Opinion
November 14, 1906.
Fred G. Dutton [ M.E. Driscoll of counsel], for the appellants.
J.T. Durham [ Joseph D. Senn of counsel], for the respondent.
It is apparent that the property was offered for sale at $4,000 and that the sale was really made at that price, but by collusion between the plaintiff and Newell the price was fixed at $6,000 to the defendant Richards, and he was induced to give the note in suit by the false representations and suppression of the facts by Newell and the plaintiff. The $2,000 check which the defendant Richards gave did in fact pay for the half of the business which he purchased, and by the collusion between Newell and the plaintiff the note in suit was obtained by the plaintiff without consideration. Newell owed to the defendant who was purchasing this property with him the utmost good faith, as they were engaged as partners in a joint undertaking, and the plaintiff knew and was chargeable with knowledge of the facts, and by his active co-operation and suppression of the facts a fraud was perpetrated upon Richards. The finding of the trial judge that the sale was in fact for $6,000, and that the $2,000 was given to Newell as a commission for his services in making the sale is not sustained by the evidence. Newell could not earn any commission in the sale of the property to himself, and the testimony of the plaintiff fairly shows that the actual selling price to Newell was $4,000 and that the alleged commission was a mere pretense and subterfuge.
By the fraud practiced upon Richards by the plaintiff and Newell he was induced to give the note in suit. It really was without consideration, because he had already paid one-half of the agreed purchase price, which was all that he undertook to pay. The alleged fact that the property was worth $6,000 does not render the fraud nor the damage any less. (20 Cyc. 141.) A party has a right to make a good bargain and is entitled to the benefit of it. The selling price of this property was $4,000. If it was worth $6,000 the defendant had secured the benefit of $1,000 by a good bargain. He was deprived of that benefit by the fraud of the plaintiff and Newell. The case, therefore, presents the situation where the defendant has paid all that was due from him on account of the interest he bought in the property. The note, therefore, represents nothing but the fraud, and is without consideration, which is equivalent to saying under the circumstances that the damage which the defendant sustained by the fraud was the amount of the note. The defendant was not required to rescind the contract, as under the facts shown at the late date of the discovery of the fraud a rescission was very difficult. But he had the right to defend against the note upon the ground that it represented no value and was obtained from him by fraud, or that the damage he sustained by the fraud of the plaintiff was equal to the amount of the note.
It is evident the defendant paid all that was due from him on account of the purchase. It is also evident that the plaintiff actually had only the benefit of $1,000 on account of the half sold Newell, but he loses the other $1,000 by his fraudulent participation in the attempt to defraud Richards, and, therefore, has only himself to blame for his present situation. The judgment should, therefore, be reversed upon the law and the facts, and a new trial granted, with costs to the appellant to abide the event.
PARKER, P.J., and CHESTER, J., concurred; SMITH, J., concurred in memorandum, in which COCHRANE, J., concurred.
I concur in the result. Richards agreed to pay $3,000 for an undivided half of the property. One of the material inducements to the purchase was the fraudulent representation by Newell that he was to pay $3,000 for the other undivided half. To this fraudulent representation the plaintiff was a party. By reason of such fraud defendant could, upon discovery thereof, rescind and return what he had received upon the contract, or he could elect to ratify the sale and counterclaim for damages suffered. While the property received has not been wholly returned, an offer to return the same was duly made and declined. This was sufficient to enable defendant to defend the note upon a rescission duly made.
COCHRANE, J., concurred.
Judgment reversed upon law and facts and new trial granted, with costs to appellant to abide event.