Schofield v. Shiffer , 32 W.N.C. 449 ( 1893 )

Opinion by

Mr. Justice Dean,

This case is not very different in the questions raised from thaLof W. & J. Sloan against the same defendants, argued and decided at this term [the preceding case]. The charge of the learned judge of the court below, to which there are five assignments of error, taken as a whole, was a correct and full statement of the law on the evidence. That part of it embraced in the third assignment, standing by itself, not read in connection with what precedes and follows it, and leaving out of view the undisputed facts, is certainly error. It is as follows :

“ And I further charge you that Schofield, Mason & Co. were not obliged, before rescinding this contract, to tender back to Judd & Co. the amount of money already paid on account of the goods shipped them.”

It is settled, both by reason and authority, that a vendor, to rescind a contract for the sale of chattels, such as the one in question, must return what he has received on the bargain. The title and possession are both in the vendee by the voluntary act of the vendor, who has the option to rescind or to bring his action on the contract. If he elect to rescind, his election must be indicated by unmistakable acts significant of the intention. The vendee must, in effect, have returned to him any money paid, and the vendor must relinquish any advantage gained by the contract. If this be neglected, the neglect is a continuous affirmance of the contract, and the law does not countenance double dealing; does not permit the vendor to both affirm and disaffirm; to do so, would be to allow him to offset the fraud upon himself by perpetrating another on the vendee. There is scarcely the semblance of diversity of opinion among the text writers on this question, and very rarely contradictory decisions in the courts: 3 A. & E. Enc. of Law, 930, and notes. This being so, the statement in the charge, constituting appellants’ third assignment of error, would seem to be in direct conflict with the law.

But it must be kept in mind that the whole of these goods, although delivered at different dates, were purchased at one time; there were not separate sales of separate parcels at different dates, but just one transaction made on the faith of the alleged false representations. On the 15th of January, 1891, Judd, accompanied by his buyer, McCoy, called at plaintiffs’ place of business, and ma.de selections and purchases of carpets to the value of ©1,882.85. Plaintiffs delayed shipping until they received a written statement from Judd & Co., on 20th of January, of their financial condition. This turned out to be grossly false, but, relying on it, they commenced shipping the goods and. continued so to do up to May 4th, when the entire bill was completed. On February 16th, $1,488.85 worth of the goods had been delivered, for which were taken three notes, each in the sum of $479.45, payable respectively in 60 days, four months and five months; two of these notes were paid, and one was not paid. On the 4th of May another settlement was had for the balance of the bill, $444.40, for which a note at 60 days was taken. This note was not paid; making paid of the whole purchase $959.03, and leaving unpaid $923.85, represented by the two unpaid notes. This was the situation on the 21st of August, when Judd & Co. confessed judgments to other creditors for more than $17,000, on which executions were at once issued, and the entire stock of goods, furniture and carpets, was seized by the sheriff. Then plaintiffs rescinded the contract and reclaimed such of their goods as could be identified as part of the purchase of the 15th of January, without tendering the money received, or the unpaid notes.

From the evidence, we fail to see, as is so earnestly argued by appellants’ counsel, that such reclamation was impossible or illegal without such tender. While the evidence shows a number of shipments running from 23d of January to 4th of May, and two settlements, there was hut one purchase of the entire bill on 15th of January, when Judd and McCoy called at plaintiffs’ place of business in Philadelphia, and but one set of false representations, those made in writing on 20th of January, on the faith of which all the shipments were made. Being then but one transaction, the whole of it is alike tainted with fraud; it is impossible to separate the bills, and say that one part was paid for by honoring the two notes, and that the goods thus paid for could not be reclaimed without tendering the money paid. Goods in the store, purchased before the 20th of January from plaintiffs, could not be substituted for those purchased under the alleged fraudulent sale; nor if there had been several sales as well as several separate bills, some paid and some unpaid, could goods paid for be substituted for those not paid for. This, however, being a single transaction, as one of the witnesses states, the “ whole lumped together,” to relieve plaintiffs from the tender, it was only necessary for them to show that the goods reclaimed were a part of those sold on the fraudulent representations, and that their value did not exceed the balance due them on the whole sum of that sale. Both facts, under very clear instructions from the court, were found in their favor. This being the case, Judd & Co. had already received back in goods, which presumptively they had already disposed of, the $959.08, amount of the two notes paid; they had no right to receive the money twice, which would have been the case if plaintiffs had paid it to them. This, taking the whole charge of the court and its reference to the evidence, is what was meant, and what without doubt the jury understood from it. And it is the only ground on which the judgment can be sustained. To have held, as argued by the'learned counsel for appellees, that the execution creditors, these appellants, had no standing to insist on a return of the money paid; that Judd & Co. alone could require it as a condition precedent to a rescission, would have been error. These creditors have just the right, and no less, of their debtors, Judd & Co. It is only because they have no higher one that plaintiffs have the right to rescind at all; Judd & Co.’s title to the goods, and consequently the creditors’ right to appropriate them in payment of. their debts, remains, until the defrauded vendor has made void that title by an effectual rescission of the contract which vested it in them. Standing in their debtor’s shoes with a grasp on their goods, they can legally and equitably say to the vendor, who seeks to reclaim them on the ground of fraud, “ You must do all that the law requires to make void the debtor’s title, before you can ask us to relinquish them.” To hold that execution creditors have no standing in. court to assert the title of their debtor against an assumed defrauded, yet unsecured vendor, would be to invite fraudulent claims on the goods of every failing debtor.

As to the unpaid notes, the court was,right in holding that in this form of issue, between these parties, a tender of and filing them in court before verdict was sufficient. When this was done, any possible prejudice to the right of Judd & Co. was guarded against, and they were put in the same situation as before the contract.

As to the alleged error in the admission in evidence of written statements made by Judd & Co. to Doernan Brothers and Boyd, White & Co., embodying representations of like character with that to plaintiffs on 20th of January, we think they were properly admitted. They were corroborative evidence of intent to defraud these plaintiffs, because tending to show a general scheme on part of Judd & Co., by false representations to wholesale dealers, to fraudulently accumulate goods purchased on credit. They were not admissible to prove that, as they had made false statements to others, therefore they had made false statements to plaintiffs; but it was shown beyond dispute they bad made a false statement to plaintiffs, and bad got, over and above what they paid for, about $1,000 worth of goods; defendants might have argued, with some force, that there was no intent to defraud, because the profit was but small; therefore, to show more clearly the fraudulent intent, plaintiffs could give evidence that the purchase from them was only a small part of a larger scheme; that the object was to get, not a single thousand dollars worth of goods on credit, but many thousand dollars worth by like false representations to others about the same time, and that the scheme was successful.

What we have said covers all of merit in the assignments of error; they are overruled; the judgment is affirmed, and appeal dismissed at costs of appellant.