116 N.Y.S. 106 | N.Y. App. Div. | 1909
The defendant was a promoter and interested in a corporation known as the Fresh Pond Realty Company which had purchased real estate with a view of utilizing it as a cemetery. Believing it to be a profitable business venture he urged the plaintiff to purchase stock of the* corporation. The plaintiff hesitated to make the investment, and the defendant said to him that he was so confident of the success of the enterprise that, to use the language of the plaintiff, “ ‘ I will guarantee your money, principal and interest, for whatever amount yon invest in the stock; you will have my personal guarantee.’ ” In confirmation of this conversation the defendant wrote plaintiff a letter in which he reminded him that he had not heard from him with respect to the investing in the cemetei’y proposition, and that, upon the grounds of friendship, he very much desired that the plaintiff should not miss the opportunity for the investment. He concluded the letter as follows: “ If you remember, I even went so far as to guarantee your money with interest, personally, my personal guarantee. I do not wish to see you get left out, because I know you will regret it.” Thereupon the plaintiff bought fifty shares of the stock and paid $5,000 therefor.
From the plaintiff’s own testimony and the correspondence that passed between the parties, it is quite plain that, although the word “guarantee” was used, all that the defendant agreed to do was to
The plaintiff’s theory is that because the stock of the realty company has ceased to exist by reason of the dissolution of the corporation, and because neither such stock nor the stock of the cemetery association has any market value on the New York stock exchange the defendant’s contract of indemnity has ripened, and the defendant is, therefore, liable for the full amount of the investment on the theory that it has become a total loss. The plaintiff’s stock still retains all the rights arising from the indebtedness owing by the cemetery association. The proportional share of plaintiff’s stock in this indebtedness is about $20,000. For anything that appears in the record such rights growing out of the investment may be worth as much or more than plaintiff invested. Proof that neither the original stock nor that of the cemetery association had any market value on the stock exchange was not sufficient proof that plaintiff’s investment had become a total loss and had no present value whatever. Many kinds of investment and many stocks may have some value, although not dealt in on the stock exchange. In order to maintain his action against the defendant upon the defendant’s contract of indemnity against loss, the plaintiff must prove that he has actually suffered loss. In an action on a contract to indemnify and save harmless no recovery can be had until actual damage is sustained. (Gilbert v. Wiman, 1 N. Y. 550; Rector, etc., of Trinity Church v. Higgins, 48 id. 532, 537; Brown v. Mechanics & Traders' Bank, 43 App. Div. 173; Aberdeen v. Blackmar, 6 Hill, 324.) As has been pointed out the defendant did not agree to indemnify the plaintiff against change in security or depreciation of the market value of the stock of the realty corporation, but only against loss on his investment. The broad distinction between a plain contract of indemnity against loss and the necessity for suffering damages before a cause of action therefor exists, and contracts to indemnify against change of situation or liability, is clearly pointed out in National Bank of Newburgh v. Bigler (83 N. Y. 51, 61) and in Brown v. Mechanics do Traders' Bank (supra).
• Of course the plaintiff is not obliged to wait before bringing his
In our view the dissolution of the realty corporation did not make the stock and plaintiff’s investment utterly worthless, because rights in the indebtedness of the cemetery association attached to it, nor was mere proof that the stock of the realty company or of the cemetery association ivas not dealt in on the stock exchange sufficient to show that the stock with its attendant rights had no value. If we are right in this conclusion, it follows that the judgment is erroneous.
The judgment and order should be reversed and a new trial granted, with costs to the appellant to abide the event.
Patteeson, P. J., McLaughlin, Laughlin and Claeke, JJ., concurred.
Judgment and order reversed, new trial ordered, costs to appellant to abide event.