Stone v. Peake

The opinion of the court was delivered by Hebard, J. This case comes here upon exceptions to the ruling of the county court excluding the defence set up to the note. The case finds that the evidence tended to prove that the contract, upon which the note was given, was fraudulent. It is a familiar principle of law, and one distinctly recognized in the case of Walker v. Smith et al., 2 Vt. 539, “ that an entire want, or failure of consideration avoids a note,” and, “ that fraud which affects the entire contract, and prevents the' whole benefit that was expected to be derived from it, will also avoid it.” This is substantially the doctrine of the case of Williams v. Hicks 2 Vt. 39. It is the doctrine of the same cases, and seems to be well settled law, that fraud cannot be set up as a defence in an action on note, merely to reduce the damages, unless the sum to be deducted is matter of certain computation. Moggridge v. Jones, 14 East 486. Basten v. Butter, 7 East 479. It then becomes important to examine and see how stands the present case. The substance of the whole case presents this' state of facts, that the plaintiff made a contract with [219] George D. Douseman for seven and one-half acres.of land in Milwaukie, and stipulated to pay him $7,000,00 in the whole, and paid a portion of it at the time, and that the rest of it was to be paid by instalments, and that he took a bond from said Douseman, that, if he paid said sums by the time stipulated, that he, Douseman, would execute to the plaintiff, or his heirs or assigns, a good and sufficient warrantee deed of the land. The plaintiff then made a sale and assignment of this bond and contract to the defendant and one Blanchard, for which this note and others were given. The first inquiry is, what was sold ? The answer to that is apparent. It was the bond. The land was not sold by the plaintiff to the defendant and Blanchard, nor does there appear to have been any stipulation between them in relation to the land. The plaintiff did not assume to have any title' to the land, and did not even engage that Douseman should deed it, but merely sold the bond to the defendant and Blanchard, which obligated Douseman to give a good and sufficient deed of the land to such person as held the bond. This bond was assigned, and was the consideration for this note and the others. When the defendant and Blanchard paid the sums stipulated in the bond, as assignees of the bond, they had a claim upon Douseman for a deed of the land. If the land was of any value, and Douseman was responsible, then the bond was of some value. In relation to both of these points the case is decisive. It finds that, if they had obtained a title to the land, they could have sold it for more than they gave, and also that Douseman was able to respond in damages. Then there was not a failure of consideration ; they had everything for which they contracted. At most it cannot be said to be an entire failure "of consideration, and, if a failure of any part, it is uncertain for how much, and whatever damage there may be, is uncertain and unliquidated. When the defendant and Blanchard, after paying the stipulated sum, ascertained that the title to the land was not in George D. Douseman, if they had called upon him upon his bond, for not deeding the land, the rule of damage would probably have been the value of the land. But that damage, whatever it was, would belong to the defendant and Blanchard, to be apportioned between them; and, only one of them being party to this suit, we have no rule by which the damage in this suit could be apportioned between them. [220] Again, when they found that the title to the land was not in George D. Douseman, and that therefore he could not perform the conditions of his bond, if any fraud had entered into the contract, instead of accepting a deed from Talbot C. Douseman, and giving up the bond, they might have rescinded the contract, and returned the bond to the plaintiff, and that would have put the parties in statu quo. The plaintiff could then have pursued Douseman upon his bond, and the defendant and Blanchard might then have resisted the attempts of the plaintiff to enforce the collection of these notes, without loss or prejudice to him. The defendant had no right, because there was fraud in the contract, to refuse to use the bond for his own benefit, and at the same time put it beyond the power of the plaintiff to use it for his advantage. But however that may be, I think it clear, that, if defendant and Blanchard are entitled to damage for the false and fraudulent representations of the plaintiff in making this contract, the damages are too uncertain to be ascertained and apportioned in this action, and they must seek and recover whatever damages they may be entitled to, in the appropriate action. Judgment of county court affirmed.