Coe v. Lindley

Day, Ch. J. i vendor and ío™nf de^d: fense. I. As to the demurrer to defendant's answer. The fourth ground of demurrer to the answer possesses the most importance, and has been chiefly argued.- It will conduce to brevity and clearness, first to give it consideration. Appellant claims the prominent question presented by this defense to be, whether a court of equity will, at the instance of a purchaser, who alleges fraudulent representations of value by the seller, as having induced the purchase, modify the contract, and let him have the property at about forty cents on the dollar, of the contract price. And the negative of this proposition he maintains with much earnestness and ability. ~We cannot, however, suppress the feeling that he has devoted his energies to the [442] combatting of a proposition, wbicb tbe theory of tbe defense does not oblige tbe defendant to maintain. Appellant concedes that “ if a vendor files bis bill to foreclose bis vendor’s lien, and tbe purchaser alleging deceitful representations brings bis action for damages and a set-off, no man questions tbe power of tbe court to entertain tbe cross-petition and give relief in that form.” But, notwithstanding this concession, be denies that tbe damages arising out of such fraudulent representations can be pleaded as a partial or total defense to an action for tbe purchase money. An examination of adjudged cases will show that tbe difficulty wbicb was supposed to be in tbe way of allowing a defense of this nature was that it could not, independently of statute, be pleaded as a cross-action. This led, in order to avoid a multiplicity of suits, to tbe permitting of tbe fraud to be pleaded as a defense, when tbe failure was total; but, inasmuch as tbe common law did not admit ofpartial defenses, it was not allowed to be shown where it went only to a part of tbe consideration. And finally, by way of reeov/pment or reduction of damages, tbe defendant was allowed, by giving notice in bis plea, to prove tbe injury sustained by tbe fraud, although it did not go to tbe whole consideration, and could not be pleaded as a complete defense. Under our statute we have no doubt that fraud may be pleaded as a counter claim or cross-demand, under tbe provisions of sections 2889 and 2891 of tbe Revision; and when so pleaded in addition to defeating tbe plaintiff’s action, it may entitle tbe defendant to an affirmative judgment. But certainly tbe granting to the defendant this additional mode .of relief does not take away tbe right wbicb existed at common law of relying upon tbe fraud as a defense in whole or in part. Under our system of pleading a partial defense may be pleaded. Davenport Gas Light and Coke Co. v. The City of Davenport, 15 Iowa, 6. That tbe damages sustained through fraudulent representations in [443] the sale of both real and personal property may be set np by way of recoupment in an action for the price, see Harrington v. Stratton, 22 Pick. 514; Sandford v. Handy, 23 Wend. 260; Van Epps v. Harrison, 5 Hill, 63; Lewis v. Wilson, 1 Edw. Ch. 305. It is claimed that, if appellees desired a rescission of the contract, they should show that they had notified Coe of the fraud as soon as they discovered it, and what use they intended to make of it. Citing Story’s Eq., § 203; Boyce's Executors v. Grundy, 3 Pet. 219. This position we concede. But a party who has been defrauded in a contract is not bound to rescind. He has his choice of remedies. He may stand to the bargain and recover damages for the fraud. Campbell v. Fleming, 1 Adol. and Ell. 40; Hoggins v. Becraft, 1 Dana. 30. And the current of authority at the present day is, that when he pursues the latter course he need not offer to rescind the contract or give notice of the fraud. See cases above referred to, and those cited in 2 Kent’s Com. (8 ed.) 480, note b. We dp not, however, understand appellant to claim that a party who has been defrauded is bound to give prompt notice if he expects to keep the property, and sue for damages on account of the fraud either in an original action or by way of cross action when sued for the purchase price. His application to this case of the doctrine for which he contends is based upon the fact that, the alleged fraud is pleaded by way of defense, and not by way of cross-action. We are unable, however, to discover any principle which renders the doctrine of the cases to which we have alluded less applicable in the former case than in the latter. The first ground of demurrer is not insisted upon in the argument, and may be regarded as waived. The second and third grounds of demurrer may conveniently be considered together. In the view which we take of the case, it is not material by whom representations were made to Clark, nor for what purpose they were made to McGiffin, nor [444] whether or not he relied upon them. It is to be observed that a personal judgment is sought against B. F. Bindley for the amount due upon the contract. To prevent this judgment, Bindley would have a right to. rely upon the fraud perpetrated in effecting the sale, if no representations had been made to either Clark or McGiffin; and if Bindley can show that nothing is due plaintiff upon his contract, it is quite apparent that no vendor’s lien can be established against the land. The court did not err in overruling the demurrer to defendant’s answer. 2. — pleading: Eibits1?6'ex II. As to the demwrrer to the cross petition. This may be briefly considered. 1. It is not a valid objection to the. cross petition that it does not set out a copy of the written obligation under which Mc-Giffin claims. This obligation is attached in full to plaintiff’s petition, which also alleges the assignment to Mc-Giffin. 2. If the cross petition does not show with sufficient certainty whether the payment for the land was made to Clark or to plaintiff, the defect furnishes ground for a more specific statement, but is not cause of demurrer. 3. If the plaintiff has received for the land all that he is entitled to under the contract, it is quite obvious that he cannot retain the money paid and the title to the land also. Under such circumstances, the plaintiff becomes the trustee of the title for the party entitled to it. McGiffin holds plaintiff’s obligation to Bindleys, and is entitled to the conveyance if full payment has been made. Clearly in an original action he could compel a conveyance to himself. No reason is apparent to us which would authorize his recovery in such action, which does not also sustain his right to recover in this. The judgment of the court below is Affirmed.