Gallup v. Bernd — 17 N.Y. St. Rep. 194

Majority

p. 194

Jerome Gallup, Pl’ff, v. Jacob Bernd, Def’t.

(Supreme Court, General Term, Fifth Department,

Filed June 23, 1888.)

Headnote

1. Fraud—Purchase of land—Misrepresentations as to quality— When the purchaser is entitled to relief.

When there is no mutual mistake and the evidence warrants the finding oí fraud or misrepresentations on the part of the grantor and ignorance or' mistake on the part of the purchaser in respect to the quality of land sold, the purchaser is entitled to equitable relief and need not resort to his action at law for damages.

2. Limitations statute of—action for fraud—When barred—Discovery OF THE FRAUD—CODE ClV. PltO., § 882.

When the right for equitable relief rests on the charge of fraud, the six years limitation is applicable, but the statute does not commence to run until the discovery of the facts constituting the fraud.

Memoir by the defendant for a new trial on exceptions; taken at Genesee circuit, and ordered heard at general term, in the first instance.

The defendant in January, 1880, purchased a farm o£ the-plaintiff, took conveyance and gave his bond with a mortgage on the premises to secure $11,700 of the purchase-money. In April, 1887, the defendant paid the plaintiff the amount of the bond and mortgage except $1,364.98. The mortgage was discharged and the bond surrendered pursuant to an agreement which had been made between the parties that the defendant would pay all but a small portion, mentioned, and for that give his note. The action is brought to recover such amount unpaid.

And the defendant’s defense is founded upon the alleged fact that the land falls short in quantity, as represented by the plaintiff, and as mentioned in deed, about eighteen acres. And by allegations and proofs the defendant seeks to render such deficiency effectual as a defense. The court directed a verdict for the plaintiff, and the defendant’s counsel excepted.

Myron H. Peck, Jr., for def’t; George Bowen, for pl’ff.

While it clearly appears that the purpose of the defendant is to seek relief on account of the alleged deficiency in the quantity of land in the farm purchased of the plaintiff, the cause upon which he relies to charge the-plaintiff with liability for such deficiency in support of such relief is not very clearly represented or defined by the allegations of the answer. He alleges that as an inducement to him to purchase the farm, the plaintiff ‘ ‘ falsely stated and represented ” to him that it contained 230 acres, that the defendant relied upon and was induced by such representation to purchase it, and that there were only two hundred and eleven and three one-hundredths acres m the land conveyed. He also alleges that to carry into effect

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the agreement of sale, the plaintiff executed and delivered to him a deed which contained a particular description of land by metes and bounds ; and according to such descriptions the quantity of land so described was about 231 acres, and was stated therein to be 230 acres more or less, and that in and by the deed the plaintiff covenanted with the defendant that the “premises thus, by said deed, conveyed to the defendant in the quiet and peaceable possession of the defendant, his heirs and assigns, he, the plaintiff, would forever warrant and defend against any person whomsoever lawfully claiming the same, or any part thereof, that two parcels of the land embraced in the deed and containing ten and thirty-four one-hundredths acres, and four and five one-hundredths acres, making fourteen and thirty-nine one-hundredths acres, had before been conveyed to other parties, who were at the time of conveyance to the defendant, and since had been, in the possession of such two parcels holding under a valid title paramount to that of the defendant.

He then alleges that the plaintiff has refused to make him suitable allowance for such deficiency, and amongst other relief demands judgment. 2. That the agreement of sale and purchase be so reformed as to provide for payment of the amount only which may be found properly due on account of the sale; and 3, that the defendant recover of the plaintiff $1,775 and interest.

The defendant gave evidence tending to prove that in the sale of the farm by the plaintiff to the defendant the price was regulated and governed by the quantity and at a certain price per acre, that the plaintiff represented that the quantity of land in tho farm and which would pass to the defendant by the deed was two hundred and thirty acres. And it appeared that the plaintiff’s father, from whom the plaintiff derived his title twenty years before, had conveyed the two parcels before mentioned, containing fourteen and thirty-nine one hundredths acres, to other parties who took title by such conveyances, that those two pieces of land were embraced in the deed to the defendant, and that the quantity to which the defendant took title by the conveyance to him was only two hundred and eleven and three one-hundredths acres.

There was a conflict in the evidence of the parties in respect to the representations and agreement pursuant to which the conveyance was made, but it permitted the jury to find the facts as above stated, and that the defendant was ignorant of the situation of which he now complains and relied upon the representations so made by the plaintiff, and was induced by them to make the purchase and undertake to pay the stipulated amount for the property. The

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plaintiff by his reply, among other things, alleged the six years’ statute of limitations. And his counsel, treating the counter-claim as one at law for fraud, moved at the close of the evidence for the direction of a verdict on the ground that the cause of action alleged in the answer was barred by the statute of limitations.

The court, in granting the motion and directing a verdict for the plaintiff, expressed the opinion that there was no defense set up in the answer that could be maintained upon the evidence given on the trial. No question appears to have been raised upon the sufficiency of the answer in any respect by objection to evidence or otherwise.

The conclusion was permitted upon the evidence consistently with allegations of the answer that the defendant’s relief was not confined to a claim for damages in a cause of action at law for fraud. There is no mutual mistake alleged, but the proof warranted the finding of fraud or misrepresentation on the part of the plaintiff and ignorance or mistake of the defendant in respect to the quantity of land which would be and was conveyed by the deed. This would justify equitable relief by way of reformation of the agreement of sale so as to permit abatement from the amount which the defendant undertook to pay correspondingly with the deficiency chargeable to such fraud on the part of the plaintiff. Bentley v. Smith, 1 Abb. Ct. App., Dec., 126 ; Kilmer v. Smith, 77 N. Y., 226 ; Waring v. Somborn, 82 N. Y., 604 ; Albany City Sav'gs Inst., v. Burdick, 87 id., 40, 47; Crowe v. Lewin, 95 id., 423; 3 Pomeroy Eq. Jur., sec. 1376.

And the fact that the contract of sale had been executed by conveyance by deed is not in the way of granting such relief. Paine v. Upton, 87 N. Y., 327 . When such equitable remedy rests on the charge of fraud the six years limitation is applicable but the statute does not commence to run against it until discovery of the facts constituting the fraud. Code Civil Procedure, § 382, subd. 5; Carr v. Thompson, 87 N. Y., 160 . The evidence on the part of the defendant warranted the conclusion that the facts constituting the alleged fraud or misrepresentation in respect to the quantity of the land, were not discovered by the defendant until within six years before he answered the complaint. If it be assumed that upon the allegations of the answer and on the proofs he had a remedy at law for damages founded in fraud, that does not deny to him equitable relief provided sufficient is alleged and proved to permit it, as the two remedies substantially differ.

While in an action at law in such case the party recovers damages estimated upon the value of the property, inequity the relief given is in the nature of reformation and goes in

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abatement of the amount of the purchase money based wholly upon the contract price which the party agreed to pay.

The relief asked for by the defendant is not limited to a judgment for a sum of money. He demands also a judgment for reformation of the agreement of sale with a view to the reduction of the purchase price upon the basis of that stipulated by it. And such relief is not inconsistent with the facts charged in the answer and which the evidence tends to prove; although the facts in support of such equitable defense are somewhat inartificially alleged in the answer.

The cause of action, as alleged in the complaint, seems to be placed upon an agreement between the parties by which the plaintiff agreed to discharge the bond and mortgage upon payment of the larger part of the amount, and the giving by the defendant of his note for the residue. The facts are fully set out in the pleadings, and the reason given by the defendant for not fully performing such agreement is that he discovered the alleged fraud after the agreement was made, and refused to pay or secure the balance upon that ground.

The inquiry for the purpose of the defense is not confined to that particular agreement, as the balance which the plaintiff seeks to recover is a portion of the purchase-money, and the counterclaim .is connected with the subject of the action. If these views are correct, a new trial must be granted. The allegation in the answer, although somewhat informal, of the covenant of quiet enjoyment in the deed made by the plaintiff to the defendant, and of the fact that fourteen and thirty-nine one hundredths acres of the land covered by it were then and since have been in the possession of other parties, and held by them under a title paramount to that conveyed by such deed to the defendant, contains the elements of counterclaim as for breach of covenant. Shattuck v. Lamb, 65 N. Y., 499 ; Scriver v. Smith, 100 N. Y., 471 ; Tucker v. Cooney, 34 Hun, 227 . The evidence tends to support such allegations, and seems to have been entitled to some consideration upon the trial, if the attention of the court was called to it. It is said on the part of the plaintiff that the theory of the defense on the trial was solely on the ground of fraud, and that no other question is properly here for consideration. That may have been the situation at the trial, but the defendant’s counsel does not so treat the case here, nor is it necessarily so represented by the record. And in that view the whole case, must be considered to determine whether in any aspect the exception to the direction of a verdict was well taken.

The motion for a new trial should be granted.

Haight and Dwight, JJ., concur.