168 N.W. 664 | N.D. | 1918
Lead Opinion
In this case defendant appeals from a judgment for $92 and costs. The complaint is that in 1914 plaintiff made to defendant his promissory note for $85.94, and in consideration of the same it agreed to insure him against loss by hail to the amount of over $500; that in July, 1914, the crops insured were destroyed by hail and the loss amounted to $500; that afterwards the loss was adjusted at $335, to be paid in cash and in return of the promissory note, and that no payment has been made excepting $164 and the return of the note.
The answer is that the loss was adjusted at the sum of $250, and
On the trial the plaintiff gave testimony showing the insurance, the loss, and an oral contract of adjustment as alleged in the complaint. The defendant showed a contract of adjustment signed by the plaintiff as alleged in the answer. The testimony of the plaintiff was that he could not read English, and that, after the making of the oral contract for adjustment, he signed the papers, believing that it ivas in accord with the oral agreement.
The verdict for $92 is well sustained by the evidence. The jury had' a right to believe the plaintiff and to find in his favor. Under the testimony the plaintiff contracted to adjust his loss at $335, including his promissory note, and by trick and smoothness the adjuster obtained the signature to a paper which was not the contract. Then, when oral testimony was offered to prove the facts and to show that the alleged written contract is not and- never was a contract, it was claimed that such proof was not admissible.
The claim is that by any trick or device a party may obtain the signature of an ignorant, illiterate person to a document in the form of a contract, and then it may not be impeached by proof that it is not a contract. And in such cases by specious and deceptive arguments the judges are too often imposed upon and misled. They forget that the signing of a paper does not make a contract. Under the plain words of the statute there can be no contract where the consent of the parties to the terms of the same is not free and mutual, and consent is not free when it is obtained by fraud, undue influence, or mistake.
In this case the jury found, and had a right to find, that the document claimed to be a written contract was not a contract, and that in truth the contract was as stated in the complaint.
The verdict is just and right, and the judgment is affirmed.
Rehearing
Appellant has filed a petition for a rehearing, wherein he asserts that the trial court erred: (1) In permitting the plaintiff to introduce evidence of fraud in the absence of any pleading on his part alleging fraud; (2) in permitting the plaintiff to introduce parol testimony to contradict the written agreement. And it is contended that the former decision either overlooked, and failed to decide these questions, or else decided them contrary to controlling decisions and statutes. We will consider these propositions in the order stated.
(1) While appellant makes the broad assertion that it was contrary to controlling decisions and statutes of this state to permit the plaintiff to introduce evidence of fraud in absence of pleading on his part alleging fraud, he has failed to cite- any statute or decision of this court supporting his contention. And we are satisfied that none can be found. On the contrary, both the statutes and the decisions of this state are to the effect that a. plaintiff is not required to reply to new matter in an answer not constituting a counterclaim, except by order of the court; but every allegation of new matter in the answer, not constituting a counterclaim, is deemed controverted by the plaintiff as upon a direct denial or avoidance, by operation of law, and the plaintiff may introduce evidence of any fact tending to deny or avoid the new matter set forth in the answer. See Comp. Laws 1913, §§ 7467, 7477, 7452; Moores v. Tomlinson, 33 N. D. 638, 157 N. W. 685. Appellant entirely ignores the rule announced in the statute, and argues that such rule is unjust and unfair to a defendant, as he may be surprised upon the trial by the introduction of evidence of fraud. A sufficient answer to appellant’s contention is that the rule is prescribed by the statute. The statute was made by the legislature, and not by the court. In this connection it may be noted, however, that the statute affords to every defendant an opportunity to apply to the court for an order requiring the plaintiff to reply to new matter in an answer. Even where no such application is made, the court has undoubted power, even upon a trial of the cause, to order a continuance, if the introduction of evidence tends to surprise a defendant and prevent him from obtaining a fair trial. In the case at bar, defendant made no such application. Nor did it assert, either by objection or by motion, that
(2) IJpon the second proposition little need be said. For it is •elementary that where a writing, by reason of fraud or mistake, does not represent the actual contract made between the parties, and evidences the proposition upon which their minds met, that then the writing may be impeached and the actual contract shown by parol. This proposition is so elementary that citation of authority thereon is wholly -unnecessary. These two were the only errors assigned and argued by appellant, and, hence, are the only ones properly before the court on this appeal.
In his petition for rehearing, however, appellant also asserts that the acceptance and retention by the plaintiff of a draft sent by the defendant precludes him from bringing suit. A party who has been induced to enter into a contract by means of fraudulent representations has, on discovery of the fraud, two primary remedies. He may either rescind the contract or affirm it. In ease of rescission, he must, as a general rule, restore or offer to restore to the other party the consideration received under the contract. 9 Cyc. 438. This is not only manifestly just, but is a logical result of rescission. For rescission is intended to abrogate the contract and restore the parties to their former position. Hence, a party cannot accept and retain the benefits of a contract which he repudiates. If he desires to rescind, he must rescind in toio. He cannot affirm a contract in part and repudiate it in part. He cannot accept the benefits on the one hand, and shirk the disadvantages on the other. 9 Cyc. 438. In case he affirms the contract he may keep what he has received under it, and also recover from the other party the difference between what he received and what he would have received, if the fraudulent representations had been true. Guild v. More, 32 N. D. 432, 155 N. W. 44. Affirmance of a contract voidable for fraud is not a waiver of the fraud, and does not bar the right of the defrauded party to maintain an action to recover the damages, which he has sustained by reason of the fraud, or set up such damages as a defense or by way of counterclaim, if sued upon the contract by the other party. Such affirmance merely bars the right subsequently to rescind the contract. 9 Cyc. 432. In the case at bar, the plaintiff did not seek to
The evidence shows that the plaintiff is unable to read, speak, or understand the English language. Upon the trial he testified through an interpreter. He obtained the insurance policy through the defend? ant’s agent, Graeber. He notified Graeber of the loss under the policy. Romo three weeks thereafter the defendant company sent its adjuster, E. R. B. Lamberch, to adjust the loss. It is undisputed that all negotiations between the plaintiff and the adjuster wore conducted in the German language. After they had agreed upon the amount of the loss a written loss adjustment was prepared and signed by the adjuster and the plaintiff. It is undisputed that the plaintiff had no knowledge of its contents, nor did any member of his family understand it. The amount of the loss or damage inserted in the agreement is $250. The plaintiff, however, testified positively that the agreement between him and the adjuster was that he (the plaintiff) was to be paid $335 in cash, and that his premium note was to be returned to him. In response to the question, “What Was the adjustment ?” the interpreter gives plaintiff’s answer as follows: “Why, the agreement was that he was to be paid cash $335 and that he did not have'to pay no insurance. That is,
In his charge the trial judge instructed the jury that, “if the plaintiff signed the written adjustment as introduced in evidence, with full knowledge of its' contents, then he is bound by such written adjustment.” But that if he was under the impression, and it was represented to him, that the written adjustment was in accordance with their oral agreement, and the oral agreement provided for a different and larger consideration, then he is not bound by the written adjustment, provided his signature thereto was secured by misrepresentation as to what the written adjustment contained. The court further instructed the jury that the burden was on the plaintiff to explain satisfactorily to the jury his signature on the written instrument. And that in order to avoid its consequences he must establish, by a preponderance of the evidence, that the adjustment was different from that disclosed by the written contract, and that he had no knowledge of the contents of the written instrument, and that his signature thereto was obtained by means of, and in reliance upon, the false representations.
It is time the evidence also shows that the plaintiff received a check for $164.04, as well as his premium note for $85.96, making a total of $250, and that he indorsed the check, and that it was paid by the defendant company in due course. And that he has retained the premium note. It is also true that the authorities recognize the principle or rule of law, that a party may under certain circumstances waive a right of action for fraud. And that it is a general rule that if a defrauded party acquires knowledge of the fraud while the contract remains executory, and thereafter does any act in performance or affirmance of it, or exacts performance from the other party, he condones the fraud and waives his right of action, as under such circumstances the injuries would be largely, if not wholly, self-inflicted. These principles, however, do not conflict with the doctrine that the defrauded party has his election to repudiate the contract or affirm it and sue in deceit. And as the question of waiver is largely one of intent, it is generally one for the jury, and it is only in rare cases that waiver can be said to exist as a matter of law. Waiver requires knowledge. And “exists only where one with full knowledge of a material fact does or forbears to do something inconsistent with the existence of the right, or of his intention to rely upon that right. .. . . No one can be said to have waived that which he does not know; or where he has acted under a misapprehension of facts.” 40 Cyc. 259, 260. And “acts done in affirmance of the contract can amount to a waiver of the fraud only where they are done with full knowledge of'the fraud and of all material facts, and’with the intention clearly manifested of abiding by the contract and waiving all right to recover for the deception. Acts which, although in affirmance of the contract, do not indicate any intention to waive the fraud, cannot be held to operate as a waiver.” 20 Cyc. 93. In the case at bar the appellant did not raise the question of waiver. It was not presented as one of the grounds oh which it moved for a directed verdict. Nor was it presented on this appeal as a ground for a reversal. But inas
The primary and fundamental propositions upon which defendant’s liability depended were fully submitted to the jury under instructions the fairness and correctness of which have not even been questioned. The jury found in plaintiff’s favor, and awarded him only the amount to which he was legally entitled if his version of the transaction is true.
A rehearing is denied.
Dissenting Opinion
(dissenting). I dissent from the per curiam opinion signed by the majority court, denying a rehearing. I am fully convinced-
The plaintiff had a loss to his crop by hail. It is claimed by the plaintiff that the adjustment was for $335 and a return of the premium note. The defendant claims the adjustment was for the amount stated in exhibit 1, which was $250. The adjustment was signed by the adjuster on behalf of the insurance company and by the plaintiff; and this adjustment constitutes a contract, in writing, of settlement, and remains a contract until rescinded and until any money received thereunder is returned. The plaintiff did receive under exhibit 1 the written contract of settlement in question, $164.04 in cash, and his premium note of $85.96, which two amounts aggregate $250, and which fully satisfied said written contract of adjustment and paid the total loss as agreed to in said written contract of adjustment. There is no allegation of fraud in the complaint, and there is no testimony showing that the adjuster made any false representations upon which plaintiff relied and was induced to sign the written contract of adjustment.
At the time plaintiff brought this action, he knew of exhibit 1, had his copy of it with him, and at that time had received and cashed a check for $164.04, and knew that he received $164.04, and admits it in his testimony, and admits receiving back the note. He then knew, or must be held to have known, that the amount of the written contract of adjustment was less than what he claims the adjustment actually was.
If the plaintiff’s version is assumed to be true, he would not only have alleged-the loss adjustment as he claims it was, but he should have alleged the making of the written contract of adjustment for-$250, admitted the signing thereof, and have alleged that he was deceived and misled when he signed same, and pleaded that at the earliest opportunity he rescinded said written contract of adjustment and tendered back the $164.04 and his note, which were received under and by virtue of the terms of said written contract of adjustment; or if these facts should have appeared in the testimony, the plaintiff should ask t'o have amended his complaint so as to correspond with the proof and made the tender above referred to so that each party might be placed just where they were with reference to the subject of litigation.
Section 5934, Compiled Laws 1913, sets out very plainly what one who desires to rescind a contract must do. Such section in substance provides that, if the consent of the party rescinding was given by mistake or obtained through duress, menace, fraud, or undue influence exercised by or with the connivance of the party as to whom the contract is rescinded; or if through the fault of the party against whom the contract is rescinded the consideration fails in whole or in part; or if the consideration becomes entirely void or fails in any material respect from any cause, or by consent of all of the other parties, — the contract may be rescinded.
Section 5936, Compiled Laws 1913, provides that when not by consent rescission can be accomplished only by the use, on the part of the party rescinding, of reasonable diligence to comply with the following rules:
1. Ho must rescind promptly upon discovering the facts which entitled him to rescind, if he is free from duress, menace, undue influence, or disability, and is aware of his right to rescind; and,
2. He must restore to the other party everything of value which he has received from him under the contract; or must offer to restore the same upon condition that such party shall do likewise, unless the latter is unable or positively refuses to do so.
That the loss adjustment in writing for $250, signed by the insurance company by their adjuster and the plaintiff, is a contract, cannot be disputed.
The plaintiff admits he signed that contract, as the following testimony of the plaintiff, on cross-examination will show:
Q. I show you exhibit 1, the loss adjustment, and ask you if that is your name on the bottom ?
A. Tes.
*254 Q. You signed that?
A. Yes, that’s my writing.
Q. You knew you were signing up an adjustment when you signed this?
A. Yes.
Q. That was the adjustment for the grain you had lost ?
A. Yes.
Q. It was the insurance adjuster who handed you that to sign?
A. Yes.
Q. That was on the 12th day of August, 1914 ?
A. Yes.
Q. You got a copy of this paper you signed up?
A. Yes.
Q. And you have held that in your possession all the time since ?
A. Yes.
Testimony which shows that at the time Mathias received the check he knew the amount of the cheek is as follows:
Q. Mr. Mathias, at the time you got your check you knew it was a check from the insurance company for your loss of grain ?
A. Yes. .
Q. And you knew the amount of it ?
A. Yes.
Q. $164.04?
A. Yes.
Q. Jake Graeber told you all about that?
A. Yes.
Q. At that time Jake Graeber told you you were getting back your note marked paid as a part of the settlement of the insurance?
A. Yes.
Q. And you took the note ?
A. Yes.
Q. And you took the check?
A. No.
Q. Well, you indorsed it and told Graeber to give you credit for the money?
A. Yes, it went on the land debt.
*255 . Q. Now, Jake Graeber explained this whole matter to you in-German ?
A. Yes, he told me.- He just showed me the check.
Q. He told you who it was from and what it was for ?
A. Yes.
Q. And you said that was all right when he handed those things-to you ?
A.- He said.it was;not enough.
Q. But you took it?
A. What could I do ? I didn’t know better than to take it.
Q. But you took it ?
A. Yes.
Q. At the time you signed exhibit 1 here, you knew it was an adjustment with respect to the loss of your grain.?,-
A. Yes. He thought it was $335.
■This testimony conclusively shows that the plaintiff signed exhibit 1, the written loss adjustment, and he knew what he was signing when he did sign it, and that when he signed the check for $164.04 he knew the amount of that check, and he accepted his note back, and without any protest so far as the testimony shows.
- Throughout all this evidence there is nothing which charges deceit, misrepresentation, or fraud; and it cannot be successfully disputed that exhibit 1, the loss adjustment signed in writing by both.the plaintiff and defendant, is a contract. Not only that, but it is a contract, the full benefits of which the plaintiff accepted and retained. He received and retained the full amount of said written settlement by receiving $164.04 and his note, a total of $250. He has never rescinded that contract; never offered to return the money received thereunder ; never offered to return the note for the premium; and notwithstanding that this contract was admittedly made, the plaintiff proceeds to bring in court another action alleging a different cause of action, totally disregarding this contract and entirely failing to offer to rescind and restore to the defendant the money and the note and everything of value received under said contract.
In the case of Swan v. Great Northern R. Co. post, 258, L.R.A. 1918F, 1063, 168 N. W. 651, a. case which the writer claims is simi
“These statutory provisions seem to be decisive of this case. The rules announced are plain and specific. They apply to all contracts. They permit a, person who has been defrauded to rescind the contract to which his consent was obtained by fraud, but in order to rescind he must restore or offer to restore the consideration received on the condition that the other party shall do lilceiuise, unless the latter is unable or positively refuses to do so. These miles are largely codifications of the common-law rules, and are founded upon elementary principles of justice. ‘One who has been led into a contract upon which he has received something of value cannot ignore the contract however induced, wnd proceed in a court of law as if the relations of the parties were wholly unaffected thereby. lie cannot, while retaining its benefits wnd thus affirming the contract, treat it as though it did not exist/ ‘He cannot treat it as good in part and void in part, bud must affirm or void it as a whole. Home Ins. Co. v. Howard, 111 Ind. 544, 13 N. E. 104.
“A contract induced by fraud is voidable at the option of the defrauded party. He has, upon discovery of the deceit, the option of cither rescinding or affirming the transaction. He must do one or the other. He cannot do both. He cannot rescind in pari and affirm the remainder. Guild v. More, 32 N. D. 432, 455, 155 N. W. 44.
“He cannot at the same time be permitted to abrógale the contract and retain the benefits he has received under it. Beare v. Wright, 14 N. D. 26, 31, 69 L.R.A. 409, 103 N. W. 632, 8 Ann. Cas. 1051; Black, Rescission & Cancellation, §§ 561 et seq. If he desires to rescind he must comply with the provisions of the statute and restore or lender what he has received as consideration for the contract on the condition that the other party shall do likewise, unless the latter is unable or positively refuses to do so.”
In the case of Swan v. Great Northern R. Co. where the suit was against the railway company for damages, and the company claiming that for a certain sum in settlement in writing of plaintiff’s claim for damages, plaintiff gave said company a release, this court said concerning plaintiff’s claim for damages: “Respondent has cited sev
The case of Swan v. Great Northern R. Co. was an action for damages, and in rescission of a contract, and this court has unanimously held that, before said action could be obtained, Swan would be compelled to return the benefits which he received under the alleged settlement for which he gave his release.
It is clear the same principle applies to the case at bar. The plaintiff, knowing that he had signed the written contract of settlement and knowing that he had received $164.04, and his premium note back under said written settlement, if he desired to recover upon any other cause of action or any other alleged contract, he was in duty bound to tender back the benefits which he had received by reason of having signed a written contract in settlement of his claims against the insurance company.
Concurrence Opinion
I concur in the result.
Dissenting Opinion
I dissent.