It is essential, in order to sustain an action of deceit, or to give a party the right to avoid a contract on the ground of fraud, that he shall have been prejudiced or injured by the fraud.60 Where, for instance, a person was induced to exchange his property for shares of stock by false representations of the other party, but the stock was worth what he gave for it, so that he suffered no injury, it was held that he could not maintain an action for deceit.81 And, in a case in which the seller of property had falsely represented that there was no mortgage thereon, it was held that the purchaser could not avoid the sale, where the seller had the mortgage released as soon as his attention was called to it.62

Same - Effect - Remedies

140. Fraud renders a contract, not void, but merely voidable at the option of the party injured. Therefore,

(a) He may affirm the contract, and sue for damages for the deceit, or, if sued on the contract, set up the fraud in reduction of the demand.

(b) He may rescind the contract, and

(1) Sue for damages for the deceit;

(2) Sue to recover what he has parted with;

(3) Resist an action at law on the contract;

(4) Resist a suit in equity for specific performance, or

(5) Sue in equity to have the contract avoided judicially.

141. There are the following limitations to a party's right to rescind a contract for fraud: (a) He cannot rescind after affirming it by accepting its benefits, or by suing or otherwise acting upon it after discovery of the fraud.

v. Ahrens, 26 S. C. 275, 2 S. E. 387; Saunders v. McClintock, 46 Mo. App. 216; Strong v. Strong, 102 N. T. 69, 5 N. E. 799; Ruff v. Jarrett, 94 I11. 475; Moline-Milburn Co. v. Franklin, 37 Minn. 137, 33 N. W. 323. See "Contracts," Dec. Dig. (Key-No.) § 94; Cent. Dig. §§ 420-1,80.

60 Sckubart v. Coke Co., 41 I11. App. 181; Marriner v. Dennison, 78 Cal. 202, 20 Pac. 386; Lorenzen v. Investment Co., 44 Neb. 99, 62 N. W. 231; Bomar v. Rosser, 131 Ala. 215, 31 South. 430. But see Nortbrop v. Hill, 57 N. Y. 351. 15 Am. Rep. 501. See "Contracts," Dec. Dig. (Key-No.) § 94; Cent. Dig. §§ 420-430.

61 Alden v.. Wright, 47 Minn. 225, 49 N. W. 767, and cases there cited. See "Fraud," Dec. Dig. (Key-No.) § 25; Cent. Dig. § 24.

62 Johnson v. Seymour, 79 Mich. 156, 44 N. W. 344. And see Beard v. Bliley, 3 Colo. App. 479, 34 Pac. 271. Cf. Stevenson v. Marble (C. C.) 84 Fed. 23. See "Sales," Dec. Dig. (Key-No.) § 88; Cent. Dig. §§ 65-85.

(b) Delay in rescinding after discovery of the fraud, or after it should have been discovered, may amount to an affirmance at law, and may bar relief in equity on the ground of laches.

(c) The consideration must be returned as a condition precedent to the right to rescind; and, as a rule, there can be no rescission if the subject-matter of the contract has been so dealt with that the parties cannot be placed in statu quo.

EXCEPTIONS - (1) This rule does not apply where the consideration has been destroyed, or taken from the injured party's control, without his fault.

(2) Where it is of no value whatever.

(3) Provided the consideration is returned, the fraudulent party need not be placed in as good a position as he before occupied, if, by reason of his own act, it is impossible to do so.

(4) If, by natural causes, or reasonable use, the value of the consideration has diminished, it may be returned in its depreciated condition.

(d) The right to rescind may be defeated by a third person's having acquired an interest under the contract for value, and without notice of the fraud.

Fraud does not render the contract void, but renders it only voidable at the option of the party defrauded.63 In other words, it is valid until rescinded. It is for the party defrauded to elect whether he will be bound.64 He therefore has several remedies on discovering the fraud:

First. He may affirm the contract, and bring an action for deceit to recover such damages as the fraud has occasioned him, or set up such damages by way of recoupment or counterclaim, if sued upon the contract by the other party.65 For instance, the defraudthe defrauded party learns of the fraud, and nevertheless continues to carry out the contract, exacting performance, and receiving benefits, he cannot maintain an action for the deceit. Kingman & Co. v. Stoddard, 85 Fed. 740, 29 C. C. A. 413; Simon v. Rubber Shoe Co., 105 Fed. 573, 44CC. A. 612, 52 L. R. A. 745. See "Fraud," Dec. Dig. (Key-No.) §§ 31, 32; Cent. Dig. §§ 27, 28.

63 ROWLEY v. BIGELOW, 12 Pick. (Mass.) 307, 23 Am. Dec. 607, Throckmorton, Cas. Contracts, 196; Baird v. Mayor, 96 N. Y. 567; Smith v. Horn-back, 4 Litt (Ky.) 232, 14 Am. Dec. 122; Foreman v. Bigelow, 4 Cliff. 541, Fed. Cas. No. 4,934; Cobb v. Hatfield, 46 N. Y. 533; Wilson v. Hundley, 96 Va. 96, 30 S. E. 492, 70 Am. St Rep. 837. See "Contracts," Dec. Dig. (Key-No.) § 98; Cent. Dig. § 447

64 Rawlins v. Wickham, 3 De Gex & J. 322; dough v. Railway Co., L. R. 7 Exch. 26; Tiffany, Sales, 119. See "Contracts," Dec. Dig. (Key-Xo.) § 98; Cent. Dig. § 447.65 Union Cent Life Ins. Co. v. Sehidler, 130 Ind. 214, 29 N. E. 1071, 15 L. R. A. 89; Peck v. Brewer, 48 i11. 54; Haven v. Neal, 43 Minn. 315, 45 N. W. 612; Pryor v. Foster, 130 N. Y. 171, 29 N. E. 123; Nauman v. Oberle, 90 Mo. 666, 3 S. W. 380; Barr v. Kimball, 43 Neb. 7615, 62 N. W. 196. But some cases hold that if, while the contract is still wholly or largely executory, ed buyer, on discovering the fraud, may keep the goods, and bring an action for damages;66, if he has not paid for them, he may set up the fraud when sued by the seller for the price.'7

Second. He may rescind the contract, and (1) sue, in an action of deceit, for any damages he may have sustained by reason of the fraud;68 or (2) if he has paid money under the contract, he may recover it back,69 and if he has delivered goods or property he may maintain an action of replevin or trover;70 or (3) he may resist an action at law brought against him on the contract;71 or (4) he may resist a suit in equity by the other party for specific performance; 72 or (5) he may himself sue in equity to have the contract judicially canceled and set aside.73

66ouldsworth v. City of Glasgow Bank, 5 App. Cas. 323. See "Sales," Dec. Dig. (Key-No.) § 404; Cent. Dig. §§ 1146-1155.

67pplegarth V. Robertson, 65 Md. 493, 4 Atl. S96. See "Sale*," Dec. Dig. (Key-No.) § S48; Cent. Dig. §§ 973-986.

68Wardell v. Fosdick, 13 Johns. (N. Y.) 325, 7 Am. Dec. 383; Burns v. Dockray, 156 Mass. 135, 30 N. E. 551; Peck v. Brewer, 48 I1L 54. See "raud;' Dec. Dig. (Key-No.) §§ 31, 32; Cent. Dig. §§ 27, 28.

es Clarke v. Dickson, El. Bl. & El. 148; Coolidge v. Brigham, 1 MetC (Mass.) 547; Jordan & Davis v. Annex Corp., 109 Va. 625, 64 S. E. 1050, 17 Ann. s. 267. See "Sales," Dec. Dig. (Key-No.) $ 404; Cent. Dig. §§ 1146-1155.

70hurston v. Blanchard, 22 Pick. (Mass.) 18, 33 Am. Dee. 700; Ferguson v. Carrington, 9 Barn. & C. 59; Lee v. Burnham, 82 Wis. 209, 52 N. W. 255; Moody v. Blake, 117 Mass. 23, 19 Am. Rep. 394; Cary v. Hotailing, 1 Hill (N. Y.) 311, 37 Am. Dec. 323; Benesch v. Weil, 69 Md. 276, 14 Atl. 666; Barker v. Dinsmore, 72 Pa. 427, 13 Am. Rep. 697. Bee "Sales," Dec. Dig. (Key-No.) §§ 316-318; Cent. Dig. §§ 890-898.

71 Clough v. Railway Co., L. R. 7 Excb. 26, 36; Olston v.Oregon Water Power & Ry. Co., 52 Or. 343, 96 Pac. 1095, 97 Pac. 538, 20 L. R. A. (N. S.) 915. See "Sales." Dec. Dig. (Key-No.) § 347; Cent. Dig. §§ 962-972.

72 Ratliff v. Vandikes, 89 Va. 307, 15 S. E. 864; Friend v. Lamb, 152 Pa. 529, 25 Atl. 577, 34 Am. St Rep. 672; McShane v. Hazlehurst, 50 Md. 107; Chute v. Quincy, 156 Mass. 189, 30 N. E. 550; Brown v. Pitcairn, 148 Pa. 387, 24 Atl. 52, 33 Am. St Rep. 834. See "Specific Performance," Dec. Dig. (Key-No.) § 53; Cent. Dig. §§ 160-171 1/2.

73 Castle v. Kemp, 124 I11. 307, 16 N. E. 255; Downing v. Wherrin, 19 N. H. 9, 49 Am. Dec. 139; Burrows v. Wene (N. J.) 26 Atl. 890; Williams v. Kerr, 152 Pa. 560, 25 Atl. 618; Jackson v. Hodges, 24 Md. 468; Tretheway v. Hulett 52 Minn. 448, 54 N. W. 486. See "Cancellation of Instruments," Dec. Dig. (Key-No.) § 4; Cent. Dig. § 1.