Mullen v. Old Colony Railroad , 127 Mass. 86 ( 1879 )

Soule, J.

The report shows that there was some evidence tending to prove that the plaintiff was induced to sign the paper, relied on by the defendant as a contract of settlement of the plaintiff’s claim, by false representations as to the purport of the paper, made by the agent of the defendant, and believed by the plaintiff to be true, he being unable to read. With the question of the weight and credibility of this evidence, and the further questions whether the conflicting testimony outweighed it or was more worthy of credit, we have no concern now. The ruling at the trial was that, even if it were true that the plaintiff was induced to sign the paper by the fraud of the defendant’s agent as to its contents, he could not maintain his action without first returning the money which he received when the paper was signed.

It is well established that, if a party enters into a contract and in consideration of so doing receives money or merchandise, and afterward seeks to avoid the effect of such contract as having been fraudulently obtained, he must first give back to the other party the consideration received. Coolidge v. Brigham, 1 Met. 547. Estabrook v. Swett, 116 Mass. 303. And if, after accepting a certain sum in settlement of an unliquidated claim for damages under a contract, one seeks to pursue his remedy for the damages on the ground that the settlement was procured by fraud, or is not binding upon him, he must first repay the amount received. Brown v. Hartford Ins. Co. 117 Mass. 479. The principle on which these decisions rest is just; but it applies to those cases only where that which was received, and which must be returned, was the consideration of the contract or settlement which the receiver intended to make, and understood that he was making, and which he seeks to avoid by reason of fraudulent practices of the other party which led him to agree to its terms. It does not apply to cases where a party holds out that he gives the consideration for one thing, and by fraud obtains an agreement that it was given for another thing.

In the case at bar, if the evidence for the plaintiff was true, he signed the paper which purports to show a settlement of his claim, believing it to be a totally different paper from what it in fact was. Signing in that belief, in consequence of the fraudulent representations of the defendant, he is not bound by it, because he never made the agreement which the paper indicates. He is not attempting to avoid a contract which he has made; but is showing that he did not make the contract which he apparently made. If this fact is established, it establishes the further fact that he did not receive the money, which was paid him when the paper was signed, in consideration of the settlement of his claim; for the only ground on which the effect of the paper is destroyed is that it was not his intelligent act, but was fraudulently procured by the artifice of the defendant, who knew that he had not made the settlement and had not received a consideration for a settlement. The answer of the defendant, which sets up a release and discharge of the plaintiff’s claim in consideration of $450, is fully met by the plaintiff’s evidence, if true; and the same evidence, which shows that the alleged release and discharge were never agreed upon, shows that the money paid was not paid under circumstances which entitle the defendant to have it returned. If it was paid for the support of the plaintiff till his case should be tried, or for a year, as a gratuity, it is clear that the defendant cannot insist on repayment. If it was paid with the representation that it was a gratuity, though with the intention on the part of the defendant’s agent to get the plaintiff’s signature to the paper relied on in defence, in consequence of such payment, the payment was a part of the fraudulent scheme, and the defendant cannot obtain any advantage from its own fraud.

We have not been referred by the defendant to any case in which it is held that, under circumstances like those of the case at bar, the plaintiff must repay money received by him before he can maintain his action. The case in our- own reports in which the facts most nearly resemble those in this case is that of Smith v. Holyoke, 112 Mass. 517, but the question whether a return of the money was necessary became unimportant, because it was held that the offer to return it was seasonably made, if any return was necessary.

We are of opinion that the case should have been submitted to the jury, and that there must be a New trial.