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.
A partial rescission of an entire contract can not be had. The contract must be valid or void in toto. This rule applies to informal rescission at law, or repudiation of liability under the contract.1 Where A had exchanged land for stock, by reason of fraudulent representations as to facts affecting its value, he could not affirm the sale, and at the same time enforce a vendor's lien on the realty to the amount of the difference between the actual value of the stock and its value as represented.2 . If the contract is avoided, it carries with it all clauses,
42 Schribar v. Maxwell, 93 Kan. 211, 144 Ac. 191 [modifying on rehearing, (Schribar v. Maxwell, 92 Kan. 306, 140 Ac. 865]; Porter v. O'Donovan, 65 Or. 1, 130 Ac. 393; Sperry v. Sperry, 80 W. Va. 142, 92 S. E. 574 (obiter, as the court found only constructive fraud).
43 Johnson v. Burnside, 3 S. D. 230, 52 N. W. 1057; Davis v. Mitchell, 72 Or. 165, 142 Ac. 788.
44 Babcock v. Farwell, 245 111. 14, 137 Am. St. Rep. 284, 91 N. E. 683; Loft v. Gibbert (N. D.), 166 N. W. 810. It is said that "a party can not rescind a contract without offering to put the other in statu quo. These principles of law are too well settled to be now doubted; a statement of them is sufficient to announce the law."
In this case, however, the defrauded party had conveyed to a third person the land which formed the consideration for such contract, and had made no effort to secure a reconveyance thereof. The evidence also showed ratification. Sherbloom v. Faussett (Wash.), 170 Ac. 337.
45 Babcock v. Farwell, 245 111. 14, 137 Am. St. Rep. 284, 91 N. E. 683.
46 Coburn v. Hardy, 63 Mo. 475; Heav-ner v. Morgan, 30 W. Va. 355, 8 Am. St. Rep. 55, 4 S. E. 406.
1 Barrie v. Earle, 143 Mass. 1, 8 N. E. 639; Yeomans v. Bell, 151 N.Y. 230, 45 N. E. 552; Guild v. More, 32 N. D. 432, 155 N. W. 44.
2 Graham v. Moffett, 119 Mich. 303, 78 N. W. 132.
such as provisions for the forfeiture of money deposited.3 Still less can the guilty party demand that the innocent party should rescind only that part of an entire contract to which the fraud specifically related.4 The rule that partial rescission or repudiation is impossible applies equally to formal rescission in equity.5 If two or more contracts are severable, one may be avoided for fraud, although the other contracts are treated as valid.6 This rule does not apply to fraud in some matter collateral to the contract, but not a term thereof. Thus, where A has by fraud been induced to pay an extra sum over and above his actual contract liability he may recover such sum without attacking the original contract.7 So if he has been induced to pay money under the contract, by fraudulent representations that the contract has been performed, he may recover such payment without avoiding the contract.8 The rule that partial rescission or repudiation is impossible applies only to entire contracts, and not to severable contracts. If the contract is divisible, a part of it may be affirmed and a part disaffirmed.9
Sec. 354. Ratification - In general Since fraud in the inducement makes a contract voidable, not void, the party defrauded may make the contract valid by electing, with full knowledge of the facts, to treat it as valid.1 A promise to pay the purchase
3 McDowell v. Caldwell, 116 la. 475, 89 N. W. 1111.
4 Butler v. Prentiss, 158 N. Y. 49, 52 N. E. 652.
5 Hyslip v. French, 52 Wis. 513, 516, 9 N. W. 605; Hoffman v. King, 70 Wis. 372, 381, 36 N. W. 25; McConnell v. Hughes, 83 Wis. 25, 53 N. W. 149.
6 Weil v. Stone, 33 Ind. App. 112, 104 Am. St. Rep. 243, 69 N. E. 698.
7 Kelly v. Solari, 9 M. & W. 54; United States v. Barlow, 132 U. S. 271, 33 L. ed. 346; Caldwell v. Maxfield, 7 S. D. 361, 64 N. W. 166.
8 Minor v. Baldridge, 123 Cal. 187, 55 Ac. 783.
9 Higham v. Harris, 108 Ind. 246, 8 N. E. 255.
1 United States. Upton v. Tribilcock, 91 U. S. 45, 23 L. ed. 203; McLean v. Clapp, 141 U. S. 429, 35 L. ed. 804; Shappirio v. Goldberg, 192 U. S. 232, 48 L. ed. 419; Kingman v. Stoddard,
85 Fed. 740, 29 C. C. A. 413; Wright v. Phipps, 90 Fed. 556; Alger v. Anderson, 92 Fed. 696; Burnes v. Burnes, 137 Fed. 781 [affirming Gatch v. Burnes, 132 Fed. 485]; Burk v. Johnson, 146 Fed. 209, 76 C. C. A. 567.
Alabama. Thweatt v. McLeod, 56 Ala. 375; Manning v. Pippen, 95 Ala. 537, 11 So. 56; Pelham v. Chattahoochee Grocery Co., 146 Ala. 216, 8 L. R. A. (N.S.) 448, 41 So. 12.
California. Nounnan v. Land Co., 81 Cal. 1, 6 L. R. A. 219, 22 Ac. 515; Schmidt v. Mesmer, 116 Cal. 267, 48 Ac. 54; Montgomery v. McLaury, 143 Cal. 83, 76 Ac. 964; North American Dredging Co. v. Outer Harbor Dock & Wharf Co. (Cal.), 173 Ac. 756.
Illinois. Brown v. Brown, 142 111. 409, 32 N. E. 500.
Indiana. St. John v. Hendrickson, 81 Ind. 350.
Iowa. Kearney, etc, Co. v. Ry. Co., money;2 giving a note in performance of the original contract;3 making a partial payment of the purchase price;4 the payment of interest thereon;5 an assignment of a contract;6 the obtaining of an extension of time;7 renewing a note;8 endorsing notes for renewal after learning that such notes were originally obtained by fraud,9 or making payments thereon;10 making a new contract,11 as by providing for payment at once, instead of deferred payments;12 or entering into a new agreement to pay in legal services and not in cash for stock, the subscription which has been induced by fraud;13 or receiving money under the contract,14 as for an extension of time;15 or leasing the property bought through fraud;16 or remaining in possession and making improvements;17 or taking security for performance;18 or treating as his own property received under the contract;19 accepting benefits under the transaction;20 or other performance of an executory contract,21 as continuing the work of excavation after learning that the material was much more expensive to excavate than had been represented;22 or bringing suit on the contract;23 or getting judgment thereon,24 are all acts which