Sloane v. Shiffer

156 Pa. 59 | Pa. | 1893

Opinion by

Mr. Justice Dean,

H. D. Judd & Co. were retail furniture and carpet dealers in the city of Scranton. W. & J. Sloane were wholesale carpet dealers in New York. Judd & Co. had made occasional purchases from them for two or three years prior to Feb. 11, 1891. On that day H. D. Judd called at Sloane’s place of business in New Yoi'k for the purpose of buying goods, and also opening an account by which goods could thereafter be got when ordered on credit. He was referred to Richard W. levers, the manager of the credit department. In reply to questions, Judd stated in writing that his firm on the 1st of January previous had a stock of goods in their store at Scranton worth over $20,000; good accounts receivable, over $6,000 ; making assets $26,000. That they were indebted for merchandise less than $8,000, and owed no borrowed money in bank or otherwise. On these representations, Sloanes opened for them a line of credit which was kept up to August 8th following, during which time there were shipped, at different dates, goods to the value of $3,287.77. From February 24th to March 16th, the purchases amounted to $799.53; for this, three notes, dated March 28th, each in sum of $266.51, at three, four and five months, were given. From April 3d to May 22d the purchases amounted to $1,279.84; for this, three notes, dated June 15th, were given ; one at 30 days for $319.96 ; one at 45 days for a like sum, and one at three months for $639.91; then, from June 8th to August 8th, there was a book account, for which no notes were given, amounting to $1,091.68.

On August 21st, Judd & Co. confessed judgments to a number of creditors, most of them near relatives, to whom they were indebted for money borrowed before the interview with Mr. levers on Feb. 11, 1891, in the aggregate sum of $17,241. On these judgments executions were at once issued, and the sheriff took possession of the stock of goods in the Scranton store. Learning of this, levers went to Scranton, when, as alleged, he not only discovered the large indebtedness for borrowed money, but also that instead of an indebtedness of less than $8,000 for merchandise, it was about $16,000. Some of the goods, about one third of those shipped by Sloanes, were still in the store. As to these, levers gave notice to both Judd & Co. and the sheriff that Sloanes rescinded the contract and reclaimed the goods because of alleged fraud by Judd & Co. in the purchase.

On the petition of the sheriff, an issue was framed between Sloanes, plaintiffs, and the execution creditors, defendants, to determine the ownership. The questions as to whether there was such fraud as warranted the rescission of the contract, and whether the goods sought to be reclaimed were identified as part of those purchased from Sloanes, were submitted to the jury, and found in their favor. From the judgment entered on this verdict, the execution creditors, Shiffer and others, take this appeal.

The appellants’ assignments of error are to the charge of the court on the facts necessary to a legal rescission. As has been stated, the whole amount of purchases under the contract of Feb. 11, 1891, was $3,287.77; two of the $266.51 notes given March 28th were paid when they matured, also two of the $319.96 notes given June 15th; these, with some goods returned, made the entire payments $1,289.66, leaving an unpaid balance of $1,998.11, represented by the five months’ note of March 28th for $266.51, the three months’ note of June 5th for $639.91, and the unpaid book account from June 8th to Aug. 8th of $1,091.68. This left the situation as to the goods on Aug. 23d, the date of rescission, as follows : Of the goods purchased up to March 16th, $533.02 had been paid for, and $266.51 had not been paid; of those purchased from that date up to May 22d, $639.92 had been paid, and $639.91 had not been paid ; none of the goods in the book account bought after that date had been paid for. The goods identified and reclaimed by Sloanes did not exceed in value $900, leaving them, even if the rescission was effectual as to these, losers to the amount of more than $1,000. But it is argued by appellants that part of the goods reclaimed were included in the bills settled for by the notes, and that as to these, or any portion of them, there can be no rescission without a return of the money and the unpaid notes given for these bills.

That a party seeking rescission of a contract must return or offer to return what he has received under it, and thus put the other party as nearly as is possible in his situation before the contract, is the law: 1 Addison on Contracts, § 805 ; 1 Benjamin on Sales, 530. But this rule is wholly an equitable one ; impossible or unreasonable things, which do not tend to accomplish equity in the particular transaction, are not required.. If Sloanes did all that was possible and could reasonably be required of them, under the circumstances, to reclaim their goods, the title of Judd & Co. to such of them as they identified was gone. The jury has found that, by a gross fraud practiced, they parted with the possession ; this gave them the right to rescind by restoring or offering to restore the purchasers, as nearly as it was possible or reasonable to do so, to their position before the contract. Before reclaiming goods included in the bills settled for by the notes of March 16th and June 15th, they were not required to refund all the money received by them, if the evidence showed that from sales already made Judd & Co. had been reimbursed for all they had paid. The evidence tended to show that Judd & Co. had received on sales to their customers out of the 16th March bills $136.17 more than they had paid on the two matured notes, yet the goods reclaimed on this lot amounted to only $130.35. While Judd & Co. could claim to be made whole on a rescission, they had no right to profit by their fraud ; to have given them back all they had paid would have made them large gainers. And so with the bill settled June 15th; two of these notes amounting to $639.92 had been paid; Sloanes identified, out of this lot, goods to the value of only $336.07. Judd & Co. had already received by sales to innocent purchasers $303.84 more than they had paid on these two notes. They had not only, in effect, been reimbursed, but had largely profited at the expense of Sloanes. Certainly, equity did not require that the party wronged should pay back to the wrongdoer money which he, the wrongdoer, already had in his pocket. The appellants’ contention, that the defrauded vendor cannot take back what he gave without giving up what he got, is sound, but the verdict of the jury on competent evidence establishes that Judd & Co. got back, in effect, far more than they paid out of each bill of goods, and that there was no reclamation of any goods which were in fact paid for.

As to the allegation that the tender of the unpaid notes at time of trial was too late, we are of the opinion that, in an interpleader issue, where the rights and liabilities of the parties have in no way been changed by the delay, the tender will be treated as if made at the date of rescission. If the sheriff had disregarded the notice, and proceeded with the sale, on an action of trespass against him, he might have successfully asserted that the rescission had not been complete before the sale, and the title to the goods was still in the fraudulent vendees. But where the offer to restore is made, and the notes filed before trial of an issue to determine the ownership, the rescission is consummated before verdict, and the right of no one is prejudiced. The court committed no error in assuming the tender of the notes was in time.

What we have said disposes of all four of appellants’ assignments of error. The instructions of the learned court below to tbe jury, although more elaborate, in substance accord with this opinion, and were a correct statement of the law bearing on the facts.

The judgment is affirmed, and the appeal is dismissed at costs of appellant.

Cf. next ease, and Boyd, White & Co. v. Sliiffer, below, p. 100.