Stryker v. Vanderbilt

25 N.J.L. 482 | N.J. | 1856

Lead Opinion

The Chief Justice.

The demurrer to the second plea raises the long agitated question, whether fraud in the consideration of a deed is a good defence at law. The question is not whether a court of common law has jurisdiction over questions of fraud, or power to relieve against it. That is conceded. The difficulty grows out of the familiar principle, that a seal imports a consideration ; and where the contract is in itself leffal, the amount or value ^of the consideration cannot be inquired into in a court of law: and inasmuch as an averment of fraud in the consideration of the contract necessarily involves an inquiry into the consideration upon which the deed is founded, that defence cannot be set up without a violation of well settled principle.

“ In contracts under seal,” says Chancellor Kent, “ a consideration is necessarily implied in the solemnity of the instrument, and fraud in relation to the consideration is held to be no defence at law, though fraud in relation to the execution of the - specialty, and going to render it void, is a good defence.” 2 Kent's Com. 464.

In Armstrong v. Hall, Coxe 181, Mr. Justice Clietwood, after stating that the reason given for admitting the plea in Collins v. Blanturn, (2 Wills, 347) was that the bond was void ab initio, adds, “ But where the obligation lias been executed upon a contract, which the parties might legally enter into, but it afterwards appears that they were induced by deceit or fraudulent misrepresentation, that the bond is void of itself, or that the party shall he permitted to set up a parol agreement dehors the bond, and thus go into the consideration of the instrument in a court of common law, is a doctrine which, I think, is not warranted by any legal authority; and if it had been correct and agreeable to law, I cannot believe that the books would not have contained a case to support it. The proper remedy for the defendant in this case appears to me to be, to apply to a court of chancery, or the more easy and less expensive remedy, by an action on the case in the nature of a deceit.”

In New York it has been uniformly held, in a long succession of eases, that fraud in the consideration of a sealed instrument, the contract itself being one which the parties might legally enter into, cannot he inquired into in a court of law. Vrooman v. Phelps, 2 Johns R. 177; Dorr v. Munsell, 13 Johns. R. 430; Franchot v. Leach, 5 Cow. 506; Champion v. White, 5 Cow. 509; Dale v. Roosevelt, 9 Cow. 307; Belden v. Davies, 2 Hall’s S. C. Rep. 433.

The statement of Mr. Justice Chet wood, that no ancient case can he found, where the consideration of a sealed instrument has been inquired into in a court of law, on the ground of fraud in the consideration, seems to ho well founded ; yet there are certainly modern authorities which maintain that doctrine.

Many of the cases will he found cited in 3 Cowen's Ph. on Ev. 1448, note 969. Mr. Justice Cowen, after citing authorities in South Carolina, which hold the defence admissible at law, adds, “ This doctrine, however, seems entirely anomolous. With respect to other states, it may be laid down as a general rule, and we believe will be found sustained by all the cases, that, independent of any statutory provision, no fraud whatever can be set up in a court of law to affect the operation of a sealed instrument, save such as relates to the execution.”

In this state, some of the earlier cases hold the defence to be admissible.

In Barrow v. Bispham, 6 Halst. 117, Mr. Justice Ford rested the practice adopted in that case upon the equitable control of the court over its judgments ; and in Pennsylvania, though the defence is admitted at law, it is considered as a mere equitable defence, permitted to prevent a failure of justice, there being no court of equity in that state. Stubb’s Adm'r v. King, 14 Serg, & R. 208.

In Rogers v. Colt, 1 Zab. 19, this court held that executed contracts under seal, where the party has received the benefit of his agreement, cannot be disaffirmed at law on the ground of fraudulent misrepresentations. This ease was affirmed in the Court of Appeals, on the broad ground, that in. an action on a sealed instrument, no fraud can be set up in a court of common law as a defence to the action, except such as relates to the execution of the instrument. And in the susbsequent case of Staats v. Freemum, the defence was overruled at the circuit, and the party compelled to resort to equity for relief.'

No great principle is involved in the question. The •controversy relates merely to the tribunal in which the party defrauded shall have relief. The principle, that fraud vitiates a contract, is admitted. But in attempting to administer relief in, a court of law, another well settled principle is encountered, vis. that a seal imports a consideration, which cannot be gainsaid at law. The only inquiry is, whether the latter principle shall be abandoned, or the party complaining be required to go. into equity for relief, it is important that the question should be at rest. I apprehend no evil result from adhering to the rule adopted by the Court of Appeals, and am accordingly of opinion that the plea should be overruled.

The fourth and fifth pleas are bad for duplicity. They severally set up two distinct matters, each of which requires a separate answer, and each of which, if it constitute any defence whatever, would bar the action. 1 Chit. Pl. 564.

The sixth plea is, that the time for the performance of the covenant was enlarged by parol' agreement of the parties, and that the defendant was ready, and offered to perform the covenant on his part, at the time thus designated for performance.

In Chit. on Con. (9th ed.) 105, the rule is stated • to be, that in the case of a specialty, a subsequent agreement not under seal, dispensing with or varying the time or mode of performing an act covenanted to be done, cannot be pleaded in bar to an action on the specialty for nonperformance of the act in the manner prescribed.” This statement is in accordance with the ancient maxim fi: the law, “ unum quodque ligamen dissoluitur eo ligamine uo ligatur.” Rogers v. Payne, 2 Wils. 376 ; West v. Blakeway 2 Man. & Gr. 729.

The weight of authority, however is, that a parol agreement, enlarging the time for performing a contract under seal, may avail as an excuse for nonperformance at the day specified in the original agreement. Fleming v. Gilbert, 3 Johns. R. 528 ; Longworthy v. Smith, 2 Wend. 587; Mead v. Degolyer, 16 Wend. 632 ; 3 Cowen's Ph. on Ev. 1479, note 987.

In Cox v. Bennet, 1 Green 165, it was held, that the time fixed for the payment of money due on bond might be extended by an agreement not under seal. And the Chief. Justice, in delivering the opinion of the court, said, “ the party to whom a condition or covenant is to be performed may, by acts as well as words, enlarge the time of performance.” There was no pretence that the bonds were avoided by the parol agreement.

It was suggested by counsel, upon the argument, with much apparent force, that this construction will entirely defeat the plaintiff’s right of recovery. For the covenant being altered by subsequent parol agreement, no action of covenant will lie upon the written contract, but the plaintiff can maintain assumpsit only upon the parol agreement, and the parol agreement, being for the sale of land, will be void under the statute of frauds.

The answer to the objection is, that a subsequent parol agreement, not contradicting the terms of the original contract, but merely enlarging the time of execution, is good, even in the case of a contract required by the statute of frauds to be in writing. Cuff v. Penn, 1 Maule & Sel. 21; Chit. on Con. (1st Am. ed.) 27, (9th Am. ed.) 125, note ; Cummings v. Arnold. 3 Metc. 486. A different doctrine is held in Blood v. Goodrich, 9 Wend. 68.

But, however this may be, it must be regarded as set tied, that the time for the performance of a contract either by deed or by parol, may be enlarged by parol.

The demurrer to the sixth plea is overruled.

Justices Potts and Haines concurred.

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Dissenting Opinion

Elmee, J., (dissenting).

To a declaration in covenant, for not complying with the conditions of a sale of reai estate, made by the plaintiff, the defendant has pleaded several pleas, which are demurred to. The second plea sets up fraud in procuring the covenant, by the fraud, covin, and misrepresentation of the plaintiff, and others with him, viz. that the plaintiff and the crier of the sale falsely and fraudulently represented and pretended to the defendant, at the said sale, that some other person was in good faith bidding at said sale against the defendant, and thereby falsely and fraudulently induced the defendant to increase his bids, from forty dollars per acre to forty-four dollars and seventy-five cents per acre, whereas there was no bona fide bidder for more than forty dollars. It is objected to this plea that it is bad, upon the ground that, in an action at law on a speciality, it is not competent for the defendant to avoid it by pleading that it was obtained by fraudulent misrepresentations ; and the case of Rogers v. Colt, 1 Zab. 18 and 704, is relied on as in point.

In the opinion of Judge Carpenter, in this court, the law is so stated, and the Chief Justice, in delivering the opinion of the Court of Errors, would seem to have concurred in his statement. The case itself, however, does not establish the broad proposition now contended for. The consideration for the defendant’s covenant in that case, according to the construction of the contract adopted by the court, was the assignment to him of the interest the plaintiff had in a certain house and lot standing in the name of a third person, for which the defendant agreed to pay the sum sued for. As the plaintiff had executed his part of the contract, and eq uities were involved which a court of law could not enforce, the facts set up as evidence of fraud, if they tended to prove fraud at all, were not of such a character as would render the contract on the defendent’s part absolutely void,but, at most, voidable on terms, and the decision was clearly right on that ground. The broad doctrine held by the New York courts in the cases of Vrooman v. Phelps, 2 Johns. 177; Dorr v. Munsell, 13 Johns. 430; Dale v. Roosevelt, 9 Cow. 307, and in other cases, cannot, in my opinion, be sustained, either upon principle or authority. The point directly decided in Rogers v. Colt, is undoubtedly to be respected by this court as established law, while the mere obiter dicta of the most respectable judges, if they appear to be incautiously made, may be disregarded. That actual fraud and deceit in the consideration which induced the execution of a sealed instrument, where the circumstances of the case are such that the party sought to be charged has no equity to set up on his part, and the fraud is of such a character as ought, in justice, to exonerate the defendant entirely, may be shown as well in a court of law as in a court of equity, is, in my opinion, the true doctrine.

It was formerly held by this court, that parol evidence of false and fraudulent representations, used in obtaining a specialty, could be given under the general issue, and would be sufficient to defeat the action. Armstrong v. Hall, Coxe's R. 178; Mason v. Evans, Ibid 182 ; Curtis v. Hall, 1 South. 148, 361. The correctness of the decision in Armstrong v. Hall, as to the propriety of admitting the evidence under the plea of nil debet, may be well questioned; but that actual fraud might properly have been pleaded in avoidance, of the sealed bill, I see no reason to doubt. Mr. Justice Chetwood, who dissented from the opinion of the majority, put his opinion, like the New York courts, upon the ground, that a bond or other sealed instrument, once executed, is of so solemn a nature that it cannot afterwards be avoided by anything less solemn, and that as it imports a good consideration, courts of law are not at liberty to enter into any inquiry as to what the consideration was. Properly understood, these undoubtedly were, and I suppose still are, the well established doctrines of the common' law, and I have no' disposition to impugn them. But do these doctrines, when properly applied, prevent a court of ■law from holding a sealed instrument'to be void when procured by fraud, either in the inducements presented for entering into it, or in the actual circumstances attending the sealing and delivery ? That fraud of the last mentioned description may be shown, all admit. That duress, infancy, and coverture may be pleaded, as showing that if the party had not the capacity to contract, it was always a nullity, is undeniable. In the case of Collins v. Blantern, 2 Wils. 347, these doctrines were urged as precluding the court from inquiring into tlie legality of tlie consideration of a bond, but the -* Tart held shat illegality in the consideration may be -s nvn, and that a bond given for an illegal consideration is void. Chief Justice Wilmot, in answering the objection, that the law will not endure a fact in pais, dehors a specialty to be averred against it, and that if there be no consideration for a bond, it is a gift, says, “ the present condition is for the payment of a sum of money; but that payment to be made, was grounded upon a vicious corn sideration, which is not inconsistent with the condition of the bond, but strikes at the contract itself, in such manner as shows that in truth the bond never had any legal entity.” This case has been strangely considered as deciding that fraud in the consideration could not be pleaded. There is nothing, however, in the opinion to .that effect, and its principle, it seems to me, is directly the other way. Fraud in the consideration strikes at the contract itself, and shows that in truth the instrument, ¡•however solemnly sealed, never had any legal entity, just as truly as illegality, unless we are bound to hold fraud . to be legal. That there was no adequate consideration, or that the intended consideration in fact, failed, are very .different from fraud, and do not, as that does, show that the sealed instrument was never valid. In this latter sense, the consideration of a specialty cannot be inquired into at law. If there was no consideration, a bond fairly executed is a gift; if the consideration fails, the bond still remains, and relief can only be administered in equity.

That actual designed fraud does, by the common law, vitiate and render void from the beginning every contract and every deed contaminated by it, may be considered an elementary principle. It is found in every treatise and in numerous cases, most of which are collected in the opinion of Judge .Betts, in the case of Day v. N. E. Car Company, October 1854, reported in 3 Liv. L. Mag. 44. Ch. Just. Savage, in the case of Stevens v. Judson, 4 Wend. 473, while he holds himself bound by the prior decisions before referred to, says he can see no very good reason for them. Chief Justice Shaw, in the case of Hazard v. Irwin, 18 Pick. 95, shows very, satisfactorily that the Hew York courts were -mistaken. Some of the courts in other states, follow the Hew York decisions, while others hold the law to be the other way.

The plea, that a specialty was obtained by fraudulent misrepresentations, is contained in 2 Chit. Plo. 464, and appears to be constantly used in Westminster hall. Mallalieu v. Hodson, 5 Eng. L. & E. R. 279; Horton v. Westminster Im. Com. 14 Eng. L. & E. R. 379 ; Evans v. Edmonds,24 Eng. L.& E.R. 228; S. C.76 Eng. Com. L. R. 775; The questions raised in these cases were, whether the fraudulent representations pleaded were such as had the effect of rendering the sealed instrument void. In the last case, the plea alleged, that a covenant to pay a certain yearly sum, upon which the suit was brought, was obtained by fraudulently misrepresenting to the defendant, that his wife was chaste and virtuous, whereas she. was not so, and thereby he was induced to enter into the deed, and it was. held a good defence.

In the case of Den v. Wright, 2 Halst. 175, it was held by this court, upon the broad ground that fraud vitiates all deed and contracts, that an executor or other trustee, cannot directly or indirectly purchase land at his own sale, and that a deed made in pursuance of such a sale was void, and passed no title to the grantee. Afterwards, in the case of Den v. McKnight, 6 Halst. 392, Chief Justice Ewing said, the expression that such sales were void was too strong; they were voidable by the heirs only; strangers could not impeach them. And in the case of Den. v. Hammel, 3 Harr. 74, the court adhere to the doctrine, that such a deed may be avoided by the heirs in an action of ejectment, Probably these , cases went too far ; not becauso fraud cannot be set up at law in avoidance of a deed, but cause, where the consideration money has been received by the grantor, such a deed is only voidable upon terms, and as a court of law cannot arrange the terms, the case ought to be left to a court of equity. Upon this ground, the Court of Errors, in the case of Mulford v. Bowen, 4 Halst. C. R. 751, decided that where the heirs brought ejectment to recover possession of land so sold, the admhiistrator who had purchased through a third person, at his own sale, might, by a bill in chancery, enjoin them from proceeding at law, and have the equities settled in that court. In the case of Den v. Newark Ind. Rub. Co., 4 Zab., this court held, a deed, made by administrators who bound themselves to convey certain real estate at an agreed price, and it was set up and sold accordingly, and the sale approved by the Orphans Court, not to be void at law', so that the heirs could maintain an ejectment against the purchasers, who had paid the consideration money.

With every disposition to abstain from any encroachment on the appropriate jurisdiction of the Court of Chancery, I am clear that the true doctrine of the common law is, that whenever fraudulent misrepresentations have induced a party to execute a specialty with due formality, and are of such a nature that in justice they render the contract absolutely void, which it belongs to the court to decide when they are presented, and no equities have arisen on the other side, the fraud may be set up at law. A person who is fraudulently entrapped into the execution of a specialty, no matter at what stage of the proceeding the fraud was committed, is no more a free agent, and ought to be no more bound by his deed than one who has been constrained by duress. The deed is in neither case his deed. Such a fraud can be dealt with as well in a court of law as in a court of equity. That species of fraud which, under some circumstances, is a matter of inference, growing out of peculiar relations and duties, is different; for the most part, it can only be remedied in a court of equity

It remains to inquire whether the fraudulent misreprer sentations set up in this plea are of such a • character, as. ought to avoid the covenant. This was not denied on the argument. Whether a sale at auction may be avoided by: the purchaser, because by-bidders or puffers were employed by the seller, has been much questioned, and the point cannot be considered as entirely settled. The weight of authority would seem to be in favor of allowing the seller, without notice, to employ a person to bid for him, if he does this with no intention to defraud and with no other purpose than to prevent a sacrifice of the property under a given price. 1 Par. Con. 418, and notes. And see Kearney v. Taylor, 15 How. U. S. 494; Towle v. Leavitt, 3 Fost. N. H. 360; Flint v. Woodin, 13 Fng. L. & E. R. 278. In Veasie v. Williams, 8 How. U. S. 134, a majority of the Supreme Court gave relief upon a bill in equity, so far as to set aside the excess of price over the fair bids, after the contract had been executed. Where the underbidding was designed to deceive and entra]), it ought, I think, to avoid the contract, although it will often be difficult to draw the line between a fraudulent design and an honest procedure. The mere crying of a fictitious bid by the auctioneer, in the manner common at public sales, without any interference with the bidders, or misrepresentations to them, probably would not of itself be sufficient evidence of fraud. The plea now in question avers that the plaintiff falsely and fraudulently represented that others were bidding, and if this is proved to the satisfaction of the court and jury, such conduct ought to bar his recovery. In -my opinion, the plea is good, and the demurrer should be overruled.

- To the fourth plea there is a special demurrer. One of the conditions of the sale, set forth in the declaration, was that twenty-four hundred dollars, secured upon the premises by bond and mortgage, might remain, and that the purchaser should pay the balance of the purchase money on a day and at a place named. The plea avers, with much-particularity, that it was publicly announced at the sale, that the said lien on the premises belonged to one Bishop, and that on the day for paying the purchase money, plaintiff demanded the balance beyond the said sum of twenty-four hundred dollars, and represented that that sum might remain ; and also avers that, instead of there being twenty-four hundred dollars secured on the premises, there was a larger sum due to several persons who held mortgageSj and who refused to allow the same to remain, but demanded their money, and threatened to enforce their claims. Besides the objection, that this plea is double and argumentative, it is, in my opinion, bad in substance. The statement in the conditions of sale made by an administrator, that twenty-four hundred dollars, secured on the premises, might remain, contains no reference to the holder or holders of the lien, and what the plaintiff said on the subject is no part of the contract. The meaning of this stipulation seems to be, that the purchaser would not be required to pay this sum to the seller, but it might remain, to be paid when due, or if due then, when demanded by the holder of the mortgage. Who held mortgages, the purchaser could ascertain from the public records. Ro fraud or deceit in this matter is alleged. That the sum was larger than the conditions stated, did no injury to the purchaser. lie was not bound to take the property, and pay the balance beyond the sum named, until the encumbrances were reduced to the sum that was to remain.

The fifth plea avers, that although the plaintiff offered to deliver him a deed, and demanded the purchase money, as alleged in the declaration, he refused to allow defendant to examine said deed, and also refused to allow him to submit the same to any person learned in the law for inspection, although defendant requested him.to allow him- and his counsel to inspect the same; and it further avers, that defendant requested plaintiff to exhibit evidence that the Orphans Court had approved the sale, which plaintiff refused. To this plea there is a special demurrer, and I think it is bad for duplicity. The pleas and demur- ' rers were filed before the late practice act took effect. It is bad,-also, in substaiice. As to the refusal to exhibit evidence of the approval of the Orphans Court, the defendant was virtually a party to that proceeding, and bound to take notice of it. As to the refusal to allow the defendant to examine the deed,. I think the plea is bad for want of an •averment that the defendant was ready and offered to perform the contract on his part. The acts of making a a deed and of paying the money were to be done at the 6ame time, and were therefore dependant the one upon the other. The plaintiff was. not bound to deliver a deed ' without the payment of the money, any more than the defendant was to pay his money without a deed. Before the defendant could claim a right to inspect the deed, he was bound to tender himself ready to perform his part of the ■contract; for if he did not intend to perform, whether the deed was correct or not, it was of no importance to him ■to know how the fact was. If issue is properly taken on the averment in the declaration, that the plaintiff tendered a deed, he must, of course, show that it was in proper form.

•The sixth plea is, that before the said conditions were ' performed, and while the same were in force,-tos. on the day fixed for the performance, the plaintiff and defendant mutually agreed to enlarge and extend the time of complying with the said conditions until a subsequent day, when defendant offered to perform, &c., but plaintiff refused. To this there was a general demurrer, and it was insisted that the case comes within the well established rule, that a contract under seal cannot be enlarged, altered, or discharged by a parol contract. Rogers v. Payne, 2 Wils. 376 ; Spencer v. Healy, 20 Eng. L. & E. R. 337; Harris v. Goodwin, 2 Man. & Gram. 405 ; West v. Blakeway, Ib. 727; Sibley v. Brown, 4 Pick 137. This rule does not apply to cases where both parties have acted under the new contract, nor does it apply to the case of a waiver of a condition. Cases referred to in West v. Blakeway. See, also, Littler v. Holland, 3 T. R. 590; Cox v. Bennet, 1 Green 166; Vamhouten v. McCarty, 3 Green C. R. 141; Langworthy v. Smith, 2 Wend. 587; Lawrence v. Dole, 11 Verm. 549; Hotham v. East I. Co., 1 T.R., 638 ; Shinn v. Roberts, Spencer 444.

Undoubtedly if the plaintiff prevented the defendant from paying the money, by agreeing to another day, that would be a waiver of the original condition, and a good defence. The conditions were dependant, the one upon the other, and the plaintiff could only entitle himself to a performance by the defendant, by an offer in due time to perform his part. This offer the plaintiff might have waived, and thus have discharged the defendant; and in that case a new agreement, if made in waiting so as to satisfy the statute of frauds, might have been binding, according to the new terms of it. Had the plea shown that the plaintiff did thus waive the original conditions, or had it shown that ho, by his acts, prevented the defendant from performing, the pica would have been good. But, as pleaded, it only sets up the alteration or discharge of a contract under seal, by another not sealed. The facts stated may all be true, and yet the plaintiff may have offered to perform on his part, and requested the defendant to perform on his, as is averred in the declaration, and may, before or after doing this, without any waiver of the tender, have agreed that the defendant might pay at a subsequent day, which would not amount to a discharge of the covenant. Independent of the technical difficulty, such a promise was without consideration and not binding. In my opinion, the demurrer to this plea is well taken.

Cited in Vanderbilt v. Stryker, 3 Dutch. 7 ; Garretson v. Kane, 3 Dutch. 211; Baker v. Baker, 4 Dutch. 19; Nightingale v. Meginms, 5 Vr. 465; Mulford v. Peterson, 6 Vr. 135; Lord v. Brookfield, 8 Vr. 553; Leigh v. Clark, 3 Stock. 112.