Case ID: ad_120/html/0168-01.html
Source: Caselaw Access Project
Author: {"author": "McLaughlin, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Richard F. Outcault and John Leffler, Appellants, v. Lucien L. Bonheur, Individually and as Trustee in Bankruptcy of Melville B. Raymond, Bankrupt, Respondent, Impleaded with Melville B. Raymond, Defendant.
    First Department,
    June 14, 1907.
    ¡Pleading— separate defense — answer alleging that contract was procured by fraud must show rescission and restitution—'Counterclaim.
    A defense pleaded as ft separate and distinct defense must be complete in itself and contain all that is necessary to answer the whole cause of action, or that part thereof which it purports to answer. Such defense, cannot be aided ¡by resorting to other parts of the answer to which it contains-no reference in terms or by necessary implication.
    A separate defense to an action to recover royalties for the use of a play which alleges that the-licensee was induced to enter into the contract by the fraud and misrepresentation of the licensor who was' not the author or owner as represented' by him, fails to state a defense in the absence of allegations showing that-the defendant rescinded the contract and offered such restoration as would put the plaintiff in the position in which he stood before the license. TMs, because a contract though fraudulently procured is not void but voidable' merely at^the election of the party defrauded, and although he can either affirm or disaffirm, he cannot do both either in whole or in part. If he elect to disaffirm, he must return the benefits reóeived.
    A counterclaim for royalties already paid by the licensee is not good when the answer does not show. that the license was surrendered and the benefits received by the licensee restored to the plaintiff.
    - Appeal by the plaintiffs, 'Richard F. Outcault and another, from an interlocutory judgment of the Supreme Court in favor 'of the defendant trustee, entered in the office of the clerk of the county of New York on the 25th day of March, 1907, upon the decision of the court, rendered after a trial at the ISTew York Special Term, overruling the plaintiffs’ demurrer to a defense and counterclaim in the amended answer of said defendant trustee.
    
      Nathan Burlccm, for the appellants.
   McLaughlin, J.:

This action is brought to recover about $800 royalties alleged to be due the plaintiffs under an agreement with one Raymond, by which he was given the exclusive.license to produce a certain play in the United States and Canada, and furnished for that purpose “ the manuscripts, scores, music, musical numbers, music parts and orchestrations ” of such play. According to the allegations of the complaint, Bonheur, after he was. appointed trustee in bankruptcy of Raymond, acting under such agreement, produced the play and thereupon became obligated to pay royalties to the amount for which judgment is demanded. The amended, answer denies the material allegations of the complaint, except the appointment of Bonheur as trustee in bankruptcy of Raymond, and then as a separate and distinct" defense, and as a counterclaim, alleges in substance ■the appointment of the defendant as trustee and that prior to such appointment Raymond was engaged in producing the play referred to in the 'complaint at the time and places therein stated, and under the agreement therein referred to;. that Raymond entered into the agreement by reason of fraud and misrepresentations prácticéd upon him by the plaintiffs, "to- the effect that “ Outcault was the'- author, inventor and designer” of the play and that the plaintiffs had the. exclusive ownership; that the plaintiffs did not, nor did either of them, have the title or ownership of the play, or of the trade mark or copyright, nor was either of them the author, but that the same belonged, to the New York Herald, which was the owner, designer and inventor, and which held the trade mark - and copyright; that Raymond believed the representations made to lnm by the plaintiffs, and by reason thereof, prior to .the time .lie became a bankrupt, paid to them upwards of $44,000 royalties provided for in the contract and for which amount judgment is demanded with interest. The plaintiffs demurred to the defense and .counterclaim consisting of new matter, upon "the ground that as a defense it is insufficient in . law upon the' face -thereof, and as a counterclaim it does not state facts sufficient to constitute a cause of action. The demurrer was. overruled,.the court .holding as a conclusion- of law that the answer demurred to- “in so far as it admits the first three paragraphs of the complaint and denies every other allegation in the complaint states a good defense,” but- that in so far as it attempts to set up a counterclaim it is ineffectual, inasmuch as “ it seeks to repudiate an agreement which the defendants are estopped - to deny.’; An interlocutory judgment was entered upon, the decision,, from which the plaintiffs appeal. The demurrer is “to tifie defense and counterclaim consisting of new matter.” >. The language is sufficiently explicit. It is almost identical with the words used in the. Code. ' (Code Civ. Proc. § 494.) It clearly indicates that all that part of the amended answer which is designated as a “ further, separate and distinct defense ” and as a counterclaim .is demurred to. This defense is introduced with the words “ for a further, separate and distinct defense to plaintiffs’ alleged- cause of action, and as aiid for a counterclaim thereto defendant, as. trustee, avers.” A defense w'íiich is separately pleaded as a distinct defense must be complete in itself' and must contain all that is necessary to answer the whole cause of action, or that part thereof which it purports to answer (Sbarboro v. Health Department, 26 App. Div. 177), and it cannot be aided'by-resorting to other parts of the answer to which it contains no reference in .terms or by necessary implication. " (Anisansel v. Coggeshall, 83 App. Div. 491.), There are no admissions or denials in this defense, nor is there any reference to the admissions or. denials' contained in the first defense. This is an ■ affirmative defense and either a general or 'specific denial would have been improperly inserted in it. (Eells v. Dumary, 84 App. Div. 105.). Defendant, in the first defense, denied substantially all of the material allegations of the complaint, and if these denials wére good they were good for every purpose at the trial and were just as effectual as if repeated in the separate and distinct defense. The facts pleaded do not constitute a defense, because there is no allegation to the effect that the defendants have rescinded the contract referred to and restored or offered to restore the plaintiffs to the position in which they stood before' the making of it. • A contract, although fraudulently procured, is not void, but. voidable, at the election of the party defrauded. Such party- can either affirm or disaffirm the contract, but he cannot do both, either in whole or in part, and, therefore, where he elects to dis-affirm he must return all benefits that have been received. (Cobb v. Hatfield, 46 N. Y. 533.) Here there are no allegations that upon discovery of the fraud Baymond or the defendant returned'or offered to return the manuscripts, scores, music, musical numbers, etc., furnished by the plaintiffs to enable the defendant to produce the play, or that either of them gave the plaintiffs any notice whatever that he elected to disaffirm the contract. These facts could not be proved at the trial because they are not alleged, and for that reason the answer is insufficient as a defense. (Devendorf v. Beardsley, 23 Barb. 656.) J

Nor are the facts .pleaded sufficient to establish a counterclaim. Neither Baymond nor his trustee, while producing the play under the license and permission from the plaintiffs, can question plaintiffs’ right to receive the royalties stipulated in-the contract. This can only be done by surrendering the license and giving back to the plaintiffs what has been received from them. (Saltus v. Belford Co., 133 N. Y. 499.)

The judgment appealed from, therefore, must be reversed, with costs, and the demurrer sustained, with costs, with leave to the defendant to serve an amended answer on payment of the costs in this court and in the court below. ■

Patterson, P. J., Laüghlin, Houghton and Soott, JJ., concurred.

. Judgment reversed, with costs, and demurrer sustained, with costs, with leave to defendant to amend on payment of costs-in this court and in the court below.