the auctioneer, intenLonally or oth3rwise, misled the bir!i1crs as to the time when tllO sale would t,Lke pl,ace; or when, under any other circumstances, proposed Lidrlers, without any negligence of their own, are prevented from attending the sale." I see no reason why this course may not be properly pursued in the case. While the assignee did not intentionally mislead the purchaser, the notice of sale would naturally lead a person to suppose that the property was to be sold subject to a certain lien and to that lien only, and the complainants in this case were in all probability misled by it. It seems to me that substantial justice will be done by granting the complainants a decree setting aside the sale, and subrogating them to the rights of Hardin, the purchaser under the execution sale. The proper course will then be for Hardesty and wife to petition the bankrupt court for their exemption. This question being determined, the assignee will know exactly what he is to sell, and the purchaser what he proposes to buy. I express no opinion in this case as to whether, in fact, Hardesty and wife are entitled to the homestead claimed by them. A decree will. be entered in accordance with this opinion.
(Oircuit Court, D. Minneaota.
CO:<lTRACT-FuAuD-EQUITALE HELIEF.-It is not always necessary for the injured party, even when fraud taints the contract, to rescin.1 it in order to resist its full operation. He may permit the eontract to be amended so as to conform to fair dca'ing, and if, under the pleadings and the relief prayed, a court of chancery can enter a decree which would be just and fair, and in accordance with equity, it will do so.
Action removed £romstate court, and heard, without change of pleadings, by consent. Gilman &; Clough, for plaintiff. Smith &; Egan, for defendant. J. The plaintiff brings this action to compel the
strict performance of the following agreement, alleging p'6rformance on his part and refusal by the defendant: "CONTRACT. "PHILADELPHIA, December 24, 1878. "This is certify that I have agreed and will, upon receipt of mortgage for $2,000, (two thousand dollars,) with note, payable in three years, with interest at 6 per cent., payable semi-annually-the security of the above to be satisfactory-I will then give Abram S. Elfelt and Susan C. Elfelt a satisfaction of a mortgage dated July 20, 1876, of $4,000, on the following described property, being a part of lot fonf, (4,) section twelve, (12,) township (28,) range twenty-three, (23,) Ramsey county, Minnesota. "ELEAZAII HART1 "Of ELL HART. "Witness: F. A. HoYT. t The defendant, in his answer, charges the plaintiff with fraud and,misrepresentation in procuring the agreement, and, avers that he was intentionally misled by the plaintiff in regard to the value of the property upon which he held the mortgage, and which was agreed to be released and satisfied, and that the plaintiff intentionally concealed facts in reference to a contemplated sale of the property mortgaged, which was partially completed; and that these fraudulent practices of the plaintiff induced him to sign the agreement, which he alleges is void and of no binding force. This is the substance of the answer, to which. a specia,l reply is interposed, disclaiming the fraud charged.. The facts are these: The defendant· held the note of the plaintiff for $4,000, with interest at 6 per cent., payable semi-annually, executed July 20, 1876, payable three years after date, and secured by a mortgage upon ·property described as follows, and denominated the' "Cave property," towit: Beginning at a point on the north boundary line of 10*, numbered four, (4,) of section numbered twelve, (12,) in town< numbered (28,) of range numbered three, aistant six hundred and five and 54-106 feet west
ELFELT V. HART.
subsequent interview attempted to obta:n the defendant's conBent to a compromise which, in substance, was that the plaintiff would pay $2,000 on the mortgage, if he could raise it or borrow it, and give a new note for $2,000, payable in three yeara, giving a satisfactory security for the same by mortgage; and the defendant, in consideration therefor, should waive all accrued interest, and release the mortgage he then held from the property embraced in it, urging that on account of his financial condition he could make no better proposition, stating that "the property is all I have that I can use for the purpose of paying my indebtedness." On a subsequent meeting the plaintiff reiterated his former statement, and told the defendant "that in times like these I did not think I was asking too much to have the whole interest thrown off." The plaintiff also told the defendant that his ability to carry out the offer made to· pay $2,000 depended upon his ability to raise or borrow the money from a friend. The plaintiff finally induced the defendant to accept the proposition, and immediately went out to raise or borrow the money. He had in his possession a draft for $2,000, and, proceeding to the office of Messrs. Young, Smythe, Field & Co., he exchanged his draft for their check on a Philadelphia bank, and, returning to the defendant, stated that he had borrowed the money ($2,000) from So friend, and the agreement above set forth was executed by. the defendant, and the $2,000 check paid over by plaintiff. After obtaining the agreement to release the mortgage, the plaintiff, in his evidence, says: "I told the brother of Mr. E. Hart that I had already sold the property, and in reply to his question, why I had not told Mr. E. Hart, I answered I knew human nature too well; that, if I had done so, Mr. E. Hart would certainly not have made any reduction in interest." The plaintiff, when he went to Philadelphia, obtained a statement of the amount of delinquent taxes, and, at the first interview, when the defendant said he was worried about the taxes, asked him "if, at the time he telegraphed about the taxes, he (plaintiff) had offered the property in payment of the mortgage, whether he would have accepted it," and re-
ceived a negative answer from the defendant, who said he could not afford to. The plaintiff, as he says, made the inquiry for the purpose of drawing out the defendant and ascertaining how much he needed the money, and what he could accomplish in the way of having the interest deducted. The defendant was exercised about losing the property on account of unpaid taxes, and the plaintiff exhibited to him the tax statements, evidently for the purpose of increasing his anxiety, and· repeatedly told him he could not pay the interest. And he withheld from him the information that the property was already sold, because, as he says, "1 did not wish to tell him. If I had, he certainly would not have been disposed to deduct the interest, and that was my only reason." He also told him "that the property had passed to the state, and could only be redeemed by him or myself." The defendant received the $2,000, signed the agreement, and on the next day discovered that the property had been sold. When the plaintiff came to obtain the release or give a plat of the property, to be embraced in the new mortgage, the defendant declined to carry out the agreement, saying that he had been deceived and misled; but he made no ofTer to restore the $2,000. These are the principal facts as they appear chiefly from the plaintiff's testimony. Leaving out the testimony introduced by the defendant, and examining the case upon the plaintiff's evidence, 1 do not think he is entitled, in equity, to a strict performance of the agreement by the defendant. It is impossible to read the plaintiff's testimony without arriving at the conclusion that he desired to make a compromise to his own advantage, without putting the defendant upon the same level, and not only concealed facts which, if known, would, in his own opinion, have influenced the defendant's action, but also induced him to believe that no redemption of the property for non-payment of taxes could be made from the state by anyone but the defendant and himself, at the time, the property had been sold, and, by the terms of the sale, the railroad company were to reserve from the purchase price enough to pay taxes and redeem the propI
ELFELT v. HART.
erty. Equity will not uphold such action, and no advantage can be obtained by such conduct. While the counsel for plaintiff does not concede this, in terms, yet he urges that the defendant, having retained the $2,000 received from the plaintiff under the contract, has affirmed it, and cannot, without placing the plaintiff in the position he occupied before the agreement was entered into, avail himself of facts which show that he was overreached and deceived, and that defendant cannot rescind the contract and retain the $2,000 paid by the plaintiff, and, having retained it, has elected to affirm and abide by the contract. The general doctrine is well stated that the party who has been induced to enter into a contract by fraud may either rescind or affirm it. If he rescinds, and has received something of value under the contract, he must restore the same to the other party. But it is not always necessary for the injured party, even where fraud taints a contract, to rescind it in order to resist its full operation. He may permit the contract to be amended so as to conform to fair dealing, and if, under the pleadings and the relief prayed, a court of chancery can enter a decree which would be just and fair, and in accordance with equity, it will do so. 2 Paige, 390; 1 Pet. 383. ' The defendant had no knowledge of the sale of the erty. He was anxious about the security of his loan, upon which no interest had been paid for over two years, and the land mortgaged forfeited to the state for non-payment of delinquent taxes. The plaintiff, while quieting his .feelings about the taxes, was still making an effort to obtain a compromise with the defendant, and concealed information of the status of the property, and indirectly induced the through fear of loss, to consent to the compromise, while fair' dealing required a frank statement from the plaintiff, so that the defendant would not be misled. I think the defendant is entitled to the protection of the court and relief against the conclusive operation of the
ment, SO far as it had the effect to remit the interest which had accrued upon the loan. The defendant accepted the $2,000, and now retains it. There is no reasonable objection to the mortgage security tendered for $2,000, and this is the correct test, in my opinion, of "satisfactory security" mentioned in this agreement. The only matter really in dispute is the interest on the sum of $4,000 up to the date of the agreement, December 24, 1878; and the plaintiff has executed the new note and mortgage for $2,000, drawing interest at 6 per cent. froQl December 24, 1878, bearing date April 24, 1879, and the same is now tendered, in court, to the defendant. The court has the subject completely before it-to enable a final determination of the case-and, upon full consideration, has come to the conclusion that a decree should be entered in the case in favor of the plaintiff conditionally. It is therefore ordered, that a decree be entered adjudging that the defendant, upon the payment of the sum of $700 by the plaiutiff-which is the amount of interest upon the original loan of $4,000, computed to the date of the new agreement, and the interest upon the $2,000 note tendered, up to December 24, 1879-execute and deliver a release and satisfaction of the $4,000 mortgage; provided, that the property described in the new mort· gage is free from all encumbrances, including taxes, and the title in the grantors.
WSI.I.S v. THJ£ SOUTHtRN MINNtSoTA RAILWAY COMPANY.
(Oircuit Oourt, D. Minnesota. March,1880.)
RAILROAD-FORECLOSURE DECREE-TERMS "SERVANT" AND "EMPLOYE" CONSTRUED.-An act of the legislature of the state of :I\1innesota provided that in a foreclosure sale of a railroad, the court granting the fo(eclosure decree should provide in such decree, or otherwise, that the purchaser should "fully pay all sums due and owing by such ... ... foreclosed railroad company to any servant or employe of such company." Held, that the terms "servant" and "employe" did not ina secretary of such railroad company.
WELLS V. SOUTHERN MINN. RY. 00.
Cause tried before the court without a jury. H. Emmons and John B. Sanborn, for plaintiff. H. J. Horn, for defendant. NELSON, J. The defendant company was organized after foreclosure and sale by the purchasers under an act of the legislature of the state of Minnesota, approved March 6, 1876. This act contained the following proviso: "Provided however, that such court (the court granting decree) shall provide in such foreclosure decree, or otherwise, that such purchaser or purchasers, shall fully pay all sums due and owing by such defaulting and foreclosed railroad company to any seryant or employe of such company." In 1872 a suit was commenced to foreclose the Southern Minnesota Railroad Company, as to part of its line, by the trustees, under certain mortgages given to secure the bonds issued by the company. On November 23, 1873, a receiver was appointed, who took possession of the mortgaged property. A decree of foreclosure was entered May 27, 1874, and on December 27, .1876, the decree was modified so as to allow a sale in the interest of second lien holders, subject to the lien of the first mortgage bondholders, and on sale being made, February 10, 1877, the defendant company was organized by the purchasers. The plaintiff brings this suit to recover compensation at the rate of $2,500 per annum, as secretary of the old company from June 1, 1874, at which time he claims he was elected, until June 19, 1876. At the time of his electIOn the mortgaged property, including 167 miles of completed railroad, was in possession of the receiver, and the stockholders had no right to select their own agents for the management of the corporation; at least, the mortgaged property. It is urged by the defendant that the act of March 6, 1816, which also contains this proviso, "that nothing herein contained shall be construed to change or impair the force of any decree of foreclosure heretofore made, or any of the terms or provisions thereof," relieves this defendant from the operation of this statute. It is unnecessary to decide this point,