. Williams and C. W....