48 N.Y.S. 295 | N.Y. App. Div. | 1897
The plaintiff brought an action to recover from the defendant the price of 158 shares of preferred stock and 30 shares of the common stock of the Forum.Publishing Company, which the. defendant had agreed to buy, but which he had refused to receive. In his answer to the complaint, the defendant set up a counterclaim, to which the plaintiff demurred upon the ground that it did not state facts sufficient to constitute a cause of action. ~ Upon the hearing,, that demurrer was overruled, and from the judgment entered upon that decision this appeal is taken.
The question jrresented by the demurrer is-not whether, upon the facts, as they may be made to appear upon the trial, the counterclaim is' sufficient, but whether the facts alleged in it would tend to defeat or diminish the recovery to which the plaintiff is apparently entitled. (§ 501.) It may well be that upon the trial the defendant will fail entirely, to prove some fact essential to make the counterclaim good, but upon the hearing of this demurrer that is of no importance. The question here is, whether within the four corners of the counterclaim are found those allegations which would set out a good cause of action if that counterclaim had been set up as a complaint in an action brought by the defendant against the plaintiff to recover upon it. It is set up to procure in behalf of the defendant the rescission of a contract made with the plaintiff by which the defend
Where a person has been by deceit induced to enter into a contract, he has as a remedy, either to bring an action at law for the damages which he has sustained, or to bring his action on the equitable side of the court for the rescission of the contract. In either case the essential ■constituents of the action are the same. They are “ representation, falsity, scienter, deception and injury.” There must have been a false representation known to be such, made by the seller, calculated and intended to influence the buyer, which came to his knowledge, and in reliance upon which he, in good faith, parted with the property, or incurred the obligation which occasioned the in jury of which he complains. (Brackett v. Griswold, 112 N. Y. 454, 467.) We. are to examine this counterclaim, therefore, to ascertain whether these elements of a cause of action for deceit are set up in it, and if they are sufficiently alleged, then the counterclaim is a good one, whether the defendant will be able to prove it upon the trial or not.
It appears from the counterclaim that the defendant was a large owner of the stock of the Forum Publishing Company, and its president, and that he controlled the policy of the company in the publication of its magazine. It appeared also that the plaintiff had become the owner of a considerable amount of stock and that he was desirous, ■or pretended to be desirous, of obtaining the control of the company, ousting the defendant from his position as president, and putting his own brother-in-law in the position of editor of the magazine. In that condition of affairs it is alleged that the plaintiff falsely .stated to the defendant that he had made a combination with certain, holders of the preferred stock of the company, whom he named, who held in the aggregate, with the plaintiff, a majority of the stock ■of the company, to elect as officers of the company persons in the plaintiff’s interest and to reinstall as editor a person who was obnoxious to the defendant, and that this combination had been made to
■ It'is claimed, however, that the representations were not such that the defendant had the right to rely upon them, but that he might have discovered their falsity by an examination. In such cases, however, where one is induced by false representations to enter into a contract-, he does not owe to the person who makes the representations any duty of active vigilance to ascertain the fact. If the facts stated are apparently within the personal knowledge of the one making them, the person to whom they are made may rely upon them and act upon them without adopting any means to discover the imposition. (Baker v. Lever, 67 N. Y. 304.)
It is said, too, that these facts were not material to the making' of the contract, and were not such as should have operated to induce' the defendant to enter into it. It might be sufficient to say, in regard to that, that the allegation of the counterclaim is that the defendant did rely upon them, and that they were an inducement to him to enter into this contract. It is not necessary that the facts falsely stated should be the sole inducement. If they were an inducement, and operated to persuade a party to enter into a con
The counterclaim sufficiently offers to make restitution to the plaintiff for what the defendant has received nndér the contract. Such an allegation is sufficient if it is stated in the action brought, for rescission that, the plaintiff is willing to restore if he is not entitled to retain what he has received. (Gould v. Cayuga County National Bank, 99 N. Y. 333.)
Van Brunt, P. j., Barrett, O’Brien and Ingraham, JJ., concurred.
Judgment affirmed, with costs, with leave to withdraw demurrer and reply on payment of costs in this court and in the court below.