Guckenheimer v. . Angevine

Andrews, J. The rule that a party undertaking to rescind a contract for fraud must restore to the other party what he has received under it is firmly established by authority. (Curtiss v. Howell, 39 N. Y. 215; Cobb v. Hatfield, 46 id. 533, and cases cited.) The person defrauded cannot at the same time avoid the contract and retain any thing received by virtue of it, of value either to himself or to the party who committed the fraud. It is claimed that within this rule the plaintiffs were bound to reimburse to the defendant Angevine the government tax paid by the latter, before they could reclaim the whisky, on the ground that the tax was a lien on the whisky when the plaintiffs sold it, and that the money paid by the defendant to discharge the lien must be regarded upon the plaintiffs’ election to rescind the contract as money paid to their use. It is doubtless true that the plaintiffs on retaking the whisky, would have the benefit of the payment of the tax, and it is claimed that its reimbursement is a necessary element in the rescission of the contract of sale. Without considering what the rule would be, in the case of the sale of a chattel, subject to a lien, voidable by the vendor for fraud, where the purchaser, after having acquired possession, pays the lien to protect his title, it is, we think, a complete answer to the claim made in this case, that the jury has found, *397 upon sufficient evidence to justify the finding, that the defendant Angevine was privy to the original fraud practiced upon the plaintiffs, and paid the tax in order to get possession of the whisky, and to enable him thereby to consummate the fraudulent scheme for depriving the plaintiffs of their property. The plaintiffs did not lose their title by the sale. The tax was not paid by the defendant at their request. They received nothing from the defendant. The law will not, under these circumstances, imply a promise on the part of the plaintiffs, on rescinding the contract, to reimburse the defendant for advances or expenditures made by the latter to effectuate his fraud, although the plaintiffs would have the benefit of such advances and expenditures on repossessing themselves of the whisky. Nor will the doctrine of equitable subrogation be applied to relieve the defendant from a loss occasioned by his own unlawful act. The case is analogous to that of a willful trespasser, who has wrongfully converted a chattel, and afterward enhances its value by labor bestowed upon it. The wrong-doer in such a case is bound to account to the true owner for the value of the chattel in its changed or improved condition, and his recovery will not be limited to its value in the condition in which it was at the time of the conversion. (Silsbury v. McCoon, 3 N. Y. 379.) The law cares very, little what a fraudulent party’s loss may be, and exacts nothing for his sake. (Beardsley, J., Mason v. Bovet, 1 Den. 74.) It certainly will not undertake to indemnify him for expenditures made in the prosecution of his fraudulent purpose. So far as this case is concerned, the defendant has no reason to complain. It appeared on the trial that the defendant had sold the whisky, and put it beyond the power of the plaintiffs to retake it on the execution. The judge limited the jury in the assessment of the damages to the sum for which the plaintiff sold the whisky, with interest thereon. The payment of this sum will satisfy the judgment. The judgment should be affirmed. All concur. Judgment affirmed.