Court Opinion

ID: 6738410
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:20:16.225683+00
Date Added: 2024-06-11T16:01:52.894416
License: Public Domain

*245On. Petition for Rehearing.
Pee Curiam.
Appellant has filed a petition for a rehearing, wherein he asserts that the trial court erred: (1) In permitting the plaintiff to introduce evidence of fraud in the absence of any pleading on his part alleging fraud; (2) in permitting the plaintiff to introduce parol testimony to contradict the written agreement. And it is contended that the former decision either overlooked, and failed to decide these questions, or else decided them contrary to controlling decisions and statutes. We will consider these propositions in the order stated.
(1) While appellant makes the broad assertion that it was contrary to controlling decisions and statutes of this state to permit the plaintiff to introduce evidence of fraud in absence of pleading on his part alleging fraud, he has failed to cite- any statute or decision of this court supporting his contention. And we are satisfied that none can be found. On the contrary, both the statutes and the decisions of this state are to the effect that a. plaintiff is not required to reply to new matter in an answer not constituting a counterclaim, except by order of the court; but every allegation of new matter in the answer, not constituting a counterclaim, is deemed controverted by the plaintiff as upon a direct denial or avoidance, by operation of law, and the plaintiff may introduce evidence of any fact tending to deny or avoid the new matter set forth in the answer. See Comp. Laws 1913, §§ 7467, 7477, 7452; Moores v. Tomlinson, 33 N. D. 638, 157 N. W. 685. Appellant entirely ignores the rule announced in the statute, and argues that such rule is unjust and unfair to a defendant, as he may be surprised upon the trial by the introduction of evidence of fraud. A sufficient answer to appellant’s contention is that the rule is prescribed by the statute. The statute was made by the legislature, and not by the court. In this connection it may be noted, however, that the statute affords to every defendant an opportunity to apply to the court for an order requiring the plaintiff to reply to new matter in an answer. Even where no such application is made, the court has undoubted power, even upon a trial of the cause, to order a continuance, if the introduction of evidence tends to surprise a defendant and prevent him from obtaining a fair trial. In the case at bar, defendant made no such application. Nor did it assert, either by objection or by motion, that *246there was any such degree of variance between the pleadings and the proof as to constitute a failure of proof. And, while defendant moved for a directed verdict, it did not see fit to make this one of the grounds of its motion. Neither did it make any showing to the trial court that, it was in any manner surprised or prejudiced by the introduction of the evidence. And “under the provisions of the Code of Civil Procedure (Comp. Laws 1913, § 7478), a variance is immaterial unless actually and prejudicially misleading, and shown to the satisfaction of the court to be so. The effect of these statutory provisions was considered by this court in Halloran v. Holmes, 13 N. D. 411, 416, 101 N. W. 310, wherein this court, speaking through Mr. Justice Engerud, said: “Under the provisions of the Code of Civil Procedure, a variance, unless it amounts to a failure of proof, is not material, unless ‘it has actually misled the adverse party to his prejudice in maintaining his action or defense upon the merits.’ If the objecting party asserts that such is its effect, ‘the fact shall be proved to the satisfaction of the court, and in what respect he has been misled; and thereupon the court may order the pleading to be amended upon such terms as shall be just.’ Rev. Codes 1899, § 5293. ‘When the variance is not material as provided ,in the last section, the' court may direct the fact to be found according to the evidencé, or may order an immediate amendment without costs.’ Rev. Codes 1899, § 5294. The effect of these provisions is to make the materiality of a variance depend upon satisfactory proof that it has actually misled the adverse party to his prejudice. Unless such proof is furnished the variance must be deemed immaterial and be disregarded. Washburn v. Winslow, 16 Minn. 33, Gil. 19; Catlin v. Gunter, 11 N. Y. 368, 62 Am. Dec. 113; North Star Boot & Shoe Co. v. Stebbins, 3 S. D. 540, 54 N. W. 593. In this case, although the defendants objected to the evidence in question on the ground of variance, they did not support their objection by proof, or offer of proof, that they were prejudicially misled by the variance in maintaining their defense on the merits. In the absence of such proof, an objection for variance is unavailing, unless the variance is of such a degree as to be a failure of proof, as defined in § 5295, Eev. Codes 1899. Under that section a failure of proof results only ‘when . . . the allegation of the cause of action or defense to which the proof is directed is unproved, not in some particular or particulars only, but in its entire scope and *247meaning.’ ” See also Robertson v. Moses, 15 N. D. 351, 108 N. W. 788; Maloney v. Geiser Mfg. Co. 17 N. D. 195, 115 N. W. 669; Rickel T. Sherman, 34 N. D. 298, 302, 158 N. W. 266.
(2) IJpon the second proposition little need be said. For it is •elementary that where a writing, by reason of fraud or mistake, does not represent the actual contract made between the parties, and evidences the proposition upon which their minds met, that then the writing may be impeached and the actual contract shown by parol. This proposition is so elementary that citation of authority thereon is wholly -unnecessary. These two were the only errors assigned and argued by appellant, and, hence, are the only ones properly before the court on this appeal.
In his petition for rehearing, however, appellant also asserts that the acceptance and retention by the plaintiff of a draft sent by the defendant precludes him from bringing suit. A party who has been induced to enter into a contract by means of fraudulent representations has, on discovery of the fraud, two primary remedies. He may either rescind the contract or affirm it. In ease of rescission, he must, as a general rule, restore or offer to restore to the other party the consideration received under the contract. 9 Cyc. 438. This is not only manifestly just, but is a logical result of rescission. For rescission is intended to abrogate the contract and restore the parties to their former position. Hence, a party cannot accept and retain the benefits of a contract which he repudiates. If he desires to rescind, he must rescind in toio. He cannot affirm a contract in part and repudiate it in part. He cannot accept the benefits on the one hand, and shirk the disadvantages on the other. 9 Cyc. 438. In case he affirms the contract he may keep what he has received under it, and also recover from the other party the difference between what he received and what he would have received, if the fraudulent representations had been true. Guild v. More, 32 N. D. 432, 155 N. W. 44. Affirmance of a contract voidable for fraud is not a waiver of the fraud, and does not bar the right of the defrauded party to maintain an action to recover the damages, which he has sustained by reason of the fraud, or set up such damages as a defense or by way of counterclaim, if sued upon the contract by the other party. Such affirmance merely bars the right subsequently to rescind the contract. 9 Cyc. 432. In the case at bar, the plaintiff did not seek to *248rescind the adjustment agreement winch lie made with, the defendant, and recover on the original cause of action. On the contrary, he bases his cause of action upon, and seeks to enforce, the contract of adjustment which he claims was actually made between the parties. He does not seek to recover the loss sustained under the insurance policy, but seeks to recover only the amount agreed upon in the adjustment between the parties. In this connection it may be noted that the amount which plaintiff seeks to recover, and which he was awarded by the jury, is exactly what he would have been entitled to recover in an action for deceit for the fraud practised upon him; viz., the difference between what he received and what he would have received if the representations made by the defendant’s adjuster had been true. And while the action is not one for deceit, it is difficult to see wherein the defendant could be prejudiced, as the issues would be substantially the same in an action for deceit as those which were submitted to the jury in this case. The primary question in the case was whether the plaintiff had been induced to sign the adjustment agreement by means of false and fraudulent representations as to the amount of the consideration to be received by him.
The evidence shows that the plaintiff is unable to read, speak, or understand the English language. Upon the trial he testified through an interpreter. He obtained the insurance policy through the defend? ant’s agent, Graeber. He notified Graeber of the loss under the policy. Romo three weeks thereafter the defendant company sent its adjuster, E. R. B. Lamberch, to adjust the loss. It is undisputed that all negotiations between the plaintiff and the adjuster wore conducted in the German language. After they had agreed upon the amount of the loss a written loss adjustment was prepared and signed by the adjuster and the plaintiff. It is undisputed that the plaintiff had no knowledge of its contents, nor did any member of his family understand it. The amount of the loss or damage inserted in the agreement is $250. The plaintiff, however, testified positively that the agreement between him and the adjuster was that he (the plaintiff) was to be paid $335 in cash, and that his premium note was to be returned to him. In response to the question, “What Was the adjustment ?” the interpreter gives plaintiff’s answer as follows: “Why, the agreement was that he was to be paid cash $335 and that he did not have'to pay no insurance. That is, *249he wouldn’t have to pay the insurance fee. That was deducted also.” The plaintiff reaffirmed this statement, both in his direct examination and his cross-examination. In answer to a question propounded by defendant’s counsel upon cross-examination as to whether plaintiff knew the written instrument to be an adjustment of the loss of the grain at the time he signed it, the plaintiff answered that at the time he believed that it was for $335. The plaintiff was the only witness who testified. The defendant did not see fit to offer any testimony, either that of its adjuster or of its agent, Graeber. And as already stated no application was made for a continuance to obtain such testimony, nor was any motion for a new trial made. And so far as the record in this case shows, there is nothing to indicate that the plaintiff’s version is not absolutely true. Under the facts as shown by the testimony, and as found by the jury, the adjuster of the defendant company agreed to pay the plaintiff $335 in cash and surrender the premium note to him. He made this agreement in the German language. He thereupon prepared a written adjustment in English and presented it to the plaintiff, who was wholly unable to read it, and manifestly signed it in the belief that it represented the adjustment agreed upon. It is clear that under this state of facts the plaintiff’s signature to the adjustment agreement was obtained by fraud.
In his charge the trial judge instructed the jury that, “if the plaintiff signed the written adjustment as introduced in evidence, with full knowledge of its' contents, then he is bound by such written adjustment.” But that if he was under the impression, and it was represented to him, that the written adjustment was in accordance with their oral agreement, and the oral agreement provided for a different and larger consideration, then he is not bound by the written adjustment, provided his signature thereto was secured by misrepresentation as to what the written adjustment contained. The court further instructed the jury that the burden was on the plaintiff to explain satisfactorily to the jury his signature on the written instrument. And that in order to avoid its consequences he must establish, by a preponderance of the evidence, that the adjustment was different from that disclosed by the written contract, and that he had no knowledge of the contents of the written instrument, and that his signature thereto was obtained by means of, and in reliance upon, the false representations.
*250The court further instructed the jury that, “in order to avoid the conditions of the written instrument, the evidence must be clear and convincing that it was not the contract of the parties,” and that plaintiff, without knowledge of its contents and through misrepresentation, was led to believe that it was different from what it was.
It is time the evidence also shows that the plaintiff received a check for $164.04, as well as his premium note for $85.96, making a total of $250, and that he indorsed the check, and that it was paid by the defendant company in due course. And that he has retained the premium note. It is also true that the authorities recognize the principle or rule of law, that a party may under certain circumstances waive a right of action for fraud. And that it is a general rule that if a defrauded party acquires knowledge of the fraud while the contract remains executory, and thereafter does any act in performance or affirmance of it, or exacts performance from the other party, he condones the fraud and waives his right of action, as under such circumstances the injuries would be largely, if not wholly, self-inflicted. These principles, however, do not conflict with the doctrine that the defrauded party has his election to repudiate the contract or affirm it and sue in deceit. And as the question of waiver is largely one of intent, it is generally one for the jury, and it is only in rare cases that waiver can be said to exist as a matter of law. Waiver requires knowledge. And “exists only where one with full knowledge of a material fact does or forbears to do something inconsistent with the existence of the right, or of his intention to rely upon that right. .. . . No one can be said to have waived that which he does not know; or where he has acted under a misapprehension of facts.” 40 Cyc. 259, 260. And “acts done in affirmance of the contract can amount to a waiver of the fraud only where they are done with full knowledge of'the fraud and of all material facts, and’with the intention clearly manifested of abiding by the contract and waiving all right to recover for the deception. Acts which, although in affirmance of the contract, do not indicate any intention to waive the fraud, cannot be held to operate as a waiver.” 20 Cyc. 93. In the case at bar the appellant did not raise the question of waiver. It was not presented as one of the grounds oh which it moved for a directed verdict. Nor was it presented on this appeal as a ground for a reversal. But inas*251much as some reference is made thereto in the petition for rehearing, we deem .it proper to say that we do not believe that, under the evidence in this case, it can be said as a matter of law that the plaintiff waived his right of action. The evidence shows that the plaintiff received the check and his premium note through the defendant’s agent, Graeber. The plaintiff was unable to read the check and knew nothing about its contents, except as he was informed by Graeber. At Graeber’s request, he indorsed it and turned it over to Graeber, who applied it upon certain indebtedness owing to Graeber by the plaintiff on a certain land contract. Bearing in mind the position of the parties, we are not prepared to say as a matter of law that the plaintiff, by indors • ing the check presented to him by Graeber and accepting and retaining his premium note, intended to, and did, waive his right either to maintain an action for deceit, or to sue upon the adjustment actually made between himself and the defendant and insist upon the payment to him of the balance of the consideration actually agreed upon. Upon this feature of the case, the court instructed the jury: “Now, as to the further fact of the check. If a person signs a cheek or receipt, payment in full of a certain adjustment, he acquiesces in said settlement, provided, however, that he had knowledge of its contents. In other words, if he knew and it is brought home to him that this check was given in full settlement of his account, and he accepted it with the knowledge that it was in full settlement, then such receipt is binding upon him, but at the same time, if the check was given to him with the signature thereon acknowledging settlement in full without knowledge of its contents or without information concerning it, and was not of the opinion it was an adjustment in full, then he is not bound by such signature to an adjustment in full.”
The primary and fundamental propositions upon which defendant’s liability depended were fully submitted to the jury under instructions the fairness and correctness of which have not even been questioned. The jury found in plaintiff’s favor, and awarded him only the amount to which he was legally entitled if his version of the transaction is true.
A rehearing is denied.