64 N.Y.S. 153 | N.Y. App. Div. | 1900
On the 25th of March, 1899, the plaintiff, by an instrument in writing, bearing date on that day, leased to the defendant for the term of ten years and one month, commencing on the 1st of April, 1899, certain premises in the city of New York, at an annual rental of $12,000, payable quarterly, except the rent for the month of
The answer of the defendant alleged that the plaintiff’s agent, who procured the defendant to execute the lease, falsely and fraudulently represented to the defendant that immediately prior to the execution of the lease the property covered by it had rented for $12,000 per year, and that in truth and fact said prior lease was at the rate of $10,000 per year; that the defendant relied upon said representations, believing the same to be true, and by reason thereof was induced to execute the lease referred to in the complaint; that “ upon the discovery of the fraud * * * that had been practiced by the plaintiff, his agent and broker, upon this defendant, this defendant gave notice in writing to the plaintiff that it repudiated the said lease so procured and executed as aforesaid.” The answer also alleged that prior to the execution of the lease, the property had been rented to E. J. Dean & Co., which lease “ had several years to run, at the rate of ten thousand ($10,000) dollars per year; ” that the defendant, though the owner of the E. J. Dean & Co. lease, at the time of the execution of the lease in suit, had not then come into possession of it and was unacquainted with its terms and it was, by reason of the fraud practiced. upon it, induced to execute the lease in suit and sign a cancellation of the E. J. Dean & Co. lease. The judgment prayed for was that the lease mentioned in the complaint be canceled and that the E. J. Dean & Co. lease be restored. The plaintiff replied to the new matter set up in the defendant’s answer; denied that the person who procured the execution of the lease referred to in the complaint was his agent, and put in issue all of the other material allegations of the defendant’s answer.
At the trial the lease referred to in the complaint was introduced in evidence. It was executed March 25, 1899, and there was indorsed upon it a cancellation of the E. J. Dean & Co. lease under the same date. After the plaintiff had testified that the April rent had not been paid a motion was made for the direction of a verdict, upon the ground that the facts stated in the defendant’s answer did not constitute a defense to the action. The motion was granted and the defendant has appealed.
The case of Rosenbaum v. Gunter (3 E. D. Smith, 204), cited by the defendant’s counsel, is not in point. In that case an undertenant agreed to pay $500 for a portion of the premises, it being repre
This brings us to the consideration of the remaining question, and
If we are right as to the effect of the answer, then it necessarily follows that the allegations contained in it were sufficient for a rescission, because the judgment rendered could do justice between the parties. (Allerton v. Allerton, 50 N. Y. 670 ; Harris v. Equitable Life Assurance Society, 64 id. 196; Gould v. Cayuga Co. Nat. Bank, 86 id. 76; I. & T. Nat. Bank v. Peters, 123 id. 279 ; Kley v. Healy, 127 id. 555 ; Thackrah v. Haas, 119 U. S. 499.)
In Allerton v. Allerton (supra) the plaintiffs allege that they were induced to part with their interest in a firm to the defendant through fraud, and the court there held that it was not necessary for them to return the moneys received, in view of the fact that it appeared that the defendant had already received a sum equal thereto out of the property transferred, and that provision could he made in the judgment by which this sum could be credited to the defendant and he be required to account for the balance. It was further held that the rule “ That he who seeks to rescind an agreement upon the ground of fraud must place the other party in as good a situation as that in which he was when the agreement was made,” is satisfied if the judgment asked for will accomplish that result, and in such case no offer to return that which was received is necessary.
In Harris v. Equitable Life Assurance Society (supra) the Allerton case was referred to, Judge Mu,t,eb, saying: “ It was also
In Gould v. Cayuga Co. Nat. Bank (supra) Judge 'Eakl, also referring to the Allerton case, said: “ But the defrauded party need not rescind and sue in an action at law for the consideration parted with upon the fraudulent contract. ‘He may bring an action in equity to rescind the contract and in that action may have full relief. Such an action does not proceed as upon a rescission, but proceeds for a rescission. In such a case it is sufficient for the plaintiff to offer, in his complaint, to restore to the defendant what he has received, and the rights of the parties can be fully regulated and protected in the judgment to be entered. Such was the case of Allerton v. Allerton (50 N. Y. 670).”
In Kley v. Healy (supra) the action was brought to set aside'the satisfaction of a judgment procured by fraud. In addition to the fraudulent representations the defendant promised to pay the plaintiff’s counsel fees and judgment, and, in fact, did pay the former. It was held that it was not necessary, in order to enable the plaintiff to maintain the action, to return the sum paid, but that it could be provided for in the judgment. And in Thackrah v. Haas (supra) a person while intoxicated was induced, for an inadequate consideration, to transfer valuable property. He was poor and unable to pay back the money received. It was held that this was unnecessary;; that the property should be directed to be sold and the defendant paid out of the proceeds — the sum which he paid — and the balance restored to the plaintiff.
Applying the principle laid down in the foregoing authorities, and many others which might be cited to the same effect, it seems to us clear that the defendant did not omit to do anything which was necessary to protect his rights, or to procure a cancellation of the new lease, and restoration of the E. J. Dean & Co. lease. As has already been indicated, the action was, in effect, an equitable one, and it should have been treated just as though the defendant
It follows from what has been said that the defendant was deprived of its right to try the defense set up in its answer, and for this reason we think the judgment and order appealed from must be reversed and a new trial ordered, with costs to the appellant to abide the event.
Van Brunt, P. J., Barrett and Rumsey, JJ., concurred ; Ingraham, J., concurred in result.
Judgment and order reversed, new trial ordered, costs to appellant to abide event.