Kelly v. Bliss

Lyon, J. The theory of the original' complaint was, that the contract between the parries for the purchase and sale of a one-twelfth interest in the vessel was purely executory; that no title passed to the plaintiff, and hence the vessel was at the’ risk of the defendant until the contract should be executed by an actual transfer of such interest to the plaintiff. If that theory is correct, the destruction of the vessel while the contract remained executory would incapacitate the defendant from conveying the agreed interest to the plaintiff, and there would be a total failure of consideration. It would be equivalent to an unqualified rescission of the contract, and the plaintiff could recover the sums he had paid on account thereof. • The theory of the answer seems to be, that, if there was any contract between the parties in respect to a sale of an interest in the vessel, it was so far executed as to vest in the plaintiff the title to a one-twelfth interest therein. In that case it is quite obvious that, in the absence of any subsequent agreement, and under the circumstances of this case, the plaintiff could not maintain an action of assumpsit to recover back the money he had paid on account of his purchase. His remedy would be for an accounting between the owners, of the earnings of the vessel and the expenses and proceeds of the action against the tug; and he could only recover his proportionate share of the net earnings, and of the net balance realized on the judgment in such action. These remarks go upon the hypothesis that there'was a total loss of the vessel. If there was not a total loss, then the cost of repairing or re [191] building the vessel (she having been rebuilt) may become an element in the accounting. Without discussing the proposition, it is sufficient to say that we think .the testimony of the plaintiff shows that the original agreement was so far executed that the title to one-twelfth of the vessel passed to and was in the defendant. In his amended answer the plaintiff changed or rather enlarged the grounds of his action. He therein seeks to recover on the subsequent conditional agreement of the defendant to repay the money received by him on account of the original purchase by the plaintiff of an interest in the vessel. The validity of this agreement is attacked on the ground that it is unsupported by any legal consideration. This présupposés that some new consideration, moving between the parties, is essential to the validity of the agreement; but we think the law is otherwise. We take it to be well settled that the parties to a contract may, by mutual agreement, vary or modify its terms, or rescind it, without any new consideration therefor. In the case of a modification or change of a contract, the consideration for the original agreement is imported into the new agreement which is substituted for it. Per Lord Denman, in Stead v. Dawber, 10 Ad. & El., 57; Brown v. Everhard, 52 Wis., 205. See also Goss v. Lord Nugent, 5 Barn. & Ad., 58. No good reason is perceived why the same principle does. not. apply to the rescission of a contract. But if it does not, the result is the same. In the case of rescission each party is released thereby from the obligations of the rescinded contract. This would seem to furnish a sufficient new consideration, if one is essential to the validity of the agreement to rescind. In Wells v. Millet, 23 Wis., 64, specific performance of a contract was refused for the reason, amongst others, that the parties had mutually agreed to rescind such contract. There is no discussion in that ca'se of the question under consideration, neither is there any suggestion of a new and independent consideration, or that one is essential to the validity of the rescission. [192] The conditional contract alleged in the amended complaint, the conditions having been fulfilled, was, in substance and effect, a rescission of the original contract, and left the parties in the same position as though the plaintiff had never purchased an interest in the vessel. It relieved the plaintiff from any liability as part owner, incurred on account of the vessel, to the defendant, and the defendant from all liability to account to the plaintiff for her earnings, or the proceeds of the suit received by him. The conditions, to wit, recovery against the tug and her owners, and collection of the damages, were fulfilled, and the contract to repay the $450 to the plaintiff thereby became absolute. "Within the rules above stated, we must hold that the contract alleged in the amended complaint is valid, and, if made, is ground for maintaining this action; and because the testimony tends to show that the parties made such contract, it was error to nonsuit the plaintiff. The defendant did not interpose an answer to the amended complaint, but stood upon his answer to the original complaint. It is claimed that those allegations of the amended complaint which are not also contained in the original, stand admitted for want of an answer. Doubtless the defendant may, if an amended complaint be interposed, stand upon his answer to the original complaint, and it will be effectual as to all averments common to both complaints. It may also be sufficiently broad to reach now averments.. But if it is not, such new averments will be taken as admitted, unless a further answer thereto is made. In this case we think the averment in the answer that the contract stated in the original complaint is the only contract for the sale of any interest in f.he vessel ever made between the parties, is sufficiently broad to reach the new averments in the amended complaint, and should be regarded as a denial thereof. This may be á somewhat liberal construction of the answer in favor of the defendant; but in view of the fact that the objection is first made in this court, the defendant is entitled to a more liberal construction of his pleading than would be given to it had the ob [193] jection been taken earlier. See Hazleton v. Union Bank, 32 Wis., 34, and cases there cited. Regarding the alleged rescission of the original contract as substantially a purchase by the defendant of the one-twelfth interest in the vessel which he theretofore sold to the plaintiff, the denial in the answer is a denial of the alleged rescission. To avoid misapprehension, it-should be remarked, however, that we do not think a generaldenial pleaded to a complaint can operate as a denial of new averments of fact in an amended complaint. The judgment of the circuit court must be reversed, and the cause will be remanded for a new trial. By the Court.— So ordered.