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Isman v. Loring

Supreme Court of New York, Appellate Division

March 19, 1909

ISMAN
v.
LORING.

Appeal from Special Term, New York County.

Action by Felix Isman against Isabella Loring. From a judgment overruling a demurrer to the complaint, the latter appeals. Affirmed.

James M. Gifford, for appellant.

Maurice B. Blumenthal, for respondent.

Argued before PATTERSON, P. J., and INGRAHAM, LAUGHLIN, McLAUGHLIN, and SCOTT, JJ.

INGRAHAM, J.

The complaint in this action was demurred to on the ground that it did not state facts sufficient to constitute a cause of action. The complaint alleges that prior to January 6, 1906, the parties to this action entered into negotiations for the sale of certain real property by the defendant to the plaintiff, and that such negotiations resulted in the execution and delivery of a contract in writing on January [115 N.Y.S. 934] 6, 1906, a copy of which is annexed to the complaint; that as part of said negotiations the defendant represented to the plaintiff that she had received a bona fide, legitimate, and fixed bid or offer to purchase said premises from a railroad corporation, and that the said corporation was then ready and willing to purchase said premises; that it was then agreed between the parties that the plaintiff would purchase said premises and pay the defendant therefor $5,000 in excess of the bid or offer made to the defendant by the said railroad company; that thereafter the defendant represented to the plaintiff that the said railroad company had made, and that there was then in fact pending, an actual, bona fide, legitimate, and fixed offer or bid to purchase said premises for the said company from the defendant for the sum of $70,000 and that the said railroad company was then ready and willing to purchase said premises at said price; that the plaintiff, relying wholly and solely upon such representations of the defendant, entered into a contract with the defendant to purchase the premises for the sum of $75,000; that subsequently the contract was fully performed, the defendant conveyed the premises to the plaintiff, and the plaintiff paid the defendant the said sum of $725,000; that the representations made by the defendant were false and untrue, in that the bid or offer made by the railroad company was in fact the sum of $55,000, and not the sum of $70,000; that these representations were known by the defendant to be false and untrue, and were made for the purpose of cheating and defrauding the plaintiff and inducing him to enter into the said contract; and that by reason of the premises the plaintiff has been damaged in the sum of $15,000, for which sum judgment is demanded. The action is therefore to recover damages sustained by the plaintiff caused by the defendant's fraud.

There can be no question but that, to sustain such a cause of action, the plaintiff must allege the fraud and resulting damage; but, when fraud and damage are both alleged, there is a cause of action. As was said in Taylor v. Guest, 58 N.Y. 262:

" This false representation, made fraudulently and with an intent to deceive, made the defendant liable in an action for deceit, if, believing it to be true and relying upon it, the plaintiff parted with the bonds for the price agreed upon, and when, except for false representation, he would not have sold them and might have realized a large price. Fraud without damage, or damage without fraud, will not sustain the action for deceit; *** and a false and fraudulent representation, made by one party to induce a contract entered into by the other, is not actionable, unless the party to whom it was made believed the representation to be true and acted upon the faith of it, to his damage."

The complaint alleges the false representations, that they were made with intent to deceive, that the plaintiff relied thereon, and that by reason of the premises the plaintiff has been damaged in the sum of $15,000. The defendant, however, claims that, to maintain the action, the plaintiff must allege the special facts from which damage can be inferred, or, in other words, in an action for deceit must allege special damage. It is clearly settled in this state that where there has been fraud in procuring a contract the injured party has at once upon the execution of the contract an action for the fraud, and that that action is barred by the statute of limitations six years after the actual execution [115 N.Y.S. 935] of the contract or the discovery of the fraud. Thus, in Northrop v. Hill, 57 N.Y. 351, 15 Am. Rep. 501, it was held that:

" When a party to a contract is guilty of fraud, he commits a wrong for which he is liable to the defrauded party to pay at least nominal damages. The act of entering into contract relations implies that the parties are to deal in good faith with each other.*** If he proves no special damage, he should at least recover nominal damages for the breach of the implied promise to act in good faith."

And the court cites from Allaire v. Whitney, 1 Hill (N. Y.) 484, where it is said:

" But actual damage is not necessary to an action. A violation of right. with a possibility of damage, forms the ground of the action.*** Once establish, therefore, that in all matters of pecuniary dealings, in all matters or contract, a man has a legal right to demand that his neighbor shall be honest, and the consequence follows, viz., if he be drawn into a contract by fraud, this is an injury actionable per se.*** Fraud in a contract can hardly be conceived, without being attended with damage in fact."

And it was held that, as the plaintiff had a complete cause of action on the day when the purchase was completed, any damage that subsequently followed was merely developed from the original wrong then committed, and was not a new cause of action. And this same principle was recognized in Pryor v. Foster, 130 N.Y. 171, 29 N.E. 123.Thus the fraud gives a cause of action for the damages which necessarily result from the wrong, and these may be recovered without an averment of special damage.

Such damages, however, as are the natural, but not the necessary, result of the injury, are special, and must be alleged. Vanderslice v. Newton, 4 N.Y. 130.In Jutte v. Hughes, 60 N.Y. 267, where the action was for a nuisance, the Court of Appeals held that the trial justice was wrong, under the allegation of general damage, in excluding proof of the rental value for the purpose of showing the damage done, and the ...


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