Hogan v. Weyer — 5 Hill & Den. 389

Majority

p. 389

Hogan vs. Weyer.

Headnote

A party who has derived benefit under a contract, and is not in a condition to restore what he has received, cannot avoid it on the ground of fraud, but must seek his redress by an action on the case; or, if sued upon the contract, he may recoupe. Per Bronson, J.

W. having taken a lease for three years, afterwards applied to H., the landlord, to be discharged for the last year of the term, which the latter declined, saying, however, he would try to find a tenant for. W.; but, a few days previous to the commencement of the last year, the parties came to terms, and W. was discharged, he paying H. $100 by way of consideration. Held, that though at the time of this arrangement the premises had been re-let by H., and he fraudulently represented the fact to be otherwise, W. could not maintain assumpsit to recover back the money paid.

Error to the In ew-York C, P. , Mrs. Weyer sued Hogan in the court below, and declared in assumpsit on the money counts. The case was this: The defendant leased a house in the city of N. Y. to the plaintiff for a term of three years, which would end on the first day of May, 1842, at the annual rent of $1000, and the plaintiff gave security for the payment of the rent. In February, 1841, the plaintiff was anxious to surrender the lease and get discharged from the contract for the last year of the term, and she applied to the defendant for that purpose. The defendant refused to release her, but said he would try to procure a tenant for her. In April following the parties came to an agreement, by which the defendant gave up the lease and took the premises off the plaintiff’s hands for the last year of the term, in consideration of the sum of one hundred dollars,' which the plaintiff paid. About that time the defendant let the premises to one Spring, who entered in May following, but failed within a few months, and the defendant had to take back the property from him. The plaintiff gave evidence tending to show that the defendant had agreed to let the premises to Spring before she paid the $100 and was discharged from her lease; and that the defendant, at the time that bargain was closed, concealed from, her the fact of his having obtained

p. 390

another tenant, and said he had not let the premises. On that ground the plaintiff claimed to recover hack the $100 which she had paid. The judge refused to nonsuit the plaintiff; and charged the jury that if the defendant had actually let the premises at the time the $100 was paid, and if they believed he had concealed facts which should have been disclosed to the plaintiff, then the plaintiff was entitled to recover. Verdict and judgment in favor of the plaintiff for the $100 and interest. The defendant, having excepted, brought error.

J. W. White & S. Sherwood, for the plaintiff in error.

P. Wilson, for the defendant in error.

Although the defendant has probably lost money by the agreement to release the plaintiff from her contract, he ought "in fairness to have' informed her that he had found a new tenant. He may, perhaps, be liable to an action on the case for misrepresenting or concealing that fact; but I see no principle upon which this action can be maintained. When money has been paid under a special con-, tract which is afterwards rescinded, or where the contract was void from the beginning in consequence of the fraud of the party receiving the payment, the money may sometimes be recovered back in an action for money had and received to the use of the party who paid it. But when the contract was valid, and still remains in force, the money cannot be recalled. There is no pretence that the agreement between these parties has ever been rescinded, nor can it be maintained that the contract ivas utterly void. The plaintiff received the stipulated consideration for her money. The lease was given up, and she was discharged from her obligation to pay rent for the last year of the term. She cannot treat the contract as valid for the purpose of retaining the consideration which she received, and still maintain that the agreement is void for the purpose of recovering back the money which she paid. The contract must be rescinded, in toto, or not at all.

When a party who has derived a benefit from the contract

p. 391

seeks to avoid it on the ground of fraud, he must first offer to restore that which he has received, so that the parties may be put in statu quo. When that cannot be done, the contract stands, and the injured party must seek redress in an action on the case for the fraud, or if he is sued on the contract he may recoupe damages. He cannot say that the contract is good so far as he has derived a benefit under it, and void for the residue. Such a rule would be manifestly mijust.^[1]

Although the defendant had found a new tenant, he was under no obligation to accept him and release the plaintiff and her surety; and he probably would not have done so for. a less sum than he actually received. And if the plaintiff had been fully informed of the facts, she might still have been willing to pay the one hundred dollars for a release. But if she has been injured by the alleged fraud, it would be for the jury to say, in a proper action, how much damages she had sustained; and the-verdict might be much less'than one hundred dollars. But this action proceeds upon the ground that the plaintiff is entitled to recover back the whole sum which she paid, with interest, and without any reference to the actual damage. By retaining the consideration which she received, the plaintiff affirms one half of the contract, and by bringing this action she attempts to disaffirm the residue. That cannot be allowed.

Judgment reversed.

(a) (a) See Voorhees and others v. Earl and Kellogg, ( 2 Hill, 288 , 292.)