109 N.Y.S. 574 | N.Y. App. Div. | 1908
This action was brought to recover the damages sustained by the plaintiff by reason of certain fraudulent representations made b) the defendant to induce him to purchase certain shares of the capital stock of the Lakeside Cemetery Company of Buffalo. The repre
The plaintiff testified that the defendant told him that the corporation had acquired a large tract of land near Buffalo which was an exceedingly “good thing;” that the defendant represented that the property was unincumbered and that the debts of the corporation did not exceed $5,000. It was then proved that in September, 1900, when the representations were made there was a mortgage upon the real estate of the corporation amounting to $22,750 ; that the corporation had taken the land subject to this mortgage, and that the total indebtedness of the cemetery in September, 1900, was $102,850, in addition to the mortgage. The defendant was called as a witness and testified that he did not know of the existence of any mortgage ón the real estate of the company; that he did not make any representations that the company was free and clear of incumbrances, to his knowledge, but that he was not sure. There can be no question but that'a verdict in favor of the plaintiff would
Thé action is based nppn the rescission of the sale of stock and a demand to recover back the consideration paid. The sale was induced by statements made by the defendant which related directly to the value of the stock, and which were false. What is necessary to justify a rescission of a sale of personal property is stated in Garrett Co. v. Appleton (101 App. Div. 507; affd. on opinion below, 184 N. Y. 557), as follows: “ To rescind a contract upon the ground of fraud, as to recover damages upon the ground of fraud, scienter must be alleged and proved ; and while either the représen tation of a fact, knowing it 'to be false, madq with' intent to deceive, or representation of actúa,! knowledge of a fact when no- such knowledge exists and the fact is not true, is sufficient to support a cause of action, one of these conditions must be proved to exist . to sustain any action based upon fraud.” There was no evidence that the defendant knew this representation to be false at the time he made it, or that he made it with intent to. deceive; and in his testimony he expressly denied such knowledge. The representation, however, was that the property had been acquired by the corporation unincumbered except for a small debt; that it was. a perfectly safe investment which he himself was interested in, and that he was conversant with the whole sitúátion. It seems to me that this is in substance a representation that he knew the situation, and thus a representation that this fact as to the incumbrances upon the property of the corporation was of his own knowledge, which' brings the case within Hadcock v. Osmer (153 N. Y. 604). In that case the defendant made “ a-positive assertion of á material fact, with the intention that it should be acted upon and should induce the loan of the money. Yet he did not know the assertion, thus positively made for such an important purpose,- to be true, and he did not investigate or seek to discover whether it was true or not, although he had dealt -some with the Browns and had some information as to their circumstances. He intended, as the jury has found upon sufficient-evidence, that the lender should understand him as communicating his actual knowledge and not as "expressing his opinion, judgment or belief. Know
The question then arises whether the court was justified in directing a verdict for the plaintiff. The proof of the representations of the defendant rests entirely upon the plaintiff’s testimony, and if the defendant had not been called as a witness 1 think the trial judge would have been required to submit the question to the jury. But the plaintiff having testified to the representation, the defendant was examined as a witness in his own behalf and, upon being asked whether he made such representations simply replied not to his knowledge, and that he was not sure whether he had made them or not. Upon such testimony a verdict for the defendant would have been clearly against the weight of evidence. Where a fact is testified to by a plaintiff as to a communication from the defendant, the plaintiff not at all impeached or contradicted, and where the defendant presents himself as a witness, but refuses to contradict the plaintiff’s testimony, the trial court is* justified in directing a verdict. It is the testimony of the plaintiff, corroborated by the fact that the defendant was examined as a witness in his own behalf and refused to .contradict the plaintiff, which justifies the court in assuming that the testimony which the defendant refused to contradict was true. There was no question of damages; as the plaintiff has rescinded the sale of the stock as having been induced by fraud, and he was then entitled to recover as for money had and received the amount that he had paid therefor, with interest, and for that amount the court properly directed a verdict for the plaintiff.
It follows that the order appealed from should be reversed, with ten dollars costs and disbursements, the verdict reinstated and j udgment directed upon the verdict, .with costs.
Patterson, P. J., Laughlin, Clarke and Houghton, JJ., concurred.
Order reversed; with ten dollars costs and disbursements, verdict reinstated and judgment directed on verdict, with costs.