This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
If A executes a contract or other written instrument in reliance upon a fraudulent statement of the adversary party as to its contents, A may treat such contract or instrument as void in an action at law; and it is not necessary that A should bring a suit in equity to obtain a formal rescission of such instrument.1 This result follows from the theory that A did not execute such instrument.2 If A signs a deed in reliance upon the fraudulent representations of the grantee as to the contents there of, A may avoid such deed, and bring an action at law upon the theory that he did not execute such instrument.3 If A signs a lease in reliance upon the fraudulent representations of the lessee as to its contents, A may recover such property by an action of unlawful detainer without suing for rescission in equity.4
1 See Sec. 221 and 223 et seq.
2 Wagner v. MaGee, 130 Minn. 162, 153 N. W. 313; Seeck v. Jakel, 71 Or. 35, L. R. A. 1915A, 679, 141 Ac. 211.
3 Seeck v. Jakel, 71 Or. 35, L. R. A. 1915A, 679, 141 Ac. 211.
4 Seeck v. Jakel, 71 Or. 35, L. R. A. 1915A, 679, 141 Ac. 211.
5 Wagner v. MaGee, 130 Minn. 162, 153 N. W. 313.
1 Spring VaHey Coal Co. v. Buzis, 213 HI. 341, 72 N. E. 1060; Sase v. Thomas, 6 Ind. Ter. 60, 11 L. R. A. (N.S.) 260, 89 S. W. 656; Girard v. St. Louis Car Wheel Co., 123 Mo. 358, 45 Am. St. Rep. 566, 25 L. R. A. 514, 27 S. W. 648;
Interior Warehouse Co. v. Dunn, 80 Or. 528, 157 Ac. 806.
Contra: That fraudulent representations as to the contents of the instrument do not affect its validity at law though they may be ground for rescission in equity: Heck v. Mo. Ac. Ry. Co., 147 Fed. 775; Whiting v. Davidge, 23 D. C. App. 156.
2 "It never had any binding force and there was nothing to rescind": Indiana, etc., Ry. v. Fowler, 201 111. 152, 94 Am. St. Rep. 158, 66 N. E. 394 [affirming 103 111. App. 565]; Pawnee Coal Co. v. Royce, 184 111. 402, 56 N. E. 621.
Even if the instrument which is executed under a mistake as to its contents is under seal, such instrument will be regarded at law as a nullity; and a decree of formal rescission in equity is not necessary.5 Ore who has executed a sealed release under a mistake as to its contents may bring an action at law upon the theory that such release was never executed, and if such release is offered as a bar to his action, he may show such mistake and thus prove that such release had no effect, even at law.6 One who signs a release in reliance upon the fraudulent statement of the adversary party as to its contents, being himself unable to read, may avoid such release at law by bringing an action upon his original cause of action and introducing evidence of fraud to avoid the effect of such release if it is interposed as a defense. It is not necessary to resort to equity to have such release cancelled.7 One who is induced to sign a compromise of his claims for a personal injury in reliance on the fradulent statement of the agent of the railway company to the effect that such contract contains a term whereby the injured party is to receive employment for life as well as a certain sum of money, may ignore such contract of compromise, and maintain an action at law upon his original cause of action.8 It has been held, however, in some jurisdictions, that even if the execution of a release is procured by misrepresentation as to its contents, the party who wishes to avoid such release must do so by a suit in equity.9 A release not under seal which is invalid for fraud or mistake as to its contents may be attacked at law.10
3 Prestwood v. Carlton, 162 Ala. 327, 50 So. 264; Kentland Coal & Coke Co. v. Elswick, 167 Ky. 593, 181 S. W..181.
4 Sass v. Thomas, 6 Ind. Ter. 60, 11 L. R. A. (N.S.) 260, 89 S. W. 656.
5Thoroughgood's Case (Thorough-good v. Cole), 2 Coke 5 (Vol. I, p. 435).
6 Thoroughgood's Case (Thorough-good v. Cole), 2 Coke 5 (Vol. I, p. 435).
7 Indiana, Decatur and Western Railroad v. Fowler, 201 111. 152, 66 N. E. 394; Chicago city Ry. Co. v. Uhter, 212 111. 174, 72 N. E. 195; Spring Valley
Coal Co. v. Buzis, 213 111. 341, 72 N. E. 1060; New Bell Jellico Coal Co. v. Oxendine, 155 Ky. 840, 160 S. W. 737; Girard v. St. Louis Car Wheel Co., 123 Mo. 358, 45 Am. St. Rep. 556, 25 L. R. A. 514, 27 S. W. 648.
8 Hayes v. Atlanta and Charlotte Air Line Ry. Co., 143 N. Car. 125, 55 S. E. 437.
9 Heck v. Missouri Pacific Ry. Co., 147 Fed. 775.
10 Louisville & N. R. Co. v. Crutcher, 135 Ky. 381, 122 S. W. 191.
It has been said that if a grantor executes a deed in reliance upon the statement of the grantee that such deed reserves the timber to the grantor, such fraud is in the inducement or treaty, and not in the execution or factum.11 In any event, the grantor may maintain an action against the grantee for such fraud, if such grantee has conveyed such property to a bona fide purchaser for value.12
One who has been induced to execute an instrument by fraudulent representations of the adversary party as to its contents, may have rescission in equity if he seeks such relief.13 If the instrument which he has executed under false representations as to its contents is a deed, he may have such deed rescinded in equity.14