#### Samuel Rothstein and Robert Rothstein, Respondents, *v.*Isidore Isaac, Appellant.

First Department,

February 7, 1908.

Vendor and purchaser — rescission of contract on ground of fraud — representations as to rental value made by broker — evidence — admissions by general agent after making of contract — unintentional mistake by agent.

The owner of real estate, in making a contract of sale, is not bound by the ' representations of the broker who procured the purchaser and negotiated the sale, where the owner did not employ the broker or authorize him to make such representations, although he paid the broker’s commissions, according to the general custom that the owner of property selling it to a purchaser produced by a broker pays the commissions.

In an action by a vendee to rescind a contract for the sale of realty on the ground of fraud it is reversible error to admit evidence as to admissions made by the vendor’s general agent some time after the contract was made.

*134Where, the contract was made with the principal, and not with his general agent, who participated in the negotiations, it is reversible error to charge that the plaintiffs are entitled to recover if the vendor’s agent made a false statement which induced the sale, even though the statement, was not intentionally-false, as an unintentional misstatement made by a general agent is not sufficient ground for rescinding a contract made by the principal.

Houghton, J., dissented.

Appeal by the defendant, Isidore Isaac, from a judgment of the Supreme Court in favor of the plaintiffs, entered in the office of the clerk of the county of New York on the 24th day of May, 1907, upon the verdict' of a jury, and also from an order entered in said clerk’s office on the 17th day of June, 1907,. denying, the-defendant’s motion for a new trial made upon the minutes.

*Martin PasJcus,*for the appellant. -

*Marry A.*Gordon, for the respondents.

Ingraham, J.:.

By a contract executed the 12th day of October, 1904, the defendant agreed to sell and the plaintiffs agreed to purchase certain real'property consisting of two lots of land on Madison street upon which was a tenement house. The price to be paid therefor was $78,000, of' which $2,000 was paid on or-before the signing of the contract; . $8,000 was to be paid in cash upon delivery of the deed; $45,000 by taking said premises subject to a mortgage then a- lien on the property; and the-balance of .$23,000 by the execution of a second mortgage, the deed to be delivered on the 15th of November, 1904. The plaintiffs did not complete the contract, but on the 18th of November, 1904, commenced this- action; the complaint alleging that the contract had been procured. by. fraud, asking that it-be canceled and annulled, and for judgment against the defendant for the $2,000 paid in cash on the contract and for $400 damages, the fraud consisting of representations made by .the defendant that the premises brought in an actual rental of $8,478 per year; and that there was to be built a tenement house adjoining the said premises immediately on the east thereof, the light shaft, or light and ventilation area, of which would be on the westerly side of said nev/ building, and immediately adjoining the light shaft, or light and ven-. tilation area, of the said premises which the plaintiffs had purchased, *135it being stated that tlie owner of the said lot had already tiled plans in the building department, which were approved, showing and requiring the said light shaft, or light and ventilation open space or area, to be immediately adjoining said light and ventilation area of the said premises; it was also alleged that the rental of the said premises was not the sum of $8,478 per ‘year, but was far and materially less than said sum; that the defendant well knew that the owner of the said adjoining lot on the east did not intend to erect a building on the said lot with the light and ventilation shaft, or area, immediately adjoining the premises in question, but that the owner of the. adjoining premises intended placing the light and ventilation area on the easterly side thereof, and not adjoining the premises mentioned in the agreement. The case was tried before a jury, who found a verdict for the plaintiffs, and from the judgment entered thereon the defendant appeals.

One of the plaintiffs testified that his attention was called to this property by a broker named Abrams, and that Abrams and another broker named Greenberg introduced him to the defendant. The plaintiffs then called the defendant, who testified that he made the contract in question and paid the brokers’ commissions for effecting the sale after the contract was made; that the defendant did not place the property in the hands of the brokers for sale, but that the defendant’s father had authority to sell the property for the defendant, and had authority to employ brokers for that purpose. On cross-examination the defendant was asked by liis counsel: “ Rid you ever authorize your father or any one else to make any representations as to the rent which this prop, erty was bringing in ? ” That was objected to as immaterial, irrelevant and incompetent, and the objection.sustained, upon the ground that anything said by any of the brokers that induced the plaintiffs to make this contract, if that saying or representation was false, was the act of the principal. To this defendant excepted. The defendant then testified that he did not tell his father to sell the property, and that his father did not sell the property for him; that he knew nothing about the brokers except that his brother had told him that they were the real estate brokers who brought the plaintiffs, and he paid the brokers for bringing about the contract. William Isaac, the defendant’s brother, was then *136called as a .witness for the plaintiffs, and testified that the defendant authorized him to settle with the brokers; that he never saw the brokers until they brought the plaintiffs to him as. purchasers of the property.. On- cross-examination he was asked whether 'he at any time prior to the execution of the contract authorized any of these brokers to make any representations to any one or to the plaintiffs as to the rents, or to make any other representations. That was objected to and.the objection sustained on the ground that the Question was not proper cross-examination. The plaintiffs .then called Emanuel Isaac, the defendant’s father, who testified that he had authority to collect the rents of the premises for .the defendant; that the defendant had said that when he got a.good price for.the house he would sell it;, that the witness was in .the real estate business; that he would not sell the house unless the defendant was present and had nothing to do with and never engaged any brokers; that the brokers never had brought the.plaintiffs to the witness -and he never had any talk with them on the subject. One of the plaintiffs was then recalled and said that the broker Abrams .“ brought me to buy the house;” that the broker-then went with the-witness to William Isaac, the defendant’s brother, .and to Emanu.el Isaac, the defendant’s father; that he gave a check for¡$200 as.a deposit on the purchase of the property; that as a result of what Abrams told the witness he went to the-premis.es and saw the janitress; that the brokers told him to go to Ho. 86 Bowery where he would meet the father of the owner; that.before the father came.-in the-defendant’s brother talked with him about the property, and when the father arrived he had a talk with him. He was then .asked what the father of the defendant said, which was objected to by the defendant. That objection was overruled and the defendant excepted. The witness then said that after he made the defendant’s brother an offer the brother said: “Wait for my father, lie has more authority and he will — see what he says. He will sell it for you; ” that when the defendant’s father came in lie made an offer of $76,000, and they finally agreed on $78,000 astheprice to be paid for the property; that “ I asked him then if the rents brought in the way I got it from the janitress; ” that the,witness had a memorandum and asked the father “if the rent as given to .me by the janitress was correct. He went over this and it was correct, that *137lie collected the rents'arid paid the same over to him (the defendant). * * * He"said these were the correct rents the property brought in at that' tiirie, between éighty-four and eighty-five hundred dollars per year.” The plaintiffs then offered this memorandum in evidence, which was objected to by the defendant; that objectiori was overruled and the defendant excepted. This is a memorandum with certain figures upon it which added together made á total of $706.50 and which is multiplied by twelve making $8,478. There is nothing on the face of this paper which connects it with the premises in, question. The witness then continued: “Then' I asked him about the vacant lot next door — that the broker Abrams who proposed the parcel, told me they began, to build so to' obstruct the light of the premises adjoining to the east of 306 Madison Street.” Cotinsel for the defendant then moved to strike out this testimony as to the conversation with the defendant’s father, and also objected to'the testimony on the ground that it was incorhpeterit and immaterial. That motion was denied and the objection overruled, tó which the defendant excepted. The witness then stated: “After that time, E. Isaac (defendant’s father) told mfe that he knew the builder, the owner of the lot adjoining 306 — liis building. It was the same builder who built his house ■— ■ his son’s house, 306-3Ó8 Madison St., and' that this builder-^-he knéw this builder and’ he knew that the builder had already filed plans for a neW six-story tenement building upon the adjoining lot, and that the builder — that these plaris were approved and the builder showed him’ the approved plans, and that such plans showed that the aréá for the shaft adjoining to the east'of 306-308 Madison Street would be-so large, according to the latest tenement house law, that it1 would not at all obstruct the light of the windows, 306-308' Madison Street, the house I was to buy. Then he told me further that I wóüld have thirteen feet wide of air shaft, double — twice the air shaft of the existing 306-308 Madison Street. It would be twice as wide.” After this answer was in, the court struck oiit what the witness told the defendant that Abrams had told- him, when defendant again moved to strike oüt all the conversation with Emanuel' Isaac on the ground that it was not binding upori the defendant, which motion Was denied. The court then, over the objection arid exception of the defendant, allowed further *138testimony as to whát E. Isaac said in relation to this open court. The plaintiff then testified that a-bout four days before the time set ■ for the closing of the title he again saw the defendant’s -father, ■ He was then asked what the conversation at that time was, to which the defendant objected. Counsel for the plaintiffs then said that he intended to prove an admission by the father.that the property did not bring the rents indicated upon this memorandum. That was objected to, the objection overruled, and the defendant excepted. The witness then testified that he saw the defendant’s father and told him that he had found out from the janitress that the rents were.altogether wrong; that when she collected the. rents she gave a certain receipt which called for more than she received by two dollars, and thus collected less than the receipt called for; that she had been instructed by the landlord to do this; that defendant’s father then said that when- the plaintiffs got the property, they • could.raise the rents. The defendant then made a motion to strike out all this testimony- in relation to what the janitress said, which motion was. denied, and the defendant excepted,. The .witness then, notwithstanding the objection and exception of the. defends ant,- was allowed to testify that he told E. Isaac, (defendant’s father). that he had found out. that the rents were altogether. wrong, and that the property would only, bring about $7,800 a year, and not $8,478, as was. represented; that the witness also told defendants father that instead of giving - liim an air shaft on the adjoining building that they were going to pu.t up a blind wall; that the defendant’s father said that when he gave to the witness the rent memorandum “ that the property .should bring.in that amount represented, $8,478, that it did only actually bring $7,800 per year; that everybody -is raising rent, I can do the same. I could easily have it bring in that amount as represented if I should raise the rent. Well — and as to the adjoining wall, that the builder is building the wall, that way in order to extort money from me that- if the plaintiffs would give the builder $500 or $1,000 he would change the wall. The defendant again moved to strike out all this. • answer relating to the conversation, which motion was.deniedand the defendant excepted.. Defendant then further moved to strike out the testimony so far as it related to the fact that. the. property only brought $7,800 in rentals. That motion was denied and the defend-. *139ant. excepted. On cross-examination this witness testified that he had examined the property before he made the contract" with the 'broker; that he examined everything at the property; that "one tenant told him she paid twenty-nine dollars for the second floor, and that amount corresponded with this written statement; that neither the defendant nor his father or brother was with him at the time he made the examination, and that he got this statement as to the rents from one of the brokers; that he bought this property relying on the representations of the real estate brokers as to what the premises were being let for ; that it was his first experience, and he thought they were telling the truth; that when the contract was signed and the defendant present the witness never stated that any representations had been made to him about the rents or about the building on the adjacent property. It was then proved that the plans filed for the building on the adjoining property did not show any air shaft adjoining the property in question. Upon this testimony the plaintiffs rested and defendant moved to dismiss the complaint, which motion was denied. The defendant and his father and brother all testified they never saw this paper in relation to the rents and made no representations about them, and made no representations as to the adjoining building.

The testimony as to these alleged representations is not satisface tory. The representations are based upon a statement with which neither the defendant nor his representatives had anything to do. When this statement was handed to the defendant’s father, who.had general charge of the property and was authorized to sell it, the plaintiff Robert Rothstein testifies that the father said that this statement was correct. The father testified that he is unable to read English. Even by the plaintiff’s testimony it does not appear that the figures were discussed, and all concerned in the transaction on behalf of the defendant expressly disclaim ever having seen the paper or making any representations about the amount of the rents. The relation of the defendant’s father to the sale was not that of agent to sell the property, which would charge the defendant with all representations made by him in relation to it on his behalf, nor did the father acting for the defendant actually sell the property. The agreement with the father was." conditioned upon the assent of the defendant, and .lie it was who signed the final contract; and while *140there is evidence that the father of the defendant had general charge of the property it does not appear that- he assumed to exercise. an authority to sell "the property. There is no-evidence, that' the brokers-were ever émployed-by "the defendant or- pretended to-act under any authority received from- him in relation to the property. They seem to rely upon - the general custom that the owner of property selling it to á customer produced by a.-broker will pay the commissions, but- there was no authority to the brokers to pro- " cure a purchaser and when they made the 'representation- to-.-the plaintiffs were not the defendant’s'agents. Taking the whole evidence together, there is much reason for the inference that these-' plaintiffs- were beset by the brokers and relied to some, extent on what they- said in relation- to the property. -But at the time- they •made such répr'eséntations-they were acting for the. plaintiffs" and' and not for the defendant, and-the plaintiff. testified that he rélied upon the solicitations and representations of the' brokers. Whatever authority, however, the father had to- act for the defendant, there is- not the slightest evidence .to justify the inference that the .father had any authority, express, or implied, to make- representations or admissions -to the plaintiffs after the contract' had been signed and just before it was to he complied with. .The court; notwithstanding the strenuous objection of the defendant,-admitted evidence of a most' damaging conversation between the- plaintiff and the defendant’s father. He- was asked as to this interview fbur days before, the contract was to be- complied with,- which' questions were objected to by the defendant. The court then' said to the plaintiffs’ counsel': “If you desire to prove an admission'by the father that the property did not bring these rents, that I think is ' all right.” The plaintiffs’ counsel having stated that that was wha-t he intended to prove the objection :was overruled, to which the defendant éxcepted. The witness then went-on to say that he told the defendant’s father that he had found out from the- janitress that the rents were altogether wrong; that when she-got"the rents ■ she-gave a -certain receipt which called for more than she got by two dollars, and that-she- was instructed by the landlord to do this ; and then testified to an admission by the father of the defendant that the- rents were $7,800. and not $8,478, as it was-alleged :had been represented, and that each apartment brought two dollars less *141than represented. Whatever may be ‘ said as to the responsibility of the defendant for representations made by his father prior to the time the contract was signed, this testimony was clearly incompetent. The account of this conversation was expressly denied and there was no evidence that the janitress made any such statement or that the statement, if made, was true, and yet it can easily be seen that evidence of such a combination between the defendant’s agent and the janitress would be extremely damaging with the jury. I think this evidence was clearly incompetent and requires us to reverse the judgment. *(White*v. Miller, *71 N.*Y. 118, 134.)

There was also an error in the charge which, I think, calls for the reversal of this judgment. The court charged the jury. that “ if the agent of the defendant with intent to deceive the plaintiffs made, representations as to the rentals of the property and those representations were untrue and material in inducing the plaintiffs to purchase, the plaintiffs had the right to' rescind the contract and to recover in this action.” And again in restating the proposition: “ If the defendant, through his agent, made the statements claimed to have been made by the plaintiffs, and plaintiffs were thereby influenced to enter into the contract, and the statements proved to be untrue, to the plaintiffs’ prejudice, plaintiffs. are entitled to recover. It is not even necessary that the statements should have been intentionally false.” And to that proposition the defendant excepted. I think this was error. These plaintiffs were not dealing with the defendant nor were they dealing with any one who had assumed to act as an agent of the defendant to make the contract in question, as the contract was finally made by the defendant and only, after he had himself accepted the proposition. I know of no'rule of law which holds an unintentional mistake in relation to such a representation by a general agent as evidence of a fraud which would justify the rescission of a contract made by the principal, and I think it was entirely misleading to say to the jury that they could find the fraud which was essential to a disaffirmance of this contract from a purely unintentional error made by an agent under such circumstances. As before stated, the plaintiffs presented to the defendant’s father a statement of the rents of this property, and it is alleged that the father went over that statement and said that it was correct. The evidence is undisputed that the *142defendant’s father was not able to read English, and there certainly could be no fraudulent representations for a purely unintentional error in such a statement which the person to whom it was submitted was unable to read.

The judgment and order must be reversed and a new trial ordered, with costs to the appellant to abide the event.

McLaughlin and Lattghlin, JJ., concurred; Patterson, P. J., concurred in result; Houghton, J., dissented.

Judgment and order reversed, new trial ordered, costs to appellant to abide event.