Court Opinion

ID: 8033322
Source: CourtListenerOpinion
Date Created: 2022-09-09 03:17:55.855776+00
Date Added: 2024-06-11T16:37:02.788122
License: Public Domain

Day, J.
This case was before this court on a former occasion, the opinion being reported, ante, p. 277. The material facts are set out in our former opinion and need not be restated.
Upon a reargument, ordered by the court, the defendants Noah and Sacks specially urge that the trial court erred in not dismissing them from the case. It is argued by these defendants that, in the form of action presented by the amended petition upon which the action was tried, they were not proper parties defendant. There is some conflict in the testimony as to whether Noah and Sacks were the agents of the Bankers Automobile Insurance Company, or Charles Maixner, in selling the stock of the automobile insurance company to the plaintiff. That fact, however, is not material as we now view the case. As originally instituted, the action was one in damages for fraud/alleged to have been practiced by the automobile insurance company, Charles Maixner, and Noah and Sacks, in inducing the plaintiff to purchase a number of shares of stock in the automobile insurance company. The original action clearly shows that Noah and Sacks were merely agents, and that the alleged fraudulent acts were committed by them in- inducing the plaintiff to purchase the stock. As originally brought, it is clear that the principal, as well as the’ agents who participated in the fraudulent acts, would be liable in damages, and therefore the agents were proper parties to be made defendants.
It appears, however, that after the action had been pending about nine months, and just prior to the trial, the plaintiff filed an amended petition in which he changed the form of his action from an action in damages to one for rescission. In the amended petition he set out the alleged fraudulent acts committed by Noah and Sacks, which induced him to purchase the stock, asked for a rescission of the contract, and prayed that the purchase price of the stock be paid back to him. The same parties were named as de*285fendants as in the original action. «The principal question presented by the record, as it now stands, is whether in an action for rescission the agents who by fraud procured the contract are proper parties c defendant. The weight of authority sustains the rule that, in an action against a corporation for a rescission of a contract of purchase of. its stock on the ground of fraudulent representations of its agent inducing the purchase, the agent is not a necessary or proper party defendant. The reason of the rule is apparent. In such case the purchaser tenders back to the principal the thing he has received and demands a return of the consideration given. YThe contract relations are between the principals, and not the agent. The liability of the agent for his wrong-doing to a purchaser is by force of other principles of law than those which measure and fix^ the rights of parties to a contract. It is true that the agents kept a part of the money paid by the plaintiff for the stock, but this was by virtue of a contract with their principal by which they were to receive a certain commission on all sales of stock made by them. From a legal standpoint their principal received all of the consideration paid by the purchaser. For cases supporting the view we have expressed, see Ritzwoller v. Lurie, 225 N. Y. 464; Wimple v. Patterson, 117 S. W. (Tex. Civ. App.) 1034. This court has approved the distinction between an action for rescission for fraud and one in tort for damages for the fraud. The two causes of action cannot be joined, as they are repugnant, one affirms and the other disaffirms the contract. Alfree Mfg. Co. v. Grape, 59 Neb. 777; Baker v. Thomas, 102 Neb. 401.
On the argument an attempt was made to show that the action was one in the nature of a conspiracy among all the' defendants to defraud the plaintiff. This contention is not sustained by the amended petition. There is no charge that the wrong-doing was collusively done, or that it was the result of concerted action on the part of the defendants. The instructions given by the trial court clearly indicate that it regarded the action as one for rescission of the contract.
Upon a consideration of the record, we think the court *286erred in not dismissing the action as to defendants Noah and Sacks.
Our former opinion in this action is set aside, and the judgment of the trial court, in so far as it affects defendants Noah and Sacks, is reversed and the cause of. action as against them is dismissed.
Judgment accordingly.
Note — See Corporations, 14 C. J. p. 614, sec. 888.