Yeater v. Hines

Hall, J. The defendant’s counsel argues that this is an action for fraud and deceit, and that the trial court erred in not trying the case on that theory. In this position the counsel, in our opinion, is not correct. The petition lays no damages. The plaintiffs seek to recover no damages. This action is for money had and received by the defendant for the use - of the plaintiffs on an implied promise on the part of the defendant to pay said money to plaintiffs, founded on the payment thereof by plaintiffs to defendant under a mistake of fact, viz.: The belief that defendant had a lien on plaintiffs’ cattle to the amount of said sum, when, in fact, the defendant had no such lien whatever, to any amount. Payment of money, under a mistake of fact, may be, generally, recovered back; if the mistake is caused and induced by the party to whom the payment is made, the right to recover is not changed, except to be made stronger. Lyle v. Shinnebaryer, 17 Mo. App. 75. The cause of action remains the same. The allegations in the petition, to the effect that the plaintiffs were induced to pay the money by the false representations made by defendant, which he knew to be false, did not change the cause of action from one in assumpsit for money had and received, to one ex delicto, for fraud and deceit. The allegations were unnecessary, but the action, nevertheless, was for the recovery of a specified sum paid under a mistake of fact. [627] The first question, therefore, is, did the facts establish the cause of action as alleged in the petition ? , What was the real transaction between the plaintiffs ■ and defendant, under the facts as stated and assumed by us ? The motives, on account of which a transaction is had, cannot be alone considered in determining the ■character or the effect of the transaction. In this case it may be true that the plaintiffs paid the amount of money in suit to extinguish a lien claimed by defendant ■on their cattle, and for this purpose only, and that they ■did not consider, or care at all for the assignment of the notes (claimed to be secured by the lien on the ■cattle) by the defendant to them; but we cannot view the transaction as if the defendant had not assigned the notes to plaintiffs, because the assignment was in fact made. Although it may be that the plaintiffs would have paid the money without the assignment of the notes to them, the transaction cannot be viewed as if the assignment had not been made. The transaction must be viewed as it is, not as it might have been. Whatever effect the assignment is entitled to must be given to it, because it was a part of the transaction. Viewed thus we see that, although the acting motive, the moving cause, on account of which the plaintiffs paid the money to the deiendant was the payment ■of the supposed lien on the cattle, another consideration was, in fact, given by the defendant therefor, viz., the assignment of the notes. Such assignment was a consideration, because the notes in the hands of the plaintiffs remained subsisting notes against Reynolds, the maker thereof. This is true, because, as the jury found, the plaintiffs, under their contract of purchase from Reynolds, did not have to pay said notes. Had, however, the plaintiffs paid the notes under their contract with Reynolds, of course, they would have had no cause of .action against the defendant on that account. The payment made by plaintiffs did not pay off, or satisfy, the [628] notes. Such payment cannot be considered as a payment of money under a mistake of fact, but, on the contrary, must be considered as the payment of the purchase price of the said notes bought by plaintiffs. In other words, it is not true that there was no contract between plaintiffs and defendant, on account of which the payment was made. There was a contract between said parties. We shall treat the allegations of the petition as sufficient to embrace the facts as they are. The plaintiffs were induced by the misrepresentations made by the defendant, to the effect that the notes were secured by chattel mortgages on the cattle purchased by them, to buy the said notes, , and to take an assignment of them without recourse. Upon the discovery that the said mortgages did not cover the cattle, the plaintiffs could have rescinded the contract by tendering to the defendant, in a reasonable time thereafter, the notes and mortgages assigned by him to them, and then they could have maintained an action in assumpsit against the defendant for the money paid by them ; and this, although the defendant had made the misrepresentations in good faith, believing them to be true. The rule on this subject is thus stated by Mr. Wharton: “A contract assented to by one party, on the faith of material misrepresentations by the other party, will be rescinded at the option of the party injured, although the misrepresentations were made neither fraudulently nor negligently.” 1 Wharton on Contracts, sect. 214, and the cases and authorities cited. The injured party, however, need not rescind, the contract. Until rescinded, the contract is binding. In this case there was no rescission of the contract. The plaintiffs retained the notes and mortgages up to the time of the trial, without ever having tendered them to the defendant. In the words of one of the plaintiffs, they still held them against Reynolds at the time of the, trial. In this case the plaintiffs had no.right to retain [629] the notes purchased by them, and to a return of the money paid by them for the notes. Under the - facts of this case, as stated by the plaintiffs, the judgment should have been for the defendant. Had the misrepresentations been made fraudulently by the defendant, and the plaintiffs had been induced thereby to purchase the notes, upon a discovery of the fraud the plaintiffs could have rescinded the contract and maintained an action for money had and received, •or they could have affirmed the contract, and maintained .an action ex delicto, i. <?., for the damages sustained by them by reason of the fraud. In the latter action it would, of course, have been necessary to prove the fraud. But, as we have said, this action is for money had •and received, and, under the facts of this case, is not maintainable, for the reason that the plaintiffs did not' rescind the contract. The judgment is reversed. Ellison, J., concurs; Philips, P. J., concurs in the result.