138 N.Y.S. 429 | N.Y. App. Term. | 1912
The court below sustained a demurrer to the complaint. This appeal presents the question whether the complaint states facts sufficient to constitute a cause of action. The complaint, among other things, alleges that the defendant is a foreign corporation, organized under the laws of Indiana, and that, in 1890, it authorized an issue of $1,500,000, seven per cent, cumulative, preferred stock, divided into fifteen thousand shares of $100 each; that, “ in order to attract investors and to induce persons to become interested in the sale of the stock,” the defendant represented to the public generally, including this plaintiff, that it had assets amounting to $1,700,000, and made other representations as to its financial condition which are set forth in the complaint. These representations are alleged to have
In testing the sufficiency of this complaint, we must bear in mind that, while the demurrer admits the “ facts ” alleged, it does not admit the conclusions averred in the complaint. The facts required to be pleaded are not propositions of law, but physical facts capable as such of being established by the evidence. The pleader cannot aver a legal conclusion as the equivalent of a group of separate facts from which it is an inference. The allegations should be such, and so stated, as to permit a distinct traverse, and evolve a definite issue. Cook v. Warren, 88 N. Y. 37, 40.
The complaint does not allege that the plaintiff, by reason of said false representations, purchased any of the" stock of the defendant; nor does it allege that the said representations were calculated to induce brokers or others to sell said stock. In the absence-of one or the other of these allegations, I think that the complaint fails to state any cause of action at all. The adroitness of the pleader seems to have been exercised
There can be no doubt that, if the statements of the defendant were knowingly false, and were made to induce the public to purchase its shares, any person who relied upon said statements and sustained injury thereby can hold the defendant liable. Downey v. Finucane, 205 N. Y. 251. So also I think it is equally clear that, if such representations had been made to induce brokers or others to act as brokers, and to sell the stock, any person within this class who relied upon said false representations to his damage could hold the defendant liable for such damages as immediately followed. The difficulty with this complaint is, that, if it is to be construed to allege that the representations were made to induce the public to buy its stock, it is.insufficient in law, because it fails to allege that the plaintiff purchased a single share of stock. If, on the other hand, the plaintiff seeks to recover because he expended time and labor in acting as a broker of said stock, it is insufficient, because the complaint nowhere alleges that the representations were made to induce brokers or others to sell said stock. In either view the complaint fails to state a cause of action. It .is an essential element of a cause of'action for fraud and deceit that the alleged representations should be calculated and intended to influence the plaintiff, or that the plaintiff should have been one of the class to whom such representations were addressed, and that such representations should have been calculated and intended 'to influence members of such a class.- That the representations to he actionable must be made for the purpose of inducing another to act upon them, was recognized as early as 1789 in the celebrated case of Pasley v. Freeman, 2 Smith L. C. (9th Am. ed. 1300, 3 T. R. 51),
“ ETo one,” said Judge Cooley, “ has a right to accept and rely upon the representations of others but those to influence whose action they were made. If every one might take up and act upon any assertion he heard made or saw in print as one made for him to act upon, and the truth of which was warranted- by the assertbr, the ordinary conversation of business and of society would become unsafe, and the customary publication of current news, or supposed news, would only be made under the most serious pecuniary responsibility.” Cooley Torts (3d ed.), 940.
In Pollock on Torts (p. 289), it is said: “It is not a necessary condition of liability that the representation complained of should have been made directly to the plaintiff, or that the defendant should have intended or desired any harm to come to him. It is enough that the representation was intended' for him to act upon, and that he has acted in the manner contemplated, and suffered damage which was a natural and probable consequence.”
In Addison on Torts (p. 732), the rule is stated as follows : “ Whether the representation is made to the plaintiff, or to a third party, is immaterial, if it is false to the knowledge of the defendant, and has been made for the purpose of being communicated to the plaintiff, or to a class of persons of whom the plaintiff is one, or even if it is made to the public generally with a view to its being acted on, and the plaintiff, as one of the public or of such class, acts on it, and suffers damage thereby.”
In the present case, the conclusion which the pleader has alleged does not disclose the existence of any fact which shows that the alleged representations were intended to be acted upon by brokers or others who were engaged in selling stocks, or that the defendant ever contemplated that the plaintiff or the class of which he was a member should have acted upon said representations.
Guy and Bijur, JJ., concur.
Interlocutory judgment affirmed, with costs.