Case ID: ad_158/html/0087-01.html
Source: Caselaw Access Project
Author: {"author": "Lyon, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Frank A. Van Denburg, Respondent, v. Vedder C. Scott, Appellant.
    Third Department,
    September 10, 1913.
    Suit to rescind sale — part payment of purchase price by promissory note subsequently dishonored—measure of damages—when amount of dishonored note should be deducted from the verdict.
    Plaintiff, having purchased a business and personal property connected therewith, sues to rescind the contract of purchase upon the ground that it was induced by the false representations of the defendant. The plaintiff had paid a certain portion of the purchase price in cash and the remainder by a promissory note, and demanded the return both of the money paid and the note, tendering the property purchased.- The note was presented for payment two days before the answer was served, and payment was refused by the plaintiff, whereupon the instrument was duly protested. The answer denied the false representations, but did not specifically plead the dishonored note as an offset; but the instrument was produced at trial and tendered to the plaintiff in reduction of damages. The jury, under the instruction of the court, awarded damages to the plaintiff as if the note had been paid.
    
      Held, that the plaintiff was only entitled to recover the damages which he had in fact sustained, and as he had not paid the note the verdict in his favor should be reversed and a new trial granted, unless he accepts the tender of the note and deducts the amount thereof from the verdict.
    
      Appeal by the defendant, Vedder 0. Scott, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Schenectady on the 4th day of November, 1912, upon the verdict of a jury, and also from two orders entered in said clerk’s office on the same day, one denying defendant’s motion to dismiss the complaint upon the ground that plaintiff had elected his remedy, the other denying his motion for a new trial made upon the minutes.
    
      R. J. Cooper, for the appellant.
    
      N. B. Spalding, for the respondent.
   Lyon, J.:

This action was brought to recover damages on account of false and fraudulent representations alleged to have been made by defendant to plaintiff in connection with the sale of a coal and ice business and the personal property connected therewith. The purchase price thereof was $5,300, of which the plaintiff paid the defendant $4,000 in cash and the remaining $1,300 by giving to the. defendant the promissory note of the plaintiff of date January 18, 1912, indorsed by Ida L. Perry, plaintiff’s sister, payable four months after date to the order of the defendant at the Citizens’ Trust Company, Schenectady, N. T. There was served with the summons March 28, 1912, a notice that the plaintiff rescinded the contract of purchase consummated January 18, 1912, upon the ground of false representations made by the defendant to the plaintiff as an inducement to the plaintiff to enter into the contract. The notice demanded the immediate restoration of the sum of $5,300 and the collateral which secured the same, and tendered to the defendant the property so purchased. The plaintiff entered upon the coal and ice business January 22 and carried it on until April 20, 1912, when he practically closed it and disposed of the greater part of the property. The note was duly presented for payment May twentieth, and payment demanded, which was refused, whereupon the note was duly protested for non-payment.

The answer herein was served May twenty-second and denied the making of false and fraudulent representations, but made no reference to the promissory note, except to claim that by reason of the plaintiff having tendered a return of the property purchased and having demanded the return of the note and of the money, he had made an election of remedies and could not maintain the action. The answer also denied that the plaintiff had suffered damage in the sum of $5,300. Upon the trial of the action in September, 1912, the defendant produced the note with notice of protest and introduced them in evidence.

In the charge the trial justice stated as follows: “Considerable has been said about the $1,300 note. That note has been given for the balance of the purchase price. $4,000 has been paid. At the time the answer was tiled that $1,300 note was not due, and so the defendant’s counsel takes the position that he could not plead it as an offset or counterclaim, and he has not seen fit at the trial to take the position that it should be considered as an offset in any respect in the case. Therefore, in considering the question of damages, gentlemen, you must, on the theory on which the attorney for the defendant has tried the case, look upon it as a payment. It has not been collected; it is outstanding. We haven’t any proof as to who is the present owner of it. Presumably it belongs to the man to whom it was given, but other proof is not here. So, as far as you are concerned, you will consider that the entire purchase price has been paid, and if the defendant holds this note judgment goes against him, it is for him to see that the $1,300 is offset against the damages. So that if you should take the $1,300 out of any damages you saw .fit to, give the plaintiff, you would put it in position so it would be taken out twice. If you make an award of damages, make it as if that $1,300 had been paid the same as the $4,000 has concededly been paid.”

Later the following appears in the record: “ [Defendant’s Attorney]: * * * I except first to your Honor’s charge the substance of which I cannot state exactly, that part of your Honor’s charge that refers to the $1,300 note in which you say in substance that it is a part of the plaintiff’s damage. The Court: I say that it is to be taken as if it had been paid, on account of the position that you have taken in the trial. You may have your exception. [Defendant’s Attorney]: I except to the charge as made in that respect and I request your Honor to charge that the plaintiff has not been damaged to the extent of that $1,300 because he has not paid it, and, therefore, it cannot be considered damages to him until he is compelled to or does pay it. The Court: I refuse to so- charge because of the theory upon which it has been tried, by the defendant and because the note is outstanding and the Court is not informed who is the present owner of it. [Defendant’s Attorney]: It was produced in Court by the defendant. The Court: It probably is the defendant, but that position has not been taken by the defendant at all. [Defendant’s Attorney]: I except to the refusal to charge as requested. The Court: If both attorneys agree it can be very well dealt with in this case, but it cannot be as I think without an amendment of the answer. So I will leave the charge as it is and give you your exception.”

The jury then rendered a verdict in favor of the plaintiff for $1,800, whereupon the following took place: “ The Court: Mr. Foreman, You make that finding under the instructions of the Court without regard to the note, whether that is collected or not, do you ? The Foreman: We did. The Court: This is the loss considered as if. the note were part of the purchase price ? The Foreman: Part of the purchase price. [Defendant’s Attorney] : I .move that the verdict be set aside and a new trial directed upon the following grounds, in addition to all the grounds stated in section 999 of the Code; on the grounds that the evidence in the case as to the damages was indefinite and uncertain, that there was no correct measure of daniages that the jury could ascertain from the evidence, and the other grounds stated in the section. On the further ground that. the $1,300 note held by the defendant, made by the plaintiff and endorsed by one Ida L. Perry, should have been taken into consideration by the jury in fixing the measure of damages. The Court: That could not have been done under the theory under which the defendant tried the case. You notice that the $1,800 is the difference between your witness’ estimate of the value of the property and the selling price exactly. They have allowed $3,500. The motion is denied; [Defendant excepts.] ”

Upon the argument of this appeal, the defendant claiming that the note was worthless, produced it and tendered it to the respondent’s attorney, asking that it be received in reduction of the judgment. The statement that the note is uncollectible seems to be borne out by the fact that it has not been paid, and that the plaintiff is not willing that it should be applied in reduction of the judgment, and in fact the claim of its worthlessness was not strenuously questioned upon the argument.

Plaintiff’s attorney declined to accept the tender of the note, saying he had no authority from his client to accept it. The court thereupon directed defendant’s attorney to file the note with the clerk of this court, which he did, the court telling plaintiff’s attorney to consult his client in regard to accepting the note in reduction of the judgment, and if he consented to do so to so advise the court. The tender of the note has not been accepted by the plaintiff, and the note still remains in the possession of the clerk of the court. The suggestion was made upon the trial that the defendant had not seen fit at the trial to take the position that the note should be considered as an offset in any respect in the case. As the action was in tort, it is difficult to see how the note could have been pleaded as an offset or counterclaim. However, the answer might have alleged the giving of the note as part of the purchase price; that it had been protested for non-payment, which occurred two days prior to the service of the answer; that it was uncollectible and that it was still held by the defendant, and had demanded that it be taken into account in connection with any verdict which might be rendered in favor of the defendant in the action. Practically these facts did appear, as the presumption was that the note having originally been given to the defendant, and being in his possession upon the trial, he was the holder thereof. The plaintiff having failed to comply with the terms of the contract, his right, to recover was restricted to the damages which he had in fact sustained, and which the jury found to be $1,800, only in the event of the payment by him of the $1,300 note, or in effect $500 in case the note were treated as not paid. To allow the plaintiff to avoid the payment of the $1,300 note and to enforce the collection of the verdict for $1,800 in face of the declaration of the jury, would be a rank injustice. The case calls for the exercise of the power vested in this court by the provisions of section 131/7 of the Code of Civil Procedure (as amd. by Laws of 1912, chap. 380). The judgment and order appealed from should be reversed and a new trial granted, with costs to appellant, unless plaintiff, within ten days from the service upon his attorney of a copy of the order granted by this court, shall file a stipulation with the clerk of this court accepting tender of said note and stipulating that $1,300 be deducted from the face of the judgment appealed from, in which event the judgment as so modified should be affirmed, without costs of this appeal to either party.

All concurred, except Smith, P. J., not voting.

Judgment and order reversed and new trial granted, with costs to appellant to abide event, unless plaintiff, within ten days from the service upon his attorney of a copy of the order granted by this court, shall file a stipulation with the clerk accepting tender of the $1,300 note and stipulating that the amount thereof be deducted from the face of the judgment appealed from, and if such stipulation be filed the judgment as so modified and the order are affirmed, without costs of this appeal to either party.