Case Name: Watson H. Whipple, Respondent, v. Brown Brothers Company, Appellant
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1919-01-07
Citations: 225 N.Y. 237
Docket Number: 
Parties: Watson H. Whipple, Respondent, v. Brown Brothers Company, Appellant.
Judges: 
Reporter: New York Reports
Volume: 225
Pages: 237–261

Head Matter:
Watson H. Whipple, Respondent, v. Brown Brothers Company, Appellant.
Contract — execution of written contract purporting to be same as oral contract previously agreed upon by parties but guaranty of which was omitted in written contract — party induced to sign such contract by false statements of contents thereof by other party — action for breach of warranty of oral contract — when such action can be maintained and damages recovered.
. 1. There is a material and manifest distinction between a meeting of the minds of parties through deceit on the part of one of them, and a writing excusably and justifiably executed by the one which, through the deceit of the other, does not express the agreement of the parties.
2. A party who is ignorant of the contents of a written instrument, from inability to read, who signs it without intending to, and who is chargeable with no negligence in not ascertaining the character of it, is no more bound than if it were a forgery. There has been no intelligent assent to its terms, and it is a fraud in one who with knowledge of the facts attempts to enforce it.
3. The complaint alleges a contract by plaintiff’s testator, its breach and resultant damages. The testimony of plaintiff’s testator proved an oral contract, whereupon the defendant proved by him his signature to a writing in form a contract set forth in the answer. Plaintiff’s testator testified that after the oral contract had been completely made he handed defendant’s representative his list of varieties of trees he wanted, and defendant’s representative wrote down the varieties, calling them as he wrote them, and handed the order to the witness to sign, who, because he had not his glasses, could read nothing of the writing and so stated to the representative, who said that it contained nothing but a statement of the varieties and the sizes and prices and time of delivery. In fact it differed materially from the oral contract. Plaintiff’s testator thereupon signed it. This testimony was taken under the objection of the defendant that it was incompetent, that the writing was the best evidence of the contract and that no fraud was alleged in the complaint, and under an exception to the adverse ruling. The court, in effect, submitted to the jury the questions: (a) Was the testator bound by the written order, notwithstanding that he did not read it, or did the conditions justify him in signing it without reading it; (b) did the writing or the oral agreements constitute the contract; and charged that if the writing constituted the contract the plaintiff could not recover; if the oral agreements constituted the contract the plaintiff could recover the damages resulting to the testator from its breach. The verdict was for plaintiff. Held, that the evidence of the oral contract was properly received, and that upon the facts found by the jury the writing was void at law. The contract was not susceptible of rescission and there was no reason for its reformation. (Wilcox v. American Tel. & Tel. Co., 176 N. Y. 115; Smith v. Rvp.n, 191 N. Y. 452, followed.)
Whipple v. Brown Brothers Co., 170 App. Div. 531, affirmed.
(Submitted October 22, 1918;
decided January 7, 1919.)
Appeal from a judgment of the Appellate Division of the Supreme Court in the fourth judicial department, entered November 24, 1915, affirming a judgment in favor of plaintiff entered upon a verdict.
The nature of the action and the facts, so far as material, are stated in the opinion.
P. Chamberlain for appellant.
The court erred in receiving evidence tending to prove fraud. The action being for breach of contract it could not be changed into one for fraud. (Dalrymple v. Hillenbrand, 62 N. Y. 5; Stumpf v. Cohen, 78 Misc. Rep. 158; Tanenbaum v. Fed. Match Co., 189 N. Y. 75; Lindsay v. Mulqueen, 26 Hun, 485; Townsend v. G. Ins. Co., 39 Misc. Rep. 87; Hartman v. Mayor, etc., 23 Hun, 586; Northam v. Dutchess Co. Mut. Ins. Co., 77 N. Y. 73; McComb v. Brewer Lumber Co., 184 Mass. 276; Kipp v. N. Y. C. & H. R. R. R., 89 App. Div. 392; Schoepflin v. Coffey, 162 N. Y. 12; Korn v. Weir, 88 N. Y. Supp. 976; Blumenfield v. Stine, 42 Misc. Rep. 411.) The court erred in admitting testimony as to dealings had between the alleged agent, Mull, and Mr. Sherwood. (McKeige v. Carroll, 120 App. Div. 521; Ellenor v. Briggs, 39 Misc. Rep. 535; Oppenheim v. Irvin, 166 App. Div. 233; Wait v. Borne, 123 N. Y. 592; Smith v. Tracy, 36 N. Y. 79.)
L. M. Sherwood for respondent.
Parol evidence was competent to prove that the signature of the plaintiff to the instrument was procured by fraudulent representations, and if so, the instrument was void. (Wilcox v. Am. T. & T. Co., 176 N. Y. 115; Smith v. Dotterweich, 200 N. Y. 299; Burrows A. Mach. Co. v. Van Dusen, 138 N. Y. Supp. 839; 19 N. Y. Supp. 951; Wells v. Yates, 44 N. Y. 531; Albany Sav. Bank v. Burdick, 87 N. Y. 40; Peary v. Manhattan Elev. Ry. Co., 56 Misc. Rep. 599; 139 N. Y. 643; E. A. Machine Co. v. Greenberg, 56 Misc. Rep. 514; Van Alstyne v. Smith, 83 Hun, 382; Kitchener v. Home Sewing Mch. Co., 135 N. Y. 182; Philips v. Gorham, 17 N. Y. 270; Smith v. Ryan, 191 N. Y. 452.)

Opinion:
Collin, J.
The action was to recover the damages sustained by Watson H. Whipple, the plaintiff's testator, through the breach by the defendant of a contract between them. The complaint alleged the contract, its making and breach and the damages of the plaintiff, in amount $1,600. It did not disclose whether the contract was oral or written. The answer denied the contract and alleged another contract and performance of it by the defendant. It is, of course, true that the allegations in the answer of new matter are to be deemed controverted by the plaintiff. (Code of Civil Procedure, section 522.) The issue thus created was: Did the parties make the contract set forth in the complaint or did they make that set forth in the answer.
The testimony of Whipple (who was living at the time of the trial) proved the oral contract set forth in the complaint. The defendant, while Whipple was testifying as a witness in his own behalf, proved the signature of Whipple to a writing in form the contract set forth in the answer. Whipple testified: after the oral contract had been completely made, the representative of the defendant " took out his order book and I handed him my list and he wrote down the varieties (of trees), calling them out as he wrote them," and handed the order over to Whipple to sign; Whipple, because he had not his glasses, could read nothing of the writing and so stated to the representative, who stated that it contained nothing but a statement of the varieties and the sizes and prices and time of delivery. Whipple thereupon signed it. Such statement was not the entire of either the oral contract or of the writing. This testimony was taken under the objection of the defendant that it was incompetent, the writing was the best evidence of the contract, no fraud being alleged in the complaint, and under an exception to the adverse ruling. Under the writing the plaintiff could not maintain the action. '
The issue tried was, was the oral agreement or the contents of the writing the real contract. The court, in effect, submitted to the jury the questions, (a) was Whipple bound by the written order, notwithstanding that he did not read it, or did the conditions justify him in signing it without reading it; (b) did the writing oi the oral agreements constitute the contract; and charged that if the writing constituted the contract the plaintiff could not recover; if the oral agreements constituted the contract the plaintiff could recover the damages resulting to the testator from its breach. It is manifest, therefore, that the recovery was because of the breach of the oral contract and not because of the defendant's fraud. The verdict was in favor of the plaintiff.
The appellant asserts and argues here that, the cause of action being founded on an express contract, fraud could not be proven without being alleged in the complaint.
Fraud was not a constituent of plaintiff's alleged or proven or submitted cause of action. The question was, did the stipulations of the written order constitute the contract. The jury were instructed that if the oral agreements were the contract the plaintiff could recover, if the evidence exonerated Whipple from negligence in signing the writing; if the writing constituted the contract the plaintiff could not recover. I think there was not error in this or in receiving the evidence of plaintiff that his signature to the writing was obtained, without negligence on his part, through deceit.
Under the evidence of Whipple the writing did not express the agreement of the parties. Whipple did not execute and deliver it with a contracting mind, and at the common law it was subject, to the plea of non esl factum. There is a material and manifest distinction between a meeting of the minds of parties through deceit on the part of one of them, and a writing excusably and justifiably executed by the one which, through the deceit of the other, does not express the agreement of the parties. The distinction has been expressed thus: " Fraud in the factum renders the writing void at law, whereas fraud in the treaty renders it voidable merely." In Page v. Krekey (137 N. Y. 307, 311) the action was upon a guaranty signed by the defendant. The court said: "In deter mining the legal effect of this paper, and the obligation thereby created against the defendant, we must assume that he signed it when intoxicated, that he was unable to read it, that he was ignorant of its contents, and that he fixed his signature to it upon the false representation that it was an application for a license. There can be no doubt that, as between the parties to this transaction, the instrument was void. It was also invalid in the hands of any person who received it with knowledge or notice of the circumstances under which the defendant's signature was obtained." In Trambly v. Ricard (130 Mass. 259) the action was for the conversion of furniture. Plaintiff alleged and proved the acts of conversion. The defendants, in justification of their acts, relied upon an alleged breach by the plaintiff of a conditional bill of sale. Plaintiff thereupon gave proof that the sale was absolute and that immediately after the oral agreement of absolute sale was made the defendants requested him to sign the written contract, which he did, supposing the same to contain the terms and stipulations of the oral agreement. The court said: " In the absence of fraud or imposition, it is presumed that the terms of' a written contract were known and assented to" by the parties who signed it; that they either read it, or were informed of its contents, or were willing to assent to its terms without reading it. This presumption is not defeated by showing that the contract signed was different from that which one or the other supposed he was signing. It is not permitted to show that another contract was the real contract, because the parties have chosen to put their agreement in writing, as the better way to preserve its terms, and paroi evidence cannot be admitted to vary it. But this familiar rule does not exclude evidence which tends to show that the written contract was by some fraud or imposition never in fact freely and intelligently signed by the party sought to be charged. It may always be shown that he was not possessed of the requisite capacity, or that his signature was obtained by fraud. A party who is ignorant of the contents of a written instrument, from inability to read, who signs it without intending to, and who is chargeable with no negligence in not ascertaining the character of it, is no more bound than if it were a forgery. There has been no intelligent assent to its terms, and it is a fraud in one who with knowledge of the fact attempts to enforce it." This case is cited with approval in O'Donnell v. Inhabitants of Clinton (145 Mass. 461); Freedley v. French (154 Mass. 339); Bliss v. New York Central & H. R. R. R. Co. (160 Mass. 447); Larsson v. Metropolitan Stock Exchange (200 Mass. 367).
In Eldorado Jewelry Co. v. Darnell (135 Iowa, 555) the defendant signed an order for the purchase of certain jewelry and upon this was sued for the price. When he signed the order he was without glasses, which had been broken, and could not read the order. He supposed that it was merely a contract under which he was to receive the goods as the property of plaintiff and dispose of them on commission with the obligation only to remit a percentage of the proceeds. The court said: "It is conceded that, if the order was voidable merely, as when procured by fraud, defendant had his election to rescind and refuse to accept the goods, or accept them and recoup in damages; but if, under the finding of the jury, the order was void, rescission was unnecessary to defeat plaintiff's claim. To render the order void, it must have been signed by mistake; that is, under the supposition that it was an instrument of another or different character. This would be no less a mistake because induced by fraud. The distinction should be kept in mind, for an agreement procured by fraud is voidable merely, while one signed by.mistake is no agreement at all. As said, the jury might have found that the defendant in signing the order was not negligent, as he was a man of advanced years, without his glasses, which had been broken, and could not read the instrument signed, which was long and in small type. The jury might also have, found that he signed the same under a mistaken supposition that it was merely a contract under which he was •to receive the goods as the property of plaintiffs, and dispose of them on commission, with the obligation to remit a percentage of the proceeds only. If so, executing the order was by a mistake, and the instrument utterly void. This must be so, for in such a case the minds of the parties have never met."
In Cummings v. Ross (90 Cal. 68) the facts, .so far as the point under consideration is concerned, were the parallel of the facts in the case at bar, as will appear from the following quotation from the opinion: "It is further contended that the court below erred in allowing the plaintiff to show that a certain written contract introduced by defendant was signed by the plaintiff, through the misrepresentation of the defendant, and that the plaintiff had never intended to sign that contract, but supposed he was signing one which had before that been drawn up in lead-pencil. The action was. brought on a contract such as the lead-pencil drought contained, and the defendant, in the answer, denied the performance of the contract as sued on. When he introduced the written contract to show the real nature of the transaction as he claimed, it was competent for the plaintiff, in support of the issue made, to show that in point of fact he had made no such contract as defendant had brought forward in evidence. One cannot be made to stand on a contract he never intended to make. If the defendant had sued the plaintiff, and sought to charge him on such a contract, it would certainly be competent,, in defense, to show that the instrument was fraudulent."
I have referred to these decisions, by the quotations, to make clear that the principles declared by us in Wilcox v. American Telephone & Tel. Co. (176 N. Y. 115) and Smith v. Ryan (191 N. Y. 452) are of general application. Those principles as stated by Chief Judge Cullen are: " There are two kinds of fraud which differ essentially in their- character; in the one the grantor is induced to convey his property by fraudulent representations as to the value, nature or character of the consideration he receives for the conveyance. This is sometimes called fraud in the consideration. In the other case the grantor is deceived into the execution of an instrument of the contents of which he is ignorant. This is sometimes called fraud in the execution of the deed. The distinction between the two cases lies just here. It is elementary law that the assent of the parties is necessary to constitute a binding contract. In the first case the assent of the party though obtained by fraud is, nevertheless, obtained not only to the execution of the instrument, but to the contract which it evidences. In the second case there is procured only the signature to and execution of the written instrument, but not" assent to the contract therein stated. In cases of this latter class the deed can be avoided at law. " " Thus, for example, reading a deed falsely to an illiterate person, whether it be so read by the grantee or by a stranger, avoids it as to the other party at law." (Smith v. Ryan, 191 N. Y. 452, 457.) " The practice adopted by the plaintiff was entirely proper. -He was not obliged to appeal to a court of equity for relief against the deed, but when it was set up to defeat his claim he could avoid its effect by proof of the fraud by which it was obtained (Kirchner v. New Home Sewing Machine Co., 135 N. Y. 182)." (Wilcox v. Am. Tel. & Tel. Co., 176 N. Y. 115, 118.) (See, also, Lotter v. Knospe, 144 Wis. 426; Biddeford National Bank v. Hill, 102 Me. 346; Black v. Wabash, St. Louis & Pacific Railway Co., 111 Ill. 351; Warder, Bushnell & Glessner Co. v. Whitish, 77 Wis. 430; Alexander v. Brogley, 63 N. J. L. 307.)
The writing in the case at bar lacks the element of mutual assent. It does not express the result of the meeting of the minds of the parties. It is a mere fiction, a nothing or a something which becomes nothing the instant the proof of the deceit under which the signature was made is given. Whipple did not and could not sue upon the writing. Under his proof it was void at law — the same as if it never had been. It, .as a contract, was not susceptible of rescission and there was not a reason for its reformation. The plaintiff controverted its existence as a contract and he had the right by evidence to- sustain the controversion.
The judgment should be affirmed, with costs.