Wessels v. Carr , 44 N.Y.S. 114 ( 1897 )

O’Brien, J.:

Little need be added to the satisfactory opinion delivered by the learned judge below.^* The essential constituents of an action for fraud are, representations of falsity, scienter, deception and injury. The complaint contains all these elements. The only question that can arise is whether the character of the representations, if proved, is of a sufficiently grave nature to entitle the plaintiff to relief. In other words, will a false and fraudulent representation, made with intent to induce a compromise, that one is poor and unable to pay his debts, when in fact he is able, justify an action for damages? Of course, if the fraud is sufficiently grave the release and assignment present no insuperable barrier to a recovery.

In Gould v. Cayugu Co. Nat. Bank (86 N. Y. 81) it is said: “ If there had been no dispute as to the amount due the plaintiff, if the sole defense of the defendants had been the compromise, and if at least the §25,000 was indisputably due the plaintiff, then it would have been unnecessary for the plaintiff to tender or return to the bank the money paid, because, in any view of the case, so much would have been due the plaintiff by virtue of the compromise, if that was upheld, and, if that was vacated, then in consequence of the original liability. It was in principle so held in Pierce v. Wood (3 Fost. [N. H.] 519). It was there decided that, if a person effect a compromise of his debts by fraudulent representations and procure a discharge of the same by paying a per cent thereon, and an action be brought to recover the balance on the ground of fraud, it is not necessary, as preliminary to the right of recovery, that the plaintiff repay or offer to repay the per cent received, and that the doctrine of the rescission of contracts does not apply to such a case. In that case, * * * the plaintiff was entitled to the per cent paid him, whether he succeeded in the action or not.”

While we have been unable to find an authority precisely in point upon the question whether the representations, if false, were of a sufficiently grave nature to vitiate an assignment of judgment or a compromise, we have found cases in which fraudulent representations as to solvency and as to one’s assets and liabilities were lield sufficient. We think the fair inference to be drawn from the statement that defendant was unable to pay his debts is that he was insolvent, and that such statement, coupled Avith the other facts alleged, was intended to induce the plaintiff to believe that the defendant, being without any means whatever, would need the assistance of a third person to furnish him the money to be paid upon the compromise. If such representations were, as alleged, false and-untrue and fraudulently'made, we think they are sufficient.

The appellant insists, however, that the form of the action is bad, and that, if it can be maintained, then the plaintiff would be able to succeed in recovering a judgment in addition to the one that he sold and assigned, for the same claim that was merged in the assigned judgment. As this same question was presented and disposed of in the case of Gould v. Cayuga Nat. Bank, from which we have quoted (and also in the same case subsequently reported in 99 E. Y. 338), it is unnecessary to discuss it further.

Our conclusion is that the judge below was correct in holding that the complaint was sufficient in substance and not obnoxious to demurrer, and that, therefore, the judgment should be affirmed, with costs, but with leave to-the defendant to withdraw demurrer and answer over on payment of costs in this court and in the court below.

Van Brunt, P. J., Williams, Patterson and Ingraham, JJ., concurred.

Judgment affirmed, with costs, but with leave to defendant to withdraw the demurrer and answer over on payment of costs in this court and in the court below.

* Pryor, J.:

Insufficiency, in substance, is the ground of demurrer to a complaint which exhibits the following facts: That plaintiff recovered a judgment against the defendant for 01,237.49, which is still unpaid and unsatisfied; on plaintiff endeavoring to collect said judgment, the defendant willfully, intentionally and falsely represented that he was a poor man and could not pay a dollar of his debts, but that if plaintiff would accept §250 in full settlement of said judgment and give defendant a release from all obligation under the said judgment, he, the defendant, would procure a party to take an assignment of said judgment for the said sum; that, relying upon the statement of the defendant in regard to his inability to pay the said judgment, the plaintiff accepted the defendant’s offer, gave the defendant a release and made an assignment of the said judgment to one William H. Mangels; that the $250 was paid, not by Man-gels, but by the defendant; that the assignment to Mangels was intended to deceive plaintiff into believing that the defendant was a poor man and unable to pay the judgment, and that, in effect, the assignment was for the benefit of the defendant; that the representation of defendant in regard to his inability to pay said judgment was false and made with the intention of deceiving and defrauding the plaintiff; that, in fact, the defendant was a man of means and able to pay the said judgment in full, and that by reason of the premises the plaintiff has suffered damage in the sum of §1,500.

Obviously, here are all the constituents of an action for deceit, namely : “Representations, falsity, scienter, deception and injury.” (Church, Ch. J., in Arthur v. Griswold, 55 N. Y. 400, 410; Brackett v. Griswold, 112 id. 454; Hickey v. Morrell, 102 id. 454, 463.)

“In determining the sufficiency of the pleading demurred to, it must be assumed that the facts stated therein, as well as such as may by reasonable and fair intendment be implied from the allegations made, are true.” (Milliken v. Telegraph Co., 110 N. Y. 403.) “ To sustain a demurrer to a complaint it is not sufficient that the facts are imperfectly or informally averred, or that it lacks definiteness and precision, or that the material facts are argumentatively averred; it will be deemed to allege what can by reasonable and fair intendment be implied from the allegations.” (Marie v. Garrison, 83 N. Y. 14; Sanders v. Soutter, 136 id. 193.) While the court may not, by implication, import an absent allegation into a complaint (Clark v. Dillon, 97 N. Y. 370), still “pleadings are to be liberally construed with a view to substantial justice, or, in other words, with a view to get out the real truth of the case, when it will not involve surprise or injustice to either party.” (Peckham, J., in Bowe v. Wilkins, 105 N. Y. 322,328.)

But why have recourse to rules of construction when the complaint is explicit in the statement of every fact essential to the support of the action?

Indeed the demurrant does not challenge the right of plaintiff on the facts pleaded to some relief, but the contention is that his only remedy is an action for cancellation of the assignment and release of the judgment. But if the complaint show title to any redress in any form, it is good against the demurrer. (Johnson v. Girdwood, 7 Misc. Rep. 651; affd. by Court of Appeals, 143 N. Y. 660.)

On discovery of the fraud plaintiff had an alternative of remedies; that is, either to rescind the contract, or to affirm it and sue for damages. (Krumm v. Beach, 96 N. Y. 398, 406; Vail v. Reynolds, 118 id. 297, 302; Cooley on Torts, 503.) He adopts the latter expedient; to the pursuit of which, manifestly, the assignment and release of the judgment, instead of opposing an obstacle, are indispensable conditions. Such assignment and release, fraudulently procured, is the gravamen of the action.

Demurrer overruled, with leave to answer.