Case ID: ad_164/html/0177-01.html
Source: Caselaw Access Project
Author: {"author": "Ingraham, P. J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Joseph Epstein, Respondent, v. Rockville Centre Improvement Company, Appellant.
    First Department,
    November 6, 1914.
    Practice — counterclaim raising equitable issues in legal action — trial at Special Term — when legal issues should be first tried.
    Where in an action to recover back moneys paid by the plaintiff on account of a contract to purchase lands which he alleges was induced by the fraudulent representations of the defendant, the latter denies the fraud and as a counterclaim demands the specific performance of the contract, the counterclaim is in equity and the defendant has a right to have it tried at Special Term pursuant to section 974 of the Code of Civil Procedure. But under the circumstances the common-law issue raised by the complaint should first be tried before a jury, for if the plaintiff succeeds in establishing the fraud, the defendant’s counterclaim necessarily fails.
    Appeal by the defendant, Rockville Centre Improvement Company, from an order of the Supreme Court, made at the New Yoik Special Term and entered in the office of the clerk of the county of New York on the 15th day of July, 1914, denying defendant’s motion for a separate trial of the issues arising upon the counterclaim and reply herein at Special Term, and his further motion that in the meantime the trial of the issues raised by the complaint and answer be stayed.
    
      
      Max Leff, for the appellant.
    
      David L. Podell, for the respondent.
   Ingraham, P. J.:

The complaint alleges two causes of action to recover back the money paid by plaintiff on account of two contracts for the purchase of real property, based upon an allegation that he was induced to execute the contracts and pay the amounts paid on their execution by false and fraudulent representations made by the defendant, and the damages demanded in each case are the amount paid by the plaintiff on the execution of the contracts. The making of the contract is admitted and there is no allegation that the defendant could not convey good title to the property, except that it is alleged that there was a mortgage upon the property. There is no allegation, however, that the defendant could not secure a release from this mortgage or that it could not convey to the plaintiff the property free from the lien of the mortgage. The defendant interposed an answer denying the fraud and setting up as a counterclaim a demand for specific performance of the contract. After the case was at issue by the service of plaintiff’s reply to this counterclaim the defendant moved to have the issues arising upon the counterclaim and reply tried at Special Term of the court and to stay the trial of the action on the complaint and answer until the trial of the issues at Special Term, and from an order denying that motion the defendant appeals.

The counterclaim is clearly a cause of action in equity which the defendant would have the right to try at Special Term. By section 974 of the Code of Civil Procedure it is provided: “Where the defendant interposes a counterclaim and thereupon demands an affirmative judgment against the plaintiff, the mode of trial of an issue of fact, arising thereupon, is the same as if it arose in an action brought by the defendant against the plaintiff for the cause of action stated in the counterclaim, and demanding the same- judgment.” The defendant is, therefore, entitled to have the issues presented upon its counterclaim and the reply thereto tried at Special Term. The question, however, is whether the defendant’s cause of action arising upon the counterclaim and reply shall be first tried.

The plaintiff’s cause of action is based upon fraud. As to the trial of that cause of action, the plaintiff is entitled as a matter of right to a trial by jury. Unless the plaintiff succeeds in proving that fraud, the defendant will be entitled to a decree for specific performance. Such a decree, however, could not be entered at Trial Term, as the question as to the terms upon which the contract shall be enforced would depend upon equitable considerations, both as to the time it should be enforced and whether or not interest should be allowed upon the purchase price. Therefore, it was error for the court below to deny the motion to have the issues arising on the counterclaim and reply tried at Special Term. (Brody, Adler & Koch Co. v. Hochstadter, No. 1, 150 App. Div. 527, and cases there cited.)

I think, however, in this particular case, that the common-law issue should be first tried. As before stated, the plaintiff’s sole reliance is upon fraud which induced the execution of the contract. That is a question peculiarly adapted to a trial by a jury, and if plaintiff should succeed on a trial in establishing the fraud, the defendant would necessarily fail in its counterclaim. If, however, the jury should find in favor of the defendant on the question of fraud, then there would seem to be no reason stated in the pleadings why the defendant should not have a decree at Special Term. The verdict of the jury would be conclusive upon the parties as to this issue.

The order should, therefore, be reversed, without costs, and an order entered providing that the issues arising on the counterclaim and the reply thereto should he tried at Special Term, but the trial thereof should be postponed until after the trial of the action arising on the complaint and answer thereto at Trial Term before a jury, either party to have the right to bring on the trial at Special Term of the issues raised by the counterclaim and the reply thereto after the verdict of a jury on the trial of the plaintiff’s cause of action.

McLaughlin, Laughlin, Clarke and Scott, JJ., concurred.

Order reversed, without costs, and order entered as directed in opinion. Order to be settled on notice.