White v. Merritt — 7 N.Y.3d 352

Majority

p. 352

White v. Merritt and another.

Headnote

Gonclusiveness. of Judgment. — Pret&rmitted defence. — Deceit.

If a defendant, relying on a false statement made by the plaintiff, permit judgment to go against him hy default, and pay it; he cannot subsequently sue for that which would have a good defence to the former action, if he had not been fraudulently imposed on hy the plaintiff therein; for this would enable him to impeach the judgment collaterally.

An action will li.e for a fraudulent misrepresentation, with intent to deceive the plaintiff, though no benefit accrue to the defendant.

Appeal from the general term of the Superior Court of the city of New York, where judgment had been rendered in favor of the defendant, upon demurrer to the declaration.

This was an action on the case, to recover damages for the alleged fraudulent conduct of the defendants, as the plaintiff's agent.

The declaration alleged that the defendants, Merritt & Wheaton, were engaged in the business of collecting bills, for cattle sold by drovers, at the Bull’s Head market, in the city of New York. That it was the custom of the trade, for drovers to make sales to customers, for cash, to be paid on the presentation * qkq i *°f the bill within one to six days; the bill was -J then delivered to the defendants, who advanced to the seller their post-dated checks, for the amount, deducting one per cent, for collection, or for their trouble, if not collected; they were then to present the bills, use due diligence to collect them, and reimburse themselves out of the proceeds; if, however, the bills were not paid within twenty days, ‘ the seller, upon notice, was to repay the advances, with one per cent.

p. 353

commissions. That the custom warranted no extension of credit to the buyer, nor the receipt of anything in payment, except cash.

That, on the 25th April 1842, the plaintiff sold a drove of cattle, at the Bull’s Head market, to different customers, in small lots; two of them to one Sammis for $84. That the bills were delivered to the defendants for collection, who made the customary advance. That instead of collecting the bill from Sammis, the defendants received from him a promissory note, at sixty days,for the amount of that and another bill in their hands. That Sammis was then solvent, and the bills could have been collected from him; but before the maturity of the note, he failed, and the note was dishonored.

That the defendants subsequently gave notice to the plaintiff that the bill was not collected, and falsely stated that they had used due diligence in their efforts to collect the same; that they also falsely informed him, that they had never taken any promissory note from Sammis, nor in any way extended the credit upon his bill. That they then brought an action against the plaintiff for their advance and commissions, and he, relying upon their false statements, and believing that there was no defence to the action, permitted them to obtain judgment against him, which they subsequently collected.

That, on the 1st July 1846, the plaintiff called on the defendants, and inquired if any note had been taken by them for the bill, and if there was any obstacle to the recovery of a judgment thereon against Sammis; and that they falsely stated to *him that no note ^ had been taken for the bill, and that Sammis *- had no defence. That the plaintiff, thereupon, brought suit against Sammis for the amount of the bill, which he defended on the ground of payment by the note; and by such defence put the plaintiff to the additional cost of $200 in obtaining his judgment: because, if he

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had known of the existence of the note, and offered to cancel it, no defence would have been interposed. ,

That in consequence of the wilful and fraudulent concealment by the defendants of the facts which showed a violation of their agreement, the plaintiff was prevented from defending the action brought by them against him for the advance upon the bill.

The defendants demurred to the declaration, upon the following grounds, among others:

1. That the breach of duty complained of did not constitute a tort, and the matters set forth in the declaration do not support an action in tort:

2. That the question whether the defendants had become chargeable with the bill against Sammis, was one which the parties might have litigated in the action brought by the defendants against the plaintiff, and that the judgment recovered therein is final upon that question:

3. That in the process of the action- against Sammis, the plaintiff obtained notice of the extension of the credit to him by the defendants, and that his bill had been included in the note given the defendants, and that by proceeding in the action and prosecuting it to judgment, he ratified the acts of the defendants, and was precluded from maintaining this action.

The court below gave judgment for the' defendants, upon the demurrer; whereupon, the plaintiff took this appeal.

* §65 ] *Hastings, for the appellant.

Sandford, for the respondents.

According to the plaintiff’s showing, he nad a good legal defence to the suit brought against him by the defendants, for their advance to him on the

p. 355

claim against Sammis, of which he neglected to avail himself. The suit was prosecuted to judgment, and the defendants recovered the amount of their advance, with interest, and the one per cent, which, by the contract, they were to receive as commissions. By the judgment, it is established, that it was legal and proper, that the plaintiff should pay the defendants the amount of their advance, with the interest and commissions, which is utterly inconsistent with the plaintiff’s claim to recover it back. No averment is to be admitted to contradict a judgment, or to dispute any legitimate inference deducible therefrom; the maxim is, “ interesse reipublicse ut sit finis litium.” To sustain this action, to recover back the advance, would be to open the judgment and inquire into its propriety and legality; that cannot be done collaterally. If it was right, under the contract between the parties, that the plaintiff should pay back to the defendants the money recovered by the judgment in their favor, it was, because they had performed all the stipulations of the agreement on their part, and had failed to collect the amount of the claim against Sammis. That is one of the things established by the judgment, and the plaintiff is not now to be allowed to deny it.

The plaintiff seeks to avoid these consequences of the judgment, by alleging fraudulent concealments and misrepresentations of facts by the defendants, which induced him to omit defending the suit, and to let judgment pass against him by default; that, however, is not a legal answer to the difficulty. It, probably, would entitle him to recover, provided the payment had been voluntary and induced by fraudulent concealment and misrepresentation, But no case has gone the length of deciding, that after the proceeding has advanced to the maturity of a ^judgment, and the judgment collected by „ ^ execution, it may be recovered back.

It is true, the action is case, for the unfaithfulness and

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fraudulent conduct of the defendants, as the plaintiff’s agent, and not assumpsit for money had and received; but it is not perceived, how the form of the action can change the legal principle. If the plaintiff had not been called upon for the money by action or otherwise, and had not paid it, clearly, he would have no ground of complaint against the defendants, for doing what the declaration alleges they have done, and it is impossible to see how he could properly be called upon to pay, if the defendants are liable upon the case made by the declaration. If the facts as alleged in the declaration are all true, the case is, undoubtedly, a hard one for the plaintiff, but that is no reason why a well-settled rule of law should be violated.

The demurrer admits none of the facts alleged but such as are well pleaded; and if nothing can be alleged to impeach a regular judgment, as is undeniable, all the allegations of the declaration tending to that result must be rejected. See the case of Marriott v. Hampton (2 Smith Leading Cases 237), and the notes to that case; also, same case, 7 T. R. 269.

After abstracting from the case all which the judgment disposes of, there is still in substance the following, to wit, that after the plaintiff had paid the judgment, he called on the defendants and inquired of them whether there was any legal impediment to his prosecuting Sammis for the price of the cattle sold, and whether any note had been taken from him for the same, and that the defendants thereupon, falsely, and with intent to injure the plaintiff, represented to him that no note had been taken, &c., whereby the plaintiff was subjected to a much larger bill of costs and other expenses in the pro ■ secution which he afterwards instituted, than he would otherwise have had to pay.

Fraud and deceit in the defendant, and damage to the plaintiff, are a sufficient foundation for the action of trespass on the case, though no benefit accrue to the defendant. The action will lie, whenever there has been the assertion of a falsehood, with a fraudulent design, as to a fact, when a direct and positive injury *arises from such assertion. (1 Bac. Abr., Action on the Case, F., p. 125, ed. of 1842; Benton v. Pratt, 2 Wend. 385 .) Here, was the assertion, by the defendants, of a falsehood, with a fraudulent intent to injure and deceive the plaintiff, by which he was induced to bring the action against Sammis on the account, as for goods sold, generally, and which induced the defendant Sammis to interpose a defence, thereby increasing the cost and expense of obtaining the judgment from $12 to $200. The law would be exceedingly lame, ana be quite undeserving of the high encomiums which have been bestowed upon it, if it failed to afford a remedy foi a malicious injury of this description. •

For these reasons, the judgment of the court below should be reversed, and judgment should be given for the plaintiff on the demurrer in that court.

Judgment reversed, and judgment for the plaintiff on the demurrer.

Cases cited

Benton v. Pratt 2 Wend. 385 N.Y. Sup. Ct. p. 356