Case ID: ny_47/html/0562-01.html
Source: Caselaw Access Project
Author: {"author": "Rapallo, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Theodore Baker, Respondent, v. William H. Spencer, Appellant.
    A party deñ’an&ed' in a contract is not barred from his right of action for the fraud, by the fact of his having compromised the claim against him upon the contract, unless it appears that he had, at the time of such compromise, knowledge of the facts constitutmg the fraud. A bare suspicion, not founded upon facts or upon any investigation, is not sufficient.
    On appeal to this court, resort cannot be had to the evidence for the purpose of establishing error in the conclusions of law; such error must be made to appear from a comparison of the conclusions, with the facts found or admitted on the record.
    A deposition taken under a commission will not be excluded because an answer to a cross-interrogatory is not full. If such answer is not clearly evasive, a party desirous of eliciting further facts can do so only by obtaining a re-execution of the commission.
    (Argued February 26, 1872;
    decided March 26, 1872.)
    Appeal from judgment of the General Term of the Supreme Court in the fourth judicial district, affirming a judgment for plaintiff entered upon the report of a referee. (Reported below, 58 Barb., 248.)
    This action was brought to recover back money paid on a note of $300, on the ground that the note was obtained by false and fraudulent representations, and was therefore void.
    This note was given in compromise and settlement of a suit brought by this defendant to recover installments due on a note of $500, executed by the plaintiff to the defendant, and was given in the place of the $500 note and exchanged for it.
    The plaintiff claimed in his complaint that he gave the $500 note for the agency of the sale of Weed’s Family Sewing Machine for Saratoga county; and that the defendant sold him such agency, and falsely and fraudulently represented that he had such agency and the right to sell and transfer it, when he had in fact no such agency and no such right; and that by reason of such fraudulent representations the note was void. The complaint alleges that, subsequent to the giving of said note, plaintiff began to suspect this fraud, and for that reason declined to pay the installments as they became due; and that afterward the note was sued by the defendant before a justice of the peace; and the defendant was sworn as a witness and reaffirmed on oath that his original statements were true, and thereby induced him to disbelieve in his former suspicions, and to believe again the truth of the original statement, and in consequence thereof he compromised the matter and gave the $300 note. He further claims that this repetition of the original statement on oath was false and fraudulent, and that the $300 note is void for that reason.
    The referee found, in substance, that the statements were made as claimed by the plaintiff, and that they were false and fraudulent, and that both notes were obtained by fraud, and were therefore void. And the plaintiff had judgment for the amount paid on the note with interest and costs.
    
      Boies & Thomas for appellant.
    
      “ Fraud can never be predicated on a mere emotion of the mind disconnected with injury.” (People v. Cook, 4 Seld., 79; Story’s Eq. J., 3d ed., vol. 1, §§ 2 and 3 ; Curtiss v. Howell, 39 N. Y., 211; 54 Barb., 34, 37.) On settlement of a fraud, the mere repetition of the fraudulent statement charged is not such a fraud as will make void the settlement. (Adams v. Sage, 28 N. Y., 103; Baker v. Bliss, 39 N. Y., 70.) The deposition of the witness, Clark, was improperly received in evidence. (Smith v. Grffith, 3 Hill, 333; Burnett v. Phalon, 11 Abb., 157; 25 Wend., 268; Terry v. McNeil, 58 Barb., 241.)
    
      Samuel Hmd for respondent.
    A party has an absolute right to rely upon the express statement of an existing fact, the truth of which is known by the party making it, and is unknown to the other contracting party. (Mead v. Burn, 32 N. Y., 275.)
   Rapallo, J.

There was some evidence in support of each of the findings of fact excepted to. The General Term not having seen fit to review them, we cannot do so.

The appellant claims, however, that the settlement of the action brought on the $500 note, and the giving of the $300 note, operated as a compromisé of the alleged fraud, and is a bar to this action.

This point would be well taken if it appeared from the pleadings, or the findings of the referee, that, at the time of that settlement, the defendant had knowledge of the facts constituting the fraud alleged in the complaint in this action. (Adams v. Sage, 28 N. Y., 103; Parsons’ Adm. v. Hughes, 9 Paige, 591.)

But it does not so appear. The findings of fact are to the contrary, and the only allegation in the complaint, upon which the defendant can rely as establishing such knowledge, is the statement that, after giving the $500 note, the plaintiff began to suspect that the defendant had not the right to sell and transfer the agency, and, therefore, declined to pay the installment. It does not appear from the complaint or findings that the plaintiff had any grounds for his suspicion, or any information on the subject, nor what defence was interposed on the trial before the justice in the action on the $500 note.

The case cannot, therefore, be brought within the principle of Parsons v. Hughes and Adams v. Sage. The first case holds that when a party has been defrauded, and, with full knowledge of the fraud, settles the matter in relation to which the fraud has been committed, he has no claim to relief at law or in equity on account of such fraud. Adams v. Sage holds, that when a party has the means at hand of determining the truth or falsehood of representations, and resorts to them, and, after investigation, avows his belief in the falsity of the representations, and acts upon it by bringing an action founded on the fraud, he is not entitled to credit when he states that he was deceived by a reiteration of the same statements, and a finding to that effect is contrary to evidence. A bare suspicion, however, not founded on facts or upon any investigation, falls far short of producing such results.

The original fraud being established in the findings, and it also appearing that the $300 note was given in compromise of the first note, the onus is upon the defendant to show that at the time of the compromise the plaintiff had knowledge of the invalidity of the first note. To reverse the judgment on that ground, the fact, unless admitted in the pleadings, must appear from the findings. jOn appeal to this court, resort cannot be had to the evidence for the purpose of establishing error in the conclusions of law. Such error must be made to appear from a comparison of the conclusions with the facts found or admitted on the record. But a reference to the evidence, were it proper, does not disclose any legal error in the findings of the referee on this point. The plaintiff testifies that he did not learn the fact that Spencer had no right to dispose of the agency, until after the giving of the $300 note, and the proceedings before the justice do not show that any fraudulent representation of Spencer as to his right to dispose of the agency was set up as a defence before the justice. The only fraudulent representation then specified was as to the value of the right in the agency, not as to its existence, or the defendant’s authority to transfer it. The fraud alleged in this action consists in the false representations of the defendant; that he had the right to transfer the agency.

It is possible that all that the defendant in fact undertook to do was to waive, in favor of the plaintiff, a right which he supposed he had, by virtue of his understanding with the company, to the agency for Saratoga county. But the referee having found adversely 'to him in that respect, and there being some evidence to sustain the finding, we cannot review his decision upon the facts.

The answer to the ninth cross-interrogatory is subject to criticism, but is not so clearly insufficient as to justify a reversal of the judgment on the ground that the deposition should have been excluded. We cannot assume that the witness intended to evade the inquiry, and his answer, unless artfully contrived with that design, in substance answers the interrogatory as a person of common understanding would comprehend it. If the defendant desired to elicit further facts in support of his defence, he could only do so by obtaining a re-execution of the commission. The judgment should be affirmed with costs.

All concur except Gboveb, J., not voting.

Judgment affirmed.