163 Mo. 79 | Mo. | 1901
This is a suit in equity for the cancellation of three cei'tain notes executed by Paul Paquin and Robert L. Owen to defendant Milliken.
The original petition was filed July 1, 1897, and a temporary injunction granted. On July 6, 1897, the temporary injunction was 'continued in force; The cause was heard upon an amended petition filed December, 20, 1897, at which time “The Paul Paquin Laboratories Company,” a corporation, was added as a party plaintiff.
The petition, though lengthy, sets forth the facts upon which plaintiffs sought relief and its reproduction will obviate any other statement of the case on the part of plaintiffs. It is in these words:
“By leave of court, the plaintiffs file their amended petition, and state that heretofore, to-wit, on the thirty-first day of January, 1895, the defendant and the plaintiff, Paul Paquin, entered into the following agreement of partnership, to-wit:
“ ‘These articles of co-partnership, made and entered into this thirty-first day of January, 1895, by and between Paul Paquin of the city of St. Louis and State of Missouri, of the one part, and John T. Milliken of the same place, of the other part, witnesseth:
“ ‘First. The said parties hereby form a co-partnership which shall continue from the day of the date hereof, until dissolved by mutual consent.
“ ‘Second. The said co-partnership is formed for the purpose of manufacturing and selling serum for the cure of tuberculosis, according to the formula and discovery of the said Paquin, and according to any improvements that he may hereafter make or discover in connection therewith.
“ ‘Third. The said Paquin' contributes as his portion of the capital, of said co-partnership, his said discovery and formula for the manufacture of serum for the purpose aforesaid,
“ ‘Fourth. The said Milliken, on his part, contributes the amount of ten thousand dollars cash money, to said co-partnership as his share of the capital thereof.
“ ‘Fifth. The said Paquin is to reduce his formula and the method of preparing serum for the cure of tuberculosis according to said formula and his said discovery, to writing, and the said writing, it is agreed by the parties hereto, shall be placed in a box, to be rented for that purpose, of the Missouri Safe Deposit Company in the city of St. Louis, to which box each of the parties hereto shall have one key, and to which box either, during their joint lives, and the continuance of this co-partnership, shall have access, but only in the company of the other.
“ ‘Sixth. The said Paquin shall devote all the time necessary to the manufacture and preparation of the said serum, in quantities as required, or shall superintend its preparation and manufacture, and with the said Milliken, devote sufficient time towards bringing about the sale thereof, as a commercial article. The said Paquin shall have charge of the laboratory work, and of the experimental work, either by himself or through assistants whose work he shall superintend.
“ ‘Seventh. The first ten thousand dollars of profit realized by the co-partnership shall belong to and be paid over to said Paquin. Thereafter, all profits that may be realized shall be divided in the proportion of four-fifths to said Paquin and one-fifth to said Milliken.
“ ‘Eighth. Losses, if any, in the said co-partnership business, shall be divided and borne in the proportion aforesaid.
“ ‘Ninth. Correct books of account shall be kept, correctly recording all co-partnership transactions, setting forth
“ ‘In witness whereof, the said parties have hereunto set their hands to duplicate copies hereof, at the city of St. Louis, the day and year first aforesaid.
“ ‘Paul Paquin.
“ ‘John T. Milliken/
“That afterwards, to-wit, on the twenty-seventh day of March, 1895, the said contract was modified by the parties thereto, as follows, to-wit:
“ ‘By mutual consent and for a valuable consideration, the foregoing agreement has been, and hereby is modified, so as to give the said John T. Milliken a two-fifths interest in the profits instead of a one-fifth interest as stated in paragraph 1, and said Milliken shall take an active part in the prosecution of the co-partnership business.
“ ‘St. Louis, March 21, 1895.
“ ‘Paul Paquin, M. D.
“ ‘John T. Milliken/
“That afterwards, to-wit, on the tenth day of June, 1895, the said contract was further modified by the parties thereto, as follows, to-wit:
“ ‘By mutual agreement, and in consideration of an additional sum of five thousand dollars, invested in said co-partnership business by John T. Milliken-, he is henceforth an equal partner with the said Paul Paquin, and entitled to an equal one-half of the profits, and shall act as, and be, the business manager of the said co-partnership affairs.
“ ‘St. Louis, Mo., June 10, 1895.
“ ‘Paul Paquin, M. D.
“ ‘John T. Milliken/
“That under the said contract and the modifications
“ ‘This agreement, made by and between John T. Milliken, party of the first part, and Paul Paquin, party of the second part, both of the city of St. Louis, Mo., witnesseth:
“ ‘That the party of the second part, for and in consideration of the covenants and agreements hereinafter set forth, to be kept and performed by the party of the first part, to and with the party of the second part, and of the sale and transfer hereinafter mentioned, has paid to the party of the first part the sum of twenty-two thousand seven hundred and fifty dollars, the receipt whereof is hereby acknowledged. And the party of the first part, in consideration thereof, agrees to make and hereby does make the covenants and agreements hereinafter set forth, to and with the party of the second part, and the sale and transfer following, that is to say: The party of the first part hereby bargains, sells, transfers and sets over unto the party of the second part, all of his right, title and interest of every kind and character in the firm of John T. Milliken & Company, including the formula and process of manufacturing and preparing antitubercule serum under said formula and process, and subsequent improvements, the same being the formula of Doctor Paul Paquin, together with the assets, credits and effects of said firm, consisting of cash in bank, the eighteen horses immunized and now in the stable of the sanitarium owned by the firm on Grand avenue in the city of St. Louis, together with the sanitarium, the lease thereof, the furniture, fixtures and carpets, the laboratory thereof and its contents, and the typewriters, desks, safe, furniture and appliances, ‘ as well as open accounts, credits,
“ ‘The party of the first part, for himself, his heirs, successors and assigns, for the consideration aforesaid, hereby covenants-and agrees to and with the party of the second part as follows, to-wit:
“ ‘Eirst. The party of the first part covenants and agrees to and with the party of the second part, his heirs, successors and assigns that no claim of any kind or character, by any person or corporation whomsoever, shall be made against the property of said firm, the partnership assets or the formula of said firm, or the business thereof.
“ ‘Second. The party of the first part covenants and agrees to and with the party of the second part, his heirs, successors and assigns, for the consideration aforesaid forever, not to engage himself either directly or indirectly, in thq manufacture, preparation, distribution or sale of serum in any way, mode, or manner, for the treatment of tuberculosis, or pulmonary consumption under the Paquin formula; and further covenants and agrees, for the consideration aforesaid, to and with the party of the second part, that he will not use, forever, directly or indirectly, the Paquin name in connection with the manufacture, preparation, distribution or sale of any kind of serum in any way, mode or manner for the treatment of tuberculosis, or pul
“ ‘Third. ' Eor the consideration aforesaid, the party of the first part hereby covenants and agrees to and with the party of the second part, his heirs, successors and assigns, for a period of one year next after the date of this agreement and contract, that he will not engage in the United States, in the manufacture, preparation, distribution or sale of any kind of serum in any way, mode or manner, for the treatment of tuberculosis or pulmonary consumption.
“ ‘Eourth. The party of the first part, for the consideration aforesaid, further covenants and agrees to and with the party of the second part, his heirs, successors and assigns, and binds himself that for the period of one year from the date of this agreement and contract, he will remain out of the business of manufacturing, preparing, selling or distributing any kind of serum, substance or fluid for the treatment of tuberculosis or pulmonary consumption, and during that time, in said country, will not make himself, or through any person or corporation, any researches, studies or experiments of any kind or character, aiding or encouraging the same, or in the connection therewith; and the party of the first part further covenants and agrees, for the consideration aforesaid, to and with the party of the second part, his heirs, successors and assigns, and binds himself for the period of one year, in the United States, from the date of this contract or agreement, not to offer or furnish himself, or through any other agency, or in any manner or form, financial
“ ‘Fifth. For tbe consideration aforesaid, tbe party of tbe first part hereby covenants and agrees to and with tbe party of tbe second part, bis beirs, successors and assigns, that be will not disclose to any person or corporation whomsoever, all, or any part, portion or particular, of tbe contents, ingredients and constituent' elements of tbe Paquin “Anti-Tubercule Serum” formula ; and tbe party of tbe first part, for tbe consideration aforessaid, further covenants and agrees to and with tbe party of tbe second part, that tbe original copy of said formula, intrusted to him by tbe party of tbe second part, and which is now delivered by him-to tbe party of tbe second part, is tbe only copy hereof in bis possession or custody, or under'bis control, directly or indirectly; and for tbe consideration aforesaid, tbe party of tbe first part further covenants and agrees to and with tbe party of tbe second part, bis beirs, successors and assigns, that all and every copy of all or any part, portion or particular of tbe same, by him or any other person whomsoever made, which is now in tbe possession of tbe party of tbe'first part, or under bis control in tbe possession of any other person whomsoever, shall be and is now delivered unto tbe party of tbe second part.
“ ‘The two parties to this agreement and contract hereby dissolve by consent tbe firm between Paquin and Milliken, known as John T. Milliken & Company, heretofore' established under and in pursuance of a certain contract made and entered into by and between tbe parties to this agreement and contract,. and dated on tbe thirty-first day of January, 1895, and additions thereto.
“ ‘In witness whereof, tbe parties hereto have hereunto set their bands and seals in duplicate this November 7, 1895.
“ ‘John T. Milliken. (Seal.)
“ ‘Paul Paquin. (Seal.)
SS"
“ ‘Personally appeared before me, the undersigned notary public within and for the city and State aforesaid, John T. Mil-liken and Paul Paquin, to me known to be the parties described in and who executed the foregoing instrument of writing, and acknowledged the same to be their free and voluntary act and deed. In witness whereof, I have hereunto set my hand and official seal this November 7, 1895.
“ ‘Geo. W. Wadlow, Notary Public.’
“That prior to the execution of said contract of dissolution and sale aforesaid, the plaintiff, Eobert L. Owen, was made aware of the intent of said defendant and said plaintiff, Paul Paquin, to terminate their said contract, and was made acquainted with the proposed terms of said agreement of sale and dissolution, which, as communicated to said plaintiff Owen, was the same as afterwards were embodied and set forth in the said agreement.
“That upon the faith of the proposed execution of said agreement and the covenants of said defendant to be expressed therein, the said plaintiff Owen, as defendant then and there well knew, arranged with said plaintiff Paquin to become interested with him in the business to be acquired by said Paquin by virtue of said agreement.
“That accordingly, as said defendant then and there well knew, upon the execution of said agreement, said plaintiff Owen advanced for the account of plaintiff Paquin, and caused to be paid to the said defendant, the sum of fifteen thousand dollars, the whole of the cash portion of the consideration of twenty-two thousand and seven hundred and fifty dollars, and together with said plaintiff Paquin, made and delivered to said defendant, as
“That the principal and controlling feature of the business -conducted by said defendant and said plaintiff Paquin, under their agreement of partnership first herein set forth, was the •manufacture and sale of ‘Anti-Tubercle Serum,’ aud the main consideration moving the said plaintiff Paquin to execute said agreement of dissolution and sale, leaving the same plaintiff ■Owen to advance said money as aforesaid, and leaving the said plaintiffs to make the said notes, was the covenants and undertakings of said defendant, expressed in said agreement, and ■upon which they placed full faith and reliance.
“That on the said seventh day of November, 1895, after the execution and delivery of said contract of sale, from said •defendant to Paquin, the plaintiff Paquin, by agreement in writing of that date, sold and delivered upon good and valuable considerations therein expressed, to the said plaintiff Owen, a one-half interest in and to the processes and formulas mentioned in, referred to and transferred by the agreements between said ■defendant and the said plaintiff Paquin, hereinbefore set forth.
“That after said seventh day of November, 1895, and after the transfer last recited from the plaintiff Paquin to the plaintiff Owen, the said plaintiff Paquin and said Owen continued the business of manufacturing, producing and selling Anti-'Tubercle Serum,’ and employed therein the property acquired under the said contract of dissolution by plaintiff Paquin from said defendant; that the said business was carried on under the name of the Paul Paquin Laboratories, and was continued down ■■to about the first day of March, 1896.
“That on or about the first day of March, 1896, the said
“That of the said capital stock said plaintiffs became subscribers to and were the owners of ninety-seven shares, and are now and have been, since the organization of said corporation, in control, ownership and management of the said corporation.
“That on or about the tenth day of March, the said plaintiffs, Paquin and Owen, transferred and assigned unto said corporation plaintiff the property acquired under the said contract between the defendant and said plaintiff, Paul Paquin, of date November 1, 1895, and the said plaintiffs, Paquin and Owen, as stockholders and officers are not only in control of the said corporation, but they constitute it, and own its properties, assets and effects.
“That neither before nor at the time of the execution of said contract of sale from said defendant to plaintiff Paquin, did either the said plaintiff Paquin or the said plaintiff Owen have any knowledge or information in regard to the contract between the defendant and G. 0. Crandall, of date November 4, 1895, and hereinafter set forth; that none of the persons who became stockholders in the said corporation, at the time when said corporation was organized, had any knowledge that such contract had been executed between the defendant and said
“The plaintiffs state that one of the said notes given by them to said defendant, to-w-it, that one payable one year after date, matured November 9, 1896, and upon refusal of plaintiffs to pay the same, because of violation by defendant of the said agreement of November 7, 1895, as hereinafter shown, suit upon the same was brought by defendant against plaintiffs, which is now pending in the circuit court of St. Louis county, and set for trial on the seventh day of July, 1897.
“That in their answer to the action upon the said note at the time when it was filed, being advised and informed only of breaches of said agreement of November 7, 1895, by defendant, after its execution, the plaintiffs pleaded failure of consideration and a counterclaim for damages by reason of such breaches.
“That since the filing of said answer, and within the last ten days of the present month of June, 1897, prior to this suit, the plaintiffs became aware, and for the first time learned of the frauds of said defendant perpetrated upon them, as hereinafter stated, before the execution of said agreement of November 7, 1895, before the payment of the cash consideration and before the making of the notes then made.
“That shortly prior to the execution of said agreement of November 7, 1895, craftily intending to avoid the operation of said agreement when executed, and for the purpose of defrauding plaintiffs, said defendant, without knowledge of plaintiffs, secretly entered on the fourth day of November, 1895, into the following agreement with one G. C. Crandall, to-wit:
“ ‘This agreement, made and entered into this fourth day of November, 1895, by and between John T. Milliken of the one part, and G. 0. Crandall, M. D., of the other part, both of the city of St. Louis, Mo., witnesseth: That whereas, here
“ ‘John T. Milliken,
“ ‘G. C. Grandall/
“That said contract was designed by defendant, so that it might appear that' he intended to keep faith with plaintiffs, while in reality he intended to violate his contract of sale as soon as it was made.
“That even in the month of September, 1895, without the knowledge of the plaintiff Paquin, with cause, for the purpose of defrauding him, and in violation of the said partnership agreement of January 31, 1895, the said defendant had already employed the said Crandall to make experiments for him, defendant, in the production of anti-tubercle serum, and shortly prior to the said dissolution with plaintiff Paquin, placed at the disposal of said Crandall ample funds to carry on the work called for by the said contract of November 4, 1895, herein-before last set forth, and with which such work was thereafter carried on and of which facts and fraudulent purposes of defendant, neither of the plaintiffs had knowledge at the time of the execution of the contract of dissolution and sale of November 7, 1895.
“That with the funds thus provided by defendant, the said Crandall, for and in behalf of defendant, made and contracted experiments in producing anti-tubercle serum, and within the year ending in November 7, 1896, at the same instance and for the benefit of said defendant, did produce, use and employ as an agency in the treatment of tuberculosis anti-tubercle serum.
“That he bound himself for the period of one year from the date of said agreement, to remain out of the business of manufacturing, preparing, selling or distributing any kind of serum, substance or fluid, for the treatment of tuberculosis or pulmonary consumption, and during that time, in the United States, to not make himself, or through any person, any researches, studies or experiments of any kind or character, aiding or encouraging the same, or in connection therewith, and bound himself, during the said period, in the said country, not to offer or furnish himself, or through any other agency, or in any manner or form, financial aid, business encouragement or assistance, directly or indirectly, to any person to do the same; ■yet he, the said defendant, has, since the execution of said agreement, of November 7, 1895, and within the period of one Year next thereafter, in the United States, directly or indirectly,
“That plaintiffs, although they have made careful investigation, since the bringing of said suit upon said notes, for the purpose of showing actual damages under their counter-claim, have, from the nature of things, been unable to obtain facts upon
“That by reason of such circumstances, and the frauds of said defendant, before and after the execution of said contract, of November 7, 1895, the plaintiffs have no adequate remedy at law, and are remediless save in equity.
“Therefore, the premises considered, the plaintiffs pray' that the defendant may be enjoined from the further prosecution of the suit now pending in the circuit court of St. Louis county, between the defendant and plaintiffs, upon the said note for twenty-five hundred dollars aforesaid; that defendant may be enjoined from selling, pledging, or otherwise disposing of the remaining notes given to him by plaintiff, as hereinbefore alleged, and that all other notes whether in suit or otherwise, may be ordered to be cancelled and surrendered to plaintiffs; that the contract of November 7, 1895, be can-celled, rescinded and for naught held; that an accounting be had between the parties in the premises, and that such sum as may have been obtained from plaintiffs by defendant, less such sum as he may be found entitled to credit for, be adjudged to be by him refunded'to plaintiffs, and for all other and proper relief.”
Defendant in his answer admitted the partnership contract of January 31, 1895, and the modifications of March 27, 1895, and of June 10, 1895, as pleaded in the petition. Admits that operations were carried on under said agreements until November 7,1895, when the partnership was dissolved and defendant sold his interest therein as alleged in the petition and the articles of dissolution, and avers that he has fully kept and performed said agreement. Says he has no knowledge that prior to the dissolution plaintiff Owen was informed of the purpose of Paquin and himself to dissolve the partnership. Denies that he knew Owen was to succeed him in the partner
I. Waiving for the present the existence or non-existence of fraud by defendant in the contract of dissolution and in obtaining the contract price of his interest in the co-partnership with Paquin, plaintiff is met with the objection that, conceding the alleged fraud, he has not elected to rescind the said contract within a reasonable time and therefore he is remitted to his action for damages. Unquestionably it is a general rule of law that a party who would rescind a contract which has been induced or procured by the fraud of the other party thereto must act promptly and make his election to rescind. In this case the evidence showed and so the trial court found, that the plaintiffs discovered that defendant had entered into the written contract with Dr. Crandall just prior to the time when the cause on the note given by them to defendant was to be tried, and learned then for the first time, that at the very time the contract of dissolution was entered into, defendant was contriving by means of the said contract to defraud them of the benefits of the contract of dissolution and their purchase of the good-will of the business, and thereupon filed the bill in this case to restrain the further prosecution of the suit on said note and to cancel all three of said notes and to have the contract declared void and for an accounting. The plaintiffs acted with promptness as soon as they discovered the fraud which entered into the contract of dissolution and sale of defendant’s interest in the business. There was no such delay in bringing the suit as will bar the remedy in equity and remit plaintiffs to their action for damages.
Again it is urged that because the plaintiffs herein, as defendants in the note suit, pleaded a failure of consideration and a counterclaim for damages by reason of such failure, they thereby waived their right to rescind and elected to stand upon
As to this contention, the allegations in the petition and answer furnish all that is pertinent.
In their petition plaintiff’s allege that “after the first note matured, November 9, 1896, suit was brought by defendant thereon against plaintiffs, Paquin and Owen, which was then pending in the circuit court of St. Louis county; that in their answer to the said action upon said note, at the time it was filed, being advised and informed only of breaches of said agreement of November 7, 1895, by defendant after its execution, the plaintiffs pleaded failure of consideration and a counterclaim for damages by reason of such breaches.” It will'be observed that this is admitted in the answer.
The answer to the suit on the note then, upon its face, only pleaded a failure of consideration and breach of the contraer after its execution. The said allegations were clearly no ground for rescission as the counterclaim was only based upon the efforts of defendant, after the sale, to decry and destroy the good-will of the property he had sold plaintiffs.
That answer was filed in ignorance of fraud entering into and vitiating the contract itself, and it is too plain for argument that that election presupposed a knowledge of the two conditions or remedies before one can be said to elect the one in preference to the other. [Johnson-Brinkman Com. Co. v. Central Bank, 116 Mo. 558.] Taylor v. Short, 107 Mo. 384, is so essentially different in the facts upon which the opinion is predicated that it furnishes no basis for the contention made that plaintiffs here are estopped, by their answer to the note, to bring this suit. The discovery of the Crandall contract in this- case was not a mere incident of the fraud going to the integrity of the contract itself of which plaintiffs already had other notice, but it was the first notice plaintiffs had of fraud entering into the execution of the contract. This is not an effort to rescind
II. Little stress is laid by defendant upon the real equity of the case. His complaint relates wholly to the questions of practice. The circuit court correctly ruled that the contract of dissolution bound defendant to do nothing, directly or indirectly, to interfere with the manufacture of anti-tubercle serum under Dr. Paquin’s formula, and bound him to refrain from any prosecution by experiments to produce the same or a similar serum to the injury of the good-will of the business which he had sold to Paquin.
A court of conscience will not countenance the attempt he made by his secret contract with Dr. Crandall to undermine and destroy the very business he had sold to Paquin, after solemnly binding himself not to do so, and receiving the full consideration therefor.
Nor will a court of equity hesitate to pronounce the scheme to which he resorted to accomplish his end a fraud. However sincere his motives might have been in employing Dr. Crandall in making experiments to discover anti-toxine for tuberculosis during the partnership, the contract of November 7, 1895, plainly required that he should no longer prosecute such investigations during the year from November 7, 1895, to November 7, 1896. Upon the merits of-the case the equities were clearly with the plaintiffs.
III. The great contention in the ease is that the decree itself is erroneous for the reason that the rescission is not in toto and because defendant has not been restored to the status quo existing when the contract was made.
The general rule is that a court of equity in decreeing the rescission or cancellation of a contract must set aside the contract in toto or not at all, and will deny it where the parties
Put it is also held that the fact that the status quo can not be restored will not prevent a rescission where such condition results from the fraud of the defendant, and without the fault of plaintiff.
In Robinson v. Siple, this court cited with approval Masson v. Bovet, 1 Denio, 69, in which the court, after stating that the general rule required plaintiff to restore what he has received upon the contract in order to rescind, says: “This is not exacted on account of any feeling of partiality or regard for the fraudulent party. The law cares very little what his loss may be, and exacts nothing for his sake. If, therefore, he has so entangled himself in the meshes of his own knavish plot, that the party defrauded can not unloose him, the fault is his own; and the law only requires the injured party to restore what he has received, and, as far as may be, undo what had been done in the execution of the contract. This is all that the party defrauded can do, and all that honesty and fairdealing require of him.”
Nor was it necessary for plaintiffs to offer to restore the membership in the partnership, and the property of the partnership which had been consumed in ignorance of the fraud defendant had perpetrated on them. As said by Sherwood, J., in Whelan v. Reilly, 61 Mo. 569, “The true meaning of the rule that- ‘he who seeks equity must do 'equity’ is simply this: that where a complainant comes before a court of conscience invoking its aid, such aid will not be granted except upon equitable terms. These terms will be impqsed ‘as the price of the decree it' gives him.’ The rule ‘decides nothing in itself,’ for you must first inquire what are the equities which the plaintiff must do in order to entitle him to the relief he seeks. Hanson v. Keating, 4 Hare, 1; Erwin v. Blake, 8 Pet. 18;
No more lucid exposition of the rule in equity has come under our observation than is found in the opinion of Chief Justice Cooper in Brown v. Norman, 65 Miss. 369. Referring to the distinction between a rescission by the party himself as a basis of an action at law, he says: “Since the law permits him to re-acquire this legal right, by his own act, it puts upon him the necessity of restitution of the thing received by him as a condition of the exercise of the right to avoid the contract. Erom necessity, the law knows nothing of compensation but requires restoration of the thing received, for to permit the plaintiff to determine what would be just compensation would be to make him judge in his own case. But in equity the complainant does not necessarily rescind and sue; he may sue for rescission. He is required to restore the consideration, not however as a condition of acquiring the right to sue, but because of the equitable maxim that he who seeks equity must do equity.”
The learned chief justice then reviews the authorities as follows:
“In Barker v. Walters, 8 Beav. 92, and Jervis v. Berridge, Lr., 8 Ch. Appeal Cases, demurrers had been interposed to bills seeking rescission, on the ground that no offer was made to restore the status quo. It was held that it was unnecessary to do so, since the court, on final hearing, would require the complainant to do equity. In the latter case, Lord Selborne said: ‘Upon principle there appears to be no good reason why a plaintiff in equity, suing upon equitable grounds, should be required, on the face of his bill, to submit to those terms which the court at the hearing may think it right to impose as the price , of any relief to which he may be entitled.’
“In Savery v. King, 5 House of Lords, 627, the party seek
“In Warner v. Daniels, 1 Woodb. & M., the court directed in decreeing a rescission that the complainant should re-deliver to the defendant the property received (certain shares in an incorporated company), but -that if it should appear that he had disposed of any of the shares, then that he should restore the value thereof with interest.
“In Myrick v. Jacks, 33 Ark. 425, the court said: ‘It is no objection that complainant can not put Jacks entirely in statu quo on rescission. The change in condition of the property was brought about by persuasion to accomplish a transaction in which Jacks was a party, and before the fraud was discovered, and by the action of complainant in a matter she
“In Ogden v. Thornton, 30 N. J. Eq. 513, the court finding itself unable to rescind the contract because the fraud occurred after the conveyance, remanded the cause in order that the bill might be amended, so as to enforce a lien upon the property for the price at which it had been valued; the defendant by his fraud having prevented the complainant from receiving what he contracted she should have.
“Upon principle and authority we think it immaterial that the status quo can not be literally restored. The defendant by the grossest fraud seduced complainant to exchange his farm for mere moonshine. What he professed to give was in fact of no value to himself or to any one else; he simply placed complainant in a position to be rendered insolvent; for by his purchase he secured nothing, except what should remain of the partnership assets after payment of debts, and the firm being hopelessly insolvent, this right was of no value. It may also be noted that from the very moment of the execution of the contract it was impossible for the defendant to be placed in statu quo, either by the act of complainant, or by both his act and the consent of the defendant. The defendant had been a member of a partnership, and his act in selling his interest therein was a dissolution of the firm; he could not again become a member without the assent of Mangum and Butler, over whom neither the defendant nor complainant had control. By his own act therefrom a restoration of the status quo was made impossible.55
These authorities emphasize what was said in Rohinson v. Siple, that if the status quo of defendant can not be restored
As plaintiffs were ignorant of the fraudulent contract of defendant with Dr. Crandall, the perishable property, the immunized animals, were used in the business and could not be restored in kind nor could defendant be restored to a partnership which he liad voluntarily dissolved, and as a result, a new partnership of Paquin & Owen formed, and that was finally dissolved, and the corporation formed which took over the assets. Under these circumstances the status quo could not be restored, but it is not true that plaintiffs are therefore remediless in a court of equity, especially where, as in this case, plaintiffs sought an accounting.
The plaintiffs did not seek a rescission of the' contract merely. More definitely speaking, they sought a cancellation of the three outstanding notes which they had .been induced by the fraud of defendant to execute to him, and also for an accounting.
Owing to the peculiar nature of the business and the secret efforts of defendant to decry and destroy it, the circuit court found itself unable to state an account, but it had no difficulty in finding that the notes which plaintiffs asked to have can-celled, were procured by fraud, and that they at least should be cancelled.
This left defendant with $19,000 in his pocket for property which he had on various occasions asserted to be without value. Recause the court can not restore the good-will of the business and estimate the damage which defendant by his fraud caused plaintiffs, is no reason why a court of equity may not cancel the executory contracts which are the outgrowth of that fraud.
Defendant invokes the general rule that a court of chan
We have seen, however, that owing to the fraud practiced by defendant on plaintiffs, it was impossible to restore the parties to the exact position in which they were when the contract of dissolution was entered into, and the learned circuit court was confronted with the difficulty that, owing to the secret assaults of defendant upon the business which he had sold to plaintiffs, neither a jury nor a master could state an account with any accuracy between the parties. It found defendant in possession still .of the $15,000 cash paid him by plaintiffs, the amount by him invested in the partnership, and the three notes for the deferred payments, and the plaintiffs and the corporation in the possession of the formula, and the right to carry on the business, and under these circumstances-it could only approximate justice by leaving defendant with $15,000 paid him for the property which they could not restore to him on account of his fraud, but denying him the right to collect the notes which the court found were procured by fraud. Under the peculiar circumstances of the case it is difficult to see what more equitable, decree the court could have rendered. Certainly defendant is in no attitude to complain, because he was not required to restore the $15,000 also..
As said by Judge Story in his Equity Jurisprudence (13 Ed.), vol. 1, section 439, “If a decree were in all cases required to be given in a prescribed form, the remedial justice would necessarily be very imperfect, and often wholly beside the merits of the case. Accident, mistake, and fraud are of an infinite variety in form, character, and circumstances, and are incapable of being adjusted by any single and uniform rule...... The beautiful character or .pervading excellency, if one may say so of equity jurisprudence, is, that it varies its adjustments and proportions so as to meet the very form and pressure
In this case the decree arrived as nearly to the equity of the case as the circumstances would admit and was one certainly of which defendant ought not to complain, and it is accordingly •affirmed.
SEPARATE OPINION.
Speaking for myself alone, I desire to-call attention to the fact that the doctrine announced in Whelan v. Reilly, 61 Mo. 565, respecting the rule that “he who seeks ■equity must do equity,” was overruled by the force of numbers in Kline v. Vogel, 90 Mo. loc. cit. 250. That doctrine, how-over, has survived that attack, as shown by the foregoing opinion, which shows, also, that the doctrine announced in Whelan v. Reilly, has received the sanction of those, both in England •and in this country, whose opinions are really deemed worthy of respect. Of course, it is easy enough to brush aside any opinion, with votes enough to do it with.
It is also proper to call attention to the fact that in the Kline-Vogel case, loc. cit. 250, 251, it is said in the majority opinion:
“Again, this court has decided on several occasions that our present statute of limitations applies to equitable as well as legal causes of action. 50 Mo. 455; 61 Mo. 188. Those rulings, in my judgment, are correct, and ought not to be disturbed. I do not, therefore, agree to the proposition that when the relief sought is based upon a right, purely equitable, that the court acts outside of and independent of the statute of limitations, for I understand the proposition to state, and to be intended to include, the doctrine that the court in that class of actions may even lengthen the statutory period within which ■such an action may be brought.”
“A court of equity will refuse relief where tbe party bas slept upon bis rights for an unreasonable length of time,-and this, too, without regard to tbe statute of limitations. In other words, a court of equity will often refuse relief, because of delay in bringing tbe suit, though tbe period of delay is less than that prescribed by tbe statute of limitations.”
But no bint was given of a contrary ruling having been made in tbe Kline-Vogel case. These two deliverances do not appear to jibe very well together. Courts of equity do “grant relief long after tbe bar of tbe statute is complete.” [1 Elliott’s Gen. Prac., sec. 302.]
