Sivut kuvina
PDF
ePub

the performance by the plaintiff of the contracts which had been entered into by the firm with their customers, would not be canceled in equity on the ground that the condition had been performed, and that the plaintiff's surety refused to deliver up the money deposited with him as security until the bond was discharged, since the plaintiff might perpetuate his evidence of performance (under a statute in force in that state), and since the defendant's right to retain the bond was not affected by plaintiff's contract with his surety."5

66

§ 163. Same; Payment or Discharge of Obligation.Where a debt evidenced by a promissory note, a bond, a mortgage, or other security has been fully paid or otherwise discharged, but the instrument remains outstanding, so as to constitute an apparent liability of the maker and threaten to cause him trouble, he may obtain relief in equity by a decree for its surrender and cancellation. Thus, where an insurance company is not entitled to be subrogated to any of the mortgagee's rights under the mortgage, upon paying him the amount of the mortgage after a loss, and taking an assignment of the mortgage and notes secured by it, the mortgagor may maintain an action against the company to compel the cancellation of the mortgage on the ground that the debt has been paid."7 Even where the holder of the outstanding obligation claims that there is a balance yet unpaid, if the maker of the obligation alleges full satisfaction of it, this issue may be tried and determined in an action for its cancellation.68 And where the claim is made that an obligation for the pay

65 Brown v. Boyd, 158 Mass. 470, 33 N. E. 568.

66 Hartley v. Matthews, 96 Ala. 224, 11 South. 452; Travelers' Ins. Co. v. Jones, 16 Colo. 515, 27 Pac. 807; Fitzmaurice v. Mosier, 116 Ind. 363, 16 N. E. 175, 19 N. E. 180, 9 Am. St. Rep. 854; Rickle v. Dow, 39 Mich. 91; Hoberg v. Haessig, 90 Mo. App. 516; Canon v. Ballard, 62 N. J. Eq. 383, 50 Atl. 178; Overall v. Avant (Tenn. Ch. App.) 46 S. W. 1031; Wofford v. Thompson, 8 Tex. 222. But compare Mercantile Bank of Norfolk v. Pettigrew, 74 N. C. 326, holding that one who has paid a note without taking it up, or taking a receipt or other acquittance therefor, cannot maintain an action to have the note canceled.

67 Loewenstein v. Queen Ins. Co., 227 Mo. 100, 127 S. W. 72. 68 Miller v. Rouse, 8 Minn. 124 (Gil. 97).

BLACK RESC.-28

ment of money has been satisfied, not by payment in money, but by the substitution of other securities, or by the delivery and acceptance of chattels in lieu of cash, equity may decree the cancellation of the obligation, if the evidence is clear and convincing.69

70

But while the courts of equity have undoubted jurisdiction thus to cancel instruments which have been paid or otherwise performed, this is a power which should be exerted only in the exercise of a sound discretion, and in the absence of any power in the courts of law to afford adequate and complete relief. It has been said that the maker of a note which has been paid by a third party, in pursuance of an agreement, should not be required to await an attack, but should be entitled to use the facts on which he relies, if they are sufficient, as an offensive weapon, to obtain the cancellation and surrender of the note.71 But a more conservative doctrine is that, in cases of this kind, equitable relief should not be given unless it appears that from lapse of time the defense of payment may fail, or that there is reason to apprehend vexatious suits by the holder of the outstanding obligation, or that there is some other recognized ground of equitable intervention."2 In an interesting case in Alabama, where the mortgagee of chattels converted the mortgaged property after the debt had been paid and the legal title had revested in the mortgagor pursuant to statute, it was held that he could not sue in equity to compel the surrender of the mortgage and its cancellation, because he had an adequate legal remedy by an action of detinue to recover the property, or an action of trover or trespass to recover damages for its conversion; and if the mortgagee took the property by writ of seizure after payment of the debt, and brought detinue to recover it, the mortgagor could set up payment of the debt by way of defense, and if he omitted to do so, and permitted judgment to go against him, he could not then seek the aid of

69 Leigh v. Citizens' Sav. Bank, 31 Ky. Law Rep. 251, 102 S. W. 233; Bradley v. Kinkead, 16 Ky. Law Rep. 238.

70 Butler v. Durham, 2 Ga. 413.

71 French v. Bellows Falls Sav. Inst., 67 Ill. App. 179.

72 Dorman v. McDonald, 47 Fla. 252, 36 South. 52; Loggie v. Chandler, 95 Me. 220, 49 Atl. 1059.

equity to obtain a cancellation of the mortgage." And it is ruled that a court of equity will not order the cancellation of a real estate mortgage securing a just debt which has not been paid, at the suit of the mortgagor or of one standing in his place, when the only ground for relief is that the statute of limitations would be available as a defense against its foreclosure."

74

§ 164. Depreciation in Value of Consideration.-That a consideration, stipulated to be given and agreed to be accepted, has depreciated in value before the execution of the contract is not ordinarily ground for rescission, unless the party against whom the rescission is sought is in some way to blame for the shrinkage. The rule on this point is that the right to rescind a contract exists when there has been a material change in the subject-matter, before the final consummation of the agreement, brought about by the act or delay of one of the parties, which the party rescinding did not authorize or assent to." Thus, where a debt is presently payable in the stock of a corporation, and the debtor delays the payment for a long time and until the stock loses its value, there is such a change of the circumstances existing at the time of the contract as will in equity relieve the payee from accepting the stock in payment.76 In a case in Michigan, the defendant, while owning stock in a corporation, agreed with plaintiff to exchange such stock for land. The deed to the land was executed and placed in the hands of a third person to be delivered when the stock was transferred on the books of the corporation. At a meeting of stockholders, action was taken (in which the defendant participated) to sell and convey all the assets of the corporation for 60 cents on the dollar, leaving the corporation insolvent. The defendant then obtained the transfer of his stock to the plaintiff, and secured the deed to the land without the plaintiff's knowledge. It was held that the plaintiff was authorized to rescind the contract,

73 Hardeman v. Donaghey, 170 Ala. 362, 54 South. 172.

74 Tracy v. Wheeler, 15 N. D. 248, 107 N. W. 68, 6 L. R. A. (N. S.) 516. And see Sartor v. Wells, 39 Colo. 84, 89 Pac. 797.

75 Harris v. Piatt, 64 Mich. 105, 31 N. W. 135. 76 Demarest v. McKee, 2 Grant Cas. (Pa.) 248.

and that equity would cancel the agreement." And a similar ruling was made in a case where land was conveyed on condition of the rendition to the grantor of a certain proportion of the crops each year, but the grantee refused to perform and allowed the land to run to waste.78 But a vendee cannot refuse a title to land on the ground that it has depreciated in value since the contract was made, when the vendor is not responsible for the delay in conveying the title.79

§ 165. Forged and Counterfeit Documents and Stolen Goods. On the ground of a failure of consideration, a buyer may recover the price paid to the seller, who has warranted the title, when the goods for which the money was paid turn out to have been stolen goods, and the buyer has been compelled to surrender them to the true owner.80 And so, when a note, bill, bond, certificate of corporate stock, or other instrument proves to have been a forgery, the buyer may rescind and recover the price paid, on the ground that the consideration has failed.81 The indorsement and transfer of an overdue town order by the payee, for value, raises a contract on his part that the order is genuine and is the legal promise of the town which it purports to be; and the purchaser of it, after it has been adjudged void, may elect to sue such indorser upon his contract, and recover the contents of the order according to its tenor, or to sue for the consideration which he paid for it, with interest.82

§ 166. Want of Value No Ground for Rescission Where Consideration is Delivered as Stipulated.-Where a party obtains what he contracted for, he cannot avoid his contract on the ground that what he received is less valuable than he supposed or that it has no value at all, unless he shows

77 Harris v. Piatt, 64 Mich. 105, 31 N. W. 135.

78 Teague v. Teague, 22 Tex. Civ. App. 443, 54 S. W. 632. But see Navarro Pub. Co. v. Fishburn, 2 Posey, Unrep. Cas. (Tex.) 587. 79 Styles v. Blume, 12 Misc. Rep. 421, 33 N. Y. Supp. 620.

80 Eichholtz v. Banister, 17 C. B. (N. S.) 708.

81 Westrop v. Solomon, 8 C. B. 345; Jones v. Ryder, 5 Taunt. 488; Gurney v. Womersley, 4 El. & Bl. 133.

82 Furgerson v. Staples, 82 Me. 159, 19 Atl. 158, 17 Am. St. Rep.

fraud or a mistake as to the subject-matter of the contract. Thus, equity will not relieve against a purchase of land, on the ground of failure of consideration, where the purchaser has received the particular land bargained for, irrespective of its value, if the purchase was not induced by fraud or misrepresentation. So, where a person bought the exclusive right of using a patent in a foreign country, being aware at the time of the purchase that no exclusive right to use the process there could be obtained, but desiring an ostensible grant of the exclusive right with the object of floating a company, it was held that, as he had obtained what he desired and intended to buy, he could not recover the purchase money on the ground of a failure of consideration.85

§ 167. Chancing Bargains and Speculative Purchases.Equity looks with very little favor on the plea of a want or failure of consideration, when the complaining party entered into the transaction with full knowledge of its highly speculative character, and with apparent willingness to take the risk of great loss as against the chance of great profit. Thus, the purchaser of a supposed onyx mine is not entitled to rescission though the stone turns out to be limestone, where both the parties understood that the result of a test was uncertain, and the purchaser knew that if the stone proved in advance to be onyx he could not purchase for the price he paid. So, where a party advances several thousand dollars to develop a silver mine, in consideration of which he is to be repaid out of the first product, and to receive in addition a fractional interest in the mine, the contract cannot be avoided on the ground that the property to be conveyed is uncertain, or that the enforcement of the contract would work hardship.87 A similar rule is applied where the subject of sale is a disputed or litigated title to realty. Thus, in a case in West Virginia, defendant induc

86

83 Fay v. Richards, 21 Wend. (N. Y.) 626; Wolford v. Powers, 85 Ind. 294, 44 Am. Rep. 16.

84 Pollard v. Lyman, 1 Day (Conn.) 156, 2 Am. Dec. 63. 85 Begbie v. Phosphate Sewage Co., L. R. 10 Q. B. 491.

86 Hood v. Todd, 22 Ky. Law Rep. 837, 58 S. W. 783. 87 Waterman v. Waterman (C. C.) 27 Fed. 827.

« EdellinenJatka »