Case Name: George R. Newell, Respondent, v. James H. Chapman, Appellant
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1893-12
Citations: 81 N.Y. Sup. Ct. 111
Docket Number: 
Parties: George R. Newell, Respondent, v. James H. Chapman, Appellant.
Judges: Herrick, J., concurred.
Reporter: Supreme Court Reports (Hun)
Volume: 81
Pages: 111–115

Head Matter:
George R. Newell, Respondent, v. James H. Chapman, Appellant.
Sale of a bond and mortgage — false representations as to their value — measure of damages — guaranty by the vendor.
In an action brought to recover damages for alleged false representations made by the defendant as to the value of a bond and mortgage, relied on by the plaintiff and by which he was induced to take such security in part payment for real estate, the measure of damages is the difference between the value of the bond and mortgage as they were and what the value would have been if the representations made had proved to be true.
No damage is sustained if the payment of the debt covered by the bond and mortgage is secured to the plaintiff by either the bond or the mortgage, and it is incumbent upon him to show that the bond could not be collected.
On the trial of such an action brought to recover tlie damages resulting from alleged false representations, the court refused to charge, at the request of the defendant, “ That if the plaintiff delivered his deed of the land, relying upon the verbal guaranty of defendant that he would guarantee the payment or collection of the mortgage, there was a present consideration and parting with property on the strength of the promise, and the guaranty or promise is valid and binding and can be enforced against defendant.”
Held, that it was error to refuse to give this instruction to the jury;
That such a guaranty was not within the Statute of Frauds and was binding on the defendant;
That the instruction was pertinent to the question as to whether the ’plaintiff relied upon the defendant’s guaranty rather than upon his representations as to the value of the security;
That the fact that the defendant was a responsible man and made himself liable for the payment of the bond and mortgage on its transfer to the plaintiff, tended to show the absence of fraudulent intent on his part.
(Mayham, P. J., dissenting, on the ground that by reason of the absence of exceptions there was nothing to review.)
Appeal by tlie defendant, Janies II. Chapman, from a judgment of tlie Supreme Court in favor of the plaintiff, entered in the office of the clerk of Saratoga county on the 2d day of February, 1893, upon a verdict rendered at the Saratoga Circuit, and also from an order denying tlie defendant’s motion for a new trial made upon the minutes.
Charles R. Patterson and J. W. Houghton, for the appellant.
T. F. Hamilton, for tlie respondent.

Opinion:
Putnam, J.:
Tlie action was brought to recover damages for alleged false statements of defendant as to the value of a bond and mortgage, relied on by plaintiff, and by which the latter was induced to take such security in part payment for a lot of real estate.
In such an action tlie measure of damages is the difference between the value of the bond and mortgage as they were, and the value if the representations made had turned out to be true. (Vail v. Reynolds, 118 N. Y. 29 Y.)
If the bond was of no value and the mortgage a good security for the amount due, plaintiff sustained no damage. So, also, if the real estate covered by the mortgage was of insufficient value and the bond collectible. The transfer to plaintiff was of the Toond cmd mortgage to secure a mortgage debt. If tbe payment of that debt was secured' to plaintiff by either the bond or mortgage he sustained no damage. I am not satisfied, after a careful examination of the case, that any sufficient evidence was given on the trial to show that the bond could not be collected of its makers. No action had been com-men'ced thereon, and it was not proved that Jane and Jerome Sullivan were irresponsible. The bond and mortgage were transferred together as one security. The bond represented the debt, and the mortgage was executed to secure the payment of the bond. If the bond was a valid and collectible security defendant could not be said to have made any false representations. Nor can plaintiff be deemed to have sustained any damage. I am inclined to think, therefore, that plaintiff should have shown that the makers of the bond were irresponsible.
Again, I think the court erred in refusing to charge as asked by the defendant in his fifteenth request, viz.: " That if the plaintiff delivered his deed of the land relying upon the verbal guaranty of defendant that he would guarantee the payment or collection of the mortgage, there was a present consideration and parting with property on the strength of the promise, and the guaranty or promise is valid and binding and can be enforced against defendant." The court refused to so hold or charge, defendant excepting.
This guaranty of the defendant, under the circumstances, was not within the Statute of Frauds, and was binding on him. (Brown v. Curtiss, 2 Comst. 225; Cardell v. McNiel, 21 N. Y. 337; Milks v. Rich, 80 id. 269; Allen v. Eighmie, 14 Hun, 559.) To establish a cause of action against defendant, plaintiff was not only bound to show the fraudulent representations but also that the representations were relied upon by the plaintiff and induced him to take the bond and mortgage. (Arthur v. Griswold, 55 N. Y. 400-405.)
In considering this question as to whether plaintiff relied on the alleged false representations of defendant or not, and whether"or not he was induced by those representations to take the bond and mortgage, the jury should have been instructed that the defendant was liable on his verbal guaranty. The plaintiff testified that he understood the defendant was a man of responsibility. If the jury had been instructed, as requested by defendant, that his agreement to guarantee the mortgage was valid and made him responsible for its payment or collection, they could well have reached the conclusion that the plaintiff, having a valid guaranty by a responsible man securing the payment of the bond and mortgage, relied rather on that guaranty than upon the other representations of defendant as to the value of the security. I think also that the defendant was entitled to the instruction asked for on the question of his alleged fraud. The fact that defendant, a responsible man, made himself liable for the payment of the bond and mortgage on its transfer to plaintiff tends to show the absence of a fraudulent intent.
Eor these reasons I think the judgment should be reversed and a new trial granted, costs to abide the event.
Herrick, J., concurred.