Kinney v. . Kiernan , 49 N.Y. 164 ( 1872 )

The evidence given by the plaintiff showed that Gill Co., by fraudulent representations, induced him to sell and deliver to them seventy-seven barrels of whisky, and receive in payment of the principal part of the purchase money checks upon a bank in Troy, drawn by Nat. Wood, which were, substantially, worthless, the residue remaining unpaid. That upon the discovery of the fraud the plaintiff at once commenced a search for the liquor and succeeded in tracing about thirty barrels in the hands of different persons; ten of which he found in the hands of the defendants, who claimed to have purchased the same of Gill Co., but the evidence tended to show that they were not purchasers in good faith. The plaintiff demanded the liquor of the defendants, and upon their refusal to deliver the same commenced this action for the recovery of its value. Upon these facts the plaintiff's action was well brought, and his right of recovery for the liquor established. It was not necessary for him to show that he had given notice to Gill Co. of his intention to rescind the contract, or that he had tendered to them the checks of Wood. His right to seize the liquor in the hands of the defendants was perfect without the performance of these acts. (Stevens v. Austin, 1 Met., 557; Nellis v.Bradley, 1 Sand., Superior Court, 560; Pearse v. Pettis, 47 Barb., 276.) The act of the plaintiff in demanding the liquor in question of the defendants and prosecuting them for its conversion, would show his election to rescind the entire contract on account of the fraud practiced by Gill Co. The plaintiff could not rescind as to the ten barrels in question, leaving the contract of sale valid as to the residue, but must rescind the entire contract in toto, if at all. (Voorhees v.Earl, 2 Hill, 288; Wheaton v. Baker, 14 Barb., 594;Goelth v. White, 35 Barb., 76.) An election to rescind, when distinctly made, cancels and puts an end to the contract intoto, and restores the vendor to his original title as owner of the property, and leaves the parties in their original position as to the title. (Stevens v. Hyde, 32 Barb., 171.) It follows that a rescission of the contract would constitute a bar to an action brought by the vendor against the purchaser upon the contract of sale for the recovery of the price of the goods. That contract is terminated by the rescission, and has no validity whatever thereafter. (Morris v. Rexford, 18 N.Y., 552.) Where the right of election exists and the party has once made his election he is concluded thereby, and can, thereafter, maintain no action inconsistent with the rights acquired by such election. (Id.) It follows that when the plaintiff exercised his right to rescind the contract on account of the fraud of Gill Co. in the purchase, by asserting his title to the liquor in the hands of the defendant, he could not, thereafter, maintain an action against Gill Co. upon the contract of sale for the recovery of the purchase price, although he could recover against them for the wrongful conversion of such quantity of the liquor as he had not obtained satisfaction for from third persons. This remedy would not have been inconsistent with the rescission of the contract of sale, but in accordance with the rights of the plaintiff so acquired. When the plaintiff, after the commencement of the present action, commenced an action against Gill Co., upon the contract of sale for the recovery of the price of the entire liquor sold, the latter might have set up the rescission of the contract as a defence to the action. (Morris v.Rexford, supra.) But this they did not do, but settled the action with the plaintiff by giving notes for a part of the purchase price, and by a further stipulation that they should retain the checks of Nat. Wood received upon the sale, with the right of collecting the same against him. The counsel for the appellant insists that this only settled the claim of the plaintiff against Gill Co. for that part of the liquor sold which he was unable to find. But the action was for the purchase price of the entire liquor sold, based upon the contract of sale. The evidence conclusively proved that this action was settled, and not a claim for the conversion by Gill Co. of any part of the liquor while the property of the plaintiff. Beside, the plaintiff under the agreement was to retain his right to the checks of Nat. Wood, received by him upon the sale of the property. What was this right? Title to the checks acquired under the contract of sale. Retaining this right was recognizing and acting upon the contract of sale as still subsisting and valid between the parties. It was competent for the parties to do this notwithstanding the suit against the defendant. This recognition and act by both vendor and purchaser made the contract valid and binding in respect of their rights. It gave to Gill Co. a valid title, under the contract of sale, to all the liquor included in the purchase which they had not already disposed of. The plaintiff could not thereafter assert any title to such liquor on the ground of the rescission of the contract. This title was made valid under the original purchase from the time of the delivery to Gill Co., and embraced not only such liquor as they had not sold, but all the liquor included in the purchase. It would scarcely be contended that, after this recognition by the plaintiff of the contract of sale as valid and subsisting, he could have commenced an action and recovered therein for the conversion of any of the liquor upon the ground that he had not parted with the title. He had thereby incapacitated himself from claiming title upon the ground of rescission not only against Gill Co. but as against all claiming title under them. But it is claimed by the counsel for the appellant that this difficulty was obviated by the proof given that it was not intended to settle for the liquor for which this action was brought against the defendants, and that the exclusion of this liquor from the writing was the result of a mistake. We have already seen that the plaintiff must rescind the contract in toto, or not at all. He could not claim title to the ten barrels of the defendants upon the ground of a rescission, and at the same time retain his right to prosecute Nat. Wood upon the checks, or the defendant upon the contract of sale. By doing the latter he precluded himself from doing the former. The fact that the settlement of the action against Gill Co. was not to be deemed final until all the notes given to the plaintiff were paid does not affect the question. Gill Co. had acquired the right to make it final, by payment. Three of the notes had matured and been paid. The last was not due at the time of the trial of this action at the circuit. This gave the plaintiff no right to reclaim any of the liquor as upon a rescission of the contract against Gill Co. or any one else. The judge was right therefore in directing a verdict for the defendant, and the judgment of the General Term affirming the judgment entered thereon must be affirmed with costs.

For reversal, CHURCH, Ch. J., RAPALLO, PECKHAM and FOLGER, JJ. For affirmance, GROVER and ALLEN, JJ.

Judgment reversed and new trial ordered; costs to abide event.