Opinion ID: 312332
Heading Depth: 3
Heading Rank: 1

Heading: A right to damages for being led into the transaction;

Text: 34 2. Recission of the fraudulent transaction and restoration of the situation which the parties occupied before the fraudulent transaction was entered into; and 35 3. Enforcement against the fraudulent person of the kind of bargain he represented that he was making. 36 Williston on Contracts, Third Edition, Sec. 1523, pp. 606-607. The defrauded party cannot seek both to have the contract rescinded and at the same time sue on the contract for the damages resulting from the fraudulent transaction. Ringsby Truck Lines, Inc. v. Beardsley, 8 Cir., 1964, 331 F.2d 14, 17 and authorities cited therein, International Sec. Life Ins. Co. v. Finck, 475 S.W.2d 363 (Tex. Civ.App.1971), Holley v. Corbell, 443 S. W.2d 63 (Tex.Civ.App.1969), Dallas Farm Machinery Company v. Reaves, 158 Tex. 1, 307 S.W.2d 233, 238-239 (1957). 37 However, at the same time a judgment for fraud and breach of contract can stand, Southwestern Packing Co. v. Cincinnati Butchers' S Company, 5 Cir., 1944, 139 F.2d 201, 203; Bankers Trust Company v. Pacific Employers Insurance Company, 9 Cir., 1960, 282 F. 2d 106, 110; and International Sec. Life Ins. Co. v. Finck, supra 475 S.W.2d at 369. In Bankers Trust Co. v. Pacific Employers Insurance Co., supra, the Court said: 38 It is the law that one who has been fraudulently induced into a contract may elect to stand by that contract and sue for damages for the fraud. When this happens and the defrauding party also refused to perform the contract as it stands, he commits a second wrong, and a separate and distinct cause of action arises for the breach of contract. The same basic transaction gives rise to distinct and independent causes of action which may be consecutively pursued to satisfaction. Thus, an action on a contract induced by fraud is not inconsistent with an action for damages for the deceit;   . 18 Am.Jur. 139, El. of Rem. Sec. 14 (1st ed. 1938). A right of action on a contract and for fraud in inducing plaintiff to enter into such contract may exist at the same time, and a recovery on one of the causes will not bar a subsequent action on the other. 50 C.J.S. Judgments Sec. 676, p. 121 (1st ed. 1947). The courts of many states have recognized the rule that a suit on a contract and a suit for fraud in inducing the contract are two different causes of action with separate and consistent remedies. [Footnote omitted.] 39 Id. 282 F.2d at 110. See also Falls Sand and Gravel Co. v. Western Concrete, Inc., 270 F.Supp. 495, 500 (D.Mont. 1967). 40 In the present case, by the very terms of the contract, Fredonia's breach of contract claims cannot stand; the contract precludes it. 41 The jury's answers to Questions Nos. 7 and 9 show how the jury viewed the contractual relationship of the parties. 42 The jury found that a contract existed in Question No. 7 4 when it found that the parties intended that the defendant's proposal of January 15, 1969, coupled with the plaintiff's February 6, 1969, letter of acceptance, and the oral representation made by the defendant to the plaintiff constituted the contract between the parties. 43 The jury further found in Question No. 9 that the defendant breached this contract by the following acts: 44 (a) By deliberately withholding shipment to the plaintiff of the items of equipment contracted for more than 75 days after February 6, 1969, and thereafter until plaintiff completed documents submitted to it by the defendant? 45 (b) By delivering such equipment contracted for on a delayed, erratic, and incomplete basis? 46 (c) By delivering equipment that was not of a quality such as is generally sold in the market and suitable for that which it is intended or for the particular uses to which the goods were to be put? 47 (d) By withholding personnel necessary to supervise the installation of equipment until after June 1, 1969, and in failing to maintain such supervisory personnel on the site, except on an intermittent and irregular basis? 48 (e) By failing, after notice, if any, to correct or remedy any such condition, or repair or replace any such equipment? 49 The jury's answer to Question No. 7 that a contract existed between the parties and its answer to Question No. 9 that RCA breached the contract show that the jury believed Fredonia affirmed the contract it had been induced into by fraud. 5 In affirming the contract, Fredonia is bound by the contract terms as were set out in RCA's January 15, 1969, proposal. In that proposal, as we have already discussed. RCA was absolved from any responsibilty for late delivery, failure to supervise, and defective equipment. 6 Therefore, Fredonia's claims for breach of contract cannot stand. 50 The District Court recognized the inconsistency between the breach theory and the terms of the contract. It attempted to reconcile and explain the inconsistency in its post-trial order as follows: 51 [U]nless there is some theory under which Fredonia can void the entire February 6 transaction, or at least certain of its terms, it seems clear to the court that Fredonia would be precluded from recovery by the terms and conditions portion, which specifically defines the relationship between the parties as regards delivery dates, warranties, and supervision of installation. The effect of the jury's finding on the fraud theory is obvious. Less apparent is the effect of the jury's determination that RCA is liable also upon the warranty and breach of contract theories. To uphold the jury's verdict on the theories of breach of warranty and breach of contract, the court must assume that the jury tacitly reformed the contract, on the basis that RCA fraudulently represented that the warranty, delivery, and supervision provisions were actually different from those provisions as stated in writing in the formal terms and conditions attached to the McClanathan proposal. Otherwise, Fredonia is left with the express written provisions of the February 6 proposal which preclude RCA's liability. 52 We cannot agree that the jury could reform the contract. The judgment of the District Court as to breach of contract must be reversed and remanded for a new trial since the jury's answers do not represent a logical and probable decision on the relevant issues as submitted. Colvin, Prigmore v. Dempsey-Tegler & Co., Inc., 5 Cir., 1973, 477 F.2d 1283, 1285 (1973). See also Griffin v. Matherne, 5 Cir., 1973, 471 F.2d 911, 915 and cases cited therein. 53 Fredonia's claim for damages for fraud may, however, stand independently of the contract claim.