
    PHOENIX DUSTER & MANUFACTURING COMPANY, Respondent, v. LANDAU GROCERY COMPANY, Appellant.
    St. Louis Court of Appeals,
    November 16, 1909.
    APPELLATE PRACTICE: Equitable Defense: Fraud and Deceit: Conclusiveness of Court’s Finding. In an action to recover tbe price of goods sold and delivered and to recover profits lost by reason of defendant’s refusal to take part of tbe goods, wbere an answer was filed asking for a rescission of tbe contract providing for tbe sale of sucb goods, on tbe ground of misrepresentation and fraud, a finding by tbe trial court against defendant .on sucb defense will not be disturbed on appeal, wbere there was evidence on both sides of tbe issue.
    Appeal from St. Louis City Circuit Court. — Eon. Matt Gf. Reynolds, Judge.
    
      Nagel & Kirby for appellant.
    (1) When the pleadings in a case present an equitable issue, the appellate court is not bound by the findings of fact made by the chancellor, but it becomes the duty of the appellate court to examine the evidence and make its own findings of fact. Patterson v. Patterson, 200 Mo. 335; Zweigart v. Reed, 119 S. W. 960; Barrie v. Railroad, 119 S. W. 1020. (2) Appeals in equity cases are determined by a preponderance of the evidence, which the appellate court will weigh for itself, the verdict of a jury or finding of the chancellor on issues of fact being advisory merely. Hall v. Hall, 77 Mo. App. 600; Lewis v. Rhodes, 150 Mo. 498. (3) The clear preponderance of the evidence in the case at bar supported the equitable defense pleaded in the answer, vis., that the signing of the contract was induced and • procured by fraudulent misrepresentations as to the material facts; (a) that the Phoenix duster was a new article in the St. Louis market, not theretofore introduced in the St. Louis market; (b) that it was a good seller. (4) “Where the right to rescind a contract springs from subsequently discovered fraud, the defrauded party does not lose his right to rescind because the contract has been partly executed, and the parties cannot be fully restored to their former positions.” Smith on Fraud, sec. 133; Wine Co. v. Brasher, 13 Fed. 595; Gatling v. Newell, 9 Ind. 572; Mason v. Bovet, 1 Denio 69; Myrick v. Jacks, 33 Ark. 425; Kelly v. Owens, 120 Cal. 502. (5) Where the inducing misrepresentation related to a fact, either peculiarly within the knowledge of the person making the representation, or of such a nature that the truth of the representation could reasonably be determined only by actual test of the article, then the fact that the defrauded purchaser uses or sells enough of the subject-matter to test the truth of the representations, will not prevent a rescission if he acts with reasonable promptness after discovering the fraud. Wine Co. v. Brasher, 13 Fed. 595. (6) In such a case equitable restitution will be decreed, and an accounting for the portion sold, together with a return of the portion unsold, will constitute equitable restitution. Wine Co. v. Brasher, 18 Fed. 595; McGhee v. Bell, 170 Mo. 121. (7) The trial court committed reversible error in not admitting evidence to show that a sale of seven gross of the dusters was not in fact an unreasonable or excessive amount to ascertain in the St. Louis market whether the duster was “a good seller,” and “a new article.”
    
      Lee W. Grant and P. B. Kennedy for respondents.
    (1) The testimony of Fickett, for plaintiff, and Louis Landau, for defendant, is directly opposed. Both cannot be true. The court, therefore, had to believe either one or the other. BOe evidently believed Fickett and disbelieved Landau. He had the witnesses before him and could judge by their demeanor as to their truthfulness. Where there is a direct and sharp conflict in the evidence before the trial court, the finding of that court will not be disturbed. Strine v. Williams, 159 Mo. 582; Carter v. Dilley, 167 Mo. 564; Chance v. Jennings, 159 Mo. 544; Culver y. Smith, 82 Mo. App. 390; Arn v. Arn, 81 Mo. App. 133. (2) The court must be satisfied by the clearest evidence that the fraudulent representations were made, and made under such circumstances as to show that the contract was founded upon them. Bailey v. Smock, 61 Mo. 213; Dunn v. White, 63 Mo. 181. (3) Even if Fickett had made the alleged statement that the wire-handle duster had not been sold before in this market, and this statement was untrue, it must be shown that this was a material element in the making of the contract. It was, in fact, collateral only to the contract. It was not shown that the previous sale of plaintiff’s wire-handle duster interfered with the sale of the wooden-handle duster. It is not sufficient that the alleged representations should have been false. Plaintiff must have rested the transaction on the faith of them, and they must he material. Story, Equity Jur., sec. 191, cited in Wannell y. Kern, 57 Mo. 478; Bryan y. Hitchcock, 43 Mo. 527; Parker v. Marquis, 64 Mo. 38, 42; Hamilton y. Mallett, 8 Mo. App. 584; Nauman y. Oberle, 90 Mo. 666. (4) Eepresentations that it was a good seller were not shown to have been relied qn by Landau. Neither were the representations proven false. Even if the duster had not been a good seller, the representations would not be ground for rescinding the contract. Black v. Epstein, 93 Mo. App. 459.
   GOODE, J.

Plaintiff is engaged in the manufacture of dusters of its own patent, of Manilla paper attached to handles either of wire or wood. The president of plaintiff, E. N. Fickett, called at defendant’s place of business to sell defendant, which is engaged in the wholesale grocery business in St. Louis, some of the dusters. He sold defendant one hundred .gross, seventy-five gross being shipped at once, but before the other twenty-five gross were shipped defendant countermanded the order on the ground the sale had been induced by false representations in these regards: First, that the dusters were a novel article and never had been sold before in St. Louis, and, second, “were good sellers.” Some correspondence ensued between the parties regarding the transaction, but having failed to settle the dispute amicably, plaintiff instituted*the present action in two counts, seeking in the first to recover $937.50, the purchase price of seventy-five gross of dusters actually shipped to defendant and received by it, and $250, the profit on the twenty-five gross which were not delivered. As instituted it was an action at law, but the answer filed by defendant was treated by both parties as converting the cause into one in the nature of a suit in equity. We will not say whether, in our opinion, the answer had this effect, being merely one to rescind the contract, but will treat the case as the parties did. The answer admitted the purchase of the dusters and set up the contract was induced by fraudulent representations as stated, asked the court to decree its rescission and tendered to plaintiff payment for some seven gross of dusters defendant had disposed of before it ascertained the alleged fraud in the sale. On the testimony the court entered judgment for plaintiff, finding against the defense of fraud. Defendant appealed and contends the judgment was against the weight of the evidence and, as the suit is in equity, this court ought to review the evidence and reverse it. The main point of fact at issue was whether Fickett represented the dusters with wood handles, as all purchased by defendant were, were a novelty and never had been sold in St. Louis, as he asserted, or whether he represented that neither those with wood handles nor those with wire handles had been sold in the St. Louis market. It is conceded dusters of this pattern with wood handles had not been sold before in St. Louis and that those with wire handles had for seven or eight years; and defendant contends, in substance, the latter species had proved so unsatisfactory that those with wood handles did not find a good market. Fickett testified the only representation he made regarding the novelty of the articles in St. Louis was that the dusters with wood handles never had been sold there. He testified further he distinctly told Landau, the purchasing agent of defendant, the wire-handled dusters had been “variously” sold in St. Louis. On the other hand the testimony for defendant tends to prove Fickett’s representation related to both dusters, and that when he made it he had both kinds in his hands, was striking them against a chair to show how they worked, and while he did this said the dusters were a novelty, meaning both of them, and never had been sold before in St. Louis. Defendant wished to obtain an exclusive market in St. Louis and bargained for this for four months. The contract between the parties, written on a blank form, with insertions and interlinings in pencil, is set forth:

“This contract made this 7th day of Oct., 1907, between Phoenix Duster & Manufacturing Co., of Atlanta, Ga., party of the first part, and Landau Grocery Co., of . . . party of the second part, witness:
“Said party of the first part has this day sold party of the second part 100 gross of their 5 1-2 oz. Phoenix Patent Dusters, at $12.50 per gross, F. O.. B. Atlanta, Ga. The said party of the first part agreeing to sell or retail but no other wholesale houses in said St. Louis for 4 months from this date, (sic.)
“Party of the second part agrees in view of the concessions made in this contract to push sale of said dusters, and should they fail to do so then said party of the first part is privileged to sell other firms.
“It is distinctly understood that there are no other conditions, verbal or otherwise, not named in this contract. No agent or other person is authorized to make any statements or agreements that will affect this contract unless they are embodied in it in writing. It is further understood that this contract is accepted by party of the first part contingent to strikes, fires or inability to get stock.
“75 Gro. once Bal. when order out.
“1 Gro. Grats.
“(Signed) Landau Grocery Co.,
Per L. Landau* Prest. Phoenix Duster & Manufacturing Co.”

If the number of witnesses must control the decision of the point, the finding of the court below as to the representation made by Fickett would be against the weight of the evidence, for two or three witnesses testified the facts were as contended by defendant, whereas Fickett’s testimony that his statement related only to the wood-handled dusters and he advised defendant the wire-handled dusters “had been previously sold in St. Louis ” was uncorroborated by any other witness. But it is to be remembered the witnesses who testified for defendant were its officials and employees, and we are not so convinced their narrative of the affair was correct as to overrule the court below, who had the advantage of seeing the manner of the witnesses on the stand. The discreeter policy in this cause is to defer to the judgment of the chancellor, as we find indications in the record that he weighed the testimony rightly. The impression we derive is that defendant became dissatisfied because it had overbought, as a panic came on in October, 1907, and money was scarce; the St. Louis banks refusing to cash checks. Defendant did not ask rescission of the contract when it first discovered it had been imposed on, as it now alleges, but in a letter dated October 30, 1907, one week after the contract was made, said, in effect, that had defendant known of the prior sales in St. Louis it would not have bought so many. This portion of the letter reads as follows: “Under the circumstances,'we cannot use this large quantity. We would not have bought this large quantity, but he insisted that we had the exclusive sale here and same was never introduced here before, and same would be sold in thirty days. Had he told us the truth, we would have taken five gross, and we are willing to accept that many and we hold the balance subject to your order. If this is satisfactory to you, we will remit for the five gross, and we will keep the balance here and you can dispose of them and forward them from here wherever you placed them, as we will not accept them since your representative had the audacity to come to our office and lie to us the way he did.” It was not until November 12th defendant declared the contract rescinded. On consideration of the whole evi> dence we will leave the decision as the court below rendered it.

The representation regarding the duster being a good seller was not proved to have been either false or fraudulent. Defendant sold six or seven gross of the dusters in a week, and at the same rate of sale would have disposed of about all it bought during the four months it was granted an exclusive market.

The judgment is affirmed.

All concur.  