Case ID: ad_171/html/0111-01.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

John H. Maybee, Respondent, v. William A. Sullivan and Fred D. Sullivan, Appellants.
    Third Department,
    January 5, 1916.
    Bills and notes—action on promissory note — defense — fraud — lack of consideration.
    In an action on a promissory note given by the defendants to the plaintiff, allegations by the defendants that the plaintiff by means of false and fraudulent representations as to the cost of property, induced them to purchase an interest therein; that they did not discover the fraud until the property had been transferred, and that up to that time they had paid interest on the note and had also made a cash payment, the sum of which they interposed as a counterclaim, constitute a defense.
    As the defendants were simply resisting the enforcement of the note alleged by them to be without consideration, and to have been procured by deceit and fraud, it was not necessary for them to show, in order to defeat the recovery, that they had suffered pecuniary loss in any particular sum by reason of the false representations of the . plaintiff.
    Appeal by the defendants, William A. Sullivan and another, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of St. Lawrence on the 7th day of November, 1912, upon the decision of the court directing judgment in plaintiff’s favor on the pleadings and on the opening, and also from the order entered in said clerk’s office directing said judgment, and also from an order entered in said clerk’s office on the 19th day of November, 1912, denying defendants’ motion to go to the jury for a new trial made upon the minutes.
    
      Thomas Spratt, for the appellants.
    
      Conger & Orvis [Arthur W. Orvis of counsel], for the respondent.
   Lyon, J. :

This action has been brought on a promissory note of $5,000 given by the defendants to the plaintiff of date March 2, 1907, due one month after date.

Concisely stated, the defense is that the plaintiff, being the owner of a tract of land in Canada, and desiring to sell a one-fourth interest therein to the defendants, and for the purpose of inducing the defendants to purchase said interest, offered to sell a one-fourth interest to them upon the basis of the cost of the whole property to the plaintiff, which the plaintiff falsely and fraudulently stated to defendants to have been $40,000, when in fact it was but $19,000; that the defendants relying upon such statement purchased such fourth interest, paying plaintiff therefor $5,000 in cash and giving the plaintiff the note in suit; that the defendants did not discover the fact that the cost of such one-fourth interest to plaintiff was not $10,000 and but $4,750 -until the year 1910, at which time the property had been transferred to a corporation and the stock sold; that up to the time of making such discovery the defendants had paid interest aggregating $900 upon the note in suit, which together with the cash over payment of $250 the defendants interposed as a counterclaim, and demanded judgment for the aggregate sum against the plaintiff, as well as that the note in suit be declared to be void. The plaintiff served a reply denying the allegations of the counterclaim.

The trial court held that the allegations of the defendants did not constitute a defense to the note, and denied the request of the defendants to go to the jury on the question whether the alleged fraudulent representations had been made by the plaintiff to the defendants and whether the defendants had acted upon the same, and the court directed judgment against the defendants for the amount of the note, to all of which the defendants duly excepted. From such judgment, and from the order denying defendants’ motion for a new trial, this appeal has been taken.

We think the court was in error, and that the facts alleged by defendants constituted a defense. The agreement between the parties was that the plaintiff should sell and the defendants buy the one-fourth interest upon the basis of what the plaintiff has paid for the tract. This was $4,750, not $10,000. The fact that the defendants, induced by the false representations of the plaintiff, may have paid in money and by giving the note in suit a greater sum than the plaintiff was entitled to receive does not give the plaintiff a greater right to retain the surplus money payment, or .to enforce the collection of the note, than if the defendants had made the over payment as the

result of an error in computation. In either case the note would be given without consideration. (Douglass v. Richards, 116 App. Div. 27.) It is to be observed that as to the note the defendants are not in this action seeking to recover damages against the plaintiff!, but are simply resisting the enforcement of- an obligation alleged by them to be without consideration, and to have been procured by deceit and fraud. It is not necessary, therefore, for the defendants to show in order to defeat a recovery upon the note that they have suffered pecuniary loss in any particular sum by reason of the false representations of the plaintiff. (Stewart v. Lester, 49 Hun, 58.)

The judgment and orders appealed from should be reversed and a new trial granted, with costs to the appellants to abide the event.

All concurred.

Judgment and orders appealed from reversed and new trial granted, with costs to appellants to abide event.