128 Va. 416 | Va. | 1920
delivered the opinion of the court.
The petitioners filed their bill against J. Paul Dutrow and William B. Dutrow, alleging in substance that the Valley Hardware Company, Inc., having a maximum capital stock of $25,000, divided into 250 shares of the par value of $100 each, had since its formation been conducting a retail and wholesale hardware business; that on the 9th of May, 1917, there were outstanding 195 shares of such stock, 108 of which were owned by the defendants, both of whom were directors of the company, and-J. Paul Dutrow its manager and treasurer; that prior to said date there were negotiations between the defendants and I. S. Ewing for the sale of the 108 shares of said stock, and on that date and during the pendency of the negotiations the defendants represented that upon the basis of the net assets of the corporation the stock was worth at least $180 per share, that the book value thereof was $180.50 per share, and that in support of such representations they presented certain statements purporting to be true and correct balance sheets of the company as of December 31, 1916, which indicated such book value; that relying upon the truth of these representations and financial statements, Ewing was induced to buy all of such stock, paying the defendants therefor
There was a demurrer to the bill upon several grounds, the third of which is, that “the complainants have failed to' state a sufficient cause for equitable jurisdiction or the relief prayed for.” This demurrer was sustained and the bill dismissed, of which the appellants are here complaining.
In Root v. Lake Shore, etc., Ry. Co., 105 U. S. 207, 26 L. Ed. 981, this is said: “It is the fundamental characteristic and limit of the jurisdiction in equity that it cannot give relief when there is a plain and adequate and com-r píete remedy a,t law; and hence it had no original,, independent and inherent power to afford redress for breaches of contract or torts, by awarding damages; for to do that
Although the concurrent jurisdiction of English chancery courts in such cases to award pecuniary compensation for mere breaches of contract, based upon allegations of fraud, is perfectly settled, this from the case of Newham v. May, 13 Price, 260, a suit in equity, seeking reasonable compensation for the difference between the actual value of property sold and its value as falsely represented by the vendor, decided in 1824, is pertinent:
“Alexander, Lord Chief Baron. — If I thought that this case turned upon the question of jurisdiction, 1 should take time to consider the point further. It is not in every case of fraud that relief is to be administered in a court of equity. In the case, for instance, of a fraudulent warranty on the sale of a horse, or any fraud upon the sale of a chattel, no one, I apprehend, ever thought of filing a bill in equity. The cases of compensation in equity I consider to have grown out of the jurisdiction of the courts of equity as exercised in respect of contracts for the purchase of real property, where it is often ancillary, as incidentally necessary to effectuate decrees of specific performance. This, however, appears to me to be no more than a common case of fraud by means of misrepresentation, raising a dry question of damages — in effect, a mere money demand.”
In 2 Pomeroy’s Eq. Jur. (4th ed.), sec. 914, referring to
- This American doctrine is said to have had its inducement and foundation in the Federal courts, because of the statute expressly forbidding equity jurisdiction where the remedy at law is adequate, and also both in the Federal and State courts, because of the constitutional provisions as to trials by jury, which have been construed to forbid equitable jurisdiction in controversies which can be determined at law.
While this precise question may not be concluded in Virginia, there are several cases in which there are expressions tending to support the generally accepted American doctrine.
In Green, Trustee, v. Spaulding, 76 Va. 417, Judge Staples says: “It is very true that to give relief in cases of fraud is one of the elementary grounds of jurisdiction of courts of equity. I do not understand, however, it is thereby meant that this jurisdiction extends to all possible cases in which the commission of a fraud may be involved. Where the party can have as effectual and complete a remedy in the courts of common law as in equity, and that remedy is direct, certain and adequate, there can be no just ground for resort to the equitable forum.”
In Goddin v. Bland & Bro., 87 Va. 708, 13 S. E. 145, 24 Am. St. Rep. 678, in which it was sought to enjoin an action at law for the recovery of the price of cordwood, on the allegatioii that the accounts were complicated, this, court refused to sustain the jurisdiction of the chancery
In Wilson v. Hundley, 96 Va. 100, 30 S. E. 492, 70 Am. St. Rep. 837, this is said: “A contract induced by fraud is not void, but voidable at the option of the party injured by the fraud. Upon the discovery of the fraud, he has, as a general rule, the choice of two remedies:. He may elect to rescind the contract, if he can restore what he has received in the same state or condition in which he received it, and sue for and recover back the consideration he has paid or given, or, if he has not paid or given anything, repudiate the contract, and rely, when sued, upon the fraud as a complete defense; or he may elect to retain what he has received under the contract, and bring an action to recover damages for injury he has sustained from the deceit. By adopting the latter course, he, in effect, affirms the contract, but not as made in good faith. He consents to be bound by its provisions, but does not thereby release or waive his claim for damages arising from the fraud collateral to the agreement.” Citing cases.
Buck v. Ward, 97 Va. 209, 33 S. E. 513, tends also to support the decree of the trial court. That was a suit in equity to cancel .an option contract for the purchase of land, and to recover the amount paid therefor, together with the amount expended by the complainants in prospecting and developing the land, based upon alleged false and fraudulent misrepre4entations. The court affirmed the decree of the trial court which sustained a demurrer to the bill. Referring to the general jurisdiction of equity to rescind contracts and award compensation in cases of fraud, this is said: “But it could not have been meant, that every case of fraud, or where the cause of action arises out of fraud, is within the scope of the elementary jurisdiction of courts of equity, but only that, where the circumstances of the particular case bring it within this elementary juris
In Kane v. Va. Coal & Iron Co., 97 Va. 329, 33 S. E. 627, it is held that a bill to remove a cloud upon a title by one not in possession of the land cannot be maintained because his remedy at law by action of ejectment is adequate. /•
No good purpose would be served by undertaking to discuss the question elaborately, for it has been frequently done by courts and text writers. Upon the face of the bill it appears that the claim of the complainants here is for pecuniary compensation alone. They propose to retain every benefit which they have received under the contract, expressly disclaim any desire to have it rescinded, and only ask for damages for the injuries they claim to have sustained by reason of the alleged deceit. That they have the right to bring an action in the nature of an action on the case, denominated an action of deceit, for such damages is clear. This action is of ancient origin in England. By the terms of the bill the complainants allege that they have been defrauded, elect to treat the contract as subsisting, and thereby in effect affirm it and consent to be bound by its provisions; but they do not release or waive their claim for damages arising out of the alleged fraud. The allegations of fraud contained in the bill would support such an action by Ewing, for it only asks for the relief which could be thereby obtained. Jordan v. Annex Corporation, 109 Va. 630, 64 S. E. 1050, 17 Ann. Cas. 267.
If the new Code, which became effective January 13, 1920, had been in force at the time the decree appealed from was entered, it would have been the duty of the trial court, under Code 1919, section 6084, to transfer the case to the common law docket and to order such changes in or amendments of the pleadings as might be necessary to conform them to the usual and proper practice in common law actions.
There are other grounds of demurrer stated, but as this is sufficient to dispose of the case, we will not discuss them.
Affirmed.