MESSRS. NASSRE AND SALEBY, by LUTFAL-LAH J. NASSRE, Agent, Syrian Merchants of Grand Bassa, Appellant, v. MESSRS. ELIAS BROTHERS, by RACHEED ELIAS, Agent, Syrian Merchants of Monrovia, Appellee.
APPEAL FROM THE CIRCUIT COURT OF THE FIRST JUDICIAL CIRCUIT, MONTSERRADO COUNTY.
Argued January 13, 14, 1936. Decided January 31, 1936.
1. Courts of equity exercise jurisdiction under three general heads, viz.: (1) concurrent ; (2) exclusive; and (3) auxiliary or supplemental.
2. Suits for the cancellation or reformation of contracts are among those of the second division above given, and are not dependent upon the nature of the right, title, interest or estate in controversy for their jurisdiction.
3. A court of equity possesses the inherent power to grant relief either through the rescission of a contract or the cancellation or reformation of the instrument as written.
4. Such equitable relief will not however be granted merely because it is prayed ; but only after a clear right to the remedy has first been shown.
5. Hence to obtain such relief there must be shown either (1) actual fraud of the defendant in which plaintiff has not participated; (2) constructive fraud against the public in which plaintiff has not participated; (3) fraud against public policy in which case, even though plaintiff had participated, by allowing it to stand, public policy would be defeated; and (4) where there is a constructive fraud by both parties, but they are not in pari delicto.
6. Equity will not relieve against an unfortunate or improvident bargain where there has been no fraud or imposition, and the contract was made negligently either with a full knowledge of all the facts or without taking advantage of a readily available opportunity of acquiring such information.
7. In order to constitute fraud there must be proven some artifice, deception or cheat.
8. Damages cannot legally be awarded in an action of cancellation.
9. For actions of cancellation belong to that class of equity suits which seek protective or preventive justice.
10. The mere fact that plaintiff has no remedy, or no adequate remedy, at law is insufficient to give a court of equity jurisdiction ; there should have been at least a misrepresentation or suggestio falsi to warrant the intervention of a court of equity.
Appellees, plaintiffs in the court below, commenced a suit in equity against appellants, defendants below, for the cancellation of a certain contract and for relief against fraud. The lower court found the contract not fraudulent, but rendered judgment in damages for the plaintiffs. Judgment reversed, and case dismissed.
Edwin A. Morgan and Charles B. Reeves for appellants. Anthony Barclay and H. Lafayette Harmon for appellees.
MR. CHIEF JUSTICE GRIMES delivered the opinion of the Court.
On the 2nd of January, 1934, one Lutfallah J. Nassre, agent at Bassa for the firm of Messrs. Nassre and Saleby, appellants in the present proceedings, made an offer to sell to Messrs. Elias Brothers, appellees, thirty-three and a half tons of good piassava fiber from Grand Bassa, at ten pounds per ton f.o.b. Grand Bassa.
In the letter of said date making the offer it was pointed out by appellants, as an inducement to appellees to buy, that the fibre at Bassa was good fibre. There is no record of a written acceptance of said offer; but we find that on January 12th, 1934, a written agreement was made for the sale by appellants of ten tons of piassava at seven pounds per ton to the said appellees and the purchase by appellees of the said amount of piassava at said price from appellants, which agreement reads as follows :
“MONROVIA,
January 12th 1934.
“This is to certify that Messrs. Elias Brothers have this 12th day of January, A.D. 1934, bought from Messrs. Nassre and Saleby of Grand Bassa ten tons ( io) piassava ready for shipment at the rate of seven pounds (£7.) per ton to be delivered at Customs Port of Grand Bassa.
“Messrs. Nassre and Saleby will be instructed to ship same from Grand Bassa wharf as soon as they receive instructions from Messrs. Elias Brothers of Monrovia to do so.
“Payment in connection with this ten (a)) tons piassava will be effected upon delivery of Bill of Lading covering the said shipment.
“Dated this 12th day of January, A.D. 1934,
MONROVIA, LIBERIA.
“[Sgd.] E. R. ELIAS,
pp. ELIAS BROTHERS, MONROVIA.
[Sgd.] NASSRE, for NASSRE AND SALEBY,
GRAND BASSA.”
By letter dated May 5th, 1934, Elias Brothers, the appellees, wrote to appellants claiming that they had received information from England that the piassava so shipped was not only not of good quality, but was also trash ; and in support of this contention subsequently submitted the copy of an award made by arbitrators appointed by Mr. J. H. Horridge of Manchester, England, to whom it was alleged the piassava had been shipped, and Messrs. J. H. Rayner and Company, Ltd., of Liverpool, alleged to have been the brokers who handled the piassava for Mr. Horridge, and a third arbitrator chosen by the two previously selected. According to this award a lot of five tons of this piassava marked Monrovia piassava was rejected as being worthless.
It may not be amiss to observe in passing that in spite of several questions from this Bench propounded both to counsel for appellants as well as to counsel for appellees, it has not been made clear whether the lot of five tons so rejected was a part of the ten tons bought by appellees from appellants and shipped from Grand Bassa, or another lot of five tons apparently shipped by the said appellees from Monrovia, as the award specifically mentioned Monrovia piassava ; nor, what is more pertinent, conceding that the five tons rejected as worthless by the arbitrators was a portion of the ten tons shipped from Grand Bassa, what had become of the other five tons about which the award was silent. However, in view of the form in which the case has been presented to us, and the position we have found ourselves compelled to take in coming to a decision of the points actually at issue before the Court, the elucidation of that doubtful point is not now absolutely necessary for the reasons which will soon be obvious.
Upon the facts hereinbefore briefly stated, appellees, on August 9th, 1934, entered a suit against appellants entitled “Bill in Equity for the cancellation of a certain contract and for relief against fraud.” The petition, filed two days later, set out the facts hereinbefore briefly stated, and prays the court to decree the said contract entered into on the 12th day of January, 1934, cancelled and made void, and for such other and further relief as the court might see fit to award.
In the 13th and 14th pleas of the answer filed by defendants, now appellants, on the 15th September, 1934, as well as in a motion to dismiss for want of jurisdiction filed on the 19th of January 1935, during the trial, appellants raised the points:
(1) That the contract, the subject of the action, had already been performed and discharged, wherefore appellants contended that said contract was no longer a subject of cancellation.
(2) That inasmuch as plaintiffs claim they had sustained loss as the result of the manner in which defendants had performed their part of the contract, said plaintiffs had an adequate remedy at law, and hence the court of Equity could not take jurisdiction over the subject matter.
(3) That plaintiffs were without the legal right to institute an action of relief against fraud of a contract the stipulations of which had been mutually performed by the contracting parties ; hence they prayed the dismissal of the case.
His Honor Judge Brownell, the judge of the trial court, on the 2nd of January decided that said court had jurisdiction “to inquire whether the contract entered into between plaintiffs and defendants which on its face is clear, had hidden within its bosom some element of fraud which equity can relieve should the case reach trial on its merits.” The court therefore overruled the points of law thus submitted for its decision, to which ruling the defendants, now appellants, took exceptions.
On the 31st of January, 1935, after a trial lasting for several days, the same judge gave a final decree, point one of which was that he found the contract not fraudulent; point 2, that the plaintiffs should recover from the defendants the sum of seventy pounds paid for the purchase of the piassava, sixteen pounds as duty and lighterage and fifty-seven pounds. In count 3 he adjudged :
“That plaintiffs pay the expense accruing from the arrival of the shipment in Liverpool up to the destruction of the piassava as his share of loss for contributory negligence in shipping a quality from a locality which his agents never authorized nor contemplated. To wit:—
Shortage 67 0 0
Arbitration E.D. Co. 125 0 0
Insurance 0 II 0
£192 II 0
In count 4 he decided “that each party pay half the cost of this suit.” And this appeal is taken to the decision of the said trial judge to the points of law herein before enumerated as having been submitted for his consideration, as well as upon his final decree in the case.
Courts of equity, according to the old standard authors, exercised jurisdiction under three general heads which were (1) concurrent; (2) exclusive; and (3) auxiliary or supplemental. Among the classes of cases cognizable under the second general division, or that over which it takes exclusive jurisdiction, which are not dependent on the nature of the right, title, interest or estate in controversy for their equitable character, may be mentioned a suit for removing a cloud on title, suits for the cancellation or reformation of instruments, and suits for injunctions or for the specific performance of contracts. 10 R.C.L. 266, §§11, 12
“A court of equity possesses the inherent power to grant relief in the rescission of a contract, and as a usual and necessary coincident to this relief, the granting of the relief of cancellation or reformation of the instrument as written. The right of rescission will be allowed usually where there has been some fraud entering into the inception of the agreement; or there has been a mistake on the part of one of the parties and fraud on the part of the other ; or where there has been an undue influence exerted ; or where the mind of the stronger has overreached and controlled the power of assent in the weaker. In these and similar cases that might be enumerated, it will be seen that the law court has no jurisdiction, and but for the powers lodged in a court of equity an untold injury and hurt might come to the weaker party to the contract. It must be understood however in the beginning of this discussion, that this equitable relief will not be granted merely because it has been prayed. It is an extraordinary power residing in the breast of the chancellor, and a clear right to the remedy must first be shown. The cancellation of a forged instrument; the annulling of a patent right alleged to have been obtained from the government by fraud; the cancellation of a release,— all of these are common subjects of equity jurisdiction.”. 2 Story, Equity Jurisprudence, § 932.
“It is obvious that the jurisdiction exercised in cases of this sort is founded upon the administration of a protective or preventive justice. The party is relieved upon the principle,—as it is technically called, —quia timet ; that is, for fear that such agreements, securities, deeds, or other instruments may be vexatiously or injuriously used against him when the evidence to impeach them may be lost, or that they may now throw a cloud or suspicion over his title or interest. A fortiori the party will have a right to come into equity to have such agreements, securities, deeds, or other instruments delivered up and cancelled where he has a defence against them which is good in equity, but not capable of being made available at law.” Id., at § 935.
“. . . Courts of Equity will generally set aside, cancel, and direct to be delivered up agreements and other instruments, however solemn in their form or operation, where they are voidable and not merely void, under the following circumstances : First, where there is actual fraud in the party defendant, in which the party plaintiff has not participated. Secondly, where there is a constructive fraud against public policy, and the party plaintiff has not participated therein. Thirdly, where there is a fraud against public policy, and the party plaintiff has participated therein, but public policy would be defeated by allowing it to stand. And lastly, where there is a constructive fraud by both parties, but they are not in pari delicto.” Id., at § 937 and note 3 which reads:
“The mere breach of a contract upon the faith of which a mortgage is executed is not a fraud, justifying the cancellation of the mortgage.”
“But equity will not relieve against an unfortunate or improvident bargain where there has been no fraud or imposition and it was entered into negligently, either with full knowledge of all the facts, or without taking advantage of a readily available opportunity of acquiring such information. Should courts undertake, because of improvidence, to set aside contracts which are lawful, they would invade personal rights and disturb and destroy the safety of business transactions. When parties have made lawful contracts in language leaving no doubt as to the intention, there is no ground for any interference by the courts, but the contract must be enforced as written.” 4 R.C.L. 503, § 16.
According to the facts that have been submitted to us the contract sought to be cancelled appears to us to be a simple contract of sale of personal property, the title to which passed from the vendor to the vendee upon the payment for, and delivery of, the goods, which completed the whole transaction in so far as the contracting parties were concerned. Bakker v. Williams, I L.L.R. 233 (1890).
If the piassava delivered was not of the quality contracted for, there has not been exhibited on the record evidence to show that defendants committed any such artifice, deception or cheat as to bring the case within the requirements of fraud endorsed by this Court in the leading case of Moore v. Solomon, I L.L.R. 347 (1900). Hence it appears to us that the trial judge correctly ruled in the first point of his decree of January 31st that the contract was not fraudulent; and had his decree stopped there we would have felt ourselves legally bound to uphold it.
But, for some reason which to us is still inexplicable, the learned judge proceeded to make decisions in the 2nd, 3rd and 4th points of his decree which considering the nature of the case brought, appear to us to be not only illegal and illogical, but incongruous. For example if, as he correctly ruled, the contract was not fraudulent, what legal authority had he to award damages against defendants to plaintiffs as he, in effect, did in the second paragraph of his decree; and to divide the responsibility of the costs between the parties as he did in the third and fourth paragraphs of his said decree? Or, if we suppose for argument’s sake that he found, and found correctly, that the contract was fraudulent, whence would he have derived the legal authority to award damages, as in substance he did in an action of cancellation? It appears to us that as soon as he reached the conclusion that the contract was not fraudulent the action of cancellation based upon an alleged fraud should have been dismissed, and the plaintiffs ruled to pay all costs as a penalty for having chosen the wrong form of action. Cavalla River Company, Ltd. v. Pepple, [1934] LRSC 5; 4 L.L.R. 39, I Lib. New Ann. Ser. 41 et seq., especially st.
There are two reasons for taking this view. First of all, as has been said, a bill in equity for cancellation, like an action of injunction, belongs to the subdivision of the cases exclusively cognizable in courts of equity which belongs to the administration of protective or preventive justice. Such suits are not like suits, for example, demanding proper accounting, or discovery, or other possessory suits for relief against fraud wherein when the equity jurisdiction once attaches the court, having received the accounts or obtained the discovery, will retain the jurisdiction so as to give complete relief. For, it has been held that,
“The necessity of obtaining a discovery in such cases therefore constitutes the sole ground of equity jurisdiction; and if upon such a bill no discovery is obtained, the cause fails and the bill must be dismissed.” 2 Story, Equity Jurisprudence 309, § 929.
Moreover this Court decided in two cases at its November term, 1934, that an action of injunction, which belongs to the same species of equity suits as an action of cancellation since they both belong to that class of actions which give protective or preventive relief, was not of a possessory character. Tubman v. Murdoch, [1934] LRSC 26; 4 L.L.R. 179, 2 Lib. Ann. Ser. 5 (1934) ; Johnson V. Powell[1934] LRSC 32; , 4 L.L.R. 221, 2 Lib. Ann. Ser. 54 (1934).
The second reason is that the trial judge apparently allowed himself to be misled by the contention of counsel for appellees which they made even before this Court, that as soon as they charged the defendants with fraud the equity jurisdiction of the court below necessarily attached since that was sufficient to show that they had no adequate remedy at law. Such a contention is but superficially correct. On the one hand it is so necessary that in order that the equity jurisdiction may attach the plaintiffs should be without an adequate remedy at law that the learned Judge Story, in his standard treatise on Equity Pleadings, lays down that the sixth part of the bill shall be the jurisdictional clause, which
“is intended to give jurisdiction of the suit to the court by general averment, that the acts complained of are contrary to equity, and tend to the injury of the plaintiff, and that he has no remedy, or not a complete remedy, without the assistance of a court of equity.” Story, Equity Pleading, § 34.
Let us now delve a little more deeply into the principles involved :
“As has been adverted to above, the most common ground of equity jurisdiction, and doubtless the great underlying principle on which it was originally assumed, is the lack of an adequate remedy at law. . . . Therefore when no remedy exists at law, courts of equity, to prevent injustice in many cases on principles of general policy, will go far in granting relief. However, the fact that there is no remedy at law does not necessarily and of itself give a court of equity jurisdiction to afford relief. For instance the publication of an unjust and malicious criticism of a manufactured article is not the subject of equitable cognizance, although the manufacturer has no remedy at law because of inability to prove special damage. So, in general, if the right of a plaintiff is doubtful equity will withhold its aid. But wherever a party has a clear legal right, in matter of property, and no remedy by means of any other jurisdiction, he is entitled to the aid of a court of equity.
“While it is often stated as the rule, as noted in the preceding paragraph, that equity has jurisdiction in cases where there is not an adequate remedy at law, the form of statement more commonly adopted is that a court of equity has no jurisdiction, or at least will not entertain jurisdiction, where there is an adequate remedy at law. This converse proposition, while it undoubtedly pervades the entire field of equity jurisprudence, requires, for its perfect understanding, something more than the mere statement thereof. The office of equity is to supplement, not to supplant the law. Hence, equity is chary of its powers. When the remedy at law is adequate there is ordinarily no need for equity to interpose.
“. . . If the only relief to which a plaintiff would be entitled in equity is the same in measure and kind as that which he might obtain in a suit at law, he is remitted to his remedy in that forum, unless the remedy at law is doubtful, circuitous, or complicated by multiplicity of parties having different interests. Hence, equity has no original independent and inherent power to afford redress for breaches of contract or torts, by awarding damages, for that is the very office of proceedings at law. But as a general proposition it may be said that whenever the object of a bill in equity is to obtain only a decree for the payment of money by way of damages, it will not be sustained when the like amount can be recovered at law in an action sounding in tort or for money had and received.” io R.C.L. 271-4, §§ i6, 17, i8.
“One of the largest classes of cases in which courts of equity are accustomed to grant relief, is where there has been a misrepresentation, or suggestio falsi. To justify the interposition of equity in such cases, however, it is necessary to establish something more than the mere fact of misrepresentation. It must relate to something material or important to the interests of the other party, in regard to which the one party places a known trust and confidence in the other. It must not be vague and inconclusive in its nature, nor must it be a mere matter of opinion. It must also actually mislead the other party. Thus, it is ground in equity for the rescission of the contract that the vendor made an intentional misrepresentation with regard to the nature of his title or the location of the premises. On the other hand, in proceedings in equity to cancel a deed for fraud, the mere expression of an opinion as to value, or a statement as to the uses for which the land is wanted, will not ordinarily suffice.” Id., at 323, § 66.
If the defendants delivered to plaintiffs a quality of piassava inferior to that which they contracted to deliver, a fact which the award of the arbitrators hereinbefore quoted has not made sufficiently clear to us, it would appear that plaintiffs, now the appellees, would have an adequate remedy at law without the auxiliary or supplemental assistance of the court of equity; or if plaintiffs, now appellees, claimed that they were damaged by the breach of a contract on the part of defendants, now appellants, in supplying an inferior quality of piassava, in such case also they would have an adequate remedy in a court of law. But if on the other hand, they had succeeded in having the contract cancelled, as they started out to do, then upon what ground they would have based their right to recover has not yet been clear to us. At all events in view of the premises it is our opinion that the second, third, and fourth paragraphs of the decree of His Honor Judge Brownell should be reversed and made null and void; that the first paragraph of said decree should be affirmed, and as a corollory that the case should be dismissed, and the plaintiffs, now appellees, ruled to pay all costs; and it is so ordered.
Reversed.