Case Name: Pease & Elliman, Inc., Appellant, v. Charles Wegeman, Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1928-06-08
Citations: 223 A.D. 682
Docket Number: 
Parties: Pease & Elliman, Inc., Appellant, v. Charles Wegeman, Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 223
Pages: 682–691

Head Matter:
Pease & Elliman, Inc., Appellant, v. Charles Wegeman, Respondent.
First Department,
June 8, 1928.
Stewart W. Bowers of counsel [Laughlin, Gerard, Bowers & Hatpin, attorneys], for the appellant.
Jacob I. Goodstein, for the respondent.

Opinion:
Finch, J.
The sole question presented by this appeal is the sufficiency of the complaint upon a motion by defendant to dismiss for failure to state a cause of action under rule 106 of the Rules of Civil Practice.
The complaint, in brief, alleges the following: Plaintiff was employed as broker by the owner of real property to sell the same and so informed the defendant. Defendant then stated to plaintiff that he represented a third party who was interested in the purchase of such a piece of property. Defendant further promised plaintiff that he, defendant, would endeavor to aid in selling said property to this third party and would communicate to said person any information which plaintiff would give him, and keep the plaintiff advised as to whether said person desired to purchase the property. In reliance upon the aforesaid statements and promises of the defendant and in the belief that the defendant intended to fulfill the same, plaintiff furnished to the defendant full and detailed information as to the premises and the terms which the owner thereof was willing to accept. Plaintiff also furnished to the defendant photographs of the premises to be exhibited to the said proposed purchaser and constituted the defendant the gratuitous agent of the plaintiff pursuant to the agreement made between plaintiff and defendant. The aforesaid statements and promises on the part of the defendant are alleged to have been false, and that it was the intention of the defendant at the time of making the same not to fulfill them, but that the defendant made the same in bad faith, for the purpose of defrauding the plaintiff of its commissions on the sale of the premises and of obtaining a part of the commissions for himself. The defendant thereafter procured the offer of purchase for the property in question to be submitted through brokers other than the plaintiff, with a secret agreement to receive one-half the commission, and pursuant to said agreement the defendant received the sum of $6,250, representing one-half the commission paid upon the sale of said property. It is further alleged that there is due and owing from the defendant the sum of $6,250 as for moneys had and received for the use and benefit of the plaintiff and that by reason of the premises plaintiff has been damaged in the sum of $12,500 which is alleged to be the agreed and reasonable value for introducing to the owner a customer ready and willing to purchase the premises.
The aforesaid allegations are sufficient to constitute a cause of action. There is set forth a promise made with a present intention not to fulfill the same and with the intention that the plaintiff should act upon said promise; that the plaintiff did so act in reliance thereon, and thereby suffered damage. These allegations contain the elements of an action in fraud and deceit. It is contended by respondent that the complaint is defective in that it does not allege a false representation in regard to an existing fact, but that the promises alleged are to be kept and performed in the future. A complete answer to this contention is that the complaint alleges that when the promises were made the defendant then intended not to fulfill them. It is well settled that a declaration of a present intention, false when made, to perform an act in the future constitutes a false representation of an existing fact. As was said' by Mr. Justice Dowling (now presiding justice) in Gabriel v. Graham (168 App. Div. 847): " Defendant claims that the only misrepresentations alleged were not of existing facts or conditions but of future happenings or conditions. But this contention overlooks entirely the fact that the representations enumerated are representations of defendant's then existing intention . As the rule is laid down in Halsbury's Laws of England (Vol. 20, p. 660): ' The existence or non-existence of an intention in the mind of a man at any given moment is as much a fact as the existence or non-existence of any other thing. Any statement, therefore, of such existence or non-existence is a representation. The proof of falsity may be difficult, but this difficulty does not make the statement any the less one of fact.' In Bigelow on Fraud (Vol. 1, p. 484) it is said: ' To profess an intent to do or not to do, when the party intends the contrary, is as clear a case of misrepresentation and of fraud as could be made.' " _
The complaint, therefore, may be sustained as setting forth a cause of action for fraud and deceit. It also may be sustained as setting forth a cause of action for money had and received as the agent of the plaintiff. As against this theory of action, it is urged that the" absence of a consideration to the defendant precludes any contractual relation between the parties. To this contention there are two answers: First, there was a consideration in imparting to the defendant in return for the defendant's promise the information which permitted the defendant to procure for his principal a property suitable tq the latter. Secondly, even theugh there were nq cqnsideration, the defendant, when he underteek tq act as the agent of the plaintiff, owed to the latter good faith and ordinary diligence. In other words, the plaintiff could not hold the defendant responsible for acts of non-feasance in violation of the defendant's promise to act as plaintiff's agent, but once the defendant undertook to act, even though gratuitously, the relation of principal and agent was created between the parties with its concomitant obligations. In 21 Ruling Case Law, 825, the rule is set forth as follows:
" The fact that an employee or agent acts gratuitously does not relieve him of liability for wrongful acts or negligence. But while the acceptance of gratuitous services is held to support an implied undertaking against misfeasance, the view has been expressed that a valuable consideration is essential to the maintenance of an action for non-feasance."
It follows that the order should be reversed, with ten dollars costs and disbursements to the appellant, and the motion denied, with ten dollars costs, with leave to the defendant to answer within twenty days from service of order upon payment of said costs.
Dowling, P. J., McAvoy and Peoskatjer, JJ., concur; Merrell, J., dissents.