Court Opinion

ID: 3882006
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:13:11.821925+00
Date Added: 2024-06-11T13:52:26.361697
License: Public Domain

Upon the first consideration of this case, as I did not concur fully in the views of either Mr. Justice Gary or Mr. Justice Woods, I stated briefly my reasons for concurring in affirming the judgment of the Circuit Court. At that time, the pressure of other work prevented a more extended consideration and discussion of the questions involved. While I felt satisfied with my conclusion, I had some doubt of the reasons upon which it was based. Therefore, I have given the case careful consideration. Being now satisfied that some of the reasons advanced were unsound, I shall take the liberty of stating more at length the reasons for the conclusions to which a more exhaustive consideration of the questions involved and the authorities bearing upon them have led me.
In the former opinion, I held that two causes of action arose out of the misrepresentation alleged, — one in equity for rescission, and one at law for damages; that the complaint *Page 140 
stated only the facts constituting the cause of action in equity for rescission, and the proof failing to establish that cause of action, the relief appropriate to the cause of action at law, — damages, — could not be awarded, because that cause of action had not been alleged, — there being no general allegation of damage, and it not even being alleged that the lands conveyed to plaintiffs were not worth the price paid, and for the further reason that, upon that cause of action, defendant was entitled to trial by jury, which had not been waived.
The material allegations of the complaint are so fully stated in the other opinions, that I shall not repeat them. The facts stated constitute only one cause of action, — one primary right of the plaintiffs and one delict of the defendant. Pom. Rem., sec. 455. But out of this single cause of action, two remediable rights arose, — one in equity for rescission, the other at law for damages. Mr. Pomeroy clearly illustrates this kind of action with a case for specific performance. Where it is alleged that plaintiff has performed his part of a valid contract to convey lands, and that defendant refuses to convey, only one cause of action is stated, affording either legal relief in damages or equitable relief in a decree for a conveyance. He says that, upon the facts stated, even though alternative relief be demanded, only one cause of action is alleged, "although the reliefs prayed for would be distinct, and would have belonged under the old system to different forums, — the common law and the equity courts." Likewise, in this case, the same state of facts, — making only one cause of action, — entitled plaintiffs to either the legal relief of damages or the equitable relief of rescission.
The position that the measure of damages is the difference between the price paid and the value of the property conveyed has the support of very high authority. Sigafus v.Porter, 179 U.S. 116; 45 L. ed. 113. See also the cases cited in 20 Cyc. 135, note 13, from the Courts of Colorado, *Page 141 
Minnesota, Pennsylvania, Texas, Washington and England. But that question has been settled by this Court in the case of Beasley v. Swinton, 46 S.C. 426, where it is held that the measure of damages is the difference between the value of the property at the time of the sale and what it would have been worth had it been as represented. This decision has the support of the greater weight of authority. 20 Cyc. 132. While the complaint does not allege, in so many words, that plaintiffs have been damaged, it does allege facts from which damages would directly, naturally and necessarily result, and that is sufficient. Levi v. Legg, 23 S.C. 280. It appears, therefore, that I erred in holding that two causes of action arose out of the misrepresentation alleged and that the allegations of the complaint were insufficient to sustain an action for damages.
But where a complaint states facts which constitute only one cause of action from which two remedial rights arise, it does not follow the plaintiff shall have both remedies in the same action, for they may be inconsistent. As in the case for specific performance instanced above, the plaintiff certainly could not recover full damages for breach of the contract, and also have a decree for conveyance of the land. In such a case, if the facts had been alleged, and both forms of relief demanded, the plaintiff would have been required to elect which remedy he would pursue. In Pettus v. Smith, 4 Rich. Eq. 197, the Court quotes with approval the following from Brown v. Winter, 10 Ohio 142: "A purchaser from a vendor who cannot make a title has his choice of remedies. He may sue at law to recover damages for the nonperformance of the contract; or he may seek in chancery a specific performance, as near as the vendor is capable of performing; or he may rescind by an action at law for the purchase money; or in a bill in equity. He cannot do both. He must select one of the alternatives, either to enforce or rescind." In that case, (Pettus v. Smith) the purchaser, after discovering the defect in his vendor's title, brought an action and *Page 142 
recovered damages in place of the land taken from him. It was held that he had elected to enforce the contract, and that he was bound by his election, and the Circuit decree rescinding it was set aside. So, in this case, while two remediable rights arose out of the same cause of action, plaintiffs certainly would not be allowed both remedies, — damages for misrepresentation and also rescission of the contract and restoration of the status quo. They are inconsistent. One is allowed on the ground that the contract has been affirmed, the other on the ground that it has been repudiated. Therefore, if plaintiffs had alleged the facts and prayed for both forms of relief or for the alternative relief of damages or rescission, they would have been required to elect which remedy they would pursue. And while, under the present system of procedure, both forms of relief are administered in the same forum, yet they require different modes of trial; for nothing is better settled by the decisions of this Court than that the adoption of the reformed procedure made no change in the inherent distinctions previously existing between actions at law and suits in equity, or in the mode of trial thereof. Adickes v. Lowry,12 S.C. 108; Chapman v. Lipscomb, 18 S.C. 222; Holliday
v. Hughes, 54 S.C. 155, 31 S.E. 867; Alston v. Limehouse,61 S.C. 1, 39 S.E. 192.
I propose now to show that plaintiffs have made their election. The complaint, in its whole scope and bearing, is an action for rescission. It alleges that, before suit brought, plaintiffs demanded of defendant rescission of the contract, offering to reconvey the property and account to defendant for the rents and profits, and demanding return to them of the money paid; that they now, in this action, tender to defendant a reconveyance and offer to account for rents and profits; that "plaintiffs are without adequate remedy at law, and will suffer great and irreparable injury without the intervention of this honorable Court." The prayer for relief is: That defendant be required to accept a reconveyance, *Page 143 
and pay back the purchase money with interest from date of the deed, together with such sums as plaintiffs have necessarily paid for taxes and in preserving the property, and that an account be taken of the rents and profits to the end that same may be allowed to defendant, and for "such other and further relief as the Court may deem just and equitable and the nature of the case require."
While the general rule is that the prayer for relief is no part of the complaint and cannot determine the character of the action (Pom. Rem., sec. 580; Glover v. Farr, 23 S.C. 480), yet where the same facts alleged make only one cause of action from which two remediable rights arise, which are inconsistent with each other, and require different modes of trial, there is no other way to determine which mode of trial the parties are entitled to, — a question which must be decided at the threshold of the case. Gillett v. Treganza,13 Wis. 472. In other words, in such a case, the prayer for relief determines the plaintiff's election.
The issues so tendered by the plaintiffs were accepted by the defendant. The case was treated by all parties and by the master and Circuit Judge as an action in equity for rescission. The Circuit Judge says in his decree: "This is a suit in equity for the rescission of a contract, and not anaction at law for damages." There is no exception to this conclusion. In opening their argument in this Court, plaintiffs' attorneys themselves say: "This was an action * * * for the rescission of a contract." Under the pleadings, neither party could have successfully resisted an order of reference.DuPont v. DuBos, 339, 11 S.C. 389, 11 S.E. 673. Therefore, under these circumstances, it cannot be said that, by failing to object to the order of reference, defendant waived the right of trial by jury of the issue of damages.
The next question, then, is: Has the defendant the right of trial by jury on the issue of damages, or "abatement of price?" If that relief is equitable, the Court may award it, provided it is "consistent with the case made by the complaint *Page 144 
and embraced within the issue." Code, sec. 297. I have attempted to show that it is not "consistent with the case made by the complaint." One the other hand, if it is legal, I think there can be no doubt of the right of trial by jury, unless it can be awarded on another principle, which I shall discuss later.
It seems to me clear, both upon principle and authority, that the relief of damages or "abatement of price," growing out of an executed contract, is purely legal in its nature. Indeed, I cannot see how the phrase "abatement of price" is at all applicable in a cause like this, where the contract has been executed and the price fully paid. While it is true that our Courts have uniformly allowed an "abatement of price" on account of misrepresentation of a material matter affecting the transaction, unless it was of such nature as to call for a total rescission of the contract; yet, in every case which I have been able to find in our reports, it was allowed in actions to recover the purchase price, — where the contract was, therefore, still executory, — in which the purchaser was defendant, and it is established by the later decisions that it was allowed on the ground of failure of consideration.Evans v. Dendy, 2 Spears 9; Commissioners v. Smith, 9 Rich. 515.
Where a contract of purchase has been fully executed, and there has been a partial or total failure of consideration, can the purchaser sue in equity to recover a part or the whole of the consideration? Suppose the plaintiffs had merely stated the facts with regard to the misrepresentation, and, knowing that they had so dealt with the land as to preclude their right to rescission, had asked judgment only for recovery of a part of the price paid, would the action have been one at law or in equity? The difference between executed and executory contracts, and the rights and remedies growing thereout, as well as the difference in the position which one occupies as plaintiff and as defendant in actions thereon is important and must not be overlooked. *Page 145 
This difference is pointed out in Jones v. Bauskett, 2 Spears 70; Evans v. Dendy, 2 Spears 9; Prescott v. Holmes, 7 Rich. Eq. 14; and Latimer v. Wharton, 41 S.C. 508,19 S.E. 855. And it is aptly illustrated by the difference in the result of the cases of Evans v. Dendy, supra, and Bolivar
v. Zeigler, 9 S.C. 287. In the former, the plaintiff was denied the right to recover upon precisely the same facts which afforded the defendant in the latter a complete defense.
After diligent search, I have found no case in our reports in which a purchaser has been allowed to recover from the seller a part of the purchase money on the ground of fraud, misrepresentation, or mistake, affecting the contract of sale,as plaintiff in an action in equity after the contract has been fully executed. And I dare say there is none. For, upon such a cause of action, the remedy at law is plain, adequate and complete; and, in that case, equity has no jurisdiction. Pom. Eq. Jur., sec. 176, 178; Eno v. Caldwell, 14 Rich. Eq. 154; Hall v. Joiner, 1 S.C. 186.
The next question is: Can the relief be granted on the principle that where equity has jurisdiction for any purpose it will grant complete relief? It is well settled that where a court of equity acquires jurisdiction for any purpose, it will afford complete relief even to the awarding of damages or a money judgment, such as would otherwise be recoverable only in an action at law, Bouland v. Carpin,27 S.C. 239, 3 S.E. 219, and cases cited; and in cases where a legal defense arises out of and is inseparable from an equitable cause of action, as in McLaurin v. Hodges,43 S.C. 187, 20 S.E. 991; or where the relief is incidental to the main purpose of the action. Jenkins v. Jenkins, 83 S.C. 537,65 S.E. 736. But before relief can be granted upon that principle, it must appear that equity had jurisdiction. Upon what does the jurisdiction depend? Certainly not upon the mere allegations of the complaint; for if that were so, the plaintiff could always select his own forum and *Page 146 
mode of trial, and the very important constitutional right of trial by jury would rest upon very precarious tenure. Necessarily the jurisdiction must rest, not upon allegation, but upon proof of the grounds of equity jurisdiction. Now, in this case, it is the unanimous judgment of the Circuit Court and of this Court that the proof shows that the plaintiffs are not entitled to the relief in equity which they sought, and not because of any act or omission of the defendant. But, because of their own conduct, they have failed to gain any foothold in equity. Therefore, inasmuch as the Court has no jurisdiction to grant any equitable relief, it cannot, under the principle under discussion, grant any relief.
There is some conflict, perhaps an irreconcilable conflict, in the authorities in other jurisdictions upon this proposition. But the views which I have announced seem to me to be reasonable and logical and they are, I think, supported by the greater weight of the decided cases, and not in conflict with any of the decisions of this Court. It would unnecessarily prolong this opinion to recite and discuss the many authorities bearing upon this question. Those who desire to pursue the subject will find many of the cases collated in an extended note to the case of Johnson v. Grommett, 19 L.R.A. (N.S.) 1064. The preponderance of judicial opinion is expressed by the author of that note as follows: "Although a few cases are found which can be characterized only as variants from the general rule, the preponderance of opinion in relation to the subject under consideration clearly seems to be that where a case for relief in equity fails, a court of equity is without jurisdiction to award other relief by way of disposing of the entire controversy; unless, indeed, it appears that the remedy at law will be inadequate. Otherwise, as the Courts have frequently pointed out, a litigant, by a pretended claim for equitable relief, might deprive his opponent of advantages incident to an action at law." In 16 Cyc. 111, the rule is *Page 147 
thus stated: "Where the bill states matter within the equity jurisdiction, but plaintiff fails to establish such equity, the rule is that the bill must be dismissed, and cannot be retained for the purpose of allowing legal relief to which plaintiff has shown himself entitled."
I propose next to notice some of our own decisions to show that the conclusions which I have reached are not in conflict with them. In Clover v. Farr, 23 S.C. 480, an action was brought to correct an alleged mistake in a deed. It was therefore treated on circuit as an action in equity, and relief was decreed accordingly. This Court held that the plaintiff had no right to raise the question of mistake, as the alleged mistake did not occur between the parties to the deed sought to be corrected. That, therefore, the court of equity had no jurisdiction. But, as the complaint stated a legal cause of action for the recovery of the possession of real property, the judgment was reversed and the case remanded for trial by jury.
In Kinsey v. Bennett, 37 S.C. 319, 15 S.E. 965, the action was to enforce an alleged trust, compel the trustee to account, and obtain a lien upon the land alleged to have been conveyed in trust. The evidence failed to establish any trust, but did show a sale of the land to defendant and his failure to pay a part of the purchase price. It was held that plaintiff had failed to show any ground of equitable jurisdiction, and the complaint was dismissed, but without prejudice to plaintiff to bring an action on the legal demand. The Court recognized the general rule, under the reformed procedure, that where a plaintiff brings an action in equity for relief which equity alone can grant and fails to establish his equitable demand, the action should not be dismissed, if the allegations and proof show that he is entitled to some legal relief, but justified the dismissal of the complaint on the ground that the equitable cause of action alleged was wholly inconsistent with the legal cause of action proved. *Page 148 
In Salinas v. Ellis, 26 S.C. 337, 2 S.E. 121, an action was brought to foreclose a mortgage. The plaintiff alleged that, besides the mortgage debt, the mortgage, by agreement of the parties, was also to secure a note of defendant for $150 given subsequent to the mortgage. Before suit, defendant tendered the amount of the mortgage debt, which was refused on the ground that the amount due on the note was not included in the amount tendered. The Court held that there was no agreement that the $150 note should be secured by the mortgage; that the tender was therefore sufficient and discharged the lien of the mortgage, but allowed plaintiff judgment for the amount due on a mortgage debt and also on the note. Upon first impression, this case to seems conflict with the view that where the ground of equity jurisdiction fails, the Court will not grant legal relief, that is, without trial by jury. But I think the conflict is more seeming than real. In that case, nothing whatever is said about the mode of trial. It appears that the amount of the mortgage debt was not in issue. The defendant tendered the amount due, — therefore admitted that amount to be due. The plaintiff refused it solely on the ground that the amount due on the note was not included. It is probable also that there was no issue as to the amount due on the $150 note, for it may be inferred from the report of the case that the only issue as to that note was whether it was secured by the mortgage. This being so, there was no issue upon which defendant had the right of trial by jury. At any rate, the case decided nothing to the contrary.
In Miller v. Hughes, 33 S.C. 530, 12 S.E. 419, the action was by a simple contract creditor, who alleged facts showing an indebtedness of the defendant Hughes to him, and a disposition by the insolvent debtor of his property with intent to defraud his creditors. This Court held that the Circuit Court erred in sustaining a demurrer to the complaint for insufficiency. In response to defendant's contention *Page 149 
that plaintiffs' demand was legal and should first be established by a judgment at law, before the aid of equity could be invoked, the Court said that under the reformed procedure there was no reason why the plaintiffs should not be allowed to demand judgment for the amount due them "on the law side of the Court," and in the same action ask relief on "the equity side" of the Court from the fraud which would render their action fruitless. On the hearing of the case on the merits, the Circuit Court held that the proof failed to sustain the charge of fraud, and dismissed the complaint. On appeal (38 S.C. 513) this Court sustained the finding as to the charge of fraud, but reversed the judgment on the ground that it was error to dismiss the complaint "without giving plaintiff the opportunity of establishing his debt on the law side of the Court," from which the plain inference is that in the establishment of the debt the parties would have had the right of trial by jury.
In McMillan v. McMillan, 77 S.C. 511, 58 S.E. 431, the action was for specific performance of a contract to convey land. This Court sustained the Circuit Court in holding that the evidence failed to establish plaintiff's right to specific performance, and held further that the complaint was broad enough to allow plaintiff to recover the money paid on the purchase price, and remanded the cause for that purpose. But nothing was said as to the mode of trial of that issue.
In Hamilton v. McAllister, 49 S.C. 230, 27 S.E. 63, an action was brought for rescission of contract on the ground of mutual mistake. The Circuit Court decreed rescission. On appeal, two of the Justices of this Court held that the Circuit Court erred in rescinding the contract, but that it should only have been reformed. The reformation suggested, however, was only an abatement of the price agreed upon for the timber on a certain tract of land on account of the plaintiff's being deprived of the timber on a part of the tract, the title to which was supposed to be in defendant, *Page 150 
but found to be in another. The other two Justices held that plaintiff had failed to prove that he was entitled to any relief and that the complaint should have been dismissed. As it requires the concurrence of three of the Justices to modify or reverse a judgment of the Circuit Court, it follows that the judgment of the Circuit Court was affirmed, and neither of the opinions is binding as authority. I may add, however, that that case may be distinguished from this on the further ground that the contract was executory, — the purchase price being still unpaid.
The case of Bradley v. Aldrich, 40 N.Y. 504, is very much like the case at bar, and the decision fully sustains the view which I have taken. The syllabus is as follows: "In an action in which the plaintiff seeks only equitable relief, and which is tried by the Court without a jury, it appearing that no equitable relief can be granted, but facts appearing which would warrant an action for damages, the Court may not order a reference to compute the damages, and give judgment therefor." See also McCullough v. Scott, 13 B. Monroe 172, 56 Am. Dec. 561.
While an election to enforce a contract will preclude the party thereafter rescinding it, I do not think the converse of the proposition is true. An election to rescind, if rescission should be denied, does not preclude an action for damages, for the affirmation of the contract carries all rights thereunder.
I think, therefore, the judgment of this Court should be that the judgment of the Circuit Court be affirmed, without prejudice to plaintiffs' right of action for damages.