Case Name: George Rubenstein, Appellant, v. Max Radt, Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1909-06-18
Citations: 133 A.D. 57
Docket Number: 
Parties: George Rubenstein, Appellant, v. Max Radt, Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 133
Pages: 57–62

Head Matter:
George Rubenstein, Appellant, v. Max Radt, Respondent.
First Department,
June 18, 1909.
Contract—counterclaim asking reformation—practice—jury trial — misrepresentation — irrelevant evidence — when error not cured by attempt to strike out.
Where in an action on a written contract the answer alleging that it does not express the real agreement between the parties by a separate defense and counterclaim seeks to have the contract reformed, an agreement for the trial of the issues at a Trial Term and the submission of the reformation of the contract to a jury is irregular. In such case the proper practice is to procure an order directing separate trials of the separate issues in the appropriate fora, and where the equitable counterclaim if established will determine the whole controversy it should be .tried first.
Defendant, a bank president, entered into a contract with plaintiff to pay him §4,000 if he should secure certain agreements. Plaintiff performed the contract. Defendant refused to pay because of difficulties with plaintiff’s father who owned the land occupied by the bank, arising out of the bank’s failure two months after the signing of the contract to exercise an option for the renewal of its lease. An action was brought by plaintiff to recover under the contract and defendant set up a counterclaim asking for a reformation on the ground that the plaintiff had misrepresented the legal effect of the contract. On the trial defendant was allowed to prove that an action brought by the bank to compel plaintiff’s father to renew the lease bad been discontinued upon terms unfavorable to the bank, and other irrelevant matters calculated to impress . the jury with the hardship which the bank had suffered in consequence of its failure to exercise its option of renewal. This was done on the theory that the ■jury"might impute to plaintiff a fraudulent design when the contract was signed by taking advantage of an improbable oversight by defendant two months later, and the trial judge so charged the jury.
Held, that the admission of the evidence was error:
That as its admission might well have induced the verdict, an attempt to strike out the evidence after the charge was delivered did not cure the error.
Appeal by the plaintiff, George Rubenstein, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of -New York on the'31st day of October, 1908, upon the verdict of a jury, and also from an order entered in said clerk’s office on the 2d day of November, 1908, denying the plaintiff’s motion for a new trial made upon the minutes.
Alton B. Parker, for the appellant.
I Maurice Wormser, for the respondent.

Opinion:
Scott, J.:
The plaintiff appeals from' a judgment upon a verdict. The plaintiff is a lawyer. The defendant is, or was, the vice-president and manager of the Jefferson Bank which was located on Canal street in the city of New York, between. Eldridge and' Forsythe streets. Plaintiff's father owned the whole of the block on the southerly side of Canal street, on which was also located another bank called "the Monroe Bank. Defendant,, in the interests of the Jefferson Bank, desired to eliminate the Monroe Bank as a competitor, and further desired to be assured that no other bank should be-located on the same block as a competitor with the Jefferson Bank. He made a written agreement with plaintiff dated December 8, 1905, to the effect that he would pay the latter the sum of $4,000 if he could secure agreements or options for the purchase of two-thirds of the capital stock of the Monroe Bank, and would also secure from his father, Louis Rubenstein, an agreement that he would not allow any part of the premises which he owned on the south side of Canal street to be used for the purposes of a business bank "so long as the Jefferson Bank shall remain in the-premises now occupied by them." Plaintiff succeeded in his negotiations for the purchase of the stock of the Monroe Bank, and on January 31, 1906, an agreement was made by defendant to purchase from the holders thereof on March 10, 1906, not less than 1,334, nor more than 1,350 shares of the capital stock of the Monroe Bank at $125 per share. Plaintiff, who was-present when the agreement was concluded, asked when he would be paid' to which defendant replied that he would have to wait until March tenth, and that if he would then bring the agreement from his father he would be paid the agreed fee. On March tenth plaintiff, having procured the required agreement from his father, tendered it to defendant who refused to receive it and declined to pay the $4,000. His reason for so refusing arose from the- following circumstances: The Jefferson Bank held as a tenant under a lease which ran to May 1, 1906, but which contained a covenant that the bank, by exercising the option so to do on or before February 1, 1906, might extend its lease for five years, and thereafter under like options might extend it to 1926. -The defendant forgot to exercise the option on behalf of the bank on or before February 1, 1906. It does not appear that anything was done by plaintiff or his father which in any way influenced defendant or caused him to omit to give the necessary notice that the bank would exercise its option to renew or extend the lease. The defendant has twice amended his answer. In the original answer he denied the agreement with plaintiff in toto., In the first amended answer he admitted making the contradi, but denied that it expressed .the true agreement between the parties, and gave a version of what he claimed to have been the true agreement, which does not correspond with the allegations in that regard made in the second amended answer upon which the cause was tided. In the present answer the defendant, alleging that the written contract does not express the real agreement between the parties, and by way of a separate defense and counterclaim, seeks to have the written contract reformed so that it shall recite as the agreement which plaintiff undertook to procure from Louis Rubenstein, his father, one that he would not allow his other property on the same block to be used for the purposes of a bank " during the period of the lease now held by the Jefferson Bank from the said Louis Rubenstein, together with the periods of renewal and options for renewal provided for'in the said lease." The defendant's allegations were that this was the actual agreement made between himself and plaintiff, and that he was led to sign the written contract upon plaintiff's false statement and representation that the contract as drawn did, in legal effect, express the agreement as defendant alleges that it really was. The whole controversy on the trial related to the issues tendered by the counterclaim, for if the contract was to be reformed, as defendant claimed it should be, it would appear that plaintiff had not performed it and was not entitled to recover his agreed fee. For some reason for which no explanation appears in the case, both parties seem to have agreed that the issues should be tried at Trial Term and the question of the reformation of the contract submitted to the decision of a' jury. This, of course, was entirely irregular. The question whether or not the contract should be reformed was addressed to the equitable jurisdiction of the court. The function of a jury is to decide questions of fact in cases addressed to the legal jurisdiction, and they have no place in an equitable action, except to decide specific ques- tions of fact which may be submitted to them. The proper practice in a case where an equitable counterclaim is interposed in an action at law is to procure an order directing separate trials.in the appropriate forum of the separate issues, and .when, as in the present case, the equitable counterclaim, if established, will determine the whole controversy, the equitable issues should be first tried. (Gossv. Goss & Co., 126 App. Div. 718.) We have, no doubt that the failure to follow the practice led directly to the result attained in the present case, for upon the evidence it does not seem probable that any judge sitting in equity would have decreed a reformation of the ¡ contract. As the case was, however, tried before a jury, it will be necessary to scrutinize the record in view of that fact. The principal question in the ease was whether or not on December 8, 1905, the plaintiff had falsely stated to defendant the legal effect of the language used in the contract with reference to the agreement to be made by Louis Rubenstein. The plaintiff was not attorney for defendant and held no confidential relation to him, and it is not clear that any misstatement as to the legal effect of the contract would justify a reformation. The case was tried, however, apparently by common consent, as if it would. Much evidence was introduced that was wholly irrelevant to any question involved. Of course the neglect of defendant, on February 1,1906, to exercise the option for the Jefferson Bank, put him and the bank at a great disadvantage. An action was afterwards commenced by the bank to compel Louis Rubenstein to renew the lease. This was finally discontinued upon terms which left the bank with a less favorable lease than it previously had. The defendant was allowed to prove all this, and also to prove the amount of money which the bank had expended upon the building, and also negotiations with other parties having nó relevancy to any matter at issue, but calculated to impress the jury with the hardship which the bank had suffered in consequence of failing to exercise its option for a renewal. The theory upon which this evidence was admitted is illustrated by the instructions upon the law embodied in the charge. The learned justice said: " While the difference in the words to be used might have been of no practical importance as viewed in December, 1905, yet as viewed in the light of events that happened afterwards there was a vast difference in effect, because had Rubenstein, senior, signed the agreement in the words the defendant claims were to be used he would be debarred from claiming a default on the part of the Jefferson Bank in requesting a renewal of its lease. If the plaintiff had in mind when the agreement of December 8th was made that his father might claim that the Jefferson Bank had defaulted in demanding' a renewal, and that plaintiff had chosen language which might have apparently expressed the agreement of the parties and yet leave an opportunity to claim a different construction when opportunity required — if this were so and if at the time Radt signed the agreement- with plaintiff he asked him if the agreement provided the limitation of the use of the Canal street block during the term of the lease and its renewal, and the plaintiff answered that it did, and the defendant relying upon the plaintiff's statement signed the paper, then the plaintiff was guilty of fraud." Thus the learned court starting out with an erroneous statement of the legal effect of the agreement if made as defendant claimed that it should have been, linked together the agreement of December 8, 1005, with the defendant's oversight on February 1, 1906, which could not have reasonably been anticipated by plaintiff, which he was powerless to promote, and with the happening of which he had nothing to do. In short the jury was given to understand that they might impute to plaintiff the fraudulent design on December 8,1905, to take advantage of a most improbable oversight by defendant nearly two months later. In view of the charge the evidence erroneously admitted may well have induced the verdict, and the attempt to strike out the evidence after the charge was delivered and the mischief done, did not cure the error. Our attention is called to other errors, some of which are appar ently serious, but which do not require detailed examination because they will probably not arise upon a retrial. It is sufficient' to say that the case was tried upon an entirely mistaken view of the rule, governing actions for the reformation of written instruments.
The judgment and order appealed from must be reversed and a new trial granted, with costs to appellant to abide the event.
Ingraham, McLaughlin, Laughlín and Houghton, JJ. concurred.
Judgment and order reversed and new trial ordered, costs to appellant to abide event.