Court Opinion

ID: 7977186
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:01:14.382574+00
Date Added: 2024-06-11T16:34:56.257864
License: Public Domain

Philip E. Brown, J.
(dissenting).
I dissent. Defendant admits for the purposes of this case that it induced plaintiff, by fraudulent representations, to enter into an executory contract for the purchase of real property, wherein he agreed to pay defendant therefor $1,440 more than its worth, actually then paying $464, the balance of the purchase price being payable in deferred annual instalments covering a period of 10 years.
The question is, can plaintiff recover the $464 in this action, it being conceded, under the rule in Sigafus v. Porter, 179 U. S. 116, 21 Sup. Ct. 34, 45 L. ed. 113, and our cases to like effect, that such is all he has lost by the transaction or which he could in any event recover. Defendant contends, and the court concludes, that he cannot, because of (a) the form of the action; (b) cancelation of the contract inaugurated before the action ivas brought and completed thereafter; (c) lack of proximate causal connection between defendant’s fraud and plaintiff’s loss; (d) the rule as to measure of damages.
Unquestionably, the complaint not only states a cause of action, but also, under defendant’s admission, sets out facts which, if they had been seasonably acted upon, would have entitled plaintiff to a rescission of the contract and a return of the money paid. Hence if defendant’s claims are sustainable, such must follow from its cancelation of the contract, or else because the law infers therefrom a deprivation of plaintiff’s right of recovery. Neither of these propositions should be sustained. It is wholly inadmissible to read into the contract any right of cancelation on defendant’s part for plaintiff’s failure to comply with the terms thereof if tainted with fraud, ■so as to cut off the remedy sought, or any authority to retain plaintiff’s money obtained by fraud; nor should use of the cancelation stat*236ute be allowed for such purpose. Defendant had the right, upon plaintiff’s default in making deferred payments, to sever contractual relations with him, for the contract so provided, but it could not thus eliminate responsibility for its previous fraudulent conduct. If defendant, as actor, had undertaken to enforce the contract, it is clear that plaintiff could have offset his claim for damages made here, and it is equally clear that when he takes the initiative defendant should not be permitted, by statutory cancelation, to deprive him of the right to recover money it has no right to retain. But the case is not one of offset, and the fact that plaintiff was indebted to defendant under the terms of the contract, when he commenced his action, in a greater sum than he sues for, is irrelevant to the issues involved. The result to which the doctrine announced leads may readily be seen from its application to a supposititious case: A. fraudulently induces B. to enter into an executory contract for the purchase of lands at the agreed price of $30,000, and to pay $10,000 thereof, the remainder to be paid in six months. The land is worth only $5,000. The six months’ period expires, leaving B. in default. B. then sues A. to recover $25,000 damages for the fraud, whereupon A. proceeds by notice to cancel the contract for default in payment, and B. does nothing in the premises. Before the cause comes on for trial the cancelation is consummated, and such is made to appear in the action. Should it be held on these facts that B. will be precluded from recovering the money actually paid merely because A. has can-celled? Or should B., in order to preserve his standing to recover back his money, be required to go on and pay A. the additional $15,-000, taking his chances of realizing upon a recovery? Or should he be held not entitled, to recover in his action, and thus remediless, because he might, by use of diligence and compliance with the technical requisites thereof, have pursued the remedy of rescission and therein recovered the amount paid defendant, but did not ?
In the supposed, and also the present, case, language cannot obscure the fact that defendant, after having obtained plaintiff’s money through fraud, secures legal sanction to its retention, without, as I think, either legal or equitable right, merely by invoking the terms of the tainted contract. Under the facts plaintiff could have re*237covered this money in an action for money had and received — and this action should not be held for less — which lies “for money got through imposition (express or implied)/’ the gist of this kind of action being “that the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity to refund the money.” Todd v. Bettingen, 109 Minn. 493, 497, 124 N. W. 443. Such action, said Chief Justice Start in Benson v. U. S. Instalment Realty Co. 113 Minn. 346,129 N. W. 594, “can be maintained whenever one party has received or obtained possession of the money of another which in equity he ought to pay over. It is immaterial in such a case that he obtained it by fraud. Lund v. Davies, 47 Minn. 290” [50 N. W. 79]. In Northness v. Hillestad, 87 Minn. 304, 306, 91 N. W. 1112, a recovery was sustained on this ground in an action for conversion. Defendant’s answer alleges no equitable circumstance entitling it to retain the payment, and it has by its act of cancelation obviated the necessity, if any, on plaintiff’s part, of offering to surrender any rights obtained under the contract. In this connection it is pertinent to consider what weight a court should, in such action, give to the short cut defense here interposed.
The result reached in the majority opinion comes largely from supposed necessity of distinguishing here between actions based on affirmance and disaffirmance. While it may be said that technically plaintiff affirmed the contract by bringing this action, he should not be deemed thereby to have affirmed the fraud, which is the essence of his complaint. But, be this as it may, no rule of procedure, I think, should be allowed to bring about the result reached by the court in this case. Dorms of actions should not be allowed to cover a wrong, and logic of practice should yield to justice.
“As the law is a practical science,” said Allen, J., in Spade v. Lynn & Boston R. Co. 168 Mass. 285 [47 N. E. 88, 38 L.R.A. 512, 60 Am. St. 393], “having to do with the affairs of life, any rule is unwise if, in its general application, it will not, as a usual result, serve the purposes of justice.”
Now as to proximate cause. Did plaintiff lose his money through defendant’s fraud, which induced him to enter into the contract and to part with his money, or through his intervening failure to make *238further payments after discovering the cheat? But for the latter, followed by the cancelation, there could be no doubt whatever that the loss was attributable to the former. Was he then obliged, in order to preserve the continuity of this first cause, and thus lay the foundation for this action, to continue payments and be charged with all the unfavorable inferences which, later, might be drawn from such conduct, if he attempted to assert his rights by action, to be met, furthermore, at the end of the period of payment, and after paying $1,440 more than he should, with the contention that his right of action, apparently valid, was then barred by limitations ? No one should be compelled so to do as a condition precedent to recovery of money fraudulently obtained, no matter what the form of action may be. With all due respect to the opinions of my colleagues, the fundamental flaw in the decision reached lies in the holding that plaintiff was required to go on with performance of the contract, in order to maintain an action for damages sustained in its inception, when, in fact, even had he been defeated in an action for rescission on any other ground than absence of fraud, he could maintain it.
It is said that our rule as to measure of damages is an insuperable obstacle to plaintiff’s recovery, because his rights in the property had been divested by cancelation before trial, thus leaving nothing by which to measure damages. But the principle underlying this rule merely limits recovery to the direct pecuniary loss sustained in the transaction, to the exclusion of expected profits. Such loss being established in the sum of $464, it is necessarily within the rule, and plaintiff should not be deprived of a recovery thereof because he might have been entitled to more had he fully performed. The greater must include the less.
I think the judgment should be reversed.