be remembered that it is only an alternative remedy, and that in an action based on deceit, the plaintiff if he so elects may always recover full damages. An analogous question in regard to remedies for breach of warranty has been previously considered. 50 § 1529. Restoration of consideration. In a suit in equity for rescission a plaintiff who has received consideration commonly offers in his bill to restore the consideration, and whether such an offer is made or not the decree in such a suit will provide, not simply for the return by the defendant of what he has wrongfully acquired, but for the restoration of the consideration by the plaintiff. 51 The same principles apply where rescission is exercised without the aid of equity. The injured party must make an offer to restore what he has received on condition of receiving in return what he was defrauded into parting with, 52 and if the offer is rejected must hold as bailee what he has received and refrain from exercising acts of ownership. 53 The place of return is the place of the original delivery. 54 Accordingly, if the defrauded party is unable to restore what he has received, rescission is impossible. 55 50 See supra, § 1464. 51 See In re American Knit Goods Mfg. Co., 173 Fed. 480, 97 C. C. A. 486; Thomas v. Beals, 154 Mass. 51, 27 N. E. 1004; Parker v. Simpson, 180 Mass. 334, 343, 62 N. E. 401; McNaught v. Equitable Life Ass. Soc., 136 N. Y. App. Div. 774, 121 N. Y. S. 447. 52 Clarke v. Dickson, E. B. & E. 148; Grymes v. Sanders, 93 U. S. 55, 23 L. Ed. 798; Samples v. Guyer, 120 Ala. 611, 24 So. 942; Herman v. Haffenegger, 54 Cal. 161; Adam, Meldrum Co. v. Stewart, 157 Ind. 678, 61 N. E. 1002, 87 Am. St. Rep. 240; Doylestown Agr. Co. v. Brackett &c. Co., 109 Me 301, 84 Atl. 146; Tisdale v. Buckmore, 33 Me. 461; Thomas v. Beals, 154 Mass. 51, 54, 27 N. E. 1004; Owen v. Button, 210 Mass. 219, 96 N. E. 333; Putney v. Schmidt, 16 N. Mex. 400, 120 Pac. 720; Rumsey v. Shaw, 212 Pa. St. 576, 578; 53 Davis v. Gifford, 182 N. Y. App. D. 99, 169 N. Y. S. 492. It seems, however, that after the lapse of a reasonable time a defrauded buyer who has paid the price must be allowed to enforce his lien on the goods by appropriate methods, without thereby losing his right of action for restitution of the price. 54 Milliken v. Skillings, 89 Me. 180, 36 Atl. 77. See also supra, §1463. Cf. Rood v. Priestly, 58 Wis. 255, 16 N. W. 546. 55 See cases cited in preceding notes. § 1530. Exceptions to the Rule. This rule, however, is subject to the exception that if the consideration was worthless it need not be returned. 56 And one who attempts to rescind a transaction on the ground of fraud, mistake or otherwise, is not bound to restore that which he has received by virtue thereof, when, in any event, he is entitled to retain it as indisputably his own whatever may be the fate of his effort to rescind the transaction.57 In other cases where on the particular facts it seems equitable to allow rescission without complete or perfect restoration of the consideration, the modern tendency seems to favor the relief, and courts of law adopting the more liberal rule in equity no longer adhere to the strict construction upheld in earlier decisions. Thus diminuv. Gilman, 34 N. H. 556; Spencer v. St. Clair, 57 N. H. 9; Crossen v. Murphy, 31 Or. 114, 49 Pac. 858. Other illustrations of worthless property may be found in Dill v. O'Ferrell, 45 Ind. 268; Haase v. Mitchell, 58 Ind. 213; Kent v. Bornstein, 12 Allen, 342; Brocklehurst & Potter Co. v. Marsch, 225 Mass. 3, 113 N. E. 646. 56 Dulaney v. Jones, 100 Miss. 835, 57 So. 225; Babcock v. Case, 61 Pa. St. 427, 100 Am. Dec. 654. On this principle a fraudulent buyer's note which has not been negotiated by the seller need not be returned. It is enough if produced for surrender at the trial. Wilcox v. San Jose Fruit Packing Co., 113 Ala. 519, 28 So. 376, 59 Am. St. Rep. 135; Coghill v. Boring, 15 Cal. 213; Morse v. Woodworth, 155 Mass. 233, 249, 27 N. E. 1010, 29 N. E. 525; Skinner v. Michigan Hoop Co., 119 Mich. 467, 78 N. W. 547, 75 Am. St. Rep. 413; Wood v. Garland, 58 N. H. 154; Berry v. American Central Ins. Co., 132 N. Y. 49, 55, 30 N. E. 254, 28 Am. St. Rep. 548; Crossen v. Murphy, 31 Or. 114, 49 Pac. 858; Sloane v. Shiffer, 156 Pa. St. 59, 27 Atl. 67. But see contra, Farwell v. Hanchett, 120 Ill. 573, 11 N. E. 875. It is otherwise in case of a note of a third person. Northampton Nat. Bank v. Smith, 169 Mass. 281, 61 Am. St. Rep. 283; Cook v. Gilman, 34 N. H. 556; Spencer v. St. Clair, 57 N. H. 9; Baker v. Robbins, 2 Denio, 136; Whitcomb v. Denio, 52 Vt. 382. Unless the note is worthless. Mahone v. Reeves, 11 Ala. 345; Estabrook v. Swett, 116 Mass. 303; Duval v. Mowry, 6 R. I. 479. Compare Cook 57 Cobb v. Tirrell, 137 Mass. 143; Brocklehurst & Potter Co. v. Marsch, 225 Mass. 3, 113 N. E. 646, citing Cobb v. Fogg, 166 Mass. 466, 479, 44 N. E. 534; Bruce v. Anderson, 176 Mass. 161, 162, 57 N. E. 354. The court adds: In this respect the rule at law approaches that prevailing in equity. Thomas v. Beals, 154 Mass. 51, 55, 27 N. E. 1004; Parker v. Simpson, 180 Mass. 334, 343, 62 N. E. 401; Atkins v. Atkins, 195 Mass. 124, 132, 80 N. E. 806, 11 L. R. A. (N. S.) 273, 122 Am. St. Rep. 221; Kley v. Healy, 127 N. Y. 555, 561, 28 N. E. 593." 58 In Bassett v. Brown, 105 Mass. 551, the court said: "This rule is held with great strictness in actions at law, as in the case of the casks that contained worthless lime (Conner v. Henderson, 15 Mass. 319, 8 Am. Dec. 103) and the sack that covered the rejected bale of cotton. Morse v. Brackett, 98 Mass. 205, and tion in value of the consideration by lapse of time, 59 or by reasonable use before the discovery of the fraud,60 or the application of the consideration for the defendant's benefit," or the use of part of the consideration in testing,62 will not prevent rescission, nor will inability to return the consideration when the inability is due to the wrongful conduct of the fraudulent party.63 The matter has been thus summarized: "That a party seeking rescission of a contract must return, or offer to return, what he has received under it, and thus put the other party as nearly as is possible in his situation before the contract, is the law. But this rule is wholly an equitable one; impossible or unreasonable things, which do not tend to accomplish equity in the particular transaction, are not required." 64 In some cases even where restoration of the consideration is entirely possible, it has not been required. Thus where the wrongdoer has injured goods fraudulently obtained by him to a greater extent than the consideration he gave, it has been held that the defrauded person need not return the latter as a condition of rescission,65 or where the party seeking relief has suffered for any reason a greater loss than the consideration which he re 104 Mass. 494." Compare with these decisions the cases in the following notes. In equity if the inability of the injured party to make complete restitution is due to no fault on his part, and substantial justice can be done without it by proper terms in the decree, rescission will be allowed. Payne v. Hiram Lindsey Co., 71 Wash. 293, 128 Pac. 678. 59 Armstrong v. Jackson, [1917] 2 K. B. 822. Gatling v. Newell, 9 Ind. 572. Even where rescission is sought merely for breach of contract, valuable use of the property has been held not to preclude rescission. See supra, § 1460. A reasonable rental value, however, might properly be deducted if the use has been valuable. Allen v. Talbot, 170 Mich. 664, 137 N. W. 97. "Brown v. Norman, 65 Miss. 369, 4 So. 293, 7 Am. St. Rep. 663. 62 Eastern Granite Roofing Co. v. Chapman, 140 Ala. 440, 443, 37 So. 199. 63 Clark v. Wells, 127 Minn. 353, 149 N. W. 547, L. R. A. 1916 F. 476; Hammond v. Pennock, 61 N. Y. 145; Hamrah v. Maloof, 127 N. Y. App. Div. 331, 111 N. Y. S. 509; Gates v. Raymond, 106 Wis. 657, 82 N. W. 530. In the latter case the defendant fraudulently caused the plaintiff to become intoxicated and sell his horse and then lose at poker to the defendant and his associates the consideration. 64 Sloane v. Shiffer, 156 Pa. St. 59, 64, 27 Atl. 67. But the fact that a defrauded buyer has disposed of the goods before discovery of the fraud will not excuse restoration. Smith v. Brittenham, 98 Ill. 188. 65 Phenix Iron Works v. McEvony, 47 Neb. 228, 66 N. W. 290, 53 Am. St. Rep. 527. tains.66 Where circumstances permit, some courts also have allowed as a substitute for restoration of the consideration a deduction of the amount of it from the recovery against the wrongdoer." This is the most satisfactory disposition of many cases. If property fraudulently obtained has got into the hands of a third person who is not a purchaser for value, he is not allowed to object to a claim of the defrauded party for the return of the property that the consideration has not been restored to the fraudulent person.68 Frequently a fraudulent seller will refuse to receive the goods when offered in rescission of the bargain, and as to the rights of the buyer then, it has been said: "A purchaser who is defrauded by the seller, and who in the lawful exercise of his right to rescind renders the property to the seller, who refuses to receive it, is under no other obligation to him than to retain the property as his bailee and agent,69 and, after notice of his intention, may in good faith dispose of the same for account of the owner. If he sells the property otherwise than in good faith, the extent of his liability would be the fair market value of the same." 70 Doubtless such a right of re 66 In Page Belting Co. v. Prince, 77 N. H. 309, 313, 91 Atl. 961, the court said: "Because of this fraud, the Wallaces claim to exercise an equitable right of rescission. It is objected that this cannot be done because they have kept the bonds received by them as a part of the repudiated transaction. While by the strict common-law rule one could not rescind save by putting the other party in statu quo, the theory has been much broken in upon since the distinction between legal and equitable relief has come to be largely disregarded; and the rule now in this jurisdiction is that the rescinding party is only required 'to do what equitably he ought to do.' Mead v. Welch, 67 N. H. 341, 342, 39 Atl. 970; Thorpe v. Packard, 73 N. H. 235, 60 Atl. 432. See, also, Sipola v. Winship, 74 N. H. 240, 66 Atl. 962. "In view of the fact that the Wallaces have made a substantial loss in the transaction, even after retaining the bonds, it seems plain that equity would not require that the bonds or their proceeds be given up." 67 Ladd v. Moore, 3 Sandf. 589; Evans v. Brooks, 34 Okl. 55, 124 Pac. 599; Crossen v. Murphy, 31 Or. 114, 49 Pac. 858; Warner v. Vallily, 13 R. I. 483; Sisson v. Hill, 18 R. I. 212, 26 Atl. 196, 21 L. R. A. 206; Hale v. Bank of Baldwin, 143 Wis. 303, 127 N. W. 969. See also Wilson v. Burks, 71 Ga. 862; Todd v. Leach, 100 Ga. 227, 28 S. E. 43; Todd v. McLaughlin, 125 Mich. 268, 84 N. W. 146; Brewster v. Wooster, 131 N. Y. 473, 30 N. E. 489; Mason v. Lawing, 10 Lea, 264. 68 Stevens v. Austin, 1 Met. 557; Schoonmaker v. Kelly, 42 Hun, 299; Frost v. Lowry, 15 Ohio, 200. 69 If he uses the property as his own, he loses the right of rescission. Mizell v. Watson, 57 Fla. 111, 49 So. 149. 70 Hambrick v. Wilkins, 65 Miss. 18, 3 So. 67, 7 Am. St. Rep. 631. See sale is allowable, but in view of the chance for subsequent dispute as to be propriety of the buyer's conduct, if it does not involve expense or any great degree of care, it would seem safer for a defrauded buyer who wishes to rescind the transaction to retain the goods on behalf of the fraudulent seller if the latter refuses to assent to rescission. § 1531. Rescission allowed only against fraudulent person. As has already been seen,71 fraud may sometimes be of such a character as to preclude assent to a bargain by the defrauded person. If goods are obtained in this way no property passes to the fraudulent person, and the defrauded person's title may be asserted even against purchasers for value.72 But in the ordinary case of fraud, the defrauded person is induced to give his assent to the bargain. If the bargain is a non-negotiable executory contract which has been induced by the fraud of one contractor the other may, in spite of any assignment, refuse to be bound by the transaction,73 since even a purchaser for value of a non-negotiable chose in action can stand in no better position than his assignor. If, however, title to a negotiable contract or to goods be secured by fraud, a purchaser from the fraudulent person acquires this title, and if he had no notice of the fraud and was not a volunteer, no equity exists against him. As commonly expressed, a purchaser for value of the voidable title of the fraudulent person acquires an indefeasible title.74 Not only may the contract be avoided as against pur "Even though by statute the assignee of such a contract may sue in his own name, his rights are limited to those of his assignor. Chrysler v. Renois, 43 N. Y. 209. But if the assignee subsequently collects the claim in good faith, he cannot be deprived of the proceeds. Fidelity Mut. L. Ins. Co. v. Clark, 203 U. S. 64, 51 L. Ed. 91, 27 S. Ct. 19. 74 White v. Garden, 10 C. B. 919; Leask v. Scott, 2 Q. B. D. 376; Ste venson v. Newnham, 13 C. B. 285, 303; Lightman v. Boyd, 132 Ala. 618, 32 So. 714; Williamson v. Russell, 39 Conn. 406; Walp v. Mooar, 76 Conn. 515, 517, 57 Atl. 277; Mears v. Waples, 3 Houst. 581, 4 Houst. 62; Kern v. Thurber, 57 Ga. 172; Ohio & Mississippi R. R. v. Kerr, 49 Ill. 458; Titcomb v. Wood, 38 Me. 561; Hall v. Hinks, 21 Md. 406; National Bank of Bristol v. Baltimore & Ohio R. R., 99 Md. 661, 59 Atl. 134, 105 Am. St. Rep. 321; Goodwin v. Mass. Loan & Trust Co., 152 Mass. 189, 198, 25 N. E. 100; White v. Dodge, 187 Mass. 449, 450, 73 N. E. 549; |