Case Name: JOSEPH C. COLLINS v. CLARENCE F. TOWNSEND
Court: Supreme Court of California
Jurisdiction: California
Decision Date: 1881
Citations: 58 Cal. 608
Docket Number: No. 6,669
Parties: JOSEPH C. COLLINS v. CLARENCE F. TOWNSEND.
Judges: 
Reporter: California Reports
Volume: 58
Pages: 608–616

Head Matter:
[No. 6,669.
In Bank.]
JOSEPH C. COLLINS v. CLARENCE F. TOWNSEND.
Fraud—Rescission of Contract.—A person desiring to rescind a contract because of fraud, must, so far as his action can do it, restore the parties to their former condition within a reasonable time.
Id.—Id.—Reasonable Time.—The defendant purchased of the plaintiff certain stock for the sum of-dollars, and pledged the stock to the plaintiff to secure promissory notes given for the purchase money. The contract was procured by fraudulent representation made by the plaintiff to the defendant with reference to the value of the stock, the falsity of which was discovered by the defendant about the 1st of January, 1873, after paying six hundred dollars of the purchase money. November 13th, 1874, the stock was sold by the plaintiff for nineteen dollars and sixty-cents, and the proceeds applied upon the notes. An action to recover on one of the notes was commenced January 4th, 1876, and the answer filed May 22d, 1876: Held, That the defendant had not sought to rescind within a reasonable time.
Construction of Pleading. —A pleading must be taken most strongly against the pleader.
Pleading—Want of Consideration.—The defendant pleaded that the note sued upon was obtained by false and fraudulent representations made to to him by the payee, and without consideration therefor.
Held, That the latter words did not constitute an independent and separate allegation of facts, the evident meaning being, that the note was without consideration, because of the false and fraudulent representations referred to.
Fraud—Rescission of Contract—New Trial—Appeal.—Held, upon reversal on the appeal, that the case'is one in which a new trial should be had if either party desired it.
Appeal from a judgment for the defendant in the Twenty-third District Court, City and County of San Francisco. Thornton, J.
James C. Cary, for Appellant.
Conceding that defendant was induced to make the pur chase by the false and fraudulent representations of plaintiff, that constitutes no defense to the payment of the note so long as the contract remains unrescinded. The contract here has never been rescinded. (Gifford v. Carvill, 29 Cal. 592.)
J. B. Townsend, for Respondent.
The case of Gifford v. Carvill, cited by appellant’s counsel, originated prior to the year 1866, and was decided by the Supreme Court in April of that year. At that time no law similar to section 439, Code Civ. Proc., existed in this State, hut a defrauded party had all of the three remedies allowed at common law. We submit that the case of Gifford v. Carvill ought not to be held decisive of the present case, especially in the present changed condition of the remedies, in cases of fraud, now allowed and compelled to he sought under our Code of Civil Procedure. The very case cited in Gifford v. Carvill as foundation for it, to wit, the case of Herrin v. Libby, 36 Me. 357, as quoted by our Supreme Court, clearly shows the choice of remedies possessed by the injured party, to either rescind and repudiate the contract in toto, “ or to affirm the contract and claim compensation or damages for the injury he has sustained by reason of the fraud.” The case of Burton v. Stewart, 3 Wend. 239; S. C., 20 Am. Dec. 692, decides only that it was too late to rescind the contract and treat it as void when sued on the note for the purchase money; not that the injured party might not, whilst affirming the contract, deduct or recoup the damages which he had sustained by the fraud. We further submit that the case of Gifford v. Carvill was, as is manifest from the opinion itself, decided wholly in view of the rights of a party who attempted and claimed to rescind the contract, and that to apply its doctrines to a case like the present, where an injured party does not attempt to rescind, but only to recoup the amount of damages which he has sustained by the fraud of the plaintiff, would be contrary to the established law, not only of England, but of all of our sister States. (Burton v. Stewart, 3 Wend. 238; Wheaton v. Baker, 14 Barb. 394; Beecker v. Vrooman, 13 Johns. 302; Hazard v. Irwin, 18 Pick. 102; Borrekins v. Bevan, 3 Rawle, 44; S. C., 23 Am. Dec. 85; Voorhees v. Earl, 2 Hill, 288; Harrington v. Stratton, 22 Pick. 510.)

Opinion:
The Court in Bank:
As the opinion of Department One contains a correct exposition of the law applicable to this case, we adopt the same as the opinion of the Court in Bank.
On reversing the judgment of the Court below this Court remanded the case to that Court for a new trial. Appellant's counsel moves that the judgment of this Court be so modified as to direct the Court below to enter a judgment in favor of the plaintiff and against the defendant. This motion must be denied. We are of the opinion that the case is one in which a new trial should be had if either party desires it.
Motion denied.