Naugle v. Yerkes , 187 Ill. 358 ( 1900 )

Mr. Justice Hand

delivered the opinion of the court:

The only matter left uncertain by the contract of July 26,1897, is the amount to be paid appellants for the “power house” and the “special work,” which, by the terms of the contract, was to be determined by M. K. Bowen. ' The ground for equitable relief relied upon in the bill is the alleged interference with the impartiality of Bowen by appellee. The bill cannot be maintained, in our opinion, on that ground, for two reasons:

First—The appellants have not placed the appellee in statu quo. The rule is well settled that when a party desires to rescind a contract upon the ground of fraud, it is his duty to act.promptly and at once tender back what he has received under the contract. If he remain silent and proceed to complete the contract or in any way recognize the validity thereof after he has notice of the fraud, he will be held to have waived the objection and be conclusively bound by the contract. Day v. Fort Scott Investment Co. 153 Ill. 293; Rigdon v. Walcott, 141 id. 649; Doane v. Lockwood, 115 id. 490; Buchenau v. Horney, 12 id. 336; Greenwood v. Fenn, 136 id. 146; Grymes v. Sanders, 93 U. S. 55.

It is said in Day v. Fort Scott Investment Co. supra, (p. 304) : “It is a familiar rule, and one well settled by the authorities, that where a party discovers that fraud has been practiced upon him in the making of a contract, it is his duty at once to repudiate the contract and tender back what he has received under the contract, so that the other party may be placed as nearly as possible in the same position he occupied before the contract was made.”

In Rigdon v. Walcott, supra, we say (p. 660): “A contract into which a party has been induced to enter by the fraud of the other party is not void, but is only voidable at the election of the defrauded party. Until he has elected to rescind, and has performed such acts on his part as are necessary to work a rescission, the contract remains in full force, and he is entitled to no remedy which is not based upon the theory of its continued validity. It is a general rule, to which there are but few exceptions, that the restoration of the party against whom the relief is sought, or the offer to restore him, to the position which he occupied before the transaction complained of took place, is a condition precedent to the right to rescind. The right can be exercised only upon the terms of returning the consideration received, or, perhaps, under certain circumstances, of returning its value.”

In Doane v. Lockwood, supra, it was said (p. 496): “Undoubtedly the law is, where a party has received any valuable consideration upon the sale of property he can not rescind the contract for fraud without first returning to or offering to return to the purchaser the consideration received, whatever it may be. The title of the fraudulent purchaser is subject to be divested, at the election of the seller, within any reasonable time after the fraud is discovered. When a sale is thus rescinded for fraud it is as though no sale of the property had been made.”

In Buchenau v. Horney, supra, we said (p. 338): “A party cannot rescind a contract of sale and at the same time retain the consideration he has received. He cannot affirm .the contract as to part and avoid the residue, but must rescind it in tolo. He must put the other party in as good a condition as he was before the sale, by a return of the property purchased.”

In Greenwood v. Fenn, supra, which was a bill to set aside a contract for the sale of land on the ground of fraudulent representations as to the quality of the land, we said (p. 158): “The rule on this subject is well stated in Grymes v. Sanders, 93 U. S. 55, as follows: ‘Where a party desires to rescind ujoon the ground of mistake or fraud, he must, upon the discovery of the facts, at once announce his purpose and adhere to it. If he be silent and continue to treat the property as his own he will be held to have waived the objection, and will be conclusively bound by the contract as if the mistake or fraud had not occurred. He is not permitted to play fast and loose. Delay and vacillation are fatal to the right which had before subsisted.

At the time the contract was made between appellants and appellee the railroad was but partially completed. Large sums of money have since been expended by .appellee in the completion thereof and in the payment of obligations assumed by him, and all the provisions of the contract have substantially been complied with by both parties, with the exception of those relating to the “power house” -and “special work.” We are of the opinion the appellants cannot rescind said contract, as, from the nature of the transaction and the necessary inferences which follow from the facts alleged in the bill, it appears they have heretofore failed, and it is impossible now for them to place the appellee in the position he occupied prior to and at the, time of the making of the contract of July 26, 1897. Especially is this true as the railroad is owned by the Suburban Railroad Company,' a corporation, and not by appellee, and it is not a party to this bill.

The bill does not state when knowledge of the alleged fraudulent arrangement between appellee and Bowen came to appellants. All intendments being against the pleader, for aught that appears in this bill appellants may have known of such fraudulent arrangement before any part of said contract was executed. It is said in 2 Pomeroy’s Bq. Jur. sec. 897: “All these considerations as to the nature of misrepresentations require great punctuality and promptness of action by the deceived party upon his discovery of the fraud. The person who has been misled is required, as soon as he learns the truth, with all reasonable diligence to disaffirm the contract or abandon the transaction, and give the other party an opportunity of rescinding it and of restoring both of them to their original position. He is not allowed to go on and derive all possible benefits from the transaction, and then claim to be relieved from his own obligations by a rescission or a refusal to perform on his own part. If, after discovering the untruth of the representations, he conducts himself with reference to the transaction as though it were still subsisting and binding, he thereby waives all benefit of and relief from the misrepresentations.”

Secondly—The appellants have a plain, speedy and adequate remedy at law, and if anything is due appellants upon the “power house” or for “special work” the law will afford them complete redress, notwithstanding the alleged misconduct of Bowen. The law is too well settled to require the citation of authorities, that if the appellants have an adequate remedy at law, a bill in chancery will not lie to rescind said contract. We are of the opinion the appellants have an adequate remedy at law, notwithstanding the alleged fraudulent and corrupt agreement between appellee and Bowen.

Where the parties to a contract for labor in cutting stone make an architect umpire to settle all disputes, and agree that his decisions will be final, and agree for-the payment of extra work provided the architect shall certify to the amount due, they will be bound by the agreement, and unless the' architect act in bad faith, refuse to act, or is prevented by some unforeseen and uncontrollable cause, no action can be maintained for extra work without his certificate, but if he acts in bad faith, refuses to act, or is prevented by some unforeseen or uncontrollable cause, suit may be brought. (Fowler v. Deakman, 84 Ill. 130.) Upon the sale of personal property, the price to be fixed by arbitrators, if the performance of the condition for a valuation be rendered impossible by the act of the vendee, the price of the thing sold must be fixed by the jury on a quantum valébat. (Humaston v. American Telegraph Co. 20 Wall. 20.) If the performance of the condition for a valuation be rendered impossible by the act of the vendee, the price of the thing sold must be fixed by the jury on a quantum valébat. (Benjamin on Sales, p. 430.)

Hood v. Hartshorn, 100 Mass. 117, was a suit upon a covenant in a lease, by which it was agreed that at the expiration of the term the buildings erected by the lessee on the demised premises should be appraised by three disinterested men, to be chosen, one by the lessor, one by the lessee and the third by the two thus appointed, and that the lessor should purchase the buildings at the price fixed by such appraisers. Certain persons were appointed appraisers, who refused or neglected to act, and the lessor refused to join in the selection of others to act in their stead. It was held that the obligation of the lessor to pay for the building was not entirely dependent upon the making of an appraisal, but that the appraisal was to be regarded as a mere method of ascertaining the price to be paid for them; that while the lessor was bound to do all that was reasonably in his power to procure the stipulated appraisal, yet if he had done so and failed, he was entitled to recover the value of the buildings to be assessed by a jury.

Phippen v. Stickney, 3 Metc. 384, was a suit upon an agreement under seal, by which the defendant covenanted to sell and convey to the plaintiff certain lands which he was about to purchase at auction, on such terms as three persons, specifically designated, should decide to be just and reasonable. But two of the arbitrators named agreed to an award, the third dissenting and refusing to sign it. The defendant having refused for that reason to perform the award, suit was brought to recover a penalty for default, fixed by the agreement, and the court, in sustaining the plaintiff’s right to recover, say (p. 389): “In a case like the present, if it appears that the plaintiff has done all in his power to procure an award, fixing the amount to be paid by him in pursuance of the terms of the contract, we do not think that the act of any one of the persons thus selected as arbitrators, in refusing to concur with his associates in fixing the sum to be paid, should operate to divest the rights of the plaintiff arising under the contract.”

Furthermore, this is not a case for rescission. The valuation of the “power house” and “special work” by Bowen is a small matter when compared with the entire subject matter covered by the contract of July 26, 1897. Appellee cannot be placed in statu quo, and the rights of appellants, if their contention is correct as to the facts, can readily be settled in a court of law and satisfied by a money judgment.

We are of the opinion, therefore, that the judgment of the Branch Appellate Court should be affirmed.

Judgment affirmed.