Issenhuth v. Kirkpatrick, 258 F. 293

258 F. 293 | 8th Cir. | 1919

M,UNGER, District Judge

(after stating the facts as above). Some of the errors assigned challenge the action of the court in withdrawing the trial of the case from the jury and in ordering its transfer to the equity docket, and the trial and determination of it thereafter as if it were a suit in equity. The defendant objected to this action of the court because the evidence showed that the plaintiff was not entitled to maintain a suit for rescission, and because he had elected to bring the action as one at law for deceit and was bound by such election. Tbe court was of the opinion that section 274a of the Judicial Code (Act March 3, 1915, c. 90, 38 Stat. 956 [Comp. St. § 1251aj) authorized the transfer.

[1, 2] The plaintiff did not bring this action until 4% years after he purchased the defendant’s stock. Long before he brought his 'action he knew the substantial facts as to the fraud that he says was perpetrated upon him by the defendant. The plaintiff elected to sue at law for his damages. He did not offer to return the shares of stock which stood in his name. He did not seek a cancellation of his outstanding notes, but asked only for a money judgment of an amount equal to the money he had paid defendant and to the amount of his obligation on the unpaid notes. The action was therefore one at law. Buzard v. Houston, 119 U. S. 347, 7 Sup. Ct. 249, 30 L. Ed. 451; Curriden v. Middleton, 232 U. S. 633, 34 Sup. Ct. 458, 58 L. Ed. 765; White v. Boyce (C. C.) 21 Fed. 228; 1 Pom. Eq. Jur. § 237. He had a choice between two remedies — -either to rescind the purchase and recover what he had paid, or to affirm the contract and to sue for the damages he had sustained. The remedies were inconsistent, and an election of one was an abandonment of the other. Stuart v. Hayden, 72 Fed. 402, 18 C. C. A. 618; A. Klipstein & Co. v. Grant, 141 Fed. 72, 72 C. C. A. 511; In re Jacob Berry & Co., 174 Fed. 409, 98 C. C. A. 360; 2 Black on Rescission, § 612.

In the case of Robb v. Vos, 155 U. S. 13, 15 Sup. Ct. 4, 39 L. Ed. 52, the court quotes with approval this statement of the rule from a decision of the Supreme Court of Michigan (Thompson v. Howard, 31 Mich. 309):

“A man may not take contradictory positions; and where lie has a right to choose one of two modes of redress, and the two are so inconsistent that the assertion of one involves the negation or repudiation of the other, his deliberate and settled choice of one; with knowledge, or the means of knowledge of such facts as would authorize a resort to each, will preclude him thereafter from going back and electing again.”

[3, 4] Has this rule changed by the enactment of section 274a of the Judicial Code? which reads:

“That in case any of said courts shall find that a suit at law should have been brought in equity or a suit in equity should* have been brought at law, the court shall order any amendments to the pleadings which may be necessary to conform them to the proper practice. Any party to the suit shall have the right, at any stage of the cause, to amend his pleadings so as to obviate the objection that his' suit was not brought on the right side of the court. The cause shall proceed and be determined upon such amended pleadings. All testimony taken before such amendment, if preserved, shall stand as testimony in the cause with like effect as if the pleadings had been originally in the amended form.”

There is no legal reason why the plaintiff should not have brought his action at law as he did, though there may have been practical reasons why an equitable suit would have been wiser. He had the right to consider the nature of the proofs he would be required to furnish, and the comparative advantages of the forms of relief offered and of the means of enforcing a judgment or decree; but, when he had elected between the institution of inconsistent remedies, it cannot be said that an action at law for deceit, which he properly brought, if he chose to bring it, should have been brought as a suit in equity. The transfer to the equity docket was not asked because of any claimed discovery that his action for deceit should have been brought in equity, but because there seemed to be a failure of proof of an essential element of his case. Section 274a of the Judicial Code permits one who is entitled to a remedy to retain it in the suit he has brought by a transfer of the case to the proper docket, although his suit may have been brought at law, when it should have been brought in equity, or vice versa; but it does not restore a remedy to one who is not entitled thereto, when he has abandoned and waived it in favor of an inconsistent remedy. The action of the court in permitting a transfer of this case to the equity docket was an error affecting the substantial right of the defendant to a jury trial in a law action (Ex parte Simons, 247 U. S. 231, 38 Sup. Ct. 497, 62 L. Ed. 1094), and requires a reversal of the decree and a new trial. As the remaining questions may nut be presented in the same form after a new trial, it is not necessary to consider them further.

The decree of the lower court will be reversed, with directions to vacate the order transferring the case to the equity docket and to grant a new trial in the action at law.