St. Louis S. F. Ry. Co. v. Richards , 23 Okla. 256 ( 1909 )

The petition filed for a rehearing in this case resulted in further oral argument on the part of both parties and the filing of a number of additional briefs in which many of the authorities pro and con were again collated, considered, and discussed. No proposition was raised, however, that had not previously received the attention and consideration of the court in its original opinion. The primary contention that plaintiff could not maintain her suit without refunding or tendering to defendant the $100 received by her, at the time of the executing of the release, is again insisted upon. The matter has again had our careful consideration, and, while we agree with counsel for defendant that there are a number of authorities — perhaps the greater in number — sustaining their claims, yet the procedure adopted in the trial of this cause has received recognition and sanction at the hands of eminent courts, and we believe substantial justice will usually be effected thereby. It would be futile to attempt in this or any other case of similar character to so decide it that it would be in harmony with all the adjudications.

In the argument on rehearing, counsel for defendant again insisted that the Oklahoma statute on rescission controlled, and cited us to a number of authorities of California where analogous questions had, as we claimed, been before that court under a statute like this one, and been determined in conformity with their contention. Some of the cases cited, to our mind, were not applicable, while the declaration of the court in the case of Hammond v. Wallace et al., 85 Cal. 522, 24 P. 837, 20 Am. St. Rep. 239, met with the dissent of Justice Works and Chief Justice Beatty, and another one of the cases on which counsel relied (Marten v. Burns Wine Co. et al., 99 Cal. 355, 33 P. 1107) was repudiated and overruled by the highest court of that state, in the case of Matteson et al v. Wagoneret al., 147 Cal. 739, 82. Pac. 436. No case where the facts were like those in this case was referred to. The case which, in our judgment, most nearly meets defendant's claims of those cited, is that of Westerfield et al v. New York Life InsuranceCompany, 129 Cal. 68, 58 P. 92, 61 P. 667. The original opinion in that case was written by Commissioner Britt, and concurred in by one other commissioner. The facts in that case were, briefly, as follows: Plaintiffs were executors of the last will of William Westerfield. The defendant was an insurance company. In 1890 the defendant issued to plaintiffs' testator a policy of insurance upon his life in the sum of $10,000. Thereafter negotiations were entered into by the insured with the agent of the company to exchange this policy for another one of the same amount on a cheaper plan. The proposed policy was delivered to the deceased with, it was claimed, the intention of having the earned cash value of the first policy applied on the premiums of the second one. Decedent was in possession of both policies at the time of his death. His executors demanded payment of the amount of the second policy, which was refused on the ground that the same never was in effect, that it had been delivered to the decedent for examination only, that he never accepted it or paid any premium thereon, and that the first policy had become void because of decedent's failure to pay the fifth annual premium, which had an exchange been effected as contemplated, and the new policy legally delivered and accepted, would have been covered by the earned value of such surrendered first policy. The executors were induced to deliver both policies to the company upon the payment of approximately one-fourth of the face value of the one sued on. After receiving this money plaintiff brought suit alleging that they were induced to accept the money and surrender the policy by the false and fraudulent representations of the defendant. Suit was brought on the second policy setting up these facts. Defendant answered admitting making the representations alleged by plaintiffs, denied their falsity, averred that they were true, and relied upon the force and effect of the release secured. It was also contended on the part of defendant, as in the case at bar, that the action could not be maintained without rescinding the contract or compromise, and restoring, or offering to restore, the money they had received as the fruits thereof. Trial was had, and plaintiffs were given judgment. The case was appealed, and under the decision of Commissioner Britt the judgment of the trial court was reversed, with the statement:

"Admitting that there is some conflict of authority, we are yet satisfied that the conclusion we have reached accords with the strong preponderance of adjudication both in this state and elsewhere."

When the case was heard by the Supreme Court, the rehearing was granted, as stated by Temple, Justice, "solely because it was thought by some members of the court that the complaint stated a cause of action for damages for deceit; it having been held in the department opinion that it did not." The Supreme Court concurred in the conclusion reached by the commissioners that plaintiffs could not maintain their action, except that they first make restitution or tender before suit, but it also found and held that the representations upon which plaintiff relied for recovery, to wit, that the policy in question was never delivered to the decedent, and that it was merely given to him to be finally delivered if he approved it and paid the premium which he did not do, and that the deceased did not accept it, were not fraudulent but true. The defendant also defended on an additional ground, which was likewise sustained by the court, to wit, that the agent who made the contract with the assured was without authority to do so, and that the same had not been ratified by the company. The court found as true both of these defenses, which amounted to a complete refutation of any right or claim in plaintiff, and, it seems to us, rendered unnecessary and superfluous the passing on the question of whether or not it was necessary to make a tender. Indeed, the court says:

"The facts proven do not show fraud, and plaintiffs could not recover in any form of action."

In the case at bar, under the instructions of the court, it was necessary, to recover, for the jury to find there was fraud in the procurement of the release, and for the court, in overruling the motion for new trial, to confirm this finding, and we have held in this court that the evidence reasonably tended to sustain this conclusion. In this view of the situation, in our judgment the force of the case is to a considerable extent broken. Moreover, in later cases, that court, in dealing with the same statute, has, we believe, properly announced exceptions to it which are so broad and sweeping as to embrace and recognize as proper the procedure adopted in this case. One of the cases of this character is that of California Farm Fruit Company et al. v.Schiappa-Pietra et al., 151 Cal. 732, 91 P. 593, in which the court, quoting approvingly from the case of Kelley v. Owens,120 Cal. 502, 47 P. 369, 52 P. 797, said:

"There are exceptional cases where restoration, or an offer to restore, before suit brought, is not necessary: As, for instance, where the thing received by the plaintiff is of no value whatever to either of the parties; or where the plaintiff has merely received the individual promissory note of the defendant; or where the contract is absolutely void; or where it clearly appears that the defendant could not possibly have been injuriously affected by a failure to restore; or where, without any fault of plaintiff, there have been peculiar complications which make it impossible for plaintiff to offer full restoration, although the circumstances are such that a court of chancery may by a final decree fully adjust the equities between the parties — and it will be found that such instances, or others similar to them in principle, are those to which the authorities cited by appellant generally relate."

The list of authorities cited and quoted in the original opinion could be much extended, but we call attention to the cases of Georgia Home Insurance Company v. Rosenfield, 37 C. C. A. 96, 95 Fed. 358, The Oriental et al. v. Barclay,16 Tex. Civ. App. 193, 41 S.W. 117, and Union Pacific R. Co. v. Harris,158 U.S. 326, 15 Sup. Ct. 843, 39 L.Ed. 1003. In the case ofUnion Pacific R. Co. v. Harris, supra, from the Supreme Court of the United States, the practice which was adopted in the case at bar of making an allowance on the recovery of the amount received for the release was sanctioned. It was a matter of debate in that case whether or not the release was deliberately entered into. This question was left to the jury, with the charge that, if they made an allowance to plaintiff, they should deduct from it what he had received. The same question was elaborately treated in the case of The Oriental v.Barclay, supra, in which Justice Finley, for the Court of Civil Appeals of Texas, said:

"The plaintiff's case here is a suit at law for damages flowing from an alleged tort. There are no allegations in her pleadings which invoke the exercise of the equitable powers of the court. She attacks the release pleaded in bar of her right to recovery as being without consideration, fraudulent, and void. The truth of these allegations a court of law has jurisdiction to determine, and, when found to be true, will disregard the instrument, as being without legal effect. It is also true that courts with equity powers will protect the equitable rights of the defendant arising upon his answer, regardless of the nature of the relief sought by the plaintiff, and will make all necessary orders to that end, and may require a tender for that purpose. Pom. Eq. Jur. § 388. In a suit for rescission the rule is that the admitted consideration received must be tendered back, to the end that all parties may be protected. Where such tender appears not to be necessary for the protection of all parties, the reason for its requirement ceases, and it will not be enforced by the courts. State v. Snyder, 66 Tex. 688, 18 S.W. 106; Terrill v. De Witt, 20 Tex. 260; McCarty v. Moore, 50 Tex. 287;Clay v. Hart, 49 Tex. 436. In cases where equitable rights arise out of the defenses urged by the defendants, and where the subject-matter of the litigation is such that the court, by its final judgment, may give full protection without the requirement of a tender, no good reason is perceived for the making of such requirement. In this case, as has already been seen, no money was received and appropriated by the plaintiff. The value of the board, lodging, nursing, medical attention, etc., claimed by defendants as part of the consideration, under the circumstances of this case, were elements of damage arising out of the injuries inflicted; and the court was able in its final judgment to protect the defendants in the expense they had incurred for the benefit of the plaintiff, and did so, by having the amount of such expenditures deducted from the amount of damages found by the jury to have been sustained by the plaintiff. This practice is approved in the following cases: Railroad Co. v. Doyle,18 Kan. 58; Railroad Co. v. Lewis, 109 Ill. 120; Mateer v. Railway Co. (Mo.) 15 S.W. 970: Railroad Co. v. Harris, 158 U.S. 330-333, 15 Sup. Ct. 483, 39 L.Ed. 1003. See cases cited. Under plaintiff's theory of the matter, she was never bound by the terms of the release; and as the court could fully protect the rights of the defendants in case it were found that their contention was true in relation to the board, etc., being part of the consideration agreed upon, we think the plaintiff was entitled to a judicial determination of her rights, without being embarrassed by a requirement of tender. The court did not err therefore in refusing to charge the jury in accordance with the contention of appellants as to a tender of the alleged consideration of the release."

It is conceded on the part of counsel for defendant that, where a release of this character is secured by a representation to the party making it that it is an instrument of an altogether different nature, so that the fraud is in the fact of the document itself, then plaintiff would be entitled to ignore it and begin action without making tender, being merely required to account for the amount received in any judgment recovered; but they contend that, where the overreaching fraud is perpetrated by a different species of deception on the part of the defendant, then plaintiff cannot be heard to prosecute an action on the original liability until rescission has been accomplished, either by restoring the money or making a tender of it. This same distinction was presented to the Circuit Court of Appeals of the Sixth District, in which the question was whether or not in a suit at law plaintiff might meet a plea of release by replication that a release was obtained by fraud, and this whether the fraud was in the execution or in misrepresentations which induced the execution where the question was solely between the parties. Judge Taft, speaking for the court in the case of Wagner v.National Life Ins. Co. of Montpelier, 33 C. C. A. 121, 90 Fed. 395, sweeps aside this artificial distinction with the following language:

"Our conclusion is therefore that it is proper in a suit at law for the plaintiff to meet a plea of release by a replication that the release was obtained by fraud, whether the fraud is in the execution, or in misrepresentation as to material facts inducing execution. We are glad to come to this conclusion, because it avoids circuity of action, and thus facilitates the administration of justice. Of course, cases may be conceived where the avoiding of a release may concern the rights of others not parties, or may involve the application of peculiar equitable doctrines of confidential relations and the like, and thus present issues which only a chancellor, with his flexible procedure and careful discrimination, can properly adjust and decide. In such cases the parties can be remitted to equity; but, where the issue is simply one of fraudulent misrepresentation, it may be as well tried to a jury as to a court of equity, for fraud is an issue of which courts of law and equity, from time immemorial, have had concurrent jurisdiction."

The court, in the syllabus, held as follows:

"It is proper, in a suit at law, for the plaintiff to meet a plea of release by a replication that the release was obtained by fraud, whether the fraud is in the execution or in misrepresentation as to material facts inducing execution, where the issue involves simply a question of fraud between the parties."

To our mind the reasoning of this case on the question of procedure is unassailable, and why should it not apply with equal force to the entire question of fraud when the controversy is, as was stated and limited by that case, confined solely to a dispute between the parties? Nor, in our judgment, did it add anything to the force of the release that it contained a proviso releasing and discharging all suits, actions, and causes of action or claims growing out of the alleged injury because the same facts which would render it invalid against plaintiff in one particular would render it equally invalid as to the other. A party fraudulently induced to waive a right to assert a right is no more bound by that kind of an agreement than by an agreement fraudulently obtained to waive any other right.

It clearly appearing to our minds that the defendant could not possibly have been injuriously affected by plaintiff's failure to restore or make tender of the sum received, the original conclusion reached is therefore adhered to.

The petition for rehearing is denied, and the mandate is directed to issue.