Court Opinion

ID: 5120530
Source: CourtListenerOpinion
Date Created: 2021-10-22 16:11:13.68969+00
Date Added: 2024-06-11T08:22:18.012318
License: Public Domain

ON MOTION FOR REHEARING.
HODGES, Associate Justice.
— In their motion for rehearing counsel for defendant Hill complain -of our conclusions of fact with reference to B. S. Me Cleary’s representations as to the existence of the note for $140 and its having been canceled. It is claimed that we did this defendant an injustice in concluding that the evidence was insufficient to show fraud on the part of B. S. McCleary, in deceiving Hill with reference to that note. Our attention is also called to some inaccuracies regarding the dates. This, however, is of no material consequence, and can not affect the result. The whole of the very elaborate argument presented by counsel is devoted to a discussion of the right of Hill to now escape liability upon his promise to pay the notes held by the plaintiffs in error, because B. S. McCleary falsely and fraudulently represented that the note for $140 had been paid at the time Hill purchased the land. We did not intend to rest our disposition of that particular question upon the insufficiency of the evidence to show that McCleary had made such representations, and that *159they were untrue. We think the result should be the same if it be conceded that McCleary made the false representations complained of, that Hill was ignorant of the truth and was misled as to the existence of the note referred to. In order to relieve the defendant from the embarrassment which counsel apprehend may result from the language of the original opinion, we deem it proper to say that we have not concluded, as a matter of fact, that the evidence is insufficient to show that McCleary was guilty of fraud. We leave that as an open question, one which we think it unnecessary to now decide. The contract which Hill is now undertaking to have rescinded is not in an executory stage; its provisions had been at least, partially, if not wholly, executed. Some of its stipulations had been substituted by another contract made by him and McCleary sometime afterward. The facts also conclusively show that at the time Hill and McCleary made their first contract, Hill obtained possession of two notes, aggregating something over $400. He admits in his testimony that he realized on both of these notes and had used the proceeds. It is also shown that the consideration which passed to McCleary in that transaction consisted, among other things, of a stock of goods all of which has apparently been disposed of. It is evident from these facts that it is now impossible to place the parties in statu quo by a cancellation of the original deed from McCleary to Hill. It is also true that Hill, not having assumed the payment of this $140, never became personally liable for it, and could have suffered no injury by a failure to have it canceled, except by an assertion of the lien against the property while he owned it. This was not done. The danger from that source passed away when Hill transferred the land back to McCleary, who was primarily and originally responsible for the payment of the note. Courts of equity will not interpose to rescind a contract for fraud, except where it becomes necessary to relieve the complaining party against some injury. Atlantic Delaine Co. v. James, 94 U. S., 207; Henninger v. Heald, 52 N. J. Eq. 431, 29 Atl., 190; Wenstrom, etc., v. Purnell, 75 Md., 119, 23 Atl. 134; Bomar v. Rosser, 131 Ala. 215, 31 So. 430; Hairalson v. Carson, 111 Ga., 57, 36 S. E., 318; 2 Pomeroy Eq. Jur. see. 898.
In the case of Delaine v. James, supra, the court used this language: “Cancelling an executed contract is an exertion of the most extraordinary power of a court of equity. The power ought not to be exercised except in a clear case, and never for an alleged fraud unless the fraud be made clearly to appear, never for alleged false representations unless their falsity is certainly proven, and unless the complainant has been deceived and injured by. them.” This language is quoted approvingly in a later case by the same court. Mr. Pomeroy in his Equity Jurisprudence, in treating of the right to have instruments canceled and contracts rescinded on account of fraudulent misrepresentations, says: “The statement of facts of which it consists must not only be relied upon as an inducement to some action, but it must also be one material to the interest of the party thus relying and acting upon it that he is pecuniarily prejudiced by its falsity, is placed in a worse position than he otherwise would have been. The party must suffer some pecuniary loss or injury as the natural consequence *160of the conduct induced by the misrepresentation. In short, the representation must be so material that its falsity renders it unconscientious in the person making it to enforce the agreement, or other transaction which it has caused. Fraud without resulting in pecuniary damage is not a ground for the exercise of remedial jurisdiction, equitable or legal. Courts of justice do not act as mere tribunals of conscience to enforce duties which are purely moral.”
Even if we admit that McCleary fraudulently induced. Hill to enter into the contract for the purchase of the land in the first instance, and that Hill might, while the owner of the land, have sustained some damage from an assertion of the lien by the holder, that danger has all passed away and that situation now no longer confronts him. In speaking of the effect of McCleary’s statement about the note, Hill says he did not think he would have taken the land had he known the truth.
It also appears that the rule permitting a cancellation for fraud will not be enforced where the rights of third parties have intervened. 2 Pomeroy, Eq. Jur., sec. 918; Navarro Pub. Co. v. Fishburn, 2 Posey, U. C., 596. If the conclusion reached in the original opinion, that Hoeldtke and Leach became creditors of Hill’s during the time he owned the land, be correct, then his obligation to pay them is absolute. It is not claimed that they were parties to the fraud, hence, they cannot be prejudiced by any right of rescission which Hill might have against McCleary on account of fraud. We therefore conclude that under the circumstances as they now exist, however fraudulent the transaction may have been originally, and however clearly the facts upon which they rely to show fraud may have been proved, Hill cannot now avail himself of the right of rescission i,n order to escape liability for the debts which he assumed. The motion is accordingly overruled.

Overruled.

Writ of error granted; reversed and remanded.