Case Name: Grant vs. Law
Court: Wisconsin Supreme Court
Jurisdiction: Wisconsin
Decision Date: 1871-06
Citations: 29 Wis. 99
Docket Number: 
Parties: Grant vs. Law.
Judges: 
Reporter: Wisconsin Reports
Volume: 29
Pages: 99–104

Head Matter:
Grant vs. Law.
Contbact: Rescission onground of frdud. JudgriieAt.
1. In an action in equity for tlie rescission of a contract for the sale of md on the ground of fraud, and also to have a mortgage and’ notes for purchase money' released and canceled, a judgment which does not provide for an absolute rescission of the contract, but treats it as valid in part, and void in part, and cancels such notes and mortgage, permitting the purchaser to hold on to the land, cannot be sustained.
2. A party cannot disaffirm a contract in part on the ground' of fraud, and’ affirm it as to the residue. He must make his election either to rescind it in toto, by restoring all that he has obtained by it, in which case he may recover back what he has paid on it, of he may retain the property and sue for damages- for the fraud. The rule is the same in respect to both personal and real estate.
APPEAL from the Circuit Court for La Fayette County.
The complaint states that the plaintiff purchased of the defendant, four hundred acres of land in LaFayette county, for the consideration of $40,000, paid $15,000 in'cash, and gave notes and a mortgage for the Balance, three'of which, fór the sum of $5,000 each and interest at ten per cent., were still' outstanding and Belonged to defendant. The' plaintiff then alleged' that, to induce him to purchase, the defendant By his agent, R. S. Law, represented among' other things, that - such land Was very rich and valuable mineral ground, add contained large quantities of lead ore, and that a test Rad been made and lead ore discovered; that he was induced by his belief in suchrepre-sentations to make the purchase and pay the price; that they were knowingly, falsely and fraudulently made for the fraudulent purpose of inducing him to purchase at that price; that in fact, no lead ore or mineral of any value had been found, and there were, at the time the representations were made, no perceptible indications to warrant the conclusion that the land was mineral land; .that he had expended a large amount of money and made a thorough test, and clearly established the fact that it was not; and that he had tendered to the defendant a deed of the premises and requested him to refund the money paid, which was refused.
He therefore asks judgment for $60,000 damages, and that the defendant be required to release and discharge such mortgage and deliver up said three notes to be canceled; and that, until final judgment, he may be restrained from disposing thereof.
The defendant, by answer, among other things, expressly denies all the fraudulent representations, alleged; or that the plaintiff was induced thereby to purchase; or that the plaintiff had been defrauded or damaged in any sum; or that R. S. Law, the person alleged to have made such representations, was- his agent; or that the plaintiff had made a thorough test of the land as to its being mineral land; but alleges that the land was good agricultural land, having on it valuable improvements, and was worth $40,000; that the negotiation for the purchase was made between the plaintiff and defendant personally,. and the plaintiff expressly stated at the time that he relied upon his own judgment about the land; and asks that the injunction may be dissolved and judgment rendered in his favor for- the interest due on the outstanding notes. .
At the trial, the court, without the consent of the parties, submitted to a jury certain questions of fact, and they having found, in answer to the first question, that the defendant did in duce the plaintiff to purchase the tracts of land described in his complaint, by means of the fraudulent and false representations alleged therein; and the court haying adopted such finding, and having found the further facts alleged in the complaint, and that the plaintiff had suffered loss and damage to the amount of four thousand dollars, expended in searching for mineral, and $27,000, the difference between the value of the land as found by the jury, and the price agreed to be paid; and that the plaintiff had remitted all damages over and above the amount of the unpaid notes and interest; it found as conclusions of law that the plaintiff was entitled to recover the amount of such notes and interest, and to have judgment that the defendant surrender the notes and discharge the mortgage in lieu of a judgment for said amount of damages, and that he recover his costs and expenses, and that the temporary injunctional order before granted be made perpetual.
From the judgment entered in accordance with such findings, the defendant appealed.
Finches, Lynde & Miller, for appellant,
contended that the whole trial had proceeded upon the erroneous theoiy that R. S. law was the agent of the defendant, which was not established by proof; and for that reason judgment should be reversed, citing 9 Wallace, 553; '20 How., 252; id., 359 ; that the verdict was against the weight of evidence; that the plaintiff’s offer to rescind, if not too late, was insufficient, as he did not offer to restore all that he had received, citing Weed v. .Page, 7 Wis., 503; Costigan v. Hawhins, 22 id., 74; jRollen-lech v. Shoyer, 16 id., 503; and that the judgment was erroneous in not rescinding the whole contract, but merely cancel-ling the unpaid notes and mortgage, thus giving the plaintiff title to the land, and depriving the vendor of the purchase money, citing Goelth v. White, 35 Barb., 76; Lamerson v. Marvin, 8 id., 9; Pratt v. Philbrooh, 33 Me., 17; Pearsoll v. Chapin, 44 Pa. St., 9 ; Aherly v. Vilas, 21 Wis., 88; Williams v. Ketchum, id., 432; Cain v. Guthrie, 8 Blachf., 409.
• ' Orton & Osborn, and M. M. Cothren, for respondent,
argued that, no written exceptions Raying been taken to tbe separate findings of fact or conclusions of law, or to tbe instructions to tbe jury, there was no error before tbe court for correction, citing laws of 1860, chap. 264, sec, 18 ; Smith v. Coolbaugh, 21 Wis., 427; Taft v. Kessel, 16 id., 278; Oilman v. Thiess, 18 id., 528; Newel y. Doty, 88 N. Y. (6 Tiff.), 88; Strohn v. D. & M. R. R. Co., 28 Wis-, 126; Nieles v. Marshall, 24 id., 139; Sylvester v. Gurnsey, 22 id., 570. As to tbe question of fraud, they cit.ed Smith v. Mariner, 5 Wis., 556; Kelly v. Sheldon, 8 id., 258; 1 Story’s Eq., § 186 and note 3; and Hubbard v. Briggs, 31 N. Y., 518, As to tbe liability of tbe defendant for tbe fraud of R. S. Law by accepting tbe contract and refusing to make restitution after knowledge of tbe fraud, they cited 1 Story’s Eq., § 193; Fitzsimmons v. Joslin, 21 Vt., 140; Fuller v.Wilson, 3 Ad. and Ell., N. S., 58; Hartopp v. Hartopp, 21 Beayan, 259; Adams’ Eq. (3 Am. ed.), 396 ; Bennettv. Judson, 21 N. Y., 238; ElweU v. Chamberlain, 31 N. Y., 611; Low v. Conn. R. R. Go., 46 N. H., 284; Morton v. Scull, 23 Ark., 289; Udell v. Atherton, 7 Hurl. & Nor. Eng. Ex., 172; Sharp v. New York, 40 Barb., 256; Ballston Spa Bank v. Marine Bank, 16 Wis., 120; Paine v. Wilcox, id., 202; Beal v. Park Fire Ins. Co., id., 241; Huguenin v. Baseley, 3 Leading Cases in Eq., 103; Whelan v. Whelan, 3 Cow., 537.

Opinion:
CoiiE, J.
It is objected that tbe judgment in this case proceeds upon an .erroneous basis, and cannot stand; that it gives tbe plaintiff the title to tbe land, and yet deprives tbe vendor of tbe unpaid purchase money. It is insisted that, if tbe plaintiff seeks to rescind the contract on account of fraud practiced upon him by the defendant at tbe time of sale, then be must rescind in tolo, and cannot rescind in part and affirm in part. The complaint demands a judgment for sixty thousand dollars damages sustained in consequence of the fraud and misrepresentations made in regard to the land being rich and valuable mineral ground, containing large quantities oí lead ore, etc., and also tbat tbe mortgage and three unpaid promissory notes be released and cancelled. Tbe circuit court beld tbat tbe plaintiff was entitled, in lieu of a judgment for tbe amount of damages, tbat tbe defendant surrender and deliver up these notes and release tbe mortgage of record, retaining, of course, tbe real estate which be bad purchased. It is net claimed by any one that this is an action at' law for fraud and deceit, where tbe recovery is a judgment in form for so many dollars according to tbe proof of tbe amount of damages sustained by the plaintiff. This evidently is not tbe theory of tbe action, and such is not tbe relief granted by tbe judgment. But this is obviously an action in equity for a recission of tbe contract on tbe ground of fraud. It is like tbe case of Miner v. Medbury, 6 Wis., 295, and cases of that character.
And tbe difficulty, therefore, which meets us at tbe outset and which appears to be insurmountable is, tbat tbe judgment does not provide for an absolute recission of tbe contract, but treats it as valid in part and void in part. Tbe plaintiff is permitted to bold on to tbe real estate, and at tbe same time have tbe notes and mortgage executed to secure tbe payment of a portion of tbe purchase money canceled for fraud. It seems to us tbat this cannot' be done'without a violation of well established principles. We do not wish to be understood as bolding that; upon tbe evidence, tbe plaintiff would be entitled to a rescission of tbe contract and a recovery of tbe amount paid, but merely tbat be cannot affirm and disaffirm tbe contract at tbe same time. This, 'is well settled. Weed v. Page, 7 Wis., 503; Hollenbeck v. Shoyer, 16 do. 499; Costigan v. Hawkins, 22 Wis., 74 ; Akerly v. Vilas, 21 do. 88; Weeks v. Robie, 42 N. H., 316; Pearsall v. Chapin, 44 Penn., S. R., 9 ; Barton v. Beer, 35 Barb. S. C., 78. are a few of tbe very many Cases which might be cited in support of this doctriue.
Tbe law upon this subject is very clearly laid down by Beardsley J., in Massen v. Bovet, 1 Denio 69-74, as follows: The party who would disaffirm a fraudulent contract must return whatever he has received upon it. This is on a plain and just principle. He cannot hold on to such part of the contract as may he desirable on his part and avoid the residue, but must rescind in toto if at all." And the rule is the same in respect to both real and personal estate. The plaintiff must make his election, either to rescind the contract by restoring all that he has obtained by it, when he may recover of the defrauding party what he has paid upon it, or he may retain the real estate and sue for damages sustained by reason of the alleged fraud. But he cannot affirm so much of the contract as may be advantageous to him, and rescind as to the residue. And this seems to be what was really done by the judgment of the court below.
It results from these views that the judgment of the circuit court must be reversed, and the cause remanded for further proceedings.
By the Court. So ordered.