Mason v. Madson , 90 Mont. 489 ( 1931 )

Upon the authorities below, but particularly the case ofStillwell v. Rankin, 55 Mont. 130, 174 P. 186, in which it was said: "In any event, a man is entitled to receive the property he contracts to purchase and cannot be required to accept in lieu thereof something else, even though it has equal value," the appellant submits that there can be no question that in this jurisdiction it is fraud in law, relating to a material matter, for a vendor to deliver to his vendee an article which he represents to be one thing while in truth it is another, even though the physical and tangible attributes of the thing delivered and the article offered are identical, and even though there be between the two not a shade of difference in their pecuniary value. It is enough, we repeat, under these authorities that at bar Mr. Mason did not get what he bargained for. (See Newhall v. Enterprise Min. Co., 205 Mass. 585, 137 Am. St. Rep. 461, 91 N.E. 905; Kirby v. Dean, 159 Minn. 451,199 N.W. 174; Nelson v. Carlson, 54 Minn. 90, 55 N.W. 821;Rubin v. Sturtevant, 80 Fed. 930, 26 C.C.A. 259; Butler v.Prussian, 252 Mass. 265, 147 N.E. 892; Da Ponte v.Simonian, 127 Wash. 214, 220 P. 799, 222 P. 901; BuckeyeBuggy Co. v. Montana Stables, 43 Wash. 49, 117 Am. St. Rep. 1032, 85 P. 1077.)

To justify the rescission of a contract for fraud it is neither necessary nor proper to allege or prove pecuniary damage, it is entirely sufficient if it appears that the defrauded party did not get substantially what he bargained for, assumed obligations or parted with a consideration which had it not been for the deceit practiced he would neither have assumed nor paid. In short, if it appears that but for the fraud he would not have accepted the thing delivered, damage sufficient to justify rescission follows, and further inquiry as to its extent or amount is immaterial. (Stillwell v. Rankin, and Kirby v.Dean, supra; Fawkes v. Knapp, 138 Minn. 384, 165 N.W. 236;Saupe v. St. Paul Trust Co., 170 Minn. 366, 212 N.W. 892;Magnuson v. Bouck, 178 Minn. 238, 226 N.W. 702; Ft. MyersDev. Corp. v. McWilliams Co., 97 Fla. 788, 122 So. 264,268; Munson v. Fishburn, 183 Cal. 206, 190 P. 808, 811-813;Vulcan Fire Ins. Co. v. Jorgenson, 33 Cal. App. 763,166 P. 835.)

An action at law as for money had and received is an appropriate remedy for the recovery of the purchase price of the lambs in question. In a case such as this, one may rescind by his own act, treat the contract or sale as though it had never taken place, and recover the consideration which he may have paid as money had and received to his use. (Stout v. CarruthersvilleHardware Co., 131 Mo. App. 520, 110 S.W. 619; J. Crouch Son v. Huber, 87 Okla. 83, 209 P. 764, 767; Byers v. Brisley, 81 Okla. 215, 198 P. 90; Stowe v.Mather, 234 Mich. 385, 208 N.W. 609, 610; Fraser v. Copake,Lake Pure Ice Corp., 216 N.Y. Supp. 496; Koehler v.Dennison, 72 Or. 362, 143 P. 649; Gary Coast Agency v.Lawrey, 101 Or. 623, 201 P. 214; Boysen v. Petersen,203 Iowa, 1073, 211 N.W. 894; 35 Cyc. 606.)

Upon the facts of this case the appellant was entitled to rescind as to the 52 Maxwell lambs, while retaining the others delivered under his contract. (Da Ponte v. Simonian, BuckeyeCo. v. Montana Stables, and Rubin v. Sturtevant, supra;Schiller v. Blyth Fargo Co., 15 Wyo. 304, 8 L.R.A. (n.s.) 1167, 88 P. 648; Field v. Austin, 131 Cal. 379,63 P. 692; Robdell v. Scheier, 46 S.D. 228, 191 N.W. 836; GrunbaumBros. Furniture Co. v. Humphrey etc. Co., 144 Wash. 620,258 P. 517; Weil v. Stone, 33 Ind. App. 112, 104 Am. St. Rep. 243, 69 N.E. 698; Edward Thompson Co. v. Schroeder, 131 Minn. 125,154 N.W. 792; Lampson v. Cummings, 52 Mich. 491,18 N.W. 232; Cohen v. Pemberton, 53 Conn. 221, 55 Am. St. Rep. 101, 2 A. 315, 5 A. 682; Bank of Antigo v. Union Trust Co.,149 Ill. 343, 23 L.R.A. 611, 36 N.E. 1029; Regent Waist Co. v.O.J. Morrison Dept. Store, 88 W. Va. 303, 106 S.E. 712;Simmons Cohn Co. v. Weil, (Tex.Civ.App.) 244 S.W. 562;Portfolio v. Rubin, 233 N.Y. 439, 135 N.E. 843.) Plaintiff's action is entirely equitable in its nature. (Spreckels v. Gorrill, 152 Cal. 383, 92 P. 1011; Distler v. Dabney, 7 Wash. 431, 35 P. 138, 1119; Simmons v.Harris, 108 Okla. 189, 235 P. 508; Warner v. Coleman,107 Okla. 292, 231 P. 1053; Lathrop v. Maddux, 58 Colo. 258,144 P. 870; People ex rel. v. District Court, 70 Colo. 500,202 P. 714; Tobin v. Gantt, 78 Okla. 73, 189 P. 170; Barger v. French, 122 Kan. 607, 50 A.L.R. 285, 253 P. 230; Kuhn v.Johnson, 91 Kan. 188, 137 P. 990; Reser v. Labude,103 Wash. 228, 173 P. 1093.)

Neither our statutes nor the decisions of this court recognize the right of an action for money had and received in such a case as the one at bar. All the Montana cases recognize only two remedies. A party induced by fraud to enter into a contract may elect either (1) to rescind by restoring what he has received or (2) to affirm without restoring and sue for damages. (ComoOrchard Land Co. v. Markham, 54 Mont. 438, 171 P. 274;Koch v. Rhodes, 57 Mont. 447, 188 P. 933; Bump v.Geddes, 70 Mont. 425, 226 P. 512; Friedrichsen v. Cobb,84 Mont. 238, 275 P. 267; Smith v. Christie, 60 Mont. 604,201 P. 101; Waite v. C.E. Shoemaker Co., 50 Mont. 264,146 P. 736; Cornell Tractor Co. v. Humphrey, 107 Cal. App. 434,290 P. 486; Paolini v. Sulprizo, 201 Cal. 683,258 P. 380.) Appellant does not refer or cite any Montana cases recognizing an action at law for money had; he may choose to denominate the case at bar an action for money had and received, but in any event his right to recover thereunder depends solely upon his right to rescind the contract. Appellant has offered to rescind and the real purpose and the gist of this action is to enforce his alleged right to rescind.

Since the case is purely one of an equitable nature it follows that the court did not err in directing a verdict. (Sec. 9327, Rev. Codes 1921; Bancroft's Code Pleading Remedies, pp. 1563-1565; Steiner v. McMillan, 59 Mont. 30, 195 P. 836;Spena v. Goffe, 119 Kan. 831, 241 P. 257.) The trial court may withdraw an equity case from the jury. (Selfridge v.Leonard-Heffner Mach. Co., 51 Colo. 314, Ann. Cas. 1913B, 282, 117 P. 158; Lindblom v. Johnston, 92 Wash. 171,158 P. 972; Frazier v. McCary, 110 Okla. 138, 236 P. 880; Galvin v. Palmer, 113 Cal. 46, 45 P. 172; Walden v. Potts,97 Okla. 24, 222 P. 549; Jamison v. Niel Nohr Auto Co.,77 Colo. 85, 234 P. 695.) This court has also held in HelenaAdjustment Co. v. Claflin, 75 Mont. 317, 243 P. 1063: "So that where, as in this case, there is no substantial evidence in support of the alleged fraud, a question of law is presented for the court's decision and the cause was properly taken away from consideration by the jury." The following cases are further mentioned at this time without comment: Ryan v. Geigel,25 Colo. 122, 136 P. 804; Sanford v. Gates, Townsend Co.,21 Mont. 277, 53 P. 749; Basantz v. Ostronich, 57 Mont. 197,187 P. 1109; Hays v. De Atley, 65 Mont. 558, 212 P. 296;Rochester v. Bennett, 74 Mont. 293, 240 P. 384.

There is no conflict in any of the evidence in the case at bar, and as was said in Avgikos v. Lowry, 54 Utah, 217,179 P. 988: "Where the facts are undisputed, the question of whether or not they constitute a performance or breach of contract, is one of law for the court." (Manti City Sav. Bank v. Petersen, 33 Utah, 209, 126 Am. St. Rep. 817, 93 P. 566;Salt Lake City v. Salt Lake Water etc. Co., 54 Utah, 10,174 P. 1134.) This is an appeal from a judgment entered upon a directed verdict in favor of defendant.

The complaint alleges that defendant was at all times engaged in the business of growing sheep and lambs in the vicinity of Absarokee, Montana, and that on or about April 5, 1929, the plaintiff bought from him 225 white-faced lambs, all of the said defendant's lamb crop for the year 1929, at so much per pound, and paid defendant the sum of $225 as part of the purchase price, promising to pay the balance due at the time of the delivery of the lambs; that the defendant bargained and sold and promised to deliver to plaintiff 225 white-faced lambs, all of his crop of lambs for the year 1929, for the price and at the time averred; that the plaintiff had duly performed all of the conditions of the contract on his part; that on or about October 4, at Stillwater county, the defendant falsely, fraudulently and intentionally, and with the intent to deceive plaintiff and to induce him to accept all of the lambs hereinafter described, did pretend, represent, and profess that he was then delivering lambs which were all of his crop of lambs for the year 1929, to-wit: 228 white-faced lambs, consisting in addition to the lambs of defendant's crop, of approximately 52 lambs which were acquired by the defendant by purchase on or about October 1, 1929, from another lamb grower, of which plaintiff was ignorant at all times up to October 11, 1929; that all of the 228 lambs so delivered were variously and indiscriminately marked and branded, and the 52 lambs were mixed and confused with the lambs of defendant's crop for 1929, and were of the same kind, description, ages, and general appearance, and at the time delivered, plaintiff could not and did not distinguish, among the lambs delivered, those which were substituted to the number of approximately 52 from those actually grown and raised by the defendant during the year 1929; that defendant concealed the facts from the plaintiff with intent then and there to deceive him, and to induce him to accept the 52 lambs under the contract, and plaintiff, thus deceived, accepted the lambs; that the representations made by defendant to plaintiff respecting the 52 lambs were false; that plaintiff would not have accepted the 52 lambs if he had known the facts; that plaintiff was not obligated to accept the 52 lambs; that plaintiff verily believed and relied upon the false and fraudulent representations and concealment of fact by the defendant as aforesaid, and was tricked and deceived thereby, and was thereby induced to accept and did accept all the 228 lambs, and did pay to the defendant $530.75 for the 52 lambs; that on October 11, the plaintiff discovered the facts, and on October 15 offered to restore to the defendant the lambs to the number of approximately 52 which were not of the defendant's crop of 1929, upon condition that the defendant would restore to plaintiff the price defendant had received for the 52 lambs, and plaintiff was then and there and at all times mentioned in the complaint, ready, able, and willing in good faith to restore to the defendant the lambs, but the defendant at all times positively refused, and still refuses to restore the price; that by reason of the premises, the defendant has had and received and now has, to and for the use and benefit of defendant, the full sum of $530.75, which defendant has refused to repay, notwithstanding the demand. Wherefore, plaintiff prayed judgment for the sum of $530.75, with interest thereon from October 14, 1929, and for his costs, with all proper relief in the premises.

The answer denied the allegations of the complaint, except as specifically admitted. Defendant admitted the execution of the contract by himself and plaintiff and the receipt of the $225, the first payment on the lambs; admitted the delivery of 228 lambs to the plaintiff and the receipt of "the balance of the purchase price agreed upon in accordance with the terms and conditions of the said contract," and alleged that the contract had been in all things fully and completely executed and performed by both parties, and that nothing remained to be done by either.

Plaintiff, in the spring of 1929, was purchasing lambs for fall delivery in defendant's neighborhood. Shortly before lambing time, he approached defendant and inquired if he desired to contract any lambs, and defendant said he had not thought about it. They discussed the price, and defendant said he thought he "could safely contract 225 head." The two then entered into a contract whereby defendant agreed to sell to plaintiff the following described livestock: * * *

Price per "No. Cwt. Time and Place of Head Description Brands Head Delivery F.O.B. Cars 225 white-faced lambs all M Oct. 1 to 5" of 1929 lamb crop

The price agreed upon was 11 cents and 13 cents per pound for wethers and ewes, respectively.

"All sick, cripples, bucks, loco or cull lambs weighing less than 40 pounds rejected, and agree to deliver said livestock free on board cars at Railway Stockyards at Reed Point 13 Station, on or about Oct. 1 to 5, 1929. * * *

"Acknowledge receipt of $225 in part payment for above mentioned livestock. The balance to be paid at time of delivery."

It seems to be conceded by respective counsel that oral testimony to explain the contract was admissible, and both sides introduced evidence to that end.

When the contract was made, defendant had 250, more or less, of breeding ewes, but as to this plaintiff gave no concern; he did not see the ewes at that or at any other time. The lambs contracted for were "just common sheep." Some conversation was had as to the meaning of "white-faced lambs." Defendant said, "Now if you turn in this contract they may throw out anything that is not absolutely white-faced," to which plaintiff, who was writing the contract, answered: "That is immaterial, so long as they pass as white-faced." The ewes having failed to produce enough lambs to enable him to deliver the number named in the contract, defendant procured of Maxwell, a neighbor, 52 lambs similar to those he already possessed. Defendant's lambs were branded with an M, some in red, some in "brown, slate color"; the Maxwell lambs were branded M in red. The lambs, being intermingled, were so nearly alike that on the day of delivery plaintiff was unable to distinguish the Maxwell lambs from the others in the bunch.

On October 4, pursuant to plaintiff's direction, defendant delivered to plaintiff 228 lambs of mixed weights, of 1929 lambs branded with an M on the back, some with cropped ears, some with split ears, and some without ear marks. Defendant did not say anything about the Maxwell lambs, and plaintiff did not know the lambs he received were other than the lambs from defendant's ewes.

Three or four days after he had received and paid for the lambs, plaintiff ascertained that defendant had turned in the Maxwell lambs on the contract, and, upon being confronted, defendant admitted it. Plaintiff then served formal notice in writing upon defendant, rescinding the sale as to the 52 Maxwell lambs and tendering them to defendant upon condition he repay their price. Upon defendant's refusal, plaintiff brought this suit for the price of the 52 lambs.

The action is to enforce rescission for fraud practiced, but[1] the complaint is drawn for money had and received to plaintiff's use. At the threshold, defendant argues that the action in this form cannot be maintained. We shall not enter into any discussion of this feature of the case further than to say that "this is a suit to enforce a rescission which has been offered and refused, and it is of equitable origin and nature." (Spreckels v. Gorrill, 152 Cal. 383, 92 P. 1011, 1016.) An action for money had and received is governed by equitable principles. Under our procedure, which abolishes the distinction between forms of action, the court could in this action administer equitable relief, regardless of the question whether, under former systems of jurisprudence, the action would be deemed an action in assumpsit for the money paid, or an action in equity to enforce rescission and a return of the consideration. (Spreckels v. Gorrill, supra.)

Upon the merits, plaintiff's position is that he did not agree to purchase any lambs other than from defendant's ewes. Defendant, on the other hand, claims that he was obligated to deliver to plaintiff 225 lambs; he paid Maxwell the same price for the 52 lambs which he, defendant, received for them from the plaintiff. No question is raised as to the kind or quality of any of the lambs; the Maxwell lambs were of the same kind and quality as those produced by defendant's ewes. Defendant's lambs were not more desirable than other lambs of like kind. They did not possess any distinctive quality, nor were they purchased for any such reason. Plaintiff does not plead that he was injured or damaged because in the 228 lambs delivered 52 were from the Maxwell ewes instead of from defendant's ewes. In fact, plaintiff does not plead, nor did he prove or attempt to prove, any damage or injury whatever. His sole contention is that he contracted to purchase the lambs from defendant's ewes and none other. It is true that in giving his testimony he said if he had known of the "substitution" he would not have accepted the Maxwell lambs, "because they were not worth the money." They were worth as much, pound for pound, as were defendant's lambs. Maybe the market had declined. But the complaint was not drawn nor was the case tried on the ground that plaintiff had suffered any loss or damage in accepting the 52 lambs. In this action, he is in no better position than if he had pleaded mere chagrin.

Whether, in view of the terms of the contract, defendant would have been liable in damages had he failed to deliver 225 head is doubtful (Barkemeyer Grain Seed Co. v. Hannant, 66 Mont. 120,213 P. 208), but that he thought he was obligated to deliver that full number is clear. We think he did not intend to defraud plaintiff; what he did put no money in his pocket; did not give him any advantage. Now upon abstract principles, plaintiff was not obligated to purchase something for which he did not bargain. Conceding that he could have refused to accept the Maxwell sheep had he known the facts; conceding that defendant's delivering the sheep to plaintiff, with the 52 Maxwell sheep among the number, amounted to a false representation, did plaintiff have the right to ask the court to enforce a rescission of the contract without showing injury or damage? The answer must be in the negative.

This was an executed contract, and as was said in the case of[2] Atlantic Delaine Co. v. James, 94 U.S. 207, 214,24 L. Ed. 112, "cancelling an executed contract is an exertion of the most extraordinary power of a court of equity. The power ought not to be exercised except in a clear case, and never for an alleged fraud, unless the fraud be made clearly to appear; never for alleged false representations, unless their falsity is certainly proved, and unless the complainant has been deceived and injured by them."

This doctrine is equally applicable to an attempt to enforce the rescission of an executed contract. It is said in Spreckels v. Gorrill, supra, that "fraud which has produced, and will produce, no injury will not justify a rescission, nor support an action either for rescission or damages, is an established principle of law and equity." (Darrow v. Houlihan, 205 Cal. 771, 272 P. 1049; Munson v. Fishburn, 183 Cal. 206,190 P. 808.)

In order to maintain an action to rescind the contract or to[3-5] enforce the rescission thereof, which amounts to the same thing, the complaining party "must have been misled to his prejudice or injury; for courts of equity do not, any more than courts of law, sit for the purpose of enforcing moral obligations or correcting unconscientious acts, which are followed by no loss or damage. It has been very justly remarked, that to support an action at law for a misrepresentation there must be a fraud committed by the defendant, and a damage resulting from such fraud to the plaintiff." (1 Story's Equity Jurisprudence, 14th ed., sec. 289.) "Courts of equity, like courts of law, however, do not concern themselves with wrongs which do not produce injury." Stillwell v. Rankin, 55 Mont. 130, 174 P. 186,187, relied upon by defendant. Therein this court chose the rule that gives to the word "damage" its broad significance, which includes either pecuniary loss or the alteration of one's position to his prejudice.

Fraud without damage affords no ground for action. (Holton v. Noble, 83 Cal. 7, 23 P. 58; Bomar v. Rosser, 131 Ala. 215,31 So. 430.)

Counsel for plaintiff has not cited an authority, nor have we found one, holding that a party may enforce the rescission of a contract where he has neither alleged nor proved that he suffered injury or prejudice. Having failed to show either, plaintiff is out of court. People are not at liberty to invoke the public force, except for the protection of substantial rights. "Deminimis non curat lex."

The judgment is affirmed.

ASSOCIATE JUSTICES GALEN, FORD and MATTHEWS concur.