Pierce v. Wilson

34 Ala. 596 | Ala. | 1859

RICE, O. J.

In 1849, the respondent, Wilson, obtained letters patent of the United States, for certain improvements in looms. On or about the 8th day of June, 1853, ’ in this State, he sold and assigned to complainant all the right, title and interest which he had in said invention so secured to him by the letters patent, ‘‘ for, to, and in the State of Tennessee, within its entire limits, and in no other place,” to be held and enjoyed by complainant as fully and entirely as the same could have been held and enjoyed by the said Wilson, had the said sale and assignment not been made.

The complainant seeks a rescission of that sale; and from the allegations oí bis bill, and the proofs in the cause, it appears that he, being ignorant of the qualities of the subject of the sale, was induced to make the purchase by the fraudulent misrepresentations of the said Wilson, in regard to material facts and matters, such, for instance, as the qualities of the subject of the sale; that the complainant had the right to rely upoq these misrepresentations'as truthful representations, and did rely upon them as true, and was thereby deceived and injured. The complainant is, therefore, entitled to a rescission of the sale, unless he has lost his right to a rescission by an affirmance of the contract after the discovery of the fraud, or by a failure'to manifest the election to disaffirm it within a reasonable time after such discovery. — Foster v. Gressett, 29 Ala. 393, and cases there cited; Kern v. Burnham, 28 ib. 428 ; Couse v. Boyles, 3 Green’s Ch. R. 212.

It is too clear for argument, that nothing said or done by him since the full discovery of the fraud amounts to an affirmance of the contract; and that upon the facts as presented by the record, and under the settled law of this State, there has not been any affirmance or confirmation of the contract by any act of the complainant since he acquired knowledge of the fraud. — Thompson v. Lee, 31 Ala. 292 ; Huckabee v. Albritton, 10 Ala. 657; Boyce v. Grundy, 3 Peters, 210.

We come, then, to the question, whether the complainant’s right of rescission has been lost by a failure to manifest the election to disaffirm the contract within a reasonable time. It is settled by the cases first above cited, that what is a reasonable time must be determined from the circumstances of the particular case. Now, in this case, tho following circumstances seem to us to be of controlling importance: The vendor was the inventor of the improvement in the machine, (the loom.) He had thoroughly tested its qualities, and was perfectly acquainted with them. He had procured letters patent for his invention and improvement. He was a citizen of South Carolina. He came to Alabama, and here made his oiler to sell to the complainant, a citizen of this State, who was wholly ignorant of the falsity of the representations of the vendor. His representations were of, at least, two classes, to-wit, those which related to the capability of the machine for being profitably worked by any ordiüary hand or negro slave, and those which related to its capability and adaption, by a slight additional expense in its construction, for being profitably used and driven by machinery in factories. His representations were of the most positive character, and as well framed, in the various turns of the negotiation for the sale, for quieting the apprehensions and commanding the reliance and faith of the complainant, as they well could have been. The discovery of the falsity of one class of his representations would not necessarily imply a discovery of the falsity of the other class. The nature of the machine, and of the representations, was such that one or two experiments, to ascertain the qualities and capabilities of the machine, might reasonably be regarded as not furnishing a decisive test of its qualities and capabilities, or satisfactory proof of the falsity of each class of the positive representations of the vendor. The vendee was, to some extent, delayed in making such experiments by the artifices of the vendor. Not long after the sale, the vendor had returned to his residence in South Carolina. In September, 1853, (about three months after the sale,) the complainant, by his agent, having discovered in South Carolina the falsity of one class of the vendor’s representations, proposed to the vendor to rescind the contract; anti thereupon Wilson agreed, that if he did not furnish a certain model loom by the 1st of November, 1853, the contract should be rescinded. On said 1st of November, 1853, the vendor having failed to furnish the model loom, the complainant, by his agent, offered to the vendor to rescind said contract, and to surrender up his aforesaid transfer of the patent right; but the vendor refused to rescind. At that time, the complainant had not by any experiment discovered the falsity of one class of the vendor’s representations, to-wit, those relating to the capabilities of the machine for being well worked and driven by machinery in factories. The vendor having refused to rescind, the vendee proceeded at his own expense,..without unreasonable delay, to have tbe capabilities of tbe machine for being worked and driven by machinery tested by actual experiments; and after ascertaining by these experiments the falsity of the .vendor’s representations in that respect, and being sued by the transferree of the vendor upon a note given for part of the purchase-money, but never having been put out of possession of the house and lot, which was to gó to the vendor, Wilson, as part of the price for the patent right, the vendee filed his bill -for relief.

But it is said, that Pierce offered to sell in Tenrfessee, and that he made declarations to the effect that the patent right and machine were of great value. Admit all that; still, he had a clear right to test, not merely once, but fully, the value of the patent right and of the machine, and the truth or falsity of each class of the representations of Wilson. A mere offer by Pierce to sell, without effecting any sale, and declarations by him as to the value of the machine, made after he had learned and believed the falsity of every class, save one, of Wilson’s representations, but before he had, by experiments and tests, ascertained the falsity of that single class, cannot constitute an answer, in a court of equity, to Pierce’s claim to rescission — a claim supported by the previous timely offer of rescission and actual tender back of the transfer of the patent right, made by Pierce and refused by Wilson, and by the well known determination of Wilson notto rescind or receive back the transfer of the patent right. A defrauded vendee, who has rendered perfect his right to claim a rescission in a court of equity, by a timely offer of rescission and tender back of the thing received by him under his purchase, cannot lose that rightbj mere declarations as to the value of the thing he had bought, nor by unavailing efforts to dispose of it, when it is clear that such declarations and such^efforts could not, and did not in any way mislead or injure the vendor, or any one claiming through him under the fraudulent contract; and that the determination of the vendor not to rescind or receive back tbe thing sold was well known at and before such declarations and efforts were made, and was in no way changed or affected by them.- — See Dill v. Camp, 22 Ala. 249, and cases therein cited; also, the eases cited supra.

The complainant is here proceeding, not upon a contract, but for a fraud practiced upon him in a contract made between him and "Wilson.. lie claims a rescission on account of that fraud. By the very nature of his case, he is authorized to show that the contract really made was different from that shown by the writings executed by the parties. The rule, that parol evidence cannot be resorted to, to vary, contradict, or explain written instruments, does not apply to the case. The very fact, that there is a material difference between the contract really made by the parties and the contract which might be inferred from the written instruments, is a circumstance which, with others, may be urged, in a case like this, to prove the fraud complained of. — Dixon v. Barclay, 22 Ala. 370; Cowles v. Townsend & Milliken, 31 Ala. 133, and cases therein cited.

In suits for specific performance, the rule which exacts a correspondence between the allegations and proof of the terms of the contract, is adhered to with great strictness. Williams v. Barnes, 28 Ala. 613. In suits for the rescission of contracts on account of fraud, that rule is not applied with the same strictness. — Lanier v. Hill, 25 Ala. 554. We do not think there is any fatal variance here between the allegations and proof.

We are satisfied that the complainant is entitled to a decree rescinding the sale. . If Wilson had never transferred the note given to him by Pierce for a part of the purchase-money, it is clear that Wilson could not be permitted, by a court of equity, to enforce that note against Pierce; and there is nothing shown in the answer of the transferee, Davis, which gives him any better right to enforce the note than his transferror would have if he had never transferred it. Pierce did not induce Davis to buy the note, and has not done anything that precludes,, him from urging against Davis the same objections to the enforcement of the note, that might be urged against Wilson, if Wilson had never parted with it. — See Lanier v. Hill, 25 Ala. 554; Clements v. Loggins, 2 Ala. 514; Huckabee v. Albritton, 10 Ala. 657.

Note by BepoRTER. — The foregoing opinion was delivered at the January term, 1859. On application for a rehearing, by the appellees’ counsel, the following opinion was pronounced at the ensuing June term :

The decree of the chancellor is erroneous. It is reversed; and the cause is remanded, with directions to the court below to proceed to carry out the views and principles declared in this opinion.

The appellees must pay the costs of the appeal.

STONE, J.

When we, at the last term, set aside the judgment we had announced, and held this case under further advisement, we had been led to doubt on two of the points which were pressed in argument — namely, the question of variance between ¡the allegations and the proof, and the question of ratification by Mr. Pierce of the contract, after he had been informed of the fraud practiced upon him in the sale by Mr. Wilson. We entertained no doubt, that Mr. Wilson had most grossly misrepresented the capabilities of his invention, and that, relying on those representations as true, Mr. Pierce had' been induced to make the purchase.

It will be readily perceived, that the chief purpose of Mr. Pierce, in becoming the proprietor of the patent for the State of Tennessee, was that he might vend to others individual and local rights to make and use Wilson’s patent loom. Hence, saleableness of the invention would be with him an inducement to purchase, little, if any, less controlling than adaptedness to use by hand power or machinery. The representations of Mr. Wilson, which are fully proved, thathe hadsoldandput into successful and satisfactory operation in the State of South Carolina a large,number of looms, constructed on the principles of his patent, rightfully would, and no doubt did, determine Mr. Pierce in making the purchase. The evidence forces upon us the conclusion, not that Mr. Wilson, in the enthusiasm of an inventor, innocently over-rated the capacities and value of his discovery, but that he knowingly and recklessly misstated the facts in every important particular. The statement by him, that several hundred looms had been trieS, and had given satisfaction, was the assertion, as matter of fact, that the invention would subserve the purposes for which he commended it, and not the mere expression of an opinion favorable to its utility.

It being shown that Mr. Pierce was drawn into the contract with Mr. "Wilson by the fraud of the latter, the law arms him with the right to rescind, unless he has, by his after conduct, forfeited that right. It is contended for appellee, that Mr. Pierce, after he was informed of the fraud, has ratified the contract, and thus made it valid, by entering into new stipulations, and dealing with the property as his own.

In Thompson v. Lee, 31 Ala. 292, 303, we thus stilted the rule: “If one who has been defrauded, and has become fully apprised of the fraud, afterwards ratifies such voidable contract, or enters into new stipulations in regard to the subject-matter of the contract, inconsistent with his right to insist on a rescission, and there be nothing more in the transaction, he cannot be heard to complain of such fraud.” It will be observed, that the rule requires that he shall be fully apprised of the fraud.

In the present case, we cannot say that Mr. Pierce was fully apprised of'the fraud. True, he had discovered some of the representations of Mr. Wilson to be false. He knew the loom had- not been tested and approved in South Carolina. He also knew, or was informed, that Mr. Wilson had not met with the success in making sales in South Carolina which he had represented. Still, we are not informed by the evidence that he was fully apprised until after his faithful trial to sell the loom, and to have it introduced in the State of Tennessee, demonstrated that it was nearly or quite valueless. He did not ratify the contract, after being fully apprised of the fraud.

Nor did he enter into new stipulations, inconsistent with his right to rescind. The only new stipulations imputed to him, were renewed exertions to obtain a model loom, and continued, though unsuccessful efforts to test the loom, and introduce it into use. These but show the fidelity with winch he labored to carry out his contract .in good faith. They did not, and could not, injure Mr. Wilson; and do not estop the complainant from seeking a rescission.

Mr. Pierce was drawn into this contract by a misplaced confidence in the representations of Mr. Wilson. The fact that he did not, on the discovery of one falsehood, distrust everything which Mr. Wilson had represented, may tend to prove him unduly credulous. Credulity is not criminal. On the contrary, it denotes a generous and ingenuous nature. We are loth to declare a rule which converts the best principles of humanity into legal disabilities.

Nor do we find anything in the record to justify us in denying relief to the complainant, because of any supposed variance between the allegations and proof. The contract was one and entire' — each stipulation forming an ingredient of one collective whole, although all the parts were not evidenced by one and the same paper-writing. This is fully proved by the witness Pierce, and is strongly confirmed by the testimony of the witnesses Constantine and Hall. . Mr. Webb does not prove the making of the contract, but only the execution of the written evidence of it. His testimony is not inconsistent with theirs.

Suppose a sale should be made, by one and the same contract, of a plantation and stock. The sale of the land would be evidenced by writing, because the law requires it to be so. The stock would probably not be mentioned in the writings, because the title to personal property passes by mere sale and delivery, without writing. Yet, we apprehend that no one would contend that the parties had made two contracts.

Nor is there anything in the fact, that two notes or obligations were given by Mr. Pierce. Purchase-money is frequently secured by more notes than one, and yet no one supposes that this destroys the unity of the contract.

The evidences in favor of the proposition that this was one contract, are as strong as in the case above supposed. In truth, we think the contract charged is precisely and fully proved.

We re-assert and re-adopt the opinion pronounced at the last term by Nice, G; J.