Nealis v. Lissner — 24 N.Y. St. Rep. 196

Majority

p. 196

James J. Nealis, as Receiver, et al., Resp’ts, v. Salem Lissner, et al., App’lts.

(Supreme Court, General Term, First Department,

Filed May 24, 1889.)

Headnote

1. Contract—Infraction of—What right of action depends üpon— Fraud.

The action was brought upon a contract, by which defendants agreed to purchase the property of plaintiffs insolvent firm, when sold at auction at a certain price. Before the sale, Reimer, a member of said firm and defendants, agreed to go into business together, and to that end the stock was.

p. 197

to be purchased. The defendants purchased "at a less price than that agreed upon, and in this action, the plaintiff, as receiver, claims to be entitled to the difference between the price paid at the sale, agd that agreed upon. The complaint charges, in connection with the contract, fraudulent conduct. Held, that assuming the fact alleged in regard to the con-tract to be true, it is not necessary in order to establish plaintiff’s claim to show, in addition, fraudulent devices of any kind whatever, that where the averments amount to a contract made and broken, the right to maintain the action depends upon these elements, and these elements alone.

2. Same—When refusal to perform involves fraud.

It may be said, perhaps, with propriety, that a .deliberate refusal to carry out a contract necessarily involves an element of fraud, the refusal being p rima facie unjustifiable, and therefore in violation of law.

. Appeal from an order made at the special term denying a motion to strike out allegations of fraud in the complaint as redundant, and for other relief.

Aaron P. Whitehead, for def’ts-app’lts; Charles Donahue, for phffs-resp’ts.

This action was brought upon a contract by which the defendants agreed to purchase the property of Strausky, Bernier and Aarons, at a price named. It appears that the firm mentioned failed in the month of March, and the merchandise owned by them was sold under execution. Before the sale, Beimer and the defendants agreed to go into business together, and to purchase the stock of the firm already suggested; the defendants agreeing that in case they should buy the stock for less than ninety per cent, at the auction, they would nevertheless pay that sum for it.

They purchased the stock at less than ninety per cent, but refused to carry out the contract, which induced this .action; the plaintiff claiming, as receiver of the firm, that he was entitled to the difference between the price paid at the auction sale and the price agreed upon, which was some-, thing like fifty per cent. The complaint charges upon the defendants in connection with the contract, fraudulent conduct; for example, it is alleged in paragraph 7th of the complaint that under the agreement to which reference has been made, the defendants unlawfully conspiring' to cheat and defraud the said firm of Strausky, Beimer & Aarons, attended the sheriff’s sale and purchased the merchandise there sold, and that still conspiring to the same fraudulent ends the defendants were guilty of certain conduct, and that by reason of the matters and things charged, the firm named were damaged to the extent of $30,000 which the plaintiff as receiver claimed the right to recover. The cases of Harway v. The Mayor (4th Thompson & Cook, 167), and Sheahan v. Shanahan ( 5 Hun, 461 ), cited on behalf of the plaintiff, do not sustain the proposition that in such a case as this the allegations of fraud are necessary, Or are to be tolerated, and for the reason that assuming the

p. 198

facts in regard to the contract as alleged to be true, it is not neccessary in order to establish the plaintiff’s claim, to show in addition fraudulent devices of any kind whatever. The averments amount to a contract made and broken, and the right to maintain the action depends upon these elements and these elements alone. The cases mentioned do not present any of these characteristics. In Sheahan v. Shanahan, for example, the defendant claimed that the judgment was erroneously recovered, because the com-1 daint was for a wrongful conversion of property, while the cause of action established by the evidence was on contract. The general term held that the foundation of the claim made by the plaintiff was an express contract, and, all hough the breach of it was alleged in terms characterizing the defendant’s failure to perform as wrongful, it was still no more than a non-performance of the agreement' alleged to have been made, and that these allegations of wrong did not change the action from one on contract to one in tort. This case is really an authority for the proposition that the allegations of fraud were unnecessary for the plaintiff’s recovery. It may be said, perhaps, with propriety, that a deliberate refusal to carry out a contract necessarily involves the element of fraud, the refusal being prima facie unjustifiable, and therefore in violation of law. For these reasons it is thought that the order in the court below should be reversed, and an order entered directing the allegations of fraud to be stricken from the complaint as redundant. This disposition of that part of the appeal disposes also of the attempt to compel the plaintiff to elect whether he will proceed upon the contract alone or upon the alleged fraud.

The attempt to obtain an order directing the plaintiff to elect whether he will rely upon the cause of action herein for damages to Alexander Reimer individually, or for damages to the firm of which he was a member, must fail. The receiver seems to be invested with all the property of the firm, and this action is broad enough to embrace all the damages that may be urged by either of them, growing out of the cause of action alleged.

The order appealed from should be reversed, without costs.

Van Brunt, Oh. J., and Daniels, J., concur.