1 Ibid.; Irvine v. Kirkpatrick, 7 Bell, App. 186; 3 Eng. Law & Eq. 17.
§ 623. The general rule is, that before a party can rescind a contract and recover the advances he may have made thereon, he must restore the other to the condition in which he stood before the contract was made; but in cases of fraud, where the subject-matter of the contract has become so entangled and complicated as to render it impossible to do this, the injured party, upon offering to restore the property received and to reinstate the other into his previous condition, as far as it lies in his power, may rescind the contract and recover his advances.6 But when the subjeckmatter is of no value at all the offer, and in the mean time A. should privately learn that the ship was lost, and with the intention of misleading B., should write to him, that, if he had not signed the policy, he need not, as the ship had been heard from; and B., not having then signed the policy, but being misled by the letter to suppose the ship was safe, should then sign the policy and return it to A., intending thereby to gain the premium, without running any risk; in such a case, as each party would have intended a fraud upon the other, to obtain some advantage, the law would doubtless refuse redress to both.
1 Hough v. Richardson, 3 Story, 695, 698; Doggett v. Emerson, 3 Story, 740; Sanborn v. Stetson, 2 Story, 481; Veazie v. Williams, 3 Story, 611; Attwood v. Small, 6 CI. & Finn. 351.
2 Ibid.; Hough v. Richardson, 3 Story, 695.
3 Partridge v. Usborne, 5 Russ. 195; Doggett v. Emerson, 3 Story, 740.
4 By Lord Cottenham, in Vigers v. Pike, 8 CI. & Finn. 562; Sanborn v. Stetson, 2 Story, 481; Veazie v. Williams, 3 Story, 611.
6 Noble v. Noble, 26 Ark. 317 (1870); Anderson v. Dunn, 19 Ark. 650. 8 Masson v. Bovet, 1 Denio, 69. In this case Beardsley, J., said: "It was urged on the argument that a contract cannot be rescinded by to either party, it need not be restored.1 And if a person rescind a contract for fraud, he can recover back the money-paid, in an action for money had and received, only when he can return the consideration received, and place the other party in statu quo. If he cannot do this, his remedy is by an action for deceit.2
§ 624. But where both parties have been guilty of a fraudulent intention, the law refuses to interfere, and leaves them as it finds them.3 Thus, if A. should open a policy of insurance on his ship, then at sea, and deliver it to B., to underwrite upon it, allowing him until the next day to consider one of the parties alone, so as to authorize a recovery by him of what had been paid upon it, unless the other party is thereby fully restored to the condition in which he stood before the contract was made. This is certainly the general rule; but in cases of fraud, such as this was, it can only mean that the party defrauded, if he would rescind the contract, must return or offer to return every thing he received in execution of it. To retain the whole, or a part only of what was received upon the contract, is incompatible with its rescission; and hence the necessity of restoring what had been received upon it.
"This is not exacted on account of any feeling of partiality or regard for the fraudulent party. The law cares very little what his loss may be, and exacts nothing for his sake. If, therefore, he has so entangled himself in the meshes of his own knavish plot, that the party defrauded cannot unloose him, the fault is his own; and the law only requires the injured party to restore what he has received, and, as far as he can, undo what had been done in the execution of the contract. This is all that the party defrauded can do, and all that honesty and fair dealing require of him. If these fail to extricate the wrong-doer from the position he has assumed in the execution of the contract, it is in no sense the fault of his intended victim, and upon the principles of eternal justice, whatever consequences may follow, they should rest on the head of the offender alone." See Stevens v. Austin, 1 Met. 557; Howard v. Cadwalader, 5 Blackf. 225; Martin v. Roberts, 5 Cush. 126; Frost v. Lowry, 15 Ohio, 200.
1 Perley v. Balch, 23 Pick. 283.
2 Clarke v. Dickson, El. B. & E. 148 (1858).
3 Taylor v. Weld, 5 Mass. 116; Deady v. Harrison, 1 Stark. 60; Robinson v. McDonnell, 2 B. & Al. 134; Doe v. Roberts, 2 B. & Al. 369; Hawes v. Loader, Yelv. 196; 1 Story, Eq. Jur. § 61; Holman v. Johnson, 1 Cowp. 341; Hannay v. Eve, 8 Cranch, 242; Warburton v. Aken, 1 McLean, 460; Goudy v. Gebhart, 1 Ohio St. 262; Clay v. Ray, 17 C. B. (n. s.) 188 (1864), an interesting case, involving a fraudulent compounding with creditors. See also Dillon v. Stephenson, 12 Irish Com. Law, 81 (1860).
§ 625. It is an established rule in law and in equity, that fraud will never be presumed, but must be clearly established by proof, dolum ex indiciis perspicuis probari convenil.1 And it is hardly necessary to say that if a deed, lease, or will is sought to be set aside on the ground of fraud, the burden of proof is upon the party alleging the fraud.2 It is not, however, necessary that positive and express proof thereof should be given; for, whenever it is manifestly indicated by the circumstances and condition of the parties contracting, it will be presumed to exist. Nor is it necessary, in order to found a right in the party defrauded to recover on the contract, that the guilty party should appear to have been benefited by the fraud, or to have colluded with the person who is.3 But it will not be implied from doubtful circumstances, which only awaken suspicion.4 Courts of equity are, however, invested with a more extensive and unrestricted jurisdiction than courts of law, in cases of fraud; and will often grant relief in cases where the circumstances and evidence would be inadequate to support a verdict founded thereupon in a court of law.5 But although the powers of courts of law are more restricted, yet, wherever fraud is clearly proved by the evidence to exist, it will always