Case ID: ny-st-rep_36/html/0716-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Van Brunt, P. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Joseph Aron, App’lt, v. Alfred de Castro, Resp’t.
    
      (Supreme Court, General Term, First Department,
    
    
      Filed February 11, 1891.)
    
    Sale—Rescission.
    In an action to rescind a sale of stock, procured by false representations, the plaintiff failed to show any damages. Seld, that the action could not be maintained. The rule in equity upon this point is the same as at law, and in both it must appear that there is a substantial wrong to be redressed.
    Appeal from judgment entered upon decision at special term.
    
      J. E. Parsons, for app’lt; B. H. Griffin, for resp’t ,
   Van Brunt, P. J.

This action was brought to rescind the sale of stock upon the ground that the plaintiff had been induced to purchase the same by reason of certain false and fraudulent representations. The action was defended upon various grounds, among which was a denial that the defendant sold the stock or that he made any false representations. The denial that the defendant sold the stock was based upon evidence tending to prove that the real principal was one Morino of Paris; and the denial as to the fraudulent representations was based somewhat upon the fact that whatever representations were made were made by one Grodchaux, acting as broker. And it has also been urged in support of the judgment upon the argument of this appeal that the plaintiff having shown no damage, equity will not interfere to relieve him, although there may have been fraudulent representations.

It seems to us from the evidence in this case that as far as the plaintiff is concerned the defendant was the principal. He knew of nobody else; he dealt with the defendant, and the reasonable inference, from the peculiar manner in which the defendant accounted for the proceeds of the sale, is that he considered himself the principal. There is no evidence that the defendant has ever accounted to anybody for the whole of the purchase money of this stock. He paid over a portion to the alleged agent of Morino in Paris. He paid his commissions to the broker, Grodcbaux, but he appears to have retained a large balance for himself. That the defendant, under the circumstances, would be responsible for the representations of Grodchaux seems to be established by the principles enumerated in the case of Mayer v. Dean, 115 N. Y., 556; 26 N. Y. State Rep., 375, in which it is stated that: “ It is well settled in this state that a principal cannot retain the benefit of a contract obtained through the misrepresentation of his agent, even though the principal was innocent of the representation and really intended no fraud.” ■

It is true that the learned judge who tried the case found that the representations made by Grodchaux to the plaintiff were substantially true, and that this finding is challenged by the appellant upon this appeal as unsupported by the evidence. But in view of the conclusion to which we have come upon the other branch of the case, it does not seem necessary to examine the evidence for the purpose of discovering whether this claim is well founded or not

It is urged, as has already been suggested upon the part of the defendant, that the plaintiff has shown no damage by reason of the representations made to him which led to the purchase by him of the stock in question.

This point seems to be well taken. There is no evidence going to show that the stock was not worth what was paid for it; nor is there any evidence showing that the plaintiff at the time he attempted to rescind could not have sold the stock at the price which was paid for it.

It is the well settled rule that it is the very essence of the action of fraud and deceit that the same should be accompanied by damage. Deobold v. Oppermann, 111 N. Y., 531; 20 N. Y. State Rep., 81, and cases there cited.

Fraud without damage, or damage without fraud will not sustain an action. Taylor v. Guest, 58 N. Y., 266.

It is true that these principles were laid down in actions at law, but the same rule prevails in actions in equity, because unless the plaintiff has suffered damage by reason of the fraudulent representations he has not been wronged thereby, and a fraudulent transaction implies a wrong doñeas well as a person wronged. Fancied grievances cannot be remedied in judicial proceedings. Courts are supposed to deal with substance, not shadow, and they will not entertain jurisdiction unless there is some injury to be redressed or wrong prevented.

Therefore; in the case at bar without showing damage the plaintiff cannot call upon a court of equity to intervene.

It may be urged that the mere showing that the representations which were the inducing cause of the purchase upon the part of the plaintiff were false implies damage. But there is no presumption of damage arising from a representation which is proved to be false. It rests upon the plaintiff to prove not only the falsity of the representation but that some damage at least has been sustained thereby; and there is-no difference in this respect between proceedings in equity and proceedings at law.

It may be true that upon proof of false representations and damage thereby upon the part of the plaintiff a -court of equity will grant relief where the action for fraud and deceit will not lie ; but the proof of damage must be furnished the court in both cases in order that it may appear that there is a substantial wrong to be redressed.

It would seem, therefore, that there is no reason for disturbing the judgment, because of the want of proof of damage.

The judgment should be affirmed, with costs.

Brady and Daniels, JJ., concur.