Case ID: ny-sup-ct_11/html/0050-01.html
Source: Caselaw Access Project
Author: {"author": "Daniels, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

CHRISTIAN F. A. DAMBMAN, Appellant, v. HERMAN SCHULTING, Respondent.
    
      Fraud — release avoided by evidence of—neglect to give such evidence in action brought to recover the debt—action to set aside release cannot thereafter be maintained— Under Oode, no reply necessary except to couni&i’-claim.
    
    All controversies respecting the subject-matter of a litigation must be determined in one action, and if the defense of fraud in obtaining a release be not set up in the action brought for the debt, and in which such release is pleaded in bar, an action to set aside such release for fraud cannot be maintained.
    Fraud invalidates all instruments, however solemn; and the effect of a release pleaded in an answer to an action prosecuted for the debt, may be avoided by proof that it was fraudulently procured.
    Under the Oode, no reply to an answer is necessary unless it sets up a counterclaim, but the plaintiff is permitted to prove any matter in denial or avoidance of the answer when it sets up new matter, as the case may require.
    Appeal from an order sustaining a demurrer to the plaintiff’s complaint.
    
      W. Watson, for the appellant.
    
      C. B. Smith, for the respondent.
   Daniels, J.:

This action was brought to set aside and annul a release, on the ground of the defendant’s alleged fraud in its procurement. It appeared by the complaint, that a preceding action had been brought for the recovery of the debt, and the release answered as a defense. For that reason the demurrer was sustained. The plaintiff insisted that the decision made was erroneous, for the reason that he could not avoid the effect of the release by proving the fraud in that action. In that the learned counsel for the plaintiff is very clearly mistaken. Fraud invalidates all instruments, however solemn, both at law and in equity. And as no reply is either required or provided for, unless directed by special order of the court, to the defense of a release, the plaintiff may avoid and overcome its effects by evidence showing it to have been procured by fraud. The provision of the Code upon this subject, is, that “ the allegation of new matter in the answer, not relating to a counterclaim, or of new matter in a reply, is to be deemed controverted by the adverse party, as upon a direct denial or avoidance, as the case may require.” And it is-so broad, that it secures to the plaintiff the benefit of every possible answer to the defense made by way of new matter not constituting a counter-claim, as fully as though it were alleged in the most complete and artistic form. He may avoid it by any evidence properly attended with that result, under the principles of either law or equity. This was held to be the right of the plaintiff under the present system of practice, when a reply was required to new matter in the answer, And the principle has been held to be equally as applicable since the reply to such a defense has been dispensed with. In deciding that case, it was stated by Judge Leonard, who delivered the opinion of the court, that no reply to an answer is necessary, unless it sets up a counter-claim; but the plaintiff is permitted to prove any matter in denial or avoidance of the answer, where it sets up new matter, as the case may require.

The right of the plaintiff to avoid the release by proof of fraud in the action prosecuted for the recovery of the debt, is further confirmed by the conclusion stated by Judge Allen, in deciding the case of Dobson v. Pearce, and which was concurred in by the court, that the intent of the legislature is very clear, that all controversies respecting the subject-matter of the litigation, should be determined in one action, and the provisions of the Code are adapted to give effect to that intent. To the same general effect, also, are the cases of Crary v. Goodman, and Foot v. Sprague.

The plaintiff’s right to be relieved from the effect of the release on the ground of fraud, was, under these principles, included in the preceding action. This action to secure that result was therefore improper, and the decision sustaining the demurrer to the complaint was right, and should be affirmed, with costs.

Davis, P. J., and Brady, J., concurred.

Order affirmed, with costs. 
      
       Code, § 168.
     
      
       Phillips v. Gorham, 17 N. Y., 270.
     
      
       Sheehan v. Hamilton, 2 Keyes, 304.
     
      
       Id., 306.
     
      
       2 Kern., 156.
     
      
      2 Kern., 165.
     
      
       Id., 266.
     
      
      
         12 How. Pr., 355.