59 Mass. 126 - Martin v. Roberts — 59 Mass. 126

Richard Martin vs. William S. Roberts. Whore the vendor of an article received in payment therefor a promissory note of a third person, falsely and fraudulently represented by the vendee to be solvent, together with an order on a third person for goods, which was duly paid, and the vendor returned the note to the vendee, on discovery of the fraud; it was held, that the vendor might maintain an action of assumpsit to recover the price of the article sold, deducting therefrom the amount of the order, without returning the latter. This was an action of assumpsit, on an account annexed, to recover a balance of $90, on the price of two watches sold by the plaintiff to the defendant. The defendant filed a specification of defence, admitting the purchase of the watches, and alleging payment of the price thereof, by a note of John Thing, for $116, and an order for groceries for $10. The plaintiff, admitting the facts alleged in the specification, insisted that the note was received by him upon a false and fraudulent representation of the defendant, and was wholly worthless, and that on the discovery of the fraud, he returned the note to the defendant. At the trial, before Bigelow, J., in the court of common pleas, it was in evidence, that, at the time of the sale and purchase of the watches, the defendant represented Thing as solvent, and as able to pay the note, and that the same would be paid at any time, on presentment; that, in fact, Thing was then insolvent, and wholly unable to pay the note, and so known to be by the defendant; and that the plaintiff, on discovering that the representation was false, within a few days after receiving the note, returned it to the defendant; but there was no evidence, that the plaintiff ever returned or offered to return the order for groceries, or its value in cash or kind, but the amount of it was credited to the defendant on the account annexed to the writ. Upon this evidence, the presiding judge instructed the jury, that if the defendant knowingly made false and fraudulent representations of the solvency of the promisor; and the plaintiff was induced solely by such representations to receive the note in payment; and the note was in fact Avorthless; the plaintiff might credit the defendant with the amount of the order for groceries, and recover for the balance as above stated. The jury returned a verdict for the plaintiff, for the balance of the account, and the defendant alleged exceptions. M. S. Chase, for the defendant. The plaintiff cannot rescind the contract in part, without rescinding it wholly. Kimball v. Cunningham, 4 Mass. 502; Thurston v. Blanchard, 22 Pick. 18; Perley v. Balch, 23 Pick. 283; Conner v. Henderson, 15 Mass. 319; Coolidge v. Brigham, 1 Met. 547; 2 Greenl. Ev. § 602; Finch v. Brook, 1 Bing. N. C. 253. The form of action is wrong; the plaintiff should have sued in tort. Jones v. Hoar, 5 Pick. 285; Allen v. Ford, 19 Pick. 217. J. Field, for the plaintiff. — Dewey, J. (majority) Dewey, J. The case presented by the bill of exceptions is an action of assumpsit, to recover the balance due for certain articles sold by the plaintiff to the defendant. At the time of the sale, the plaintiff received as payment an order for groceries to the amount of ten dollars, which was duly accepted and paid; and for the residue of the price, a worthless note of hand of a third person, which he received wholly upon the representation of the defendant, that the promisor was a responsible person, and that payment of the note would be made on demand; when in fact the promisor was wholly insolvent, and the note was of no value. It further appeared, that the defendant, at the time he thus delivered the note to the plaintiff, knew of the insolvency and inability of the promisor to pay the same. This note the plaintiff had returned to the defendant. The defendant insists, that this action cannot be maintained, inasmuch as the plaintiff has not returned the order for groceries; taking the position that without returning the entire con sideration, the plaintiff has no right to maintain his action for the price or any part thereof. Various authorities were cited by the counsel for the defendant, to establish the doctrine, that if a party would rescind a contract entered into through fraud or misapprehension, he must return the whole consideration received. In the case of rescinding a contract, in the full and proper sense of the term, this may be so ; but the doctrine has no application to a case like the present. If the plaintiff had sought to recover, in an action of replevin, the specific articles sold to the defendant, and had not returned the order for groceries, the objection might have been well taken, that before the plaintiff could enforce a claim to property in the articles thus sold, he must restore to the other party all the valuable consideration that he received from him. But the plaintiff does not seek to rescind the contract of sale, or to reclaim the property sold by him to the defendant. He gives full effect to the sale; he counts upon it in his writ; and only seeks to recover damages by reason of non-payment for the same. Such non-payment, he seeks to establish by proof, that so much of the payment, as was to be realized from the note of John Thing, has entirely failed to be realized, by reason of the worthlessness of that note; which note, it is agreed, was taken upon the false and fraudulent representation of the defendant as to the solvency of the maker. This being the case, the defendant has failed, to the amount of this note, to pay the plaintiff for the articles bought of him. It is as though no such note had been delivered to the plaintiff ; and to this extent the plaintiff is the creditor of the defendant on account of the articles sold. The principle, upon which the right of the plaintiff to recover rests, is a very clear one, and will entitle him to retain his verdict. The supposed payment has proved delusive. The vendor received in payment an article of no value, and this through the fraudulent representation of the defendant. He may demand that this loss may be made good to him. Puckford v. Maxwell, 6 T. R. 52; Young v. Adams, 6 Mass. 182, and cases there cited. Holding, as this court does most fully, that the vendee, in an action against him by the vendor for the stipulated price, may give in reduction of damages any claim he may have, by reason of any false representation as to the quality of the article sold; it seems equally reasonable and proper, that the vendor also should, in answer to the defence of payment, have the like opportunity to show, that in such payment the vendor was fraudulently imposed upon, and that what was received as supposed payment was in truth of no value. The case stated in the bill of exceptions, presenting a case of fraudulent representations made by the defendant, as to the value of the note of John Thing, and of consequent damage to the plaintiff, the plaintiff may recover to the extent of the loss he has sustained, by reason of the worthlessness of the note thus received by him in payment-of the articles sold. Exceptions overruled.