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osition that equity will cancel the contract in the absence of injury, but infers injury, and on account thereof will relieve against the contract in its entirety at the election of the injured party. In the contemplation of equity, for one to be defrauded in the making of a contract means that he was injured, or defrauded to his damage.

Black on Rescission & Cancellation, § 567, announces the rule in the following language: "In order to obtain a rescission of a contract, it is necessary for the complaining party to show that he has suffered actual loss or injury by reason of it, or that he is threatened with substantial loss or injury which will fall upon him if the contract is not annulled."

In § 37 he gives the reasons for the rule as follows:

"Resulting Loss or Damage to Defrauded Party.-As a general rule, a fraud which causes no injury is not legally cognizable; and it is an essential part of the definition of fraud as a cause for the intervention of equity, or for a party to take steps to rescind a contract or other obligation into which he has entered, that it should have resulted, or that it will result, in some loss, damage, detriment, or injury to him. Neither courts of law nor courts of equity exercise their powers for the purpose of enforcing moral obligations or correcting unconscientious acts which are not followed by any loss or damage; fraud and injury must concur to furnish a ground of judicial action. In the case of executed contracts, the loss, if any, will naturally have occurred before steps are taken to rescind. But in the case of executory contracts, the rule does not mean that the party complaining should have sustained actual loss at the moment of rescinding or filing his bill for rescission, but it is enough to show that such will be the inevitable result if the contract is completed according to its terms. In the state of Louisiana this has been incorporated into the Code, but it will

probably be recognized everywhere as a sound principle of equity jurisprudence. . . . If damage is shown, the extent of the injury occasioned by the fraud will not be inquired into in a suit to rescind the contract. And the injury need not be accurately measurable in money, but it is sufficient if it is of a pecuniary nature."

See authorities cited by him.

With one exception, all the authors that we have examined have announced the rule as above stated without qualification.

Cyc. vol. 9, p. 431, states it briefly, but clearly:

"Damage Must Be Shown. As in an action for deceit, so also in order to avoid a contract for false representations, it is essential that the party complaining shall have been prejudiced or injured by the fraud."

Elliott on Contracts, vol. 1, § 91, says: "Before fraud will give rise to an action for deceit, or for rescission, or before a sufficient defense can be predicated thereon in an action on the contract, the fraud practiced must result in injury. The principle of damnum absque injuria applies."

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sion.

Of course, as is pointed out in Elliott and others, the word "damage" should not be restricted to a monetary loss; that is, it need not be measured in money, but it is sufficient if the defrauded party has been induced to incur legal liabilities or obligations different ferent from from that -rescissionrepresented or con- what damage justifies. tracted for. In an

action for rescission, the amount of the damage is immaterial, provided it is substantial.

Williston on Contracts says: "It is not necessary that actual damage. Ishall have resulted from fraud in order to justify rescission." [S 1525.]

He cites only one case, that of Barnes v. Century Sav. Bank, 149 Iowa, 367, 128 N. W. 541. The holding in that case is properly summed up in the syllabus as fol

(113 Tex. 441, 251 S. W. 1034.)

lows: "False representations knowingly made with intent to deceive, or a concealment of material facts with like intent to induce one to incur an obligation which he would not otherwise have made, are grounds for rescission, although no actual damage results."

The facts of the case showed that the complaining party had by fraudulent representations been induced to incur an obligation which but for same he would not have incurred. He had not actually suffered damage, but would do so unless the contract was canceled. Therefore injury was shown.

The case first presented and most relied on by plaintiff in error as supporting his proposition that no injury need be shown is that of Spreckels V. Gorrill, 152 152 Cal. 383, 92 Pac. 1011, by the Supreme Court of California. This

case does not support the contention. The question under consideration was not whether rescission could be had without a showing of injury, but whether or not damage or injury was shown by the facts of the case, and at the threshold of the discussion the court says:

"That fraud which has produced, and will produce, no injury, will not justify a rescission, nor support an action either for rescission or damages, is an established principle of law and equity. [Italics ours.] But there is no rule that the injury must be of such a nature that it can be accurately measured in money. And we know of no rule of pleading which, in an action based upon a rescission between the parties or seeking to enforce such rescission, requires a statement that the fraud complained of had caused or would cause a specific amount of damages. It may be conceded that it must be shown that the plaintiff, by reason of the fraud, suffered an injury of a pecuniary nature, that is, an injury to his property rights, as distinguished from a mere injury to his feelings, but it will be sufficient if the facts alleged show that mate

rial injury will necessarily ensue from the fraud, although the amount of the pecuniary loss is not stated. Such injury is shown by the facts alleged in the present case."

It then quotes with approval the following by Mr. Pomeroy: "If any pecuniary loss is shown to have resulted, the court will not inquire into the extent of the injury; it is sufficient if the party misled has been very slightly prejudiced, if the amount is at all appreciable." 2 Pom. Eq. Jur. § 898.

It cites with approval Wainscott v. Occidental Bldg. & L. Asso. 98 Cal. 257, 33 Pac. 88, wherein' in cases of this kind it is held that the fraud is the essential thing; the precise amount of damage being of secondary importance. The holding of the court clearly was that damage or injury was shown, and the principle emphasized was that "one who buys property is lawfully entitled to all the benefit of the purchase; that is, to the full value of the property he buys regardless of the price he paid."

And following the language last quoted, the court uses the following language, relied on by plaintiff in error: "And it is a fundamental principle of the law of fraud that where one has, by false and fraudulent representations as to the quallieve it to be possessed of valuable ity of property, led another to bequalities and thereby wrongfully induced the other to buy the property, presumably in order to obtain the benefit of property possessing those qualities, the seller will not be allowed to show as a defense to an action for such fraud, that the property, in its actual condition, was worth the price paid, or more.'

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The court sums up its holding with: "The real question in all such cases is whether or not the property, if it had been as represented, would have been of substantially greater value than its actual value in its real condition. The price actually paid is immaterial as an element in the cause of action, though it may

be admissible evidence on the question of value."

The issue decided was not that rescission could be had without a showing of injury, but how that injury may be shown, the measure of injury or damage.

The cases of Davis v. Butler, 154 Cal. 627, 98 Pac. 1047, and Mather v. Barnes (C. C.) 146 Fed. 1004, are to the same effect.

In 1919 the Legislature of Texas enacted a statute bearing upon the rule or measure of damages in fraud cases. Complete Statutes, art. 3973b.

We have examined a number of cases from California, and it appears that the Supreme Court of California has uniformly supported the general rule announced by the text-writers and the courts of the various states of the Union, that some pecuniary injury must be shown.

The cases from the various states and from the Supreme Court of the United States are so numerous that we refrain from citing them. Many are cited by the text-writers.

We can safely say that, at least, the great weight of authority supports the rule herein announced. We think the safe and true rule is that some pecuniary injury is essential to an action to rescind a contract for fraud, as announced by Mr. Pomeroy and as has been uniformly held by this and the other courts of Texas.

We have given more extensive discussion perhaps than the subject demands in view of the former holdings of the Texas courts and the great weight of authority, but it is justified by the fact that we withdrew the case from the Commission on this issue, and in view of the earnest argument by able counsel for plaintiff in error.

Plaintiff in error in his motion for a rehearing does not contend. that the findings of the jury disclose injury to him. However, the circumstances under which the case now rests make it advisable that we should briefly review the findings.

The court propounded to the jury the question: "Did Johns and Londergon represent to plaintiff, at the time he purchased the same, that the stock was then worth more than he was paying for said stock?" It answered: "Yes."

The court did not ask whether or not that representation was true, but asked what was the reasonable cash market value of the stock at the time plaintiff purchased same; to which the jury answered: "Unknown."

If the jury had been asked and had found that that representation was false, it might reasonably have been deduced therefrom that the stock at the time of purchase was not worth more than he was paying for it, and that he was injured, in that by fraud he was induced to buy stock of less value than represented and of less value than he contracted for. So, those questions and answers are of no avail to plaintiff in

error.

The court propounded to the jury the question: "Did Johns and Londergon represent to plaintiff that they had intimate knowledge of the value of the stock in controversy and the defendant's business?"

It answered: "Yes."

Then: "Did the said Johns and Londergon represent to plaintiff that the existing condition of the business at that time was such that they could, and did they, guarantee that said stock would be worth on the market after August 1, 1920, 25 per cent more than he was paying for same?"

It answered: "Yes."

Then: "Were such representations in reference to the condition of said business true?"

It answered: "No."

It will be observed that the finding of the jury was upon the existing condition of the business at the time the contract was made, and not the value of the stock at a future date. It was upon the latter view of the findings-that is, that the representation was as to a fact in futuro-that the honorable Court of

(113 Ter. 441, 251 S. W. 1034.)

Civil Appeals held the representations were merely expressions of pinion, and therefore not actionatle as fraud.

The court asked the jury: "What was the reasonable cash market value of the stock in question on the 1st day of August, 1920?"

And to this the jury answered: "Unknown."

It was not the guaranties included in the questions upon which plaintiff in error was seeking to recover. If so, his suit would have been for damages, and, of course, he would of necessity have had to show damage and its extent.

It is clear that the questions as to the representations and their falsity were for the purpose of proving fraud and the questions as to the value of the stock at the time of the contract and on August 1st thereafter were for the purpose of proving that plaintiff in error was injured or damaged by the fraud.

While it is suggestive that it might be deduced from the finding that the representation as to the existing condition of the business at the time plaintiff in error purchased the stock was false, that on August 1st thereafter the stock was not worth 25 per cent more than he was paying for it, yet it must not be overlooked that this was in futuro, and the liability was based-and necessarily so, in order to maintain the action-upon the existing condition of the business at the time of the purchase of the stock; else, instead of representation, it would have been an expression of an opinion.

The court and the parties treated

the questions as to the value of the stock at the time of the purchase and on August 1st as necessary to a showing of loss, though perhaps on motion for judgment the court and plaintiff in error took the view that loss or injury was not necessary to a rescission; fraud having been shown.

The questions having been asked, we cannot, in support of the judgment, presume that the court found injury to plaintiff in error, or that the jury gave that effect to their answers to other questions. The only possible purpose of those questions that were answered "unknown" was to develop the fact that plaintiff in error was injured, as he was suing only for rescission, and not to recover damages. Their answers could have been applied to no other use.

The original judgment herein. rendered, remanding the cause to the district court for a new trial, was correct. Therefore the judgment. of the Court of Civil Appeals reversing the case, is affirmed, and the cause is remanded to the trial court for another trial in accordance with the original opinion herein and this opinion.

NOTE.

The question whether fraud may be predicated on promises and statements as to future events is treated in annotation following PALMETTO BANK & T. Co. v. GRIMSLEY, post, 46. On the specific questions passed on in RusSELL V. INDUSTRIAL TRANSP. Co. ante, 1, see subdivisions III. and VII. f, of that annotation.

CHARLES T. BUSHNELL, Impleaded, etc., Appt.,

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Evidence, § 820- representations constituting fraud.

1. Representations to the maker of a promissory note given in payment

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of a stock subscription, that 8 per cent of his purchases from the company would be credited upon the note, and that he would never be compelled to pay any part thereof other than in this way, being statements which were merely expressions of opinion and expectation that the business of the corporation would be successful, are not of such character as to constitute legal fraud, and cannot defeat the operation of the parol-evidence rule. [See annotation on this question beginning on page 46.]

Corporations, § 185 subscription to stock effect of nondelivery of certificate.

2. The execution of a note in pursuance of a subscription contract secures the right of a subscriber to his stock, and he thereby becomes a stockholder in the corporation; but the stock certificate itself is merely evidence of the ownership of a share in the corporation; and the fact that a subscriber did not actually receive the same is no defense to an action on a note given by him in payment therefor, particularly where the corporation incurred an indebtedness upon the strength of the subscription.

[See 7 R. C. L. 249; 2 R. C. L. Supp. 326.]

Trial, § 12 evidence failure to object effect.

3. The admission, without objection, of testimony in violation of the parolevidence rule, does not preclude the court from disregarding such testimony upon a motion to direct the verdict, for the rule mentioned is not in fact a rule of evidence, but a rule of substantive law.

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4. An agreement in writing, complete on its face, and certain and definite as to its objects, is conclusively presumed to be the whole contract of the parties thereto, and may not be contradicted, altered, added to, or varied, by parol evidence, this rule being. founded on the policy of the law, rather than that such evidence may have no probative value.

[See 10 R. C. L. 1030; 2 R. C. L. Supp. 1142; 4 R. C. L. Supp. 687; 5 R. C. L. Supp. 583.]

Evidence, § 793-as to method of paying note admissibility.

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5. In an action upon a promissory note given in payment of a subscription to corporate stock, parol testimony that the note was to be paid by discounts on purchases from the company is inadmissible as contradicting and varying the terms of the instrument.

[See 10 R. C. L. 1022; 2 R. C. L. Supp. 1141; 5 R. C. L. Supp. 583.]

APPEAL by plaintiff Bushnell from a judgment of the District Court for Niobrara County (Brown, J.) in favor of defendant in an action on a promissory note. Reversed.

The facts are stated in the opinion of the court.

Mr. Thomas M. Fagan, for appellant:

Parol testimony is not admissible to vary, contradict, add to, or qualify the terms of a written instrument.

Stickney v. Hughes, 12 Wyo. 397, 75 Pac. 945; Hangen v. Pinkston, 110 Kan. 463, 204 Pac. 675.

No representations, of which defendants complain, made by plaintiff, or anyone associated with him, were more than expressions of opinion in regard to future happenings, which, by their very nature, were of a contingent character, and do not come within the scope of fraudulent transactions.

12 R. C. L. pp. 244, 250; Stevens v. Inch, 98 Kan. 306, 158 Pac. 43; First

Nat. Bank v. Swan, 3 Wyo. 356, 23 Pac.
743; Dodd v. McCraw, 8 Ark. 83, 46
Am. Dec. 301; Parker v. Thomas, 19
Ind. 213, 81 Am. Dec. 385.

Messrs. Harold I. Bacheller and E.
Paul Bacheller, for respondent:

Any false representation of a material fact, made by a person for whose representations the corporation is responsible, with knowledge that it is false, or without knowledge as to its truth or falsity, if relied upon by a person to whom it is made in subscribing for shares, is such fraud as entitles him to rescind his subscription or maintain an action for damages.

Coles v. Kennedy, 81 Iowa, 360, 25 Am. St. Rep. 503, 46 N. W. 1088, 17 Mor.

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