Case ID: ny-super-ct_32/html/0503-01.html
Source: Caselaw Access Project
Author: {"author": "Freedman, J. Spencer, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

MARTIN L. TOWNSEND, Plaintiff and Respondent, v. MORTIMER HENDRICKS et al., Defendants and Appellants. 
    
    
      [Decided June 30, 1870.]
    Where the complaint states a cause of action which, if true, would entitle the plaintiff to recover back moneys paid by him to the defendants (upon their representations that certain steps had been taken by them toward the completion of a contract), upon the ground that the defendants never entered upon a performance of the contract, and the defendants, by answer, interpose a counter-claim, the trial of which requires the examination of a long account, the action is referable, notwithstanding the complaint, by further averments, charges that said representations were false and fraudulent, and such reference is not in violation of the provisions of the constitution guaranteeing trial by jury.
    Before Barbour, C.J., Freedman and Spencer, JJ.
    Appeal by defendants from an order made at Special Term, referring the action, and all the issues therein, to a referee to hear and determine the same.
    
      Mr. Charles M. Da Costa for apppellants.
    This is. an appealable order (section 349 of the Code).
    It “ affects a substantial right,” in that the order appealed from deprives the defendants of their constitutional right of trial by jury, in a case in which it is conceived the law of the land does not authorize a compulsory reference.
    The rule is well settled that an appeal from an order of reference will lie, where a reference is not authorized by law (Cram v. Bradford, 4 Abb. Pr. R., 193; Batchelor v. Albany City Ins. Co., 6 Abb., N. S., 240; Turner v. Taylor, 2 Daly, 278).
    The cause of action alleged in the complaint is not one which the court can compulsorily refer. Its gravamen is fraud, the plaintiff seeking to recover, as damages, the several amounts of money which he alleges he was induced to part with and pay to the defendants, by reason of their alleged false and fraudulent statements and representations. The answer, while admitting the receipt by the defendants of the respective amounts of moneys alleged by the plaintiff to have been paid, denies each and every of the allegations of the complaint charging, or purporting to charge, the defendants with any fraud, or attempt at fraud; and then, as a further defense, sets up the true and exact statement of the transactions had between the parties. It is clear, therefore, that such an issue is not one which it is in the power of the court compulsorily to refer.
    It is true that the defendants’ answer also sets up a counterclaim, and which is put at issue by the reply; and the learned justice held that such an issue required the examination of a long account; and it was, therefore, within the power of the court to compulsorily refer all the issues in the action.
    It is respectfully submitted that in this the learned court below erred, for the reasons stated in the following .points, viz.:
    Ho issue involving any accounting is framed by the answer and reply, for the plaintiff, in his complaint, avers that during the pendency of the transactions the defendants delivered to the plaintiff several statements of account, which are alleged to be untrue, false, and fraudulent, and made with intent to deceive the plaintiff, and to induce him to pay the moneys he did to the defendants. The answer avers that the several statements of account rendered were just and true, and accepted by the plaintiff. The reply avers that the statements of account referred to and mentioned in the answer are the identical statements of account mentioned in the complaint, and that they are made up of false, fictitious, and usurious charges.
    The accounts thus rendered are either:
    Accounts stated, and therefore conclusive (Lockwood v. Thorn, 1 Kernan, 170; ibid., 18 N. Y., 285; Smith v. Marvin, 27 N. Y., 137).
    
      Or are fraudulent, and part and parcel of the alleged scheme of fraud, which, if the plaintiff succeeds in establishing his alleged cause of action, will fall by themselves.
    Should.it be suggested that the counter-claim of the defendants, put at issue by the reply, involves an accounting as to the balance claimed, it will be sufficient to answer:
    That it does not involve a long accounting.
    That the court has no power to determine, or to presume, as the court below did, whether or not, if the plaintiff is defeated in his alleged cause of action, the defendants will then proceed with, or abandon their counter-claim. It is an affirmative cause of action on their part, and its prosecution or abandonment is entirely within their own control and option.
    But even if the issue raised by the defendants’ counter-claim involves the examination of a long account, no accounting can by any possibility be necessary until the plaintiff has either abandoned or been defeated in his alleged cause of action; and, until then, the court has no power to order a compulsory reference (Draper v. Day, 11 How. Pr. R., 439; McCulloch v. Brodie, 13 How. Pr. R., 347; Sharp v. The Mayor, 14 How. Pr. R., 213; affirmed on appeal, 31 Barb., 578; Cameron v. Freeman, 18 How. Pr. R., 353; Ross v. The Mayor, 2 Abb., N. S., 266; Goodyear v. Brooks, 4 Rob., 682; ibid., 2 Abb., N. S., 296; Bushnell v. Eastman, 2 Abb. N. S., 411).
    If the 271st section of the Code be construed to authorize the compulsory reference of all the issues in all cases in which any one of the issues does, or by possibility may, involve the examination of a long account, then it is submitted that such section is, quoad hoe, unconstitutional and void.
    Section 2 of article 1 of the Constitution of this State provides : 5‘ That the trial by jury, in all cases in which it has been heretofore used, shall remain inviolate forever.”
    At the time of the adoption of such Constitution, the Revised Statutes (2 R. S., 383), as amended by chapter 163 of the Laws of 1845, were in force; and they authorized a compulsory reference in “a ccmse founded wpon contract” when it should appear that “ the trial of the same ” would involve the examination of a long account; and i/n no other ease in which an issue was joined did the statute authorize a compulsory reference. In other words, at the time of the adoption of the Constitution of 1846, actions ex eontraetu, involving the examination of a long aceowit, could alone be compulsorily referred; all other actions, whether ex contractu or ex delicto, could not be so referred; and the trial by jury of the latter was, therefore, by the terms of the above cited section of the Constitution, preserved “ inviolate forever,” unless waived by both parties to the action, in the manner herein provided.
    The cause of action in the complaint alleged, being clearly one ex delicto, the defendants have a right to insist upon their constitutional right of a trial by jury of the same, even though the court might, after they had succeeded on such trial, have the right to order a compulsory reference of the affirmative cause of action pleaded by them in their counter-claim.
    The right of trial by jury is a constitutional right, and cannot be too faithfully preserved; and any legislative tampering with it should at least be strictly construed (Sharp v. The Mayor, 18 How. Pr. R., 213; Bushnell v. Eastman, 2 Abb., N. S., 411).
    Mor are the views above suggested at all in conflict with the case of Batchelor v. The Albany City Ins. Co. (6 Abb., N. S., 240). The action there was one ex contractu—viz.: on a policy of insurance. The policy provided for the furnishing of the usual preliminary proofs before any right of action under the policy could accrue. The plaintiff furnished the required preliminary proofs, which consisted of one hundred and forty-five items of the aggregate value exceeding eleven thousand dollars. The answer not merely contained a denial, but attempted to raise an issue of fraud. The court held:
    That the answer was insufficient to raise an issue of fraud.
    That by the terms of the policy the account (viz., the preliminary proofs rendered), was a pre-essential to the cause of action, and formed part of the basis of the action, and that by it the recovery was to be controlled and limited; and that hence the plaintiff’s cause of action, arising ex contractu, and involving the examination of a long account, could be compulsorily referred.
    That it being a case in which a compulsory reference could be ordered, the Appellate Court could not disturb such order.
    But if all the foregoing views be erroneous, it is apparent from the pleadings (and so sworn to by one of the defendants, under and by advice of his counsel) that the decision of difficult questions of law will be required on the trial of the issues. The exception contained in the 271st section of the Code therefore applies ; and hence the court cannot order a compulsory reference (Goodyear v. Brooks, 4 Rob., 682; 2 Abb., N. S., 296-301, and cases there cited).
    
      Mr. John L. Hill for respondent.
    The contract made between the parties is the gist or gravamen of this complaint.
    The complaint now, as a declaration before the Code, consists of three distinct parts: (1) The gist or substance; (2) matter of inducement, and (3) matter of aggravation (Gould’s Pleadings, chap. 3, sec. 7).
    The gist is the essential ground, without which there can be no legal cause of complaint. The inducement is ■ introductory, without which this essential ground cannot well or forcibly appear. Matter of aggravation consists of the various circumstances of enormity under which the principal act was committed. Aggravation and inducement sometimes perform the same office.
    The Code has introduced a change which has an important bearing upon these distinctions. While it has not abolished this framework in pleading, it permits, more than formerly, a simple inartificial narration of the facts and circumstances.
    It was not the object, but it has been the result of this change to make the discovery of this old-fashioned framework extremely difficult in many cases.
    
      
      This complaint certainly sets forth a contract, and assigns breaches upon it. It presents an agreement in several different parts:
    It alleges a simple reguest to parchase copper for the plaintiff, and an undertaking to perform.
    It next alleges that plaintiff paid the defendants $2,000 (two bonds taken as cash), in consideration of which they agree “ to take up, pay for, deposit and heep the same (the copper), and would adnance ” the money necessary for that purpose.
    It then alleges a series of such payments and agreements in the order with the circumstances, and at the time when each was made.
    It then assigns the breaches of these several agreements: “They did not tahe up, they did not pay for, * * they did not put and heep in store, they did not incur the expenses, etc.,” i. e., they did not advance the money as they had agreed to.
    This contract and the breaches so assigned comprise the gist of this complaint.
    It is obvious that if the defendants shall show that they have hept and performed this contract, no matter how corrupt thei/r purposes may have been, the plaintiff cannot succeed. It is equally clear that if the plaintiff shall show nonperformance, he will be entitled to recover something. In other words, this contract and its regui/rements is the thing “ without which the pla/intiffwould have no legal cause of complaint” This exactly defines the gist or gravamen of the pleading, as we have seen.
    It matters not what the defendants said, what they represented, or what plaintiff may have believed. The sole question is this: Has this contract beenperformed ?
    
    The defendants were the plaintiff’s agents to purchase the copper. He hnew nothing about the purchase, except what they represented to him. It is not pretended that he was present at the purchase, or that he ever saw the property or the evidence of its ownership.
    The allegations of the falsity of these representations does not affect the main issue. It was proper to state them. They were 
      
      a part of the story, strictly matter of inducement to the contract. If proper to state them it was proper, also, upon two grounds, to state their falsity:
    It was simply matter of aggravation under the old system.
    It was a part of the story which we are required, at least permitted, to spread upon the record, under the new one.
    But it is said the representations were made with intent to deceive! True, but-what of that? There are two answers to this suggestion:
    The same as to the allegation of falsity.
    It was impossible truthfully to tell this story, as we understand it, and conceal or avoid showing the court that wé had been cheated. '■ The character of the representations, and the circumstances under which they were made, were such that an allegation of their falsity necessarily implied an intent to cheat. We might have omitted these words, but the fact would, nevertheless, have appeared.
    We submit that a fraudulent act with a fraudulent intent may be used simply as matter of aggravation without changing the nature of the action.
    It is said that the prayer discloses the character of the action. We submit that the prayer of a complaint has no such office to perform.
    It is apparent from the foregoing analysis that the contract is the gist of this complaint. Strike out the contract, and the backbone of the pleading is gone. Concede its performance, and the plaintiff has no legal cause of complaint
    All the allegations which are said to be distinctive of fraud might be stricken out, and leave a perfectly valid cause of action.
    Try a similar experiment with the allegations about contract, and the complaint is destroyed. Ho cause of action could be imagined based upon the remaining facts.
    We therefore submit that the gravamen of this complaint is contract.
    
    In this view of the complaint the reference of the cause did not violate any principle of the Constitution.
    
      The only constitutional restriction applicable to the case is found in section 2, article 1:
    “ The trial by jury, in all cases in which it has been heretofore used, shall remain inviolate forever.”
    The restriction is not to such as were referable by law at the time of the adoption of the Constitution of 1846. It does not say “ in all cases in which it is now used.” It is “ in all cases in which it has leen heretofore used” Hence, if actions of tort even had ever leen referable, although the laws under vbhich the power was exercised might have leen abrogated or expressly repealed, the restriction of this article would not prevent the reenactment of simila/r provisions.
    
    We submit that even actions of tort were allowed to be referred prior to 1846 (1 Dunlap’s Practice, ed. of 1821, 533, citing 1 Revised Laws, 516).
    Various cases are referred to, showing what the practice was at this time.
    It is worthy of note that it was common practice under the Constitution of 1820, to refer actions of assumpsit, and there was no provision against referring actions ex delicto.
    
    “ The statute, so far from restricting the power of referees to matters of account alone, does not even confine it to actions arising ex contractu“ It is a satisfactory answer, however, that references as broad as that now contended for by the plaintiff were sanctioned by statute and practised by the courts long before the adoption of the Constitution” (Lee v. Tillotson, 24 Wend., 338).
    From these authorities it will appear that prior to the Constitution of 1846, it was common practice to refer an action of assumpsit or any action arising on contract which involved a long account; and at the same time there was no constitutional provision against referring any cause, in the discretion of the court, in which a long account was prolally involved (see act April 5, 1813, § 2, and 1 Rev. Laws, 516).
    The long account was not, as seems to have been supposed by some, the old action of account where there were mutual charges with items on each side. The act of 1813 gave a reference at discretion where the account was composed of items all on one side.
    
    We have seen that this action is on contract, and referable within common practice prior to 1820.
    But again, if the action is for fraud, it is still referable at discretion. The act of 1813 would hapermitted it.
    A statute just prior to 1846 (Act of May 1,1845, ch. 163, sec. 2, amending Bevised Statutes) gave references in actions founded on contract. The act of 1813 was not then inoperative. The Code contains no restriction of this kind. It is as broad as the act of 1813. The omission of the limitation to actions on contract is significant, showing that the prolixity of the account was the only test.
    The issue requires the examination of a long account.
    The plaintiff cannot develop his case without an examination of long accounts. The plaintiff swears expressly that various books will have to be examined, and the defendant does not deny it. Ho difficult question of law is involved
    The court can see, from the bill of particulars, that a long account is involved. We dispute every item of this bill.
    The issue formed by the answer and reply is solely one on contract, and involves the examination of an account. Both issues are to be tried at once; hence the trial requires the examination of this account.
    The granting of this motion was matter of discretion.
    The Code intended to revive the practice under the .act of 1813. It was then discretionary by express provision.
    Common experience shows that it must be discretionary.
    Take the case of a trial at circuit, where the judge, discovering the character t of the action, refers it on his own motion. Is it appealable % We say not.
    It is upon these substantial principles that the recent case of Batchelor v. The Albany City Insurance Company (6 Abb., 240) has been decided by this court.
    Although the gist of this complaint should be held to be fraud, the order should be affirmed.
    
      We have seen that the power of the court was not limited to actions arising ex contractu.
    
    We have also seen that actions sounding in fraud were referable at discretion, although practice had confined them to actions on contract.
    This case, so far as the propriety of reviewing this order is concerned, is precisely within the rule of this court, holding that it should be affirmed.
    There was uncontradicted evidence that the trial would require the examination of a long account. The court below took that view of the facts. The court can now discover not only sufficient but abundant evidence to show that this view was correct.
    In such case the ruling of the Special Term must be affirmed (Batchelor v. Albany City Ins. Co., 6 Abb., 240).
    
      
       Reversed by Court of Appeals, October, 1870.
    
   By the Court :

Freedman, J.

The complaint sets forth two contracts between the parties for the purchase of 400,000 pounds of ingot copper and several supplemental agreements, whereby the defendants undertook to advance the purchase-money, to store the copper and carry the same, as it is usually called, at the option and for account of plaintiff and subject to his order, charging him therefor the usual and customary expenses for storage, insurance, and interest on the money advanced; that from time to time defendants reported to plaintiff progress in the performance of the various agreements on their part, and that upon the faith of each successive report plaintiff paid to defendants certain moneys, amounting in the aggregate to $25,000, towards the performance of said agreements on his part; that all the representations made by the defendants from time to time as to performance on their part were untrue and made with intent to deceive and defraud plaintiff; that defendants did not perform the contracts or any of the agreements on their part; that before the commencement of the action, upon discovering the false and fraudulent acts and representations of the defendants, the plaintiff duly demanded of them the repayment of the several sums of money paid by him on account, but that they refused. Plaintiff prays judgment for the return of the $25,000 paid by him.

The defendants, by their answer, deny the fraud and misrepresentations charged, and set up full performance on their part (an agreement by plaintiff to maintain in their hands a margin of four cents per pound), non-performance on the part of the plaintiff, a sale of the copper for plaintiff’s account upon due notice to him, and, as a counter-claim, a balance of $1,031.07 due from plaintiff to defendants on account of moneys advanced, expenses incurred, commissions, insurance, and interest, for which they demand an affirmative judgment against the plaintiff.

The plaintiff, by his reply, puts in issue all the material facts relied upon as constituting the said counter-claim.

Upon the hearing of the motion for a reference, founded upon affidavits, the pleadings, and the defendants’ bill of particulars, the learned judge at Special Term found, as matter of fact, that the trial of the issues necessarily raised by the pleadings involved the examination of a long account within the meaning of section 271 of the Code, and thereupon granted plaintiff’s motion for a reference of all the issues to hear and determine the same. According to the decision of the case of Batchelor v. The Albany City Insurance Company (6 Abb., N. S., 241; 37 How., 399), this determination of the Special Term will be held final and conclusive, especially as it has been the law of this court almost since the adoption of the Code that a reference may be ordered in an action sounding in tort, where the trial of the issues of fact will require the examination of a long account (Sheldon v. Wood, 3 Sandf., 739). The case last cited was decided with the concurrence of the entire court.

The appellants have argued, however, that even if section 271 of the Code can be construed to authorize the compulsory reference of all the issues in an action sounding in tort, in which any one of the issues does involve the examination of a long account, such construction would render the said section unconstitutional and void, as contravening article 1, section 2 of the Constitution of 1846, which provides : “ The trial by jury, in all cases in which, it has been heretofore used, shall remain inviolate forever. But a jury trial may be waived by the parties in all civil cases, in the manner to be prescribed by law.” This point was not raised in the cases above named. It is now advanced, as I believe, for the first time in this court, but in my judgment does not necessarily enter into the decision of this case. The complaint is not a complaint for a mere naked tort in an action in which damages for the wrong are sought to be recovered, but it contains a statement of facts which show that plaintiff’s payments were not voluntary ones with knowledge of the facts, and that, for this reason, he is entitled to recover back the amount paid. This state of facts, according to the decision of the Court of Appeals in Byxbie v.Wood (24 N. Y., 610), does not necessarily require an action to be brought for the tort, even if it allows one to be so brought. Such facts always raise in law the implied promise which was the contract cause of action in indebitatus assumpsit for money had and received. Under the Code this implied, promise is treated as a fiction, and the facts (out of which the prior law raised the promise) are to be stated without any designation of a form of action, and the law gives such judgment as, being asked for, is appropriate to the facts. If the plaintiff in the case at bar shall show, as he may do under his complaint, that the defendants never entered upon a performance, and that in consequence he demanded back his money, which was refused, the allegations of fraud, pleaded as matter of aggravation, do not affect the main issue.

It will also be seen that the issue, the trial of which requires the examination of a long account, has been raised and''forced into the case by the appellants.

The case, therefore, is not one which calls upon this court to adjudge an act of the legislature void in which the bench and bar have acquiesced for over twenty years.

The order should be affirmed, with costs.

Spencer, J.

(dissenting). My associates at this General Term .have'.decided to sustain this order of reference appealed from.

I agree with them as to the convenience and policy of compelling parties to take a reference in cases where the examination of a long account is necessary. I believe it to be greatly for the interest of the courts and of suitors that a reference should be ordered in all such cases. I differ with my associates in regard to the power of the court to make a compulsory reference in cases sounding in tort or (according to old divisions) in an action “ ex delicto,” and upon due consideration of this case I conclude that it is an action of that class.

In a like case before me at Special Term, I held that I had no power to order a reference without consent of parties: that a party objecting had the constitutional right to a trial by jury, and that it must be preserved to him; and upon further consideration of the same constitutional point in this case, I hold that a compulsory order of reference should not have been made, and the order of the Special Term should be reversed.