Court Opinion

ID: 9540444
Source: CourtListenerOpinion
Date Created: 2023-08-07 16:16:03.79945+00
Date Added: 2024-06-11T14:59:50.933570
License: Public Domain

Holden, J.
(concurring). I concur with the conclusion that the demurrer to the replication should be sustained. The facts pleaded do not specifically and affirmatively establish that the defendant was guilty of fraud in the procurement of the settlement of December 31, 1957 to squarely frame triable issues of fact on the claim. I depart from the majority opinion in its holding that the demurrer should be sustained for want of an allegation of restoration or tender.
Whatever the shortcomings of the pleading may be on the issue of fraud, it is manifest that the purpose of the contract of December 31, 1957, referred to as a "Sub-Contractor’s Release,” was to provide a means for adjustment and settlement of the claims and accounts of the parties under the Victory Construction Project. It further appears that had it not been for the defendant’s alleged deception, payment of the claim now sued upon would have been included in the settlement price agreed upon. By its demurrer, the defendant concedes that upon the facts alleged, the payment would have been $31,306.77 instead of the amount $29,516.52 actually paid.
The general rule, stated in the majority opinion, that one who seeks to avoid the effect of a contract made by him must restore what he has received under the agreement, is not *167questioned. The sound reason for the rule is to prevent the enrichment of the complainant at the expense of the other contracting party. But the purpose of the rule limits its application. Restatement, Restitution, §65 a, Comment e. In consequence, the requirement of restoration is subject to several exceptions. Williston, Contracts, (Rev. Ed. 1937), §1530, pp. 4290-4292.
One who attacks an agreement on the ground of fraud is not bound to restore that which he has received under the agreement when he is entitled to retain the avails, whatever the outcome of his claim of fraud. Brocklehurst & Potter Co. v. Marsch, 225 Mass 3, 113 NE 646, 650; Leaper v. Vaught, 45 Idaho 587, 264 P 386, 388; Newark Brass Plate & Engraving Co. v. Citizen’s National Bank, 95 NJ Eq 382, 110 A 130; 2 Williston, Contracts, (Rev. Ed. 1937) §1530, p. 4291. The exception applies whether the action is in tort or contract. Brocklehurst & Potter Co. v. Marsch, supra, 113 NE at 650.
Thus it is here. If the plaintiff can appropriately allege and establish a fraudulent exclusion of the present claim from the settlement and the payment, the payment already made is but a payment on account. If the defendant prevails, and it be ultimately determined that the claim was in truth released, the defendant’s obligation has been satisfied in full. In either event, the amount already paid would be properly retained by the plaintiff without any unjust enrichment at the expense of the defendant.
From the record presented, I perceive no reason in law or equity to require a subcontractor to repay the consideration received under a general settlement with the main contractor, in order to recover a fractional amount beyond the settlement, which amount he claims was fraudulently excluded. Upon these facts, restoration is not required.
This is much the same situation that obtained in Brocklehurst & Potter Co. v. Marsch, supra, 225 Mass 3, 113 NE at 650. In holding there was no obligation to return the consideration received under a subcontractor’s release, Chief Justice Rugg observed, "When the reason for the rule does not exist, its dry husk does not stand in the way of reaching a just result.”
*168I would affirm the order sustaining the demurrer and grant the plaintiff leave to amend its allegation of fraud, if it be so advised, without requiring an allegation of restoration or tender.