ments been true. This last form of redress, however, is not based on fraud, and has been sufficiently considered in connection with warranty. But as has been seen in an earlier section 13 in many States the measure of damages in an action of deceit has been assimilated to the measure of damages appropriate for breach of warranty. The other instance where the defrauded party in effect can compel the fraudulent party to make good his representations is illustrated by the rule that reformation may be had of a written contract or conveyance for fraud. If through the fraud of one party and mistake of the other the writing does not conform to the agreement between the parties, equity will rectify it. 14

§ 1524. Action of damages for deceit.

The right of one who has suffered damage by fraudulent representations to bring an action for deceit needs no citations of authorities. In order to maintain such an action where benefit has been received by the plaintiff, it is not necessary that such benefit be returned. The defrauded party may retain this benefit and sue for the damages he has suffered.15 Nor need demand be made before suit16 It is of course essential to the right of action that some damage shall have been suffered, and it has been urged that where a contract induced by fraud is still wholly executory on both sides at the time the fraud is discovered, no damage is suffered by the defrauded party since the fraud furnishes a complete defense to the enforcement of the contract. According to this view, therefore, performance of

13 Supra, § 1392.

14 See infra, § 1525.

15 Binghampton Trust Co. v. Auten, 68 Ark. 294, 299, 57 S. W. 936, 82 Am. St. Rep. 295; Herfort v. Cramer, 7 Colo. 483; Nysewander v. Lowman, 124 Ind. 584, 24 N. E. 355; Ligon v. Minton (Ky.), 125 S. W. 304; Andrews v. Jackson, 168 Mass. 266, 47 N. E. 412, 37 L. R. A. 402, 60 Am. St. Rep. 390; Elliott v. Brady, 192 N. Y. 221, 85 N. E. 69; Smith v. Salomon, 172 N. Y. S. 515; McCabe v. Kelleher (Oreg.), 175 Pac. 608. See also cases

cited in the following note. A defrauded seller may prove in the buyer's bankruptcy for the price, and thereafter sue him for deceit. Talcott v. Friend, 179 Fed. 676, 103 C. C. A. 80, 43 L. R. A. (N. S.) 649.

16 Morrow Shoe Mfg. Co. v. New England Shoe Co., 57 Fed. 685, 692, 18 U. S. App. 256, 616, 24 L. R. A. 417, 6 C. C. A. 508; Farwell v. Hanchett, 120 Ill. 573, 577, 11 N. E. 875; Parker v. Simpson, 180 Mass. 334, 62 N. E. 401.

the contract by the defrauded party under these circumstances is an unnecessary act, and no damages can be recovered.17 If this doctrine is logically carried out, however, it would be necessary also to hold that if the contract though not wholly executory is capable of rescission, and if thereby the parties can be restored to their former situation, no recovery can be had in deceit, because no damage has been suffered. It seems more accurate, however, to hold the damage is caused by the original transaction. Even if this is merely an executory contract, the contract is not void, and the result of the fraud is the existence of a contract to which the defrauded person is a party. Moreover, as has been previously shown, 18 in most jurisdictions recovery is allowed on false representations on the basis of warranty; that is, the plaintiff recovers, not the damages caused by being induced to enter into the transaction, but the damages he suffers by the failure to make good the representations. Accordingly it is generally held that one who has been defrauded may, though the contract is executory, affirm the contract and perform it without forfeiting his right to recover damages for deceit. Certainly where the contract is even partially executed this result is clearly sound. 19 The right to damage may be asserted by the defrauded person not only as plaintiff but as defendant. By recoupment, or counterclaim, he is allowed to deduct his damages when sued for failure to perform his obligations under the bargain.20

"Thomas v. Birch (Cal.), 173 Pac. 1102; St. John v. Hendrickson, 81 Ind. 350; Thompson v. Libby, 36 Minn. 287, 31 N. W. 52; McCabe v. Kelleher (Oreg.), 175 Pac. 608.

13 Supra, § 1392.

19 Matlock v. Reppy, 47 Ark. 148, 14 S. W. 546; Williams v. McFadden, 23 Fla. 143, 1 So. 618, 11 Am. St. Rep. 345; Dowagiac Mfg. Co. v. Gibson, 73 Iowa, 525, 35 N. W. 603, 5 Am. St. Rep. 697; Haven v. Neal, 43 Minn. 315, 45 N. W. 612; Nauman v. Oberle, 90 Mo. 666, 3 S. W. 380; Whitney v. Allaire, 4 Denio, 554, 1 N Y. 305; Allaire v. Whitney, 1. Hill, 484; Grabenheimer v. Blum,

63 Tex. 369; Mallory v. Leach, 35 Vt. 156, 82 Am. Dec. 625. In Cain v. Dickenson, 60 N. H. 371, the defrauded person when performing expressly reserved his right to sue for the fraud.

20 Wilson v. New United States Cattle Ranch Co., 73 Fed. 994, 36 U. S. App. 634, 20 C. C. A. 244; Lilley v. Randall, 3 Colo. 298; Sharp v. Ponce, 76 Me. 350; Gent v. Ensor, 41 Md. 24; Perley v. Balch, 23 Pick. 283, 34 Am. Dec. 56; Sanborn v. Osgood, 16 N. H. 112; Lukens v. Aiken, 174 Pa. St. 152, 34 Atl. 575. See also in regard to similar procedure for breach of warranty, supra, §§ 1391, 1464.

It is commonly said that the right to recover damages may be waived. Doubtless election to rescind the transaction operates as a bar to the right to recover damages. 21 And a right of action for deceit may be settled in the same way as any other right of action by a release under seal, or by a compromise or accord and satisfaction accompanied by sufficient consideration. In most if not all the cases relied on as showing the possibility of waiving a right to sue for fraud, the elements of accord and satisfaction will be found. That an assent or agreement or rescission without consideration or formal release will discharge a right of action for deceit already accrued cannot be admitted. 22

§ 1525. Rescission and restitution reformation.

The alternative remedy of rescission and restitution is in its origin equitable, though now relief can generally be obtained at law. If the defrauded party has parted with nothing, but has merely entered into an executory obligation by simple contract it needs no citation of cases to establish the point that he may plead the fraud as a defense. If the obligation was under seal, this was not allowed in England prior to the Common Law Procedure Act of 1854; 23 and the early law in the United States was the same.23" It was necessary to apply to equity for an injunction. As an unconditional perpetual injunction would be granted, 236 it followed that as soon as equitable pleas were allowed at law the defense became available without application to equity. If the defrauded person has parted with property which he wishes to regain, he is compelled to become an actor. Where the property is of a sort requiring formal transfer of F. & F. 393; Ames, Legal Essays, 106.

21 In Cohoon v. Fisher, 146 Ind. 583, 44 N. E. 664, 45 N. E. 787, it was held that an action to rescind a contract might be amended into an action to recover damages for the fraud alleged to have been committed, but this seems unsound, as the assertion of the right to rescind without even beginning a suit seems a conclusive election. See infra, § 1469.

22 See supra, §§ 678 et seq.

23 Mason v. Ditchbourne, 1 M. & Rob. 460; Wright v. Campbell, 2

230 George v. Tate, 102 U. S. 564, 26 L. Ed. 232; Vandervelden v. Chicago & N. W. Ry. Co., 61 Fed. Rep. 54; Halley v. Younge, 27 Ala. 203; Gage v. Lewis, 68 Ill. 604, 613; Huston v. Williams, 3 Blackf. 170, 25 Am. Dec. 84; Burrows v. Alter, 7 Mo. 424; Stryker v. Vanderbilt, 1 Dutch. 482; Dale v. Roosevelt, 9 Cow. 307; Wyche v. Macklin, 2 Rand. 426.

236 Lovell v. Hicks, 2 Y. & C. Ex. 46; Ames, Legal Essays, 106.

title, as land or shares of stock, it will generally be necessary for him to get the aid of a court having equity powers in order to bring about a restoration of the former status. The test of equity jurisdiction is the inadequacy of available remedies at law. 23 But, as previously shown,24 in the case of chattel property a defrauded seller may regain title by trover or replevin or without the aid of a court; and a defrauded buyer may sue at law for the price which he paid. 25 It is not necessary that actual damage shall have resulted from fraud in order to justify rescission. 26 The transaction if rescinded must be rescinded as a whole. 27 Therefore, it is generally held that a seller who has sold goods on credit cannot, because the sale was induced by fraud, sue for the price before the period of credit has expired. 28 In some jurisdictions, however, either on the ground that the agreement for credit is a separate collateral agreement, or for some other reason, immediate recovery is allowed.29 Though it seems impossible to support the maintenance of an action on the contract for the price before the period of credit has expired, there seems good ground for allowing the plaintiff at once to rescind the contract and, instead of suing in trover, to waive the tort and sue in assumpsit, not for the price of the goods but for their value.30 The same reasoning as that applied to the case of sales has led to the conclusion that where one is fraudulently induced to contract to work for a specific sum, and has done the work he can recover in indebitatus assumpsit only according to the terms of the contract.31

29 Blalock v. Phillips, 38 Ga. 216; Wigand v. Sichel, 3 Keyes, 120; Crossman v. Universal Rubber Co., 127 N. Y. 34, 27 N. E. 400, 13 L. R. A. 91; Heilbronn v. Herzog, 165 N. Y. 98, 58 N. E. 759; Jaffray v. Wolf, 4 Okla. 303, 47 Pac. 496.

30 Barrett v. Koella, 5 Biss. 40; Dietz's Assignee v. Sutcliffe, 80 Ky. 650; Crown Cycle Co. v. Brown, 39 Or. 285, 64 Pac. 451. See further, 44 Cent. L. J. 380; and supra, §§ 1455, 1458.

1 Selway v. Fogg, 5 M. & W. 83; Klaus v. J. H. Flick Const. Co., 198 Ill. App. 445; Prest v. Farmington, 117 Me. 348, 104 Atl. 521.

Another remedy is applicable also for a particular kind of fraud. Where a writing owing to the fraud of one of the parties, and mistake of the other fails to express the agreement at which they arrived, reformation will be allowed. 32

1526. Time allowed for election of remedies.

33

It is generally said that a defrauded party must elect whether he will affirm the fraudulent transaction or rescind it. But a transaction though induced by fraud is not on that account void, it is only voidable. Consequently if nothing is done the transaction is not avoided, and the rights of the parties will be fixed by the agreement which they made without any manifestation of election. The right to sue for deceit which is based on the assumption that the fraudulent transaction is to stand does not, therefore, require prompt action by the injured party.3 The Statute of Limitations alone prevents excessive delay, though it is obvious that delay in asserting a right of action for fraud will tend to show both that no fraud was perpetrated and, in connection with other circumstances, that if there was fraud, any right of action that may have existed has been discharged. Setting a fraudulent bargain aside, however, is an alternative right given on equitable principles to the injured party and, therefore, if this remedy is desired it must be sought with reasonable promptness after the fraud has been discovered. 34 But

32 Rhode Island v. Massachusetts, 15 Pet. 233, 10 L. Ed. 721; Medical Society v. Gilbreth, 208 Fed. 899; Trenton Terra Cotta Co. v. Clay Shingle Co., 80 Fed. 46; Hand v. Cox, 164 Ala. 348, 51 So. 519; Hansford v. Freeman, 99 Ga. 376, 27 S. E. 706; Dazey v. Binkley, 285 III. 513, 121 N. E. 165; Koons v. Blanton, 129 Ind. 383, 27 N. E. 334; Scott v. Spurr, 169 Ky. 575, 184 S. W. 866; Hitchins v. Pettingill, 58 N. H. 386; Hayes v. Stiger, 29 N. J. Eq. 196; Green v. Stone, 54 N. J. Eq. 387, 34 Atl. 1099, 55 Am. St. 577; Walker v. Bourgeois, 88 N. J. Eq. 124, 102 Atl. 250; Cleveland v. Bateman, 21 N. Mex. 675, 158 Pac. 648, Ann. Cas. 1918 E.

1011; Welles v. Yates, 44 N. Y. 525;Kyle v Fehley, 81 Wis. 67, 29 Am. St. Rep. 866, 51 N. W. 257; Moehlenpah v. Mayhew, 138 Wis. 561, 119 N. W. 826. 33 Cottrill v. Krum, 100 Mo. 397, 13 S. W. 753, 18 Am. St. Rep. 549; Huber Mfg. Co. v. Hunter, 99 Mo. App. 46.

34 Clough v. London, etc., Ry. Co., L. R. 7 Ex. 26; Upton v. Tribilcock, 91 U. S. 45, 23 L. Ed. 203; Pence v. Langdon, 99 U. S. 578, 25 L. Ed. 420; Mudsill Mining Co. v. Watrous, 61 Fed. 163, 22 U. S. App. 12, 9 C. C. A. 415; Blank v. Aronson, 187 Fed. 241, 109 C. C. A. 327; Bowden v. Spellman, 59 Ark. 251, 259, 27 S. W. 602; Board