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District Court of Appeal, Second District, Division 2, California.


Civ. 8080.

Decided: March 28, 1934

Walter M. Campbell, of Los Angeles (Loeb, Walker & Loeb, of Los Angeles, of counsel), for appellants. Robert L. Hubbard and Mart Coles, both of Los Angeles, for respondent.

Petition for rehearing denied.

Appellants Barteaux and Elliott urged in their petition for a rehearing as to them that under the rule laid down in McDonald v. Southern California Railway Co., 101 Cal. 206, 35 P. 643, and other cases cited, the allegations of rescission as a defense cannot be used as evidence of such fact; that, there being no other proof of such fact, there could be no recovery, and that the statement used in one defense cannot be used as evidence upon another issue, because to so hold would deprive the defendant of the benefit of his denials.

In our opinion such rule is not applicable to the situation disclosed by the pleadings and evidence in the instant case. The complaint here was in four counts, each of them duplicates of the other, except for the fact that a different contract to purchase was involved in each count and different amounts were paid on each contract. The allegations in each were sufficient to charge fraudulent representations by the defendants inducing the execution of such contract, exclusive of the paragraph charging the use of the name Calivalli Development Company by defendants. By each count it is sought to recover the payments made on account thereof, but none alleges that the contract was rescinded by the buyer. There is no allegation of a cause of action based on the common counts. The answer contains a specific denial of each paragraph of each count, except that the execution of the contract is admitted, and as an affirmative and separate defense alleges, first, that the Union Bank & Trust Company had no interest in the property “sold by the Calivalli Farms Company to the plaintiff,” other than in its capacity as trustee; second, that plaintiff made an independent investigation before contracting to purchase; and, third, that plaintiff elected to rescind such contracts and served each defendant with a notice in writing of such rescission, together with a demand for the payment of all moneys paid by him thereof, and that defendants subsequent to the service of such notices of rescission, “relying upon plaintiff's election to rescind,” sold the property covered by such agreements, etc. There is no defense set up in such answer of which defendants are deprived of the benefit.

The case made by the complaint is lacking only in showing that the damage done by the alleged fraudulent representations consisted of the money paid on the contracts alleged to have been fraudulently induced. Defendants by their answer supply such lack by showing that as a matter of fact there was a rescission of such contracts made by the plaintiff. That being the case, the only issue for the jury to determine was whether or not the contracts were fraudulently induced as alleged in the complaint and denied in the answer. Having so found, and it appearing without question, by reason of defendants' allegations that the damages consisted of the payments found to be made, it would seem to be a senseless thing to send the case back for a new trial when all the real issues between the parties were determined. The relief granted would seem to be clearly within the case made by the complaint and embraced within the issue (section 580, Code Civ. Proc.), and defendants would not appear to be in a position to complain that they themselves by their pleading made unimportant, by conceding it, what might have been a very important issue if it had not been conceded by them. “The rule is well settled that a complaint which lacks the averment of a fact essential to a cause of action may be so aided by the averment of that fact in the answer as to uphold a judgment thereon.” Daggett v. Gray, 110 Cal. 169, 172, 42 P. 568, 569. And it is equally well settled that a “defendant, by answering, may enlarge the scope of the relief to any extent consistent with the pleadings and ‘embraced within the issue.’ ” Woods C. I. Ditch Co. v. Porter S. Ditch Co., 173 Cal. 149, 153, 159 P. 427, 429.

Nor in our opinion can petitioning defendants save themselves from the effect of the acts found by the jury to have been fraudulently committed by them, by pointing to the provisions inserted in the contract by the Union Bank & Trust Company for its protection from representations not contained within the written contracts, made by selling agents unknown to such company and employed by others. If such clause could be so construed, it would in our opinion be void under section 1668 of the Civil Code.

This is not an action for rescission, but one for damages for the alleged wrongful inducements, after rescission accomplished.