Court Opinion

ID: 8264144
Source: CourtListenerOpinion
Date Created: 2022-10-16 15:58:48.588557+00
Date Added: 2024-06-11T16:43:17.113427
License: Public Domain

MacFarlane, J.,
concurred in the result and wrote a separate opinion. Burgess, J., wrote a dissenting opinion concurred in by Gantt, P. J., and Sherwood, J., in which it is said (1. c. 385.) :
“If anything has been paid by the purchaser, although he obtain the property through fraud, before the vendor can recover it, he must restore whatever value he received to the purchaser.
“The parties should be put in statu quo as far as possible. [Stevens v. Hyde, 32 Barb. 171; McMichael v. Kilmer, 76 N. Y. 36; Graham v. Meyer, 99 N. Y. 611; Baird v. The Mayor, etc., 96 N. Y. 567; Tisdale v. Buckmore, 33 Me. 461; Camplin v. Burton, 2 J. J. Marsh. 216; Gifford v. Carvill, 29 Cal. 589; Estis v. Reynolds, 75 Mo. 563; Bisbee v. Ham, 47 Me. 543; 1 Bigelow on the Law of Fraud, pp. 73, 74.]
“When one has received anything of value on a settlement of a right of action and executed a release thereof, it follows inevitably that the contract of settlement, not being void, it constitutes an insuperable barrier against a recovery SO' long as it is rescinded or avoided by an offer to return the consideration paid for it. It was in principle SO' held in Insurance Co. v. Howtard, 111 Ind. 544. It was there decided that it did not 'alter the case that the compromise may have been brought about by the fraud and misrepresentation of the defendant. Or that in the end it was found that a sum largely in excess of the amount paid to settle the disputed liability was due the plaintiff.’ [See, also Brown v. Ins. Co., 117 Mass. 479.]”
If it be conceded that the opinion of Barclay, J., *90in the Girard case, correctly states the law, it does not support the contention of the plaintiffs. In the opinion of M'ofarlane, J., concurred in by Black, C. J., and Brace, J., reply was not regarded as an equitable plea praying that the release be cancelled, but was treated as a plea at common law alleging that the release was o'b; tained by fraud and holding it a proper plea under the rule given by Ohitty that “to a bill of release, he (plaintiff) may reply non est factum, or that it was obtained by duress or fraud.” [1 Ohitty on Pleading (1 .Am. Ed.), 608.] So it appears by the opinion of three of the judges that the omission to- tender back the benefits received was not fatal to the reply on the ground that the reply alleged the release pleaded in bar of the suit was obtained by fraud. The doctrine of this case, in actions for personal injuries, has been incorporated into our Code of Civil Procedure by a new section (R. S. 1899, sec. 654)
In Robinson v. Siple, 129 Mo. 208, 31 S. W. 788, on a review of the authorities, the court held that the failure of a party desiring to rescind a contract of sale to tender back the consideration of the sale and place the other party in statu quo, was an insurmountable barrier to his right to recover.
In Carson v. Smith, 133 Mo. 606, 34 S. W. 855, it was ruled: “Where one is induced to enter into a contract by reason of false and'fraudulent representations, he can rescind the same only by placing the other party in statu quo.”
These were all actions at law, and there is a broad distinction between a bill in equity brought to rescind a contract and an action at law based upon the theory that it has already been rescinded. The distinction is well drawn in Gould v. Cayuga County National Bank, 86 N. Y. 75, where the plaintiff brought suit upon the theory that a contract, upon which he had been paid twenty-five thousand dollars, had been rescinded. Before bringing his suit he failed to put the other party in statu, quo*91by paying or offering to pay back tbe money be bad received, tbougb, pending tbe suit, be deposited tbe money, with interest, with tbe clerk of tbe court, to remain on deposit until final judgment, and to be restored to bim unless tbe judgment should determine that tbe bank should recover it, in which event it should be awarded to tbe bank. Tbe court held that tbe plaintiff could not maintain bis suit for tbe reason be bad not paid or tendered tbe twenty-five thousand dollars, before commencing tbe suit. At page 83, tbe court said:
“If this bad been an action in equity to rescind tbe contract, tbe court could have done equity between tbe parties and so moulded its judgment as to accomplish that result. It could,, if needful, have brought into tbe litigation matters pertaining to tbe trust created by Starin for plaintiff’s benefit, and to that end could have ordered that Starin and tbe trustee be made parties. This action was brought as an action at law, no mention being made in tbe complaint of tbe compromise agreement or of tbe $25,000 paid to tbe plaintiff. A purely legal defense was set up; it was tried-as an action at law, and no motion was made to convert it into an equity action.
“It is idle to say that tbe distinction between legal and equitable actions has been wiped out by tbe modern practice. It is true that all actions must be commenced in tbe same way; that in every form of action tbe facts constituting tbe cause of action or defense must be truly stated; that fictions in pleadings have been abolished, and that both kinds of actions are triable in tbe same courts. But tbe distinction between legal and equitable actions is as fundamental as that between actions eat contracto and ex delicto, and no legislative fiat can wipe it out.” On tbe succeeding page it is said: “Tbe difference between an action to rescind a contract and one brought, not to rescind it, but based upon tbe theory that it has already been rescinded, is as broad as a gulf.”
In Paquin v. Milliken, 163 Mo. 79, 63 S. W. 417, *921092, a suit in equity, Gantt, J., in discussing the rule, that he who seeks equity should do equity, at p. 105, said:
“No more lucid exposition of the rule in equity has come under our observation than is found in the opinion of Chief Justice Cooper in Brown v. Norman, 65 Miss.. B69. Referring to the dintinction between a rescission by the party himself as a basis of an action at law, he says: ‘Since the law permits him to reacquire this legal right, by his own act, it puts upon him the necessity of restitution of the thing received by him as a condition of the exercise of the right to avoid the contract. From necessity, the law knows nothing of compensation but requires restoration of the thing received, for to permit the plaintiff to determine what would be just compensation would be to- make him judge in his own case. But in equity the complainant does not necessarily rescind and sue; he may sue for rescission. He is required to restore the consideration, not however as a condition of acquiring the right to sue but because of the equitable maxim that he wlm seeks equity must do equity.’ ”
Under the head of “Cancellation of Instruments,” Story says: “Courts of equity act upon an enlarged and comprehensive policy; and therefore in granting the relief they will impose such terms and qualifications as shall meet the just equities of the opposing party.” [2 Story’s Equity Jurisprudence, sec. 707.]
In Whelan v. Reilly et al., 61 Mo. 565, Judge Sherwood, after quoting the rule that he who seeks equity must do equity, and after citing instances where it should be applied, at page 570, says: “The above are only a few out of a large number of examples which might be cited in illustration of the rule referred to, which finds its application, not in questions of pleading, nor by what the plaintiff offers to do therein, but in the form and frame of the orders and decrees, both interlocutory and final, whereby equitable terms are im*93posed as a condition precedent to equitable relief granted.”
Barker v. Wallace, 8 Beav. 92, was a suit to' cancel a life insurance policy on the ground that it had been obtained by false and fraudulent representations. Premiums had been paid on the policy by the assured. The plaintiffs did not make a tender of the' premiums before bringing the suit. On this ground, a demurrer to the bill was filed. The prayer of the bill was that the policy might be delivered up to' be cancelled, or that the plaintiffs might otherwise be" relieved, in such manner as the court might think fit. This Avas held sufficient and the demurrer was overruled. Substantially the same ruling was made by Lord Selborne, L. C., in Jervis v. Berridge, 8 Chan. App. Cases 351.
In their petition plaintiffs ask that the six hundred dollars paid be regarded as part payment of the damages alleged to have accrued to them. The rescission of the contract would as to the parties thereto, have the effect to expunge from the records of the Greene Circuit Court the judgment for one hundred dollars plaintiffs ■ recovered of the city of Springfield and the milling company, and also plaintiffs’ suit against the defendant railroad company and the milling company, pending at the time the contract was made, and likewise to cancel the deed made by plaintiffs to defendant and thus to reopen the entire controversy between the plaintiffs on the one side and the defendant, the city of Springfield and the milling company on the other, in respect to the laying of the tracks in the street in front of plaintiffs’ property and the operation and standing of cars thereon, and necessitate a new inquiry as to the damages caused thereby. Not only the six hundred dollars paid by plaintiffs, but the costs, also accrued and paid by defendant in the two suits, should be offset against any damages to which plaintiffs may be entitled. In their petition plaintiffs ask that the six hundred dollars paid to them be regarded as part payment of the damages, but no mention *94is made of the costs paid by the defendant. It seems to me that when plaintiffs offered to do equity, they should have offered to do complete equity by asking that the costs paid, as well as the six hundred dollars, be regarded as part payment of their damages. But it is contended that it is not indispensable that plaintiffs should make a formal offer in their petition to put the opposite party in statu quo, that the chancellor, on the hearing, will make such orders and render such judgments, interlocutory and otherwise, as the equities of the case may require. It is true, that it was not indispensable that plaintiffs should have formally offered to restore to defendant what it paid out on the contract and that the chancellor may, on the hearing, adjust the equities between the parties, by such decrees as to Mm may seem proper. But when plaintiffs by their bill offer to do equity, they should not have stopped short of offering to do complete equity. The petition should, in any view of the case, have put the chancellor in possession of all the facts within the knowledge of the plaintiffs and, as the petition shows on its face the existence of facts, the payment of costs in the possession of the plaintiffs or easily ascertainable by them, which the chancellor should know, and must know to do' complete equity between the parties, plaintiffs should have stated these omitted facts. TMs criticism, however, does no't go to the sufficiency of the petition to state a cause of action, and I do not think the petition is open to the objection, that it fails to state a cause of action for the reason it does not offer to restore to the opposite party what plaintiffs received on the contract and what defendant paid out on the contract. Thp petition is sufficient to support a judgment if the facts alleged bring the case within the jurisdiction of a court of equity.
The jurisdiction of a court of equity to rescind or cancel a contract or other solemn instrument is exercised for fraud actual or constructive, on account of mistake or oppression, or where the signature of the *95complaining party to the instrument was obtained by duress or undue influence, or where it is against conscience for the party holding the same to retain it. Pomeroy says: “The occasion giving rise to the exercise of this jurisdiction (to cancel or rescind a contract) are mistake, fraud, and other instances where enforcing instruments or agreements would be inequitable or unjust.” [4 Pomeroy’s Equity Jurisprudence, sec. 1377.] It is nowhere alleged in the petition that the contract is voidable for mistake, fraud, duress .or that plaintiffs’ signatures were procured by undue influence. The sole ground relied on for its cancellation is that a part of the consideration moving from defendant to plaintiffs, inducing them to enter into the cotranct, was defendant’s covenant that it would not in the future stand cars on its tracks in front of plaintiffs’ premises, and that defendant has broken this covenant. The breach alleged does not go to the whole of the consideration for the contract, and for this reason does not authorize a rescission by either party. The covenant, not to stand its cars upon the tracks in front of plaintiffs’ premises, is not a mutual, dependent covenant, for the reason it does not go to the whole of the consideration of the contract and plaintiffs have an adequate remedy at law for damages for its breach. [Butler, Admr., v. Manny, 52 Mo. 506; Turner v. Mellier, 59 Mr. 526.] As was said by Lord Mansfield, in a note to Duke of Albans v. Shore, 1 H. Bl. 1. c. 273: “The distinction is very clear, where mutual covenants go to the whole of the consideration on both sides, they are mutual conditions, the one precedent to the other. But where they go only to a part, where a breach may be paid for in damages, there the defendant has a remedy on his covenant, and shall not plead it as a condition precedent.” [See, also, Central Appalachian Co. v. Buchanan, 73 Fed. 1. c. 1012.]
In Union Pacific Ry. Co. v. Ins. Co., 49 U. S. App. at page 759, the court said: “But a breach of the covenant of the second class, a covenant which does not go to *96the whole consideration of the contract, hut is subordinate and incidental to its main purpose, does not constitute a breach of the entire contract or put an end to the agreement, but the injured party is still bound to perform his part of the contract, and the only damages he can recover consist in the difference between the amount which he actually received or lost and the amount which he would have received or lost if the broken covenant had been kept. [Pordage v. Cole, 1 Saund. 320, note; Campbell v. Jones, 6 T. R. 570, 573; Surplice v. Farnsworth, 7 Man. & Gra. 576, 584; Obermyer v. Nichols, 6 Binney, 159, 160, 164; Burnes v. McCubbin, 3 Kan. 221, 226; Butler v. Manny, 52 Mo. 497, 506; Turner v. Mellier, 59 Mo. 526, 536; Pepper v. Haight, 20 Barbour 429, 440; Central Appalachian Company, Limited, v. Buchanan, 43 U. S. App. 265.]” [See also Kauffman v. Reader, 54 L. R. A. 247, s. c., 108 Fed. 171.] These are law cases but they show, if citation of authorities is necessary in support of so plain a proposition, that plaintiffs have an adequate remedy at law for the breach of the covenant of which they complain. Reduced to its last analysis, the petition seeks a rescission of the contract on the sole ground that when it was made, plaintiffs accepted a less sum as compensation for the damages then accrued than was justly due them, and for this reason the compromise settlement should he rescinded. The law favors compromises and settlements of disputes; the policy of the law being that there should be an end of disputes. [Mateer v. Railway, 105 Mo. 320, 16 S. W. 839.] That equity will uphold compromise settlements, when fairly entered into, was ruled in Faust’s Admx. v. Birner, 30 Mo. 414. The petition does not allege that any unfairness entered into the making of the compromise settlement, nor does it state any other ground for equitable relief. I think, therefore, the learned trial judge correctly ruled that the petition stated no cause of action.
I think the judgment should he affirmed.