Mendelson v. Stout — 37 N.Y. Super. Ct. 408

Majority

p. 408

LEOPOLD MENDELSON, et al , Plaintiffs and Respondents, v. JACOB STOUT, Defendant and Appellant.

Headnote

The guarantor of a tenant, for the payment of the rent and the performance of other conditions of a lease, who alleges that he was-induced to sign the guaranty by the representations of the landlord made to him and the tenant at the time, has the right to rely upon those representations being true, and to become the-surety in consequence thereof, and if such representations wore-falsely and fraudulently made, he will be relieved from his liability as guarantor.

The fact that there was no rescission of the contract or lease by the-tenant does not affect the rights of his surety or guarantor. The-contract of the latter is so far independent of the former that the-tenant could not do anything, nor omit to do anything, that would destroy or impair the right of the guarantor to set up a fraud practiced upon himself by the landlord, and to avail himself of the .same; as a defense.

Before Monell, Ch. J., and Freedman and Sedgwick, JJ.

Decided June 1, 1874.

Appeal from a judgment and order.

The action was against the defendant as the guarantor of one Neiison for the payment of certain moneys and the performance of certain covenants by said Neil son, in a lease to him of certain premises executed by the-plaintiffs.

The defendant, after some admissions, alleged that the acceptance of the lease by the said Neilson and his-covenant to pay the rents reserved in 'said lease, and the execution and delivery of the guaranty by the-defendant were obtained by the plaintiffs from the said Neilson, and from the defendant by the following false-

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and fraudulent representations on the part of the plaintiffs :

That the plaintiffs for several months prior to March, 1871, had been engaged in the manufacture and sale of maccaroni and vermicelli, at Nos. 311 and 313 Avenue A, being the premises described in the lease set forth in the complaint, and the said Neilson was acting as an inspector in the United States Custom House, in the city'of New York, and up to that time had no knowledge of the manufacture of vermicelli and maccaroni, and the defendant was an intimate friend to said Neilson.

That said Neilson having been attracted by an advertisement in the New Yorlc Herald,, offering the factory above referred to for sale, which advertisement was shown by him to defendant, called upon the plaintiffs and entered into negotiations for the purchase of the-machinery, presses and fixtures used in said factory, and for the transfer of the lease of the factory to him, said Neilson, which sale and transfer, and the guaranty of said lease were obtained by the following statements made by bne or both of the plaintiffs, who were copartners in said business, to said defendant, or to said Neilson, and repeated by him to defendant.

The plaintiff's stated that said business was profitable, that it was paying one hundred per cent, profit on the cost of manufacture and sale ; that this was the only factory for the manufacture of maccaroni in the country except one in Chicago and a small concern in Brooklyn. That the machinery, engine, boiler, presses and fixtures connected with the factory were in perfect order ; that the machinery and fixtures which plaintiffs offered to and did selhto said Neilson were worth fifteen thousand dollars, and they did not charge anything for the good will.

That they had manufactured from ten to fourteen barrels of flour a day, every day, for several months,

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and that. the factory was equal in capacity to the manufacture of ten to fourteen barrels per day the year round. That the business was uniform ; that there was no dull season, and the demand was greater than the supply ; that there was no need of a salesman, as the orders sent to the factory were three weeks ahead all the time of their capacity to fill them.

That the lease was a very favorable one, and they could sell it at any moment, at one thousand dollars profit. That the plaintiff Mendelson, was obliged to go do Europe, to be absent a long time, was their only .reason for selling. That there was more business than one person could attend to without injury to his health. That the two presses used, in the business cost six thousand dollars each when new.

That defendant relied upon the truth of such statements. That they were made with intent to deceive the defendant, and that he was deceived thereby. And that such statements and representations were false, and known by the plaintiffs to b.e false, at the time they were made.

At the close of the plaintiffs’ “evidence, the defendant’s counsel opened the defense to the jury, whereupon the plaintiffs’ counsel moved to rule but any evidence offered by defendant ill support of the answer, and also moved that the court direct a verdict on the pleadings and the evidence for the plaintiffs.

The counsel for the defendant admitted, for the purpose of the trial, that ETeilson occupied the premises in question up to the expiration of the lease,.and used the machinery and property covered by the bill of sale, and that he had made no rescission of the contract, and that the property has never been given back.

.. Thereupon the court ruled, that the matter set up in the answer, did not constitute.a defense, and directed a verdict for the plaintiffs, for two thousand four hundred seventy-three dollars and four cents.

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The defendant’s counsel duly excepted to the ruling of the court.

The jury found a verdict for the plaintiffs as directed by the court.

The defendant’s counsel thereupon made a motion for a new trial upon the judge’s minutes.

The court denied the motion.

The defendant appealed from the judgment and order.

Mr. II. M. Whitehead, for appellant.

Mr. Geo. W. Carpenter, for respondents.

I think it quite clear that the representations alleged in the defendant’s answer were material, and affected the question of his liability as guarantor.

He was about becoming surety for the payment of rent and certain other moneys, and the performance of covenants by Neilson, whose ability to pay such rent and moneys, and perform such covenants, depended upon the truth of the representations, which the plaintiffs made in respect to the lease, premises and business which Neilson was about to undertake. If such representations were true, there was little, or certainly less risk, in the defendant’s becoming the guarantor ; for a valuable property and profitable business would secure the success of his principal, and enable him to perform all his engagements.

The answer alleges that the defendant was induced by the representations, to sign the guaranty ; and he has .the right to insist, that if they were fraudulently made, he shall be relieved from his liability. They were not the expressions of mere opinions, but the assertion of facts, presumed to be known to the plaintiffs, and not known to the defendent, and upon which

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he had the right to rely, to influence his act of becoming surety.

Nor is there any force in the objection, that there was no rescission of the contract by Neilson. That can not affect the rights of his surety. Had Neilson attempted to avail himself of the fraud, it would have been a good answer, that he had not surrendered the lease and restored the .property to the plaintiffs. But the defendant’s contract is so far independent of Neil-son, that nothing that he could do, or omit to do, could destroy or impair the defendant’s right of setting up a fraud practiced upon himself by the plaintiffs.

I think the defense was improperly excluded, and that there should be another trial.

Judgment and order reversed, and a new trial ordered, with costs to appellant, to abide the event.

Freedman and Sedgwick, JJ., concurred.