Majority
p. 760Clara Fairchild, Resp’t, v. Lucy Ann McMahon, App’lt. (Supreme Court, General Term, Second Department, Filed July 22, 1892.) The following is the opinion at special term:
Headnote
Foreclosure—Purchase money mortgage—False statement of- consideration.The purchaser of property for $7,000 caused the consideration to be stated at $12,000 in the deed, and shortly after, through her agents, in selling the property, falsely exaggerated the consideration paid by her. In an action to foreclose a mortgage given as part of the purchase price of- the property so sold, Held, that such exaggeration was a good defense.
Appeal by plaintiff from a judgment of the special term. Kings county.
Action to foreclose a mortgage given to plaintiff by defendant upon an exchange of premises to secure a difference in the former’s favor. The defense was fraudulent representations as to the value of the property.
Cullen, J.—I cannot resist the conclusion that, in the exchange of properties on which the mortgage in suit proceeded, the defendant was imposed upon. A mere statement of value, though stated as fact and made fraudulently, does not give a right of action. Ellis v. Andrews, 56 N. Y., 83 . But a statement of the price paid by the vendor, as well as statements of other facts affecting the value, if false and fraudulent, will give a right of action. Here, if the facts be as testified to by defendant’s husband, there was a direct, positive statement of the price paid by the vendor, and her purchase was but a few weeks prior to the sale to the defendant The price paid at so recent a purchase might well affect the defendant’s judgment as to value. But artifice was used to aid this result. In the deed to the representative of the real owner and vendor to defendant, the. consideration was stated as $12,000, though but $7,000 was the true price, and the right to dictate the consideration to be expressed in the deed was expressly reserved to the vendee in the contract of purchase. This could have been done with but one object: to mislead subsequent purchasers as to the true price. As to the question of fact, I find that in favor of the defendant. While defendant’s case rests on the testimony of her husband alone, and that is contradicted by the agent, Benner, Benner is in conflict with several other witnesses, and, as already stated, the insertion of the exaggerated consideration in the deed confirms the statement of McMahon. The vendor was liable for the fraud of her agent Krumm v. Beach, 96 N. Y., 398 . I find also that the value of the property did not exceed from ,$7,000 to $8,000. and the defendant, relying upon the statement of the agent, believed it to be at least $12,000, and that hence she was damaged in a greater sum than that represented by the mortgage in suit. Judgment for defendant, with costs.
p. 761
Merrill & Rogers, (Geo. C. Holt and Payson Merrill, of counsel,) for app’lt; McMahon & Handley, (W. D. Veeder, of counsel,) for resp’t.
—The judgment in this action should be affirmed on the opinion of the trial judge at the special term, with costs.
Barnard, P. J., concurs; Cullen, J., not sitting.