Preston v. Spaulding

Citations

• 120 Ill. 208
• 10 N.E. 903

Syllabus

<p>1. Rescission of contract—for fraud—jurisdiction in chancery. The jurisdiction of courts of equity to decree the rescission of contracts for fraud, and to administer those remedies which are dependent upon such rescission, is unquestionable.</p> <p>2. Same—right to affirm, or rescind a fraudtilent contract—intervening rights of third persons. A contract tainted with fraud is not absolutely void, but only voidable. Therefore, a vendor, after knowledge of the fraud of his vendee, may affirm the sale. As a general rule, the vendor may dis-affirm the sale after notice of the fraud, and recover back his property if still in the hands of his vendee, or the value of it. But if he lie by, after notice, till the rights of innocent persons intervene, his right to rescind is gone, or is postponed as to such innocent third persons.</p> <p>3. So if the vendor of personal property has, in whatever good faith, though not exercising proper care in that regard, through a series of years, held out to the world his vendees as men of financial ability, and as worthy of credit, and sells them a large amount of goods on credit, clothing them with the apparent ownership free of incumbrance, and also makes representations as to the ability of his vendees, and they receive credit from others on the faith of their ownership of such goods, or of such representations, a court of equity will not rescind the sale of the goods, in favor of such vendor, on account of fraudulent representations made to him by the vendees, as against the equitable rights of those who trusted such vendees on the faith of the misleading action of such vendor; but as to all goods sold by such original vendor after the giving of credit to the vendees by others, the rule is different, as no credit was given on account thereof. .</p> <p>4. Same—rescission must be in toto, or not at all—placing the parties , m statu quo. A party can not rescind a contract for fraud, and at the same time retain the consideration, in whol