But this is not necessarily the effect of a suit for damages. The party wronged may still find himself far from whole after a complete and consummated rescission of the contract; he may have been induced to incur expense, or to put himself to detriment, in making necessary preparations for the carrying out of the contract. If this is true, if and in so far as such expense or detriment was the natural and reasonable consequence of the fraud, it would be strange to say that a suit for such damage would be an affirmance of the contract, and therefore inconsistent with any rescission of it; it simply would not be true. For such cases the law must permit, and does permit, an action for damages, with rescission (assuming that to be possible), if the defrauded party prefer.1

1 Lenox v. Fuller, 39 Mich. 268; Warren v. Cole, 15 Mich. 265.

CHAPTER IV.

ACTIONS FOR DAMAGES, AND CROSS-ACTIONS.

It is to be borne in mind that the general subject under consideration in these earlier chapters is the 'adjective' law, which assumes the existence of a right of redress or relief in some way, and only prescribes what is necessary for enforcing the right. The present chapter will therefore treat, not of the facts necessary to create a right of action, but of the question, when the remedy in damages is the appropriate remedy; and the same remark, mutatis mutandis, will apply to all the chapters relating to the remedy for fraud.

After what has been said in the preceding chapter there remains little to be said upon the subject of this one. The action for damages scarcely extends beyond the case of redress of misrepresentations. It may be used for some other cases, as e. g. for the concealment by a plaintiff of a defence of fraud,2 and perhaps for the fraudulent procurement in some other way than by misrepresentation, of the abandonment of an attachment; but such cases are infrequent, and it will generally be found that the law has provided some better mode of redress. The action may often be brought regardless of the question whether, in a case of sale to the defendant, there has been a rescission of the transaction; for the plaintiff may elect to affirm the contract and sue for the damages sustained by him in being drawn into it, and though he has rescinded the 1 See the chapters on Deception. 2 Verplanck v. Van Buren, 76 N. Y. 247; chapter 6, § 2.

8 Whitney v. Allaire, 4 Denio, 554; s. c. 1 Comst. 305; Gould v. Cayuga Bank, 86 N. Y. 75; Mallory v. Leach,

35 Vt. 156; Allin v. Millison, 72 Ill. 201; Cain v. Dickinson, 60 N. H. 371; Jewett v. Petit, 4 Mich. 508; Walsh r. Lilley, 49 Mich. 423; Pierce v. Wood, 23 N. H. 519 (there is some doubt whether the right form of action was

contract and recovered his property, he may not thereby be made good the loss inflicted upon him by the other party.1

A creditor cannot, according to the weight of authority, maintain an action at common law against his debtor, or against persons conspiring with him, for fraudulently disposing of his property in order to avoid the payment of his debts.2 The debtor in such a case has indeed committed a fraud upon others, to their damage; but the law has provided a more suitable mode of procedure to meet such cases. If such an action were to be allowed, the result would generally be to prevent the possibility of a ratable division of the debtor's property among his creditors; for it often happens that the estate of the debtor is insufficient to meet all the claims of the creditors, and if an action for damages were to be allowed, the plaintiff would be entitled to recover the amount of his debt. This would be more than he would be entitled to under a distribution of the effects in bankruptcy. It is true a debtor may prefer one creditor over another in many cases, or one creditor may by diligence secure an advantage over other creditors; but the proceedings in such cases must be according to established methods, of which an action for damages is

not one.

This principle will not be affected by the circumstance that the debtor has made false and fraudulent representations to his creditors of his financial condition, by which they were deceived, and led to refrain from making attachments upon his property until it was too late.3 The same objection to the

brought in this case. See Jewett v. Petit, supra); Parker v. Marquis, 64 Mo. 38; Cavender v. Roberson, 3 Kans. 626; Grabenheimer v. Blum, 63 Tex. 369. The case of St. John v. Hendrickson, 81 Ind. 350, was wrongly decided. See especially Parker v. Marquis, supra. 1 See ante, p. 67.

2 Austin v. Barrows, 41 Conn. 287; Cowles v. Day, 30 Conn. 410; Smith v.

Blake, 1 Day, 258; Adler v. Fenton, 24 How. 407; Lamb v. Stone, 11 Pick. 527; Wellington v. Small, 3 Cush. 145; Bradley v. Fuller, 118 Mass. 239; Moody v. Burton, 27 Maine, 427. Contra Mott v. Danforth, 6 Watts, 304; Kelsey v. Murphy, 26 Penn. St. 78.

3 Austin v. Barrows, 41 Conn. 287; Moody v. Burton, 27 Maine, 427.

action will arise which exists in the case above stated. A further and perhaps a better reason, especially applicable to those conspiring with the debtor, is that the loss of an attachment which had not been undertaken in the least was not a reasonably certain effect of the fraud. But if the plaintiffs had actually levied an attachment upon the defendant's property, and were prevented from retaining their lien by the defendant's fraudulent representations, the case would have been different, and the action held maintainable.1

One to whom a warranty is made may, instead of suing upon the warranty in contract, sue in deceit upon the representations made; but in such a case it will be necessary, it seems, to allege and prove that the representations were made fraudulently. At all events if the plaintiff allege that the defendant made false and fraudulent representations, making such an allegation the foundation of his suit, he will not, apart from statute, be permitted to show a warranty, unless that was made in fraud; for it is a well-recognized rule of law that a party must stand upon the case which he has made.1

Independent cross rights of action generally, like the case of mutual debts, have been the subject of statutory provision in some states. Whether a (dependent) cross right of action for fraud in a particular matter can be employed after judgment for the opposite party upon the demand out of which the cross right grew, though clear in principle is not clear on authority except in cases in which the supposed cross right was set up and adjudicated; in such a case there could of course be no further use of the right in any way, at least in the absence of fraud in regard to the adjudication upon it.

1 Bradley v. Fuller, 118 Mass. 239. 2 Mahurin v. Harding, 28 N. H. 128; Larey v. Taliafferro, 57 Ga. 443.

3 Mahurin v. Harding, supra; Cooper v. Landon, 102 Mass. 58. See Graves v. Waite, 59 N. Y. 156; Barnes v. Quigley, Ib. 265.

4 See chapter on Evidence, section Variance: Allegata et Probata.'

5 See e. g. Witte v. Lockwood, 39 Ohio St. 141; Lombard v. Cowham, 34 Wis. 486; Stilphen v. Houdlette, 60 Maine, 447 (cross divorces).

The doubt is in regard to cases in which no use was made of the cross right in the former action. There is reason to believe however that a cross right of action for fraud in the transaction upon which the opposite party has obtained judgment may in such a case still be available. It has been held by a large preponderance of authority that, notwithstanding an action has been sustained upon a contract e. g. of services, to which the defence of negligence or breach of warranty might have been raised, which defence however was not made, a cross action can be maintained for the negligence or breach of warranty; the two proceedings are quite consistent with each other. If this is accepted, there appears to be no serious reason why a cross action for fraud should not be permitted under the same circumstances.3 Indeed, the case of fraud is often much stronger; for while the negligence or breach of warranty will generally be known, though the extent of loss may not be known, at the time of the suit by the opposite party, fraud is often concealed so effectively as not to be discoverable for a long period of time. In such a case, not barred by limitation, there would clearly be a right to call for redress.1

1 Hall v. Clark, 21 Mo. 415.

2 Bodurtha v. Phelon, 13 Gray, 413; Bascom v. Manning, 52 N. H. 132; Sykes v. Bonner, Cin. Sup. Ct. Rep. 464; Ressequie v. Byers, 52 Wis. 650; Goble v. Dillon, 86 Ind. 327; Barker v. Cleveland, 19 Mich. 230; Mondel v. Steel, 8 Mees. & W. 858; Davis v. Hedges, L. R. 6 Q. B. 687; Houstoun v. Sligo, 29 Ch. D. 448. Contra in New York. Gates v. Preston, 41 N. Y. 113; White v. Merritt, 7 N. Y. 352; Davis v. Talcott, 12 N. Y. 184. Bigelow, Estoppel, 164-176, 4th ed.

See

3 See Hall v. Clark, 21 Mo. 415, directly to that effect; Wanzer v. De Baun, 1 E. D. Smith, 261; Michigan v. Phonix Bank, 33 N. Y. 9, 25; Cadaval v. Collins, 4 Ad. & E. 858. 'If a proper

judgment be rendered in each of any two actions, taken separately, the two judgments will be perfectly harmonious and consistent, and if they are both satisfied or performed, perfect legal justice will be done.' Langdell, Equity Pl., p. 174, 2d ed.

4 Verplanck v. Van Buren, 76 N. Y. 247. A defendant, ignorant of facts which entitle him to file a cross bill until the depositions of the plaintiff's witnesses reveal such facts, cannot, if he now file his cross bill without unnecessary delay, be deprived of the benefit of such facts at the plaintiff's instance, when he was wilfully kept in ignorance of them by a person acting in concert with the plaintiff, who had been recommended by the plaintiff to the