83 Minn. 288 | Minn. | 1901
Appeal from an order overruling a general demurrer to the complaint. The complaint alleges, substantially the following facts: Plaintiff and defendant Libera were on July 24, 1894, and prior thereto, co-partners engaged in contract work under the firm name of Libera & Mlnazek. On the day named, defendant Standard Life & Accident Insurance Company issued and delivered to the co-partnership a contract of insurance thereby indemnifying the firm against liability for injury to any of their employees caused while engaged in the course of their employment, and by which it contracted to pay to the firm all sums which they might become liable for in case of such injuries during the time stated in the policy. Subsequent to the issuance of the policy, and during its life, the firm was engaged in the digging and construction of a cistern at Walnut Grove, this state, in and about which two of their employees were killed by the caving in of the walls of the cistern. Separate actions were subsequently brought by the personal representatives of the deceased laborers against the co-partnership, in which a total recovery of about $6,000 was obtained; and the judgments stand as a liability against the firm, as well as against the individual members thereof. The firm is, and was at
In a former action between the same parties, brought to reform this contract and to recover on the policy, which is reported in 78 Minn. 151, 80 N. W. 866, it was held that the contract could not be reformed, because to do so would make a contract neither party intended to enter into, viz., a contract which would, in effect, release the company as to one of the firm, and render it liable as to the other. But it was further held, because the contract could not be reformed, plaintiff was not remediless, and was entitled to -every right of which he was deprived by the fraud of his co-partner and the company. The complaint in its present form was evidently drawn to meet the suggestions of the court in that case, and we are of opinion that it states a cause of action, within the law as there laid down.
1. Appellant contends that no cause of action is stated, because the policy is not shown by the complaint to be a firm asset. The contention in this respect is that the complaint alleges that the copartnership was formed on September 24, 1894, and that, as the policy was issued prior to that time, it could not have been issued to the firm. A fair and reasonable construction of the complaint is a full and complete answer to this contention. The allegations thus construed fairly show that the co-partnership existed at the
2. Appellant also contends that the release of the insurance company, having been procured by fraud, was a nullity, not binding upon the plaintiff, and that his remedy is by direct action upon the policy; that, inasmuch as the release of the company was obtained by fraud, it is void as to plaintiff, in consequence of which he was in no way injured by it, and cannot maintain an action for damages for the fraud.
It may be stated, as a general rule, that fraud in a contract does not necessarily render it void. The fact that fraud entered into it, or that one party was induced to- make the same by the fraud of the other, is perfectly consistent with the existence of the agreement. It is not, therefore, as a rule, void, but only -voidable at the election of the defrauded party. Cochran v. Stewart, 21 Minn. 435, 439; 14 Am. & Eng. Enc. 156.
It may also be stated, as a general principle of law, that a party who has been induced by fraud to enter into a contract has the election of two remedies: (1) He may, upon discovering the fraud, rescind and repudiate the contract, and demand to be placed in statu quo; or (2) he may affirm the contract, and sue for damages caused and suffered by the fraud. 1 Bigelow, Fraud, 68, 73, and cases cited; Haven v. Neal, 43 Minn. 315, 45 N. W. 612. This was substantially held in Stanek v. Libera, 73 Minn. 171, 75 N. W. 1124, —an action involving this same contract.
These general rules control this case, and we have only to inquire whether the complaint states a cause of action within them. It alleges that Libera settled with the insurance company, and released it from all liability on the policy, and the agreement of release and discharge is set out therein. From this it appears that a settlement was in fact made. Whether Libera had authority, as a member of the firm, to make it on the terms shown, we need not inquire. The fact remains that he settled with the company, and delivered to it a written contract in evidence thereof, which contract was, with the connivance of the company, fraudulently procured from plaintiff by the false and fraudulent repre
The suggestion that the action cannot be maintained because plaintiff has not returned the consideration paid by the insurance company for the fraudulent release of its liability is not sound. A full answer to the contention is that plaintiff never received such consideration, nor any part of it. It was the price received by his co-partner for his dishonesty, and no part of it is shown to have reached the plaintiff. And, besides, plaintiff does not seek to rescind the contract, but asks to recover damages resulting to him from the fraud, and in such cases a return of the consideration is unnecessary. Haven v. Neal, supra.
The order appealed from is affirmed.