Court Opinion

ID: 9637314
Source: CourtListenerOpinion
Date Created: 2023-08-22 15:03:09.049747+00
Date Added: 2024-06-11T18:09:55.259265
License: Public Domain

■HOOD,
Associate Judge (dissenting).
The complaint in this case asked for $3,000 damages and cancellation of a $3,-200 note. (The note was originally $3,-500, but plaintiff had made six $50 payments on it.) Viewing the complaint alone it would appear that it asked relief beyond the jurisdiction of the Municipal Court because Code, § 11-755 (a) limits the civil jurisdiction of that court to actions “in which the claimed value of personal property or the debt or damages claimed” does not exceed $3,000. However, neither party raised the jurisdictional question in the trial court or here, and it was first raised by us after the appeal had been argued and submitted on the merits. We then ordered reargument .solely on the jurisdictional question. We must consider this question in the light of Whelan v. Hirshon, 98 U.S.App.D.C. 82, 232 F.2d 339. In that case the complaint asked $2,-990 damages and rescission of a $15,000 contract; the trial court ruled that the *783contract be rescinded and that the complainant recover $2,990; and judgment for that amount was entered. In reversing this court,1 the United States Court of Appeals ruled that the action was within the jurisdictional limits of the Municipal Court. On the surface it would appear that if the Muncipal Court had jurisdiction in that case, it necessarily had jurisdiction in the present case. Although the two cases have some similar features, I believe there are material differences.
One point of similarity is that in both cases the jurisdictional question was first raised in this court after argument on the merits. Some emphasis was placed on this point in the Whelan case, but I do not understand that case to hold that jurisdiction of subject-matter can be conferred on a court by a failure to object. I understand the holding to be that when the question is first raised after trial and judgment, such question is to be viewed “in the light of the evidence and proceedings.” In the Whelan case it was pointed out that the complaint was ambiguous in that although it prayed for rescission, it “alleged facts indicating that plaintiff had already exercised his claimed right to rescind by offering to return the property to defendant if the defendant would return plaintiff to his status quo.” There is no such allegation in the complaint in this case. There is an allegation that some six months after purchasing the business plaintiff accused defendant of breaching the contract “and made demand upon defendant for return of all money paid to defendant,” which demand was refused, but there is no allegation of any offer to return the property to defendant. It was also pointed out in the Whelan case that although the trial court made a finding that the contract was rescinded the judgment itself contained no such adjudication. In the present case the trial court concluded its oral decision by announcing: “The final judgment, Mr. Clerk, is finding for the plaintiff in the sum of $800 against the defendant and cancellation of the note.” Although the judgment thereafter entered purported to be only a money judgment for plaintiff for $800, there is in the record before us the note endorsed by the Clerk as “Canceled by trial finding.” Thus the court went further in this case than in the Whelan case, for its finding that the note should be cancelled was put into effect.
Examining the evidence and proceedings at trial, it appears from the record that at the commencement of the trial plaintiff “was requested to state his theory of the case since it was not readily apparent from the complaint as to whether the suit was to rescind or affirm the contract”; and the plaintiff stated “that his suit was for rescission.” This, I take it, meant what it said, namely, that the suit was one for rescission and not one upon a rescission. And nowhere in plaintiff’s testimony is it shown that he ever attempted to rescind. He continued to operate the store until business so fell off that he was “forced to close.” And it is significant that plaintiff continued to make payments on the note until the month in which he closed the business. One who had exercised a claimed right of rescission of a contract would hardly continue making payments on the contract. The only possible evidence of an attempt to rescind is defendant’s admission on cross-examination of receiving a letter from plaintiff notifying him of plaintiff’s “desire to return the business to defendant under the terms of the contract.” I see nothing in the evidence which would justify the conclusion that plaintiff had rescinded the contract prior to bringing his suit; and no such claim was made during the course of the trial and the trial court did not find that such had occurred.
If plaintiff is not to be held to his statement in open court that his suit was one for rescission, then the nature of his suit at least should be determined by the relief he sought. In Weigel v. Cook, 237 N.Y. *784136, 142 N.E. 444, 446, cited in the Whelan case, the following language was quoted from Vail v. Reynolds, 118 N.Y. 297, 302, 23 N.E. 301, 303:
“A person who has been induced by fraudulent representations to become the purchaser of property, has upon discovery of the fraud three remedies open to him, either of which he may elect. He may rescind the contract absolutely and sue in an action • at law to recover the consideration parted with upon the fraudulent contract. * * * He may bring ,an action in equity to rescind the contract and in that action have full relief. (Allerton v. Allerton, 50 N.Y. 670). Such an action is not founded upon a rescission, but is maintained for a rescission, and it is sufficient therefore for the plaintiff to offer in his complaint to return what he has received and make tender of it on the trial. Lastly, he may retain what he has received and bring an action at law to recover the damages sustained.”
It is clear that plaintiff here did not follow the first of the above-stated remedies because he asked not only for the return of the consideration parted with ($1,800 representing the down payment of $1,500 and the $300 paid on the note) but also for an additional sum of $1,200, denominated as punitive damages, plus cancellation of the note. Neither did he follow the last stated remedy, for to have done so he would have been compelled to affirm the contract, including the note. Obviously he sought the second remedy, that is, to rescind and to have full relief.
Finally, if we leave aside the complaint and the trial proceedings and look only to the relief granted, we find plaintiff receiving a judgment for $800 and obtaining cancellation of his note then in the amount of $2,670. (In addition to plaintiff’s payments, defendant had credited $530 on the note, the net proceeds of the foreclosure sale.) The aggregate of these two sums exceeded the jurisdictional limitation of the trial court.
My conclusion is that whether we look at the case from the viewpoint of the complaint, the evidence and proceedings, or the relief granted, it is one beyond the jurisdiction of the court, and the case should be remanded with instructions to vacate the judgment and dismiss for lack of jurisdiction. Such a result would no doubt appear harsh to appellee, but the jurisdictional limitation placed on the trial court by Congress must be observed and enforced in the trial court and in this court despite any resulting hardship in a particular case.
With respect to the merits of the appeal, the majority hold there was no basis for rescission under a theory of fraud. That being so, there is no basis for holding that the action can be sustained either as one on a rescission or one for a rescission. .Apparently the majority sustain the judgment as one for damages for breach of covenant not to compete, but the case was neither tried nor decided on that theory.

. See our opinion on rehearing in 113 A.2d 484, 480.