Newell v. Chapman — 56 N.Y. St. Rep. 380

Majority

p. 380

George R. Newell, Resp’t, v. James H. Chapman, App’lt.

(Supreme Court, General Term, Third Department,

Filed December, 1893.)

Headnote

1. Damages—Fraud.

In an action to recover damages for alleged false statements as to the value of a bond and mortgage, the measure of damages is the difference between the value of the bond and mortgage as they were, and the value, if the represenlions had proved true.

2. Fraud—Essentials.

To establish a cause of action for fraud, plaintiff is not only bound to show the fraudulent representations, but also that they were relied upon by him and induced him to take the bond and mortgage.

3. Same.

In such case, if the bond is a valid and collectible security, the defendant cannot be said to have made any false representations.

4. Same.

The fact that the defendant, who is a responsible party, made himself liable for the payment of the bond and mortgage on the transfer to plaintiff, tends to show the absence of fraudulent intent.

5. Guaranty—Valid.

Where the delivery of a deed is made in reliance upon the verbal guaranty, by the grantee, of the payment or collection of a mortgage received in part payment, such guaranty is valid and can be enforced.

Appeal from a judgment for the plaintiff.

Charles B. Patterson (J. W Houghton, of counsel), for app’lt; 1. F. Hamilton, for resp’t.

The action was brought to recover damages for alleged false statements of defendant as to the value of a bond and mortgage relied on by plaintiff, and by which the latter was induced to take such security in part payment for a lot of real estate. In such an action the measure of damages is the difference between the value of the bond and mortgage as they were and the value if the representations made had turned out true. Vail v. Reynolds, 118 N. Y., 297 ; 28 St. Rep., 707 . If the bond was of no value, and the mortgage a good security for the amount due, plaintiff sustained no damage. So if the real estate covered by the .mortgage was of insufficient value and the bond collectible, the transfer to plaintiff was of the bond and mortgage to secure a mortgage debt. If the payment of that debt was secured to plaintiff by either the bond or mortgage he sustained no damage. I am not satisfied after a careful examination of the case that any sufficient evidence was given on the trial to show

Dissent

p. 381

that the bond could not be collected of its makers. Ro action had been commenced thereon, and it was not proved that Jane and Jerome Sullivan were irresponsible. The bond and mortgoge were transferred together as one security. The bond represented the debt and the mortgage being executed to secure the payment of the bond. If the bond was a valid and collectible security, defendant could not be said to have made any false representations, nor can plaintiff be deemed to have sustained any damage. I am inclined to think, therefore, that plaintiff should have shown that the makers of the bond were irresponsible.

Again, I think, the' court erred in refusing to charge as asked by the defendant in his fifteenth request, viz.: “ That if the plaintiff delivered his deed of the land relying upon the verbal guaranty of defendant, that he would guarantee the payment or collection of the mortgage, there was a present consideration and parting with property on the strength of the promise, and the guaranty or promise is valid and binding and can be enforced against defendant.’’ The court refused to so hold or charge, defendant excepting.

This guaranty of the defendant, under the circumstances, was not within the statute of frauds, and was binding on him. Brown v. Curtiss, 2 N. Y., 225 ; Cardell v. McNiel, 21 N. Y., 337 ; Milks v. Rich, 80 N. Y., 269 ; Allen v. Eighmie, 14 Hun, 559 . To establish a cause of action against defendant plaintiff was not only bound to show the fraudulent representations but also that the representations were relied upon by the plaintiff and induced him to take the bond and mortgage. Arthur v. Griswold, 55 N. Y., 400 -405.

■ In considering this question as to whether plaintiff relied on the alleged false representations of defendant or not, and whether or not he was induced by those representations to take the bond and mortgage, the jury should have been instructed that the defendant was liable on his verbal guaranty. The plaintiff testified that he understood the defendant was a man of responsibility. If the jury had been instructed, as requested by defendant, that his agreement to guarantee the mortgage was valid and made him responsible for its payment or collection, they could well have reached the conclusion that the plaintiff having a valid guaranty by a responsible man securing the payment of the bond and mortgage relied rather on that guaranty than upon the other representations of defendant as to the value of the security. I think also that the defendant was entitled to the instruction asked for on the question of his alleged fraud. The fact that the defendant, a responsible man, made himself liable for the payment of the bond and mortgage on its transfer to plaintiff, tends to show the absence of a fraudulent intent.

For these reasons I think the judgment should be reversed and a new trial granted, costs to abide the event.

Herrick, J., concurs; Mayham, P. J., dissenting.

This action was to recover damage for an alleged fraudulent representation of the defendant in

p. 382

negotiating the sale of a bond and real estate mortgage to the defendant.

To sustain this action the plaintiff was required to prove representation, falsity, scienter deception, and injury. Brackett v. Gris wold., 112 N. Y., 467 ; 21 St. Rep., 791 .

There must be sufficient evidence to support each of these affirmative propositions. We think the jury having found these propositions in favor of the plaintiff, that there is sufficient proof to sustain their verdict, It was the province of the jury to pass upon the conflicting evidence, and as there is some evidence to support each of the elements essential to a recovery in this action, the court should not set aside the verdict on the ground that it is wholly unsupported by evidence.

It was not error, therefore, for the trial judge to refuse to set aside the verdict on a motion for that purpose made upon the minutes at the trial.

The defendant failed to take exception to what he now insists were errors in the charge of the trial judge to the jury. If the direction of the judge in his charge was erroneous, it cannot be reviewed on appeal except upon exceptions, and a's no exceptions were taken we cannot review the charge or reverse, if the same was erroneous. It is true the defendant did except to what he claimed the judge charged, but the judge disclaimed making the statement excepted to, and we do not find the objectionable language in the charge.

On the whole case we see no error for which the judgment should be reversed.

Judgment affirmed with costs.