Court Opinion

ID: 8656049
Source: CourtListenerOpinion
Date Created: 2022-11-24 21:16:02.982798+00
Date Added: 2024-06-11T16:56:43.242741
License: Public Domain

FRICK, J.
This is an appeal from a judgment on the pleadings. The plaintiff, an attorney at law, commenced this action in the district court of Salt Lake County on March 29, 1913, to rescind a contract entered into by him with the defendants in December, 1908. The plaintiff alleges in his complaint:
“ (1) That heretofore, to wit, on or about the 12th day of December, 1908, at Salt Lake City, Utah, plaintiff and defendants entered into a contract in writing, by the terms of which defendants agreed to sell to plaintiff, and plaintiff agreed to purchase from defendants, five shares of the capital stock of the Merchants’ Protective Association, a corporation under the laws of Utah, for the sum of $2,500, and that a certificate or writing, purporting to be certificate No. 33 of said the Merchants’ Protective Association, for said five shares of stock, was thereupon delivered to plaintiff; and plaintiff thereafter paid defendants the said sum of $2,500.
“ (2) That in and by the terms of said contract it was further agreed that plaintiff should be employed for an indefinite period by said the Merchants’ Protective Association, at an agreed monthly salary, the defendants assuming to act for and represent said corporation to the extent of making said contract for such employment; and that, in accordance with *28the said provision of said contract, plaintiff entered into the employ of a collection business purporting to operate as and in the name of the Merchants’ Protective Association, on or about the said 12th day of December, 1908, and continued in its employ until on or about the 1st day of January, 1913, during which time he received the monthly salary prescribed in said contract.
“(3) That immediately before and at the time said contract was executed, and as an inducement to plaintiff to execute the same, defendants stated and represented to plaintiff that a certain collection business then being conducted by defendants was owned by the Merchants ’ Protective Association, a corporation under the laws of Utah, with a total authorized capitalization of 100 shares, of which the defendants were the owners of not less than 85 shares, they having purchased all said stock from the original incorporators of said corporation and their assignees; that defendant Francis G-. Luke was the general manager of said corporation, and that it was in an exceedingly prosperous condition, so much so that its stock, which had a par value of only one dollar per share, had increased to an actual value of $500 per share; that it was the owner of judgments against various individuals amounting to at least $1,000,000, all of which could and would be collected, and the proceeds of which, when collected, would belong to said corporation; that it had a large reserve fund, amounting to not less than $10,000 on deposit with MeCornick & Co., Bankers, of Salt Lake City, Utah; that it was not indebted to any of its clients in any. sum whatever, but had always kept its collections of money belonging to clients fully paid up as fast as such collections were received by it; that its business standing in the State of Utah and elsewhere was first-class, which would enable it to increase its business in the future, and that it had unsettled business in its possession, which, without any new business whatever, would enable it to continue operations and pay dividends of not less than 12 per cent, per annum upon its stock', valued at $500 per share, for many years.
“(4) That plaintiff relied upon said representations so made to him by defendants, and believed the same and each *29and all of them to be true as stated, and such representations formed the sole and only consideration and inducement to plaintiff to enter into said contract with defendants, which he would not have executed and entered into, had he not believed said representations and each of them to be true. ’ ’
The plaintiff, in substance, further alleged that the representations set forth were false and were .known to be so by the defendants; that they were not, at the time said contract was entered into or at all, the owners of the capital stock aforesaid; that said collection business was not as represented by them; that the defendants did not, nor did said Merchants’ Protective Association, own collectible solvent judgments to the value of $1,000,000, or any other sum in excess of $100; that neither the defendant Francis G-. Luke individually, nor said association, had on deposit with McCornick & Co., Bankers, or elsewhere, any moneys, and that said capital stock was not worth in excess of one dollar per share; that in the month of June, 1912, he obtained the first intimation or information that the representations made by said defendants respecting-the extent and value of their business and the amount of their assets and the value of said stock were false, and that they knew that said representations were false when made; that said capital stock was and is worthless, and plaintiff, in the month of January, 1913, and before bringing this action, tendered said stock to said defendants and demanded repayment to him of said $2,500 paid therefor, which demand defendants refused. The plaintiff did not set forth the contract, but contented himself with stating its effect.
The defendants filed an answer in which they admitted the formal parts of the complaint and explained and denied the allegations of the complaint in the following terms:
“ (2) The defendants deny that they procured said agreement from the plaintiff by fraud and misrepresentation, as alleged in paragraph numbered 3 of the plaintiff’s complaint, and deny, particularly, that, immediately before and at the time said contract was executed, they made any or all of the following representations: That the stock of said Merchants’ Protective Association had an actual value of $500 per share; that the said association was the owner of judgments, amount*30ing to $1,000,000, all of which could and would be collected, or that the proceeds of each judgment would, when collected, belong to said corporation; that it had on deposit with McCor-nick & Co., Bankers of Salt Lake City, Utah, a large reserve fund amounting to not less than $10,000; that said Merchants’ Protective Association was not indebted to any of its clients in any sum whatever, or that it always kept fully paid up its collections of money belonging to clients as fast as such collections were received by it; that it had unsettled business in its possession which, without any new business whatever, would enable it to continue operations and pay dividends of not less than twelve per cent, per annum upon the stock, valued at $500 per share, -for many years.
“ (3) And, on the contrary, the defendants say: That, at the execution of said contract, the plaintiff well knew, and for two months prior thereto had known, that, by an agreement between the defendant Francis G. Luke and the said Merchants ’ Protective Association, the said defendant was entitled to all the eranings, profits, and income of the said association, including its proportion of any and all judgments owned or controlled by it; and the defendants did not, at any time before or at the execution of the said contract between the defendants and plaintiff, represent or agree that the proceeds of such judgments, or the proportionate share thereof belonging to said Merchants’ Protective Association, should be set aside as a surplus fund or to increase the capital and assets of the said corporation, or that the same should be paid out as dividends to its stockholders, all of which said plaintiff well knew; and the defendants show that it is recited in said contract that said corporation, Merchants ’ Protective Association, does not pay dividends, and at the execution of said contract the plaintiff understood and knew that he was not, and would not, be directly interested in the business of said corporation or in the profits of the same, whether as dividends or interest or by whatever name they might be called, but, on the contrary, the plaintiff knew that defendant Francis G. Luke was entitled to all the income, earnings, and profit of said Merchants’ Protective Association by reason of the agreement hereinbefore mentioned, and accepted the personal cove*31nants of the defendants to pay him the monthly salary stipulated for in said agreement, and to pay the interest on the $2,500 so invested by the plaintiff; and the defendants further allege that before and at the time of the execution of said contract between plaintiff and defendants, and before and at each and all the times plaintiff paid to defendants the installments of said $2,500, as stipulated in said agreement, the plaintiff had full knowledge of the true value of .said stock, of the course of business between the said Merchants’ Protective Association and its clients, and of the resources, assets, liabilities, and actual condition of said corporation.
“ (4) The defendants deny each and every other allegation in the said complaint contained.”
The defendants then proceed to set forth, with much particularity and detail, the acts and conduct of the parties with respect to the contract referred to by the plaintiff. The relation of the defendants to the collection business of said association and their rights or interest therein are also set forth. The extent and .value of the business are also stated. In other words, the defendants set forth their version of the transactions between the parties relative to said collection business and pursuant to said contract, and in stating their version, while they refer to the same matters referred to in the complaint, they nevertheless state many of them in such a manner as to negative the statements of the plaintiff. The contract is also set forth, and it is alleged that thereunder the plaintiff was paid and ,received annually twelve per cent, interest on said $2,500, and also received the monthly salary specified in the contract; that, at the time he entered into said contract and accepted employment thereunder, he was a young attorney without practice or experience, and that he entered into said'contract and paid said sum of $2,500, and entered upon said employment, for the purpose of gaining experience and the necessary experience to fit him for the practice of law, and that he was paid more than his services were actually worth. By reference to the contract, it will be seen that no time is specified therein respecting the duration of said employment. All that is mentioned there in that regard is that the salary of the plaintiff *32is to be increased from time to time as the increase in profits of the association might justify, not, however, to exceed the sum of $250 per month; that at the expiration of ten years the defendants agreed to repurchase said stock from the plaintiff in case he should desire to sell it and to pay him therefor one-half the amount paid by him for it, or that they would pay him a salary of $250 per month from that time forward.
There were no objections interposed by either party to the pleadings until the ease was called for trial, when the plaintiff moved for judgment on the pleadings, which motion was granted by the court, and judgment for the plaintiff was accordingly entered for $2,500. The defendants assign the ruling of the court in granting said motion and in entering judgment as aforesaid as error.
Where, as here, many of the denials contained in an answer are cast in the form of negative pregnants, all of which are followed by, a sweeping general denial, it is not always easy to determine just what the effect of the denials 1 is. This is especially so where, as here, each party also affirmatively states his own version of a series of transactions which, in many respects, differ in their details and effect. Under our statute, “a pleading for the purpose of determining its effect, its allegations must be liberally construed with a view to substantial justice between the parties.” Comp. Laws 1907, Section 2986. Where it is clear, therefore, that a denial of particular allegations of the complaint was intended, the mere form of such denial is not always conclusive.
Some point is sought to be made by the plaintiff upon the fact that, at the time the motion for judgment on the pleadings was made, the defendants also interposed an objection to the introduction of any evidence upon the ground that the complaint did not state facts sufficient to constitute 2, 3 a cause of action. There is nothing to that contention. The motion for judgment on the pleadings was, in legal effect, a general demurrer to the answer, and such demurrer searches the-entire record, including the sufficiency of the complaint. If the complaint, therefore, had been deficient in substance, the motion, regardless of defendants’ objection, would have been fatal to it. We are of the opinion, however, *33that the complaint was sufficient to withstand a general demurrer. The question therefore arises: Did the court err in sustaining the motion for judgment on the pleadings and in entering judgment as prayed for in the complaint ?
We have no statute authorizing such a motion. The courts are, however, practically unanimous in holding that courts of general jurisdiction possess inherent power, independently of statute, to direct judgment on the pleadings in case a legal cause of action is not set forth in the complaint 4, 5 or, if there is, when no legal defense is presented thereto in the answer. Motions for judgments on the pleadings are, however, not favored by the courts, and upon such a motion the pleadings will be construed with great liberality in favor of the party whose pleadings are assailed. Bowles v. Doble, 11 Or. 480; Currie v. So. Pac. Co., 23 Or. 400, 31 Pac. 963; James River, etc., Bank v. Purchase, 9 N. D. 280, 83 N. W. 7; Giles, etc., Co. v. Recamier Mfg. Co., 15 N. Y. St. Rep. 354. In the last case cited the court says:
“It is a dangerous practice to allow either party to interpose an oral demurrer, at the trial, to the pleading of his adversary. If a pleading be substantially defective, the honest course is to demur to it, and thus give court and counsel a fair opportunity to examine and consider the question of law that is involved. If there be any reasonable doubt as to the insufficiency of the pleading, the court should deny a motion that is sprung at the trial for judgment on the pleadings.”
See, also, 31 Cyc. 605, 606, to the same effect.
Courts generally do, and always should, require the parties to proceed to the merits, if such a course is permissible, after giving the allegations and averments contained in the pleadings, and the necessary inferences arising therefrom, a liberal construction and application. Of course, if in no view that may be indulged in favor of the pleadings the law sanctions a defense, then tut one course is permissible, and that is judgment for plaintiff on the pleadings. It is contended that such should be the result under the answer in the case at bar. It is true that the denials, with the exception of the general denial “of all other allegations,” are in the nature *34of negative pregnants, and thus ordinarily do not raise an issue. It is also true that the general denial can cover only those matters not covered by the special denials, which perhaps are not many nor of great importance. There are, however, many affirmative statements and averments in the answer which, when liberally construed, as they must be, may nevertheless put in issue some of the material allegations of the complaint. An affirmative statement in one pleading very often is equivalent to a denial of another affirmative statement in the pleading of the opposite party, and this is especially true when construed in connection with a denial. Plaintiff, however, contends that, even when so construed, the answer, considered as a whole, presents no defense to the cause of action set forth in the complaint. For example, it is contended in that connection that it is apparent from the answer itself that the plaintiff received no consideraion from the defendants, or either of them, for the $2,500 paid by him to them, and hence he, in any event, is entitled to recover that sum from them. We need not and we shall not now stop to consider whether a plaintiff may entirely depart from the allegations of his complaint and rely upon the allegations contained in an adversary’s answer to recover a judgment upon a theory entirely different from that upon which the complaint is framed. That he may do so may well be doubted. It is, however, further contended that from an inspection of the contract, which is set forth by the defendants as a part of their answer, it is apparent that its provisions are unenforceable because they lack mutuality; and for the further reason that no time is specified in the contract during which the employment therein contemplated should continue. In this connection it should be remembered that the plaintiff in his complaint shows that he continued for a period of more than four years to enjoy all the benefits of the contract he now seeks to repudiate. Let it be conceded, therefore, that the contract is unenforceable, yet it does not follow from that alone that either of the parties, after receiving the fruits thereof, may not in equity be required in some form to account to the other party. Without now attempting to determine the equities and rights of the parties to the contract, we remark *35that it may well be that after the answer is amended in accordance with the offer made by defendants’ counsel, and all the evidence, pro and con, is heard and considered, and the law is applied thereto, although the plaintiff may be entitled to judgment, yet he may not be entitled to the full sum of $2,500 as against the defendants. The contract is not void because it contravenes a positive statute, nor because it is contrary to public policy. Whatever rights, therefore, may have arisen by reason of its part performance may require adjustment as between the parties by a court of equity. We desire it distinctly understood, however, that we do not at this time pass upon what the rights of the parties may be under the contract, or under the present state of the pleadings, in view of its part performance. That matter, as a matter of course, cannot be adjusted, except upon a full hearing. All that we now hold is that although, under the answer as it now stands, it were conceded that plaintiff is entitled to judgment, yet inasmuch as the defendants have applied for leave to amend their answer, and in view that in our judgment they should be permitted to amend, therefore the extent of the relief that defendants may be entitled to, if any, cannot be now determined.
Immediately following the ruling of the court sustaining plaintiff’s motion for judgment on the pleadings, 6 defendants’ counsel asked leave to amend the answer as hereinafter set forth. The court denied the application to amend, and the ruling of the court is now assigned as error as follows:
“The court erred in denying defendants’ motion to amend their answer.”
In defendants’ brief the foregoing assignment is reiterated, and counsel then insist and argue that the court erred in refusing to allow them to amend the answer. The authorities in support of their contention are cited on page 14 of their brief. What was said in the brief was supplemented and enlarged upon in oral argument at the hearing. In their printed abstract counsel set forth what occurred at the time the application to amend was made in the following words:
“Thereupon the defendants moved to amend the answer. Before defendants could state the particulars wherein they *36proposed to amend, the court sustained an objection by plaintiff that the motion came too late, and overruled the motion, to which defendants excepted.”
Counsel for plaintiff assert that the proceedings are not correctly reflected in the foregoing statement, and they have set forth the proceedings which they contend took place at the time, by producing a transcript of the stenographer’s notes. The transcript produced reads as follows:
‘‘Mr.' Armstrong (for defendants) : Now we make a motion, if the court please, to amend the answer. Mr. Wilson (for plaintiff) : We wish to resist that motion, of course, your honor, because it comes too late. In the first place, there isn’t anything to amend. Mr. Armstrong: There are some allegations in the answer that we hadn’t noticed, having been called into the case just lately, that may be a little ambiguous. Mr. Snyder (for plaintiff) : I submit, your honor, it is too late now. Mr. Wilson: I would like to be heard on it if the court has any idea of entertaining it. The Court: It will be overruled. Mr. Armstrong: Take an exception. Mr. Wilson: We ask for judgment, your honor. The Court: You may have it. Mr. Armstrong: Exception. Mr. Wilson: We will draw it up later and serve it on counsel. The Court: We will just consider ourselves adjourned.”
If we take plaintiff’s version of what occurred at the time, still we cannot see how it helps his ease. It is manifest that, immediately after the court had announced its ruling upon the motion for judgment on the pleadings counsel for defendants moved ‘ ‘ to amend the answer. ’ ’ Up to the time the court ruled, and while the motion remained-“in the breast of the court, ’ ’ it certainly could not be known what the ruling would be. If the ruling had been favorable to the defendants, then, perhaps, in the view of counsel, no amendment of the answer would have been necessary. If, however, the ruling was in favor of the plaintiff, as it in fact was, then, unless counsel for defendants desired to stand on their answer, they had the right, we think, to ask and to obtain leave to amend the same. We cannot conceive what plaintiff’s counsel meant by the statement that the motion for leave to amend came “too late.” Certainly no judgment had been formally ren*37dered at tbe time, and of course none could have been entered, as tbe colloquy between court and counsel shows. "Why, then, was the offer to amend not timely? In case pleadings are assailed, must a party move to amend before he is apprised of what the ruling of the court will be? We think not. We are of the opinion, therefore, that the motion for leave to amend was timely. We are also of the opinion that, under the circumstances, it constituted reversible error for the court to deny the motion for leave to amend. It is quite clear that it was the intention of the attorney who drew the answer to deny the allegations of the complaint respecting fraud and the misrepresentations as well as some of the other allegations. It is equally apparent that, in the opinion of the District Court, he had failed to do that. It is also clear that, in pleading the affirmative matters contained in the answer, the pleader left many of them in doubt by failing to make clear and concise statements. All those statements, as well as the denials, were amendable, however, and, if properly amended, might set forth a defense to the cause of action, to some extent at least, either negative or affirmative. What we mean is that it cannot be said in advance that the answer could not be so amended as to set forth at least a partial defense to the matters set forth in the complaint. If, in this case, plaintiff had interposed a general demurrer to the answer, and the court had sustained it, the defendants would have been permitted to amend their answer as a matter of course, under the practice, if not as a matter of absolute right. This is the view that is taken by the author of Pom-eroy's Code Remedies (4th Ed.), Section 454. In our judgment there is not a respectable attorney practicing in this jurisdiction .who would question the right of his adversary to at least attempt to amend a pleading after a general demurrer thereto had been sustained by the court. Is there any reason for a different rule in case of a motion for judgment on the pleadings? We confess our inability to discover any substantial difference between a general demurrer and a motion for judgment on the pleadings, in so far as the right to amend is concerned. In Doll v. Good, 38 Cal. 287-291, the Supreme Court of California directed the lower court to grant *38defendant leave to amend bis answer, although the court held that the lower court erred in not sustaining plaintiff’s motion for judgment on the pleadings. Courts ordinarily encourage rather than discourage all proper amendments to the pleadings, to the end that a full hearing may be had upon all phases of the controversy in the trial courts before the case is taken to the Appellate Court for review. In our judgment, all the authorities are to that effect.
Bliss on Code Pleading (3d Ed.), Section 429, says:
“Courts should be liberal in allowing amendments to the end that cases may be fully and fairly presented on their merits.”
The author further says:
“The power of amendment of pleadings is great under the Code. The real limitation seems to he that the 'amendment shall not bring a new cause of action”’
The rule is admirably stated by Mr. Justice Jaggard in the case of Todd v. Bettingen, 102 Minn. 260, 113 N. W. 906, 18 L. R. A. (N. S.) 263, in the following words:
“The right of the trial court to make amendments is recognized by statute and enforced by well-settled practice, permitting such amendments with great liberality, so as to properly determine the merits of legal controversies. The trend of modern judicial opinion is wholly opposed to allowing mere mistake in form to defeat the substantial rights of parties. The right of amendment in the earlier stages of the proceedings may he a matter of course. In later stages, amendments are liberally allowed for cause shown, upon application to and by leave of the court, upon terms, it may he.”
We can see no reason whatever why the defendants in this ease should be denied the right of amendment when the exercise of that right is a matter of daily occurrence in our courts of justice. True, motions for judgment ori the pleadings may be rare, but that is no reason why the right of amendment should be denied when timely proposed, as in the case at bar. Nor can we conceive how any one can say in advance that in this case at least a partial defense may hot be set forth by a proper amendment to the answer. Nor can we see how it can successfully be contended that the motion for leave to amend was not'timely made, or that prejudice or undue delay will result if allowed.
*39The judgment is therefore reversed, and the cause remanded to the District Court of Salt Lake County, with directions to set aside the judgment and to proceed with the case as herein suggested, to permit the defendants to amend their answer, and, if the court is of the opinion that the answer does state a defense as just indicated, then to permit the plaintiff also to amend, if he is so advised, and to proceed to hear the case upon the merits and to make such disposition thereof as in his judgment the law and the facts require, and in accordance with the views herein expressed. Defendants to recover costs.
STRAUP, C. J.
It is rare where a court, on pleadings, ought to' render judgment against one not slothful and offering to amend, unless nothing issuable is or can be tendered. It is claimed nothing such was tendered; but look at the ruling. To the defendants’ offer “to amend the answer” came the objection “too late” and “nothing to amend.” On that objection leave to amend was denied, not because nothing issuable was tendered, but because the offer to amend, regardless of substance, came too late, and because the answer was unamendable. It is claimed I am in error as to this. The record must speak as to that. It is fully set forth in the prevailing opinion. Looking at the objections and the ruling, I think it clear that leave to amend was denied because the offer came too late, and because there “wasn’t anything to amend.” Counsel’s remark at the time that some of the allegations of the answer “may be a little ambiguous” is pointed to as indicating the particulars of a tendered amendment. I think that somewhat strai'ned. Then see the only objection following the remarks, “I submit, your honor, it is too late now,” the same objection interposed at the threshold of the offer “to amend the answer.” Upon that followed the ruling denying the offer. Now, I do not think the ruling should be upheld on the ground that nothing issuable was tendered, for manifestly, on the objections and by the ruling, no opportunity was given the defendants to amend or to present anything. Granting or refusing leave to amend a pleading, and permitting or denying a proposed amend*40ment, are different things. One should not be punished for failure to propose terms of a good amendment, when at the threshold leave to amend ‘at all was denied him, I think the court ought to have granted leave. To have done so would not have occasioned unnecessary delay or any harm. Were there exigencies demanding it, the court could have required a tender of the amendment within even a few hours. When made, the court then could have determined what, if anything, issuable dn the pleadings, as amended, was presented, and could, have proceeded accordingly. That the present answer may be insufficient is reason to grant, but not to deny, leave to amend. It certainly is not so bad as to be wholly incurable.
. Then it is further claimed that I rule the case on something not presented and not argued. Again must we submit to the record. The assigned errors are correctly stated in.the prevailing opinion. They go to the rulings: (1) Holding the complaint good; (2) granting judgment on pleadings; and (3) refusing defendants to amend. True, the greater part of the briefs is devoted to rulings 1 and 2, but 3 is not unnoticed. It also is discussed, maybe not in language used by me; but I prefer to use my own. The point, however, is there, is assigned, and is discussed. It is also noticed in the prevailing opinion, and the case largely ruled on it. In that I concur. I do not think it fair to the record to treat it as abandoned and to review the case alone on ruling 1 and 2. But let us look at 2. The action is to rescind a contract on the ground of fraud. The contract itself is not set forth in the complaint, nor is a copy attached to it. Its contents are pleaded in most general and vague terms. They are that the plaintiff agreed to buy and the defendants to sell five shares of the capital stock of the association for $2,500, and that “thereupon the stock was delivered to the plaintiff, who paid the defendants said sum of $2,500 ’ ’; that it was further agreed that “the plaintiff should be employed for an indefinite period” by the association “at an agreed monthly salary”; and that in pursuance of the contract he entered and continued in the employment for about four years, “during which time he received the monthly salary prescribed in said contract.” The amount of salary he was to receive, or did *41receive, is not alleged by Mm. He, however, did allege that his employment and salary were a part of the contract which he seeks to repudiate and rescind. That is all he states as to the substance of the contract. He asks to have it rescinded on the ground of misrepresentations. The representations are alleged in paragraph 3 of the complaint and as set forth in the prevailing opinion, followed by allegations of their falsity, plaintiff’s reliance on them, and injury. These constitute the charging part of the complaint. They are denied by paragraphs 2 and 3 of the answer, also set forth in the prevailing opinion, followed by a general denial and affirmative averments. Now, conceding that the denials of the representations, in the language of the complaint, are insufficient, yet it ought further be conceded that they are amendable. If they are bad and not aided by other denials and averments in the answer, they are so because they are not sufficiently specific and certain. And, if the defendants desired to make them more specific and certain, why deny them that right? But I think the denials, aided as they are by the general denial, and other affirmative averments, sufficiently put in issue the charging portions of the complaint to ward off a motion for judgment on pleadings.
The defendants pleaded the contract in extenso by attaching a copy of it to the answer. This, it is said, for various reasons, is a bad and an unenforceable contract, and for that reason should the defendants, in equity, be required to repay plaintiff the $2,500 received by them from him. Then is it also said that the contract together with the defendants’ affirmative allegations, shows that the plaintiff, in legal effect, but loaned the defendants $2,500, which they, on his demand, ought to repay. But see the cause declared on and then how plaintiff wanders from it. He must take a stand somewhere. He took it where he was required to take it — in his complaint. It is to rescind the contract on the ground of fraud, alleged false representations relied on by him to his injury. To aid and support Mm in that he, of course, may look to the answer. But he may not wholly depart from his complaint and look alone to the answer as the foundation for another cause or other relief. To recover at all he must recover within the *42cause and upon the grounds stated in his complaint. To permit him to go beyond that is to disregard basic principles and functions of pleadings. Neither the contract as pleaded by the defendants nor their affirmative allegations aid the plaintiff in the cause as stated by him. They do not show that the alleged representations were made, or that they were false, or that the plaintiff relied on them, or because of them he was induced to enter into the contract, or caused to perform any of its conditions, or was harmed. They, in such respect, tend to negative all that.
And then to entitle him to recover on his alleged theory of repudiation and rescission and on his alleged grounds of fraud and misrepresentations, and to be restored to what he in pursuance of the contract paid out, he must himself do equity and account .for or offer to restore what, if any, benefits he himself received on part performance and in pursuance of the contract. He alleged he offered to surrender the certificate of stock. But he also alleged that he for four years ''received the monthly salary prescribed in said contract." He did not allege what that was. The defendants alleged it was $100 a month for the first three months, $125 for the next three, and $150 a month thereafter. They alleged that he also received twelve per cent, per annum on the $2,500 or $1,200 for the four years which was paid in lieu of dividends. It may be that what he received by way of salary is balanced by services rendered by him, that by way of dividends by interest on the money paid out by him, and hence on a rescission of the contract, equity would not require restoration on his part, further than contained in his offer, a surrender of the certificate. But it is better to adjudicate than to assume that. If on the other hand, and as is argued in the next breath, the contract is subsisting but terminable at will, and that by its terms the plaintiff, in legal effect but loaned the defendants $2,500, subject to his demand, then let him so aver and proceed on that theory. I do not think he can do so on what he has now averred. I therefore think the case should go back with directions to set the judgment aside and to permit either party on his application to amend. If neither desires to amend then to proceed to trial on the issues presented by the complaint.