201 A.D. 344 | N.Y. App. Div. | 1922
In their amended complaint the plaintiffs allege that the defendants Samphimor Holding Corporation and Tiffany Realty Company are domestic corporations organized and existing under and by virtue of the laws of the State of New York. Upon information and belief, the plaintiffs further allege in their complaint that during all the times thereinafter mentioned the defendants Morris Schneider, Samuel Berlin and Philip Schapiro were directors,, officers and stockholders of the said defendant Samphimor Holding Corporation, and as such would be financially benefited by the consummation of the transaction thereinafter in said complaint set forth; that the defendant Joseph G. Abramson was an attorney and counselor at law and was the attorney for the said defendant Samphimor Holding Corporation and for Morris Schneider, Samuel Berlin and Philip Schapiro, and acted for each of said defendants in the transaction therein alleged; that the said defendant Abramson was also an officer, stockholder or director of the defendant Tiffany Realty Corporation and acted as its attorney. The plaintiffs further allege upon information and belief that at all the times in the complaint mentioned the defendant Tiffany Realty Company was interested in certain real property in the complaint described, either as owner or as holder of a contract for the sale or purchase thereof; and that the said Tiffany Realty Company and the said defendant Abramson, by reason of his interest in said realty company, were and each of them was interested in the sale of said premises to the plaintiffs and derived or would have derived material benefit upon the consummation of said sale in the said complaint alleged; and that at the time of the transaction set forth in the complaint the said defendant Abramson was or had been financially interested in the said premises, either as owner or as the holder or as stockholder of a corporation holding a contract for the sale or purchase of the same, and was financially or otherwise interested in a sale to plaintiffs of said premises. Plaintiffs further allege upon information and belief that on or about December 26, 1919, all of the defendants herein were interested financially or otherwise in certain real property and premises known as and by the street numbers 535, 537, 539 and 541 West One Hundred and Sixty-third street, in the borough of Manhattan, city of New York, which premises are particularly described in said complaint. Plain
Alleging that the plaintiffs have no adequate remedy at law, judgment is demanded, first, that the said agreement be rescinded by reason of the false and fraudulent representations made as aforesaid; second, that the defendants be adjudged to pay to the plaintiffs the sum of $11,000, with interest on $6,000 from December 26, 1919, and on $5,000 from February 11, 1920, together with the sum of $2,000 for expenses incurred for counsel fees and the examination of title; and third, that the plaintiffs have such other and further relief is in the premises will be just and proper, together with the costs and disbursements of the action.
To this complaint the defendants demurred, the defendants Samphimor Holding Corporation, Morris Schneider, Samuel Berlin and Philip Schapiro uniting in one demurrer, and the other defendants uniting in another. The said separate demurrers are substantially alike, each setting forth three grounds of demurrer: First, that two causes of action have been improperly united, one being for the rescission of said contract between the plain
Second, that causes of action have been improperly united in the complaint, in that an equitable action for rescission of the contract given by the defendants herein has been joined with a cause of action to recover of the defendant Abramson the said sum of $5,000.
Third, that the complaint does not state facts sufficient to constitute a cause of action.
The issue of law herein raised by said demurrers came on to be heard upon plaintiffs’ notice of motion for an order overruling said demurrers and for judgment in plaintiffs’ favor thereon. The learned court at Special Term sustained said demurrers upon the ground that the action was for a rescission of contract for the purchase by plaintiffs from the defendant Samphimor Holding Corporation of said real estate, and could not be maintained against any defendant other than the defendant Samphimor Holding Corporation, and that the facts alleged in the complaint were not sufficient to warrant the plaintiffs in joining the other defendants as parties.
We are of the opinion that the court erred in thus sustaining defendants’ demurrers to said complaint. It seems to us that but one cause of action is set forth and alleged in said amended complaint, namely, for a rescission of the contract therein alleged by reason of the false and fraudulent representations made by the defendants and each of them whereby the plaintiffs were induced to enter into said contract, and, incidentally, for the recovery back from all of the defendants of the moneys paid down thereon. The allegations of the complaint plainly set forth that the corporate defendants are dummies organized and created as conduits to effectuate the fraudulent scheme of the individual defendants whereby said individual defendants sought to enrich themselves at the expense of the plaintiffs. Fairly interpreted, the complaint alleges that both the $6,000 and the $5,000 payments were made to the defendant Samphimor Holding Corporation, although
The necessary elements in an action for fraud and deceit upon which to base the judgment prayed for appear in said amended complaint, namely, the representations made by the defendants, their falsity and the defendants’ knowledge thereof, plaintiffs’ reliance thereon and deception thereby, and the injury suffered by reason thereof.
The defendants’ main attack upon the complaint is that the contract for the sale of said real property being under seal, only the Samphimor Holding Corporation, which executed the same, can be held. The answer to this is that the law did not require that said contract be under seal, and that, therefore, all of the parties acting through the instrumentality of their dummy corporation are to be held liable in an action to rescind said contract. The only requirement that refers to a contract for the sale of real property is that it shall be in writing, expressing the consideration and subscribed by the party to be bound thereby or by his duly authorized agent. (Worrall v. Munn, 5 N. Y. 229; Wood v. Auburn & Rochester R. R. Co., 8 id. 160, 167; Ford v. Williams, 13 id. 577, 585; Real Prop. Law, § 259.)
The recent case of Kaston v. Zimmerman (192 App. Div. 511) is directly in point. In that case Mr. Justice Laitghlin, writing for this court, said (at p. 513): “ I deem it now well settled in this jurisdiction that if the purchaser has just ground for rescinding such a contract, he may either elect to rescind and bring an action to recover the money paid, or he may sue in equity for a rescission, and upon rescission, as incidental relief, recover at least the down payment, although he would not have a lien therefor.”
In his opinion in Davis v. Rosenzweig Realty Co. (192 N. Y. 128) Judge Vann, writing for the Court of Appeals, quoted with approval from 24 American and English Encyclopedia of Law (2d ed.), 615, as follows: “ Where the complainant in equity seeks to have a contract totally rescinded and declared void for fraud, the fact that he seeks also a recovery of money is not sufficient ground for the refusal of the court to entertain jurisdiction; for in an action at law the recovery of money is the principal object, while in the suit in equity the rescission of the contract is the principal matter of relief and the recovery of money is merely an incidental although a necessary consequence; hence the court being properly in possession of the cause for the purpose of granting purely equitable relief, will proceed to do complete justice between the parties, although a part of the relief granted is purely legal in its nature. This principle is in full accordance with the broader principle of equity, that in all cases of fraud, if the party defrauded is entitled to any equitable relief as to the contract in which he has been defrauded, and if it is necessary for him to establish the fraud in order to obtain this relief, the court will grant him
Upon the foregoing authority there can be no question of the right of the plaintiffs to maintain this action in equity against all of the defendants to obtain a rescission of said contract and incidentally to recover of defendants the moneys paid down thereon, which moneys have been distributed by the defendant Samphimor Holding Corporation among all of the other defendants. The plain allegations of the complaint are to the effect that all of the defendants participated in the fraud and were financially interested in the consummation and sale of said premises and that all would have benefited thereby, and that all shared in the moneys paid by plaintiffs thereon.
In Mayer v. Phoenix Assurance Co., Ltd. (124 App. Div. 241) the court said: “ In equity it is proper to join as defendants in one action different persons guilty of independent acts which combine to produce an injury to the plaintiff. * * * Much more is it proper to join defendants whose joint act produces the injury.” The citation of authorities should not be required in support of such equitable doctrine.
The appellants concede that they cannot recover in this action the expense incurred by them for the examination of the title to the premises contracted to be sold and for counsel fees, thereby eliminating the item of $2,000 alleged to have been incurred by plaintiffs therefor.
We are of the opinion, therefore, that the court improperly sustained defendants’ demurrers to the complaint, and that the order appealed from should be reversed, with ten dollars costs and disbursements, and said demurrers overruled, with ten dollars costs, with leave to the defendants to withdraw the same and answer upon payment of said costs.
Clarke, P. J., Smith, Page and Greenbaum, JJ., concur.
Order reversed, with ten dollars costs and disbursements, and motion granted and demurrers overruled, with ten dollars costs, with leave to defendants to withdraw demurrers and to answer within twenty days upon payment of said costs.