Case Name: Alexander Engel and Julius Horst, Respondents, v. The Shubert Theatrical Company, Appellant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1915-02-05
Citations: 166 A.D. 394
Docket Number: 
Parties: Alexander Engel and Julius Horst, Respondents, v. The Shubert Theatrical Company, Appellant.
Judges: 
Reporter: Appellate Division Reports
Volume: 166
Pages: 394–396

Head Matter:
Alexander Engel and Julius Horst, Respondents, v. The Shubert Theatrical Company, Appellant.
First Department,
February 5, 1915.
Fraud—release of debt for inadequate consideration—when action not upon sealed instrument — when agreement that foreign court shall have jurisdiction does not bar action here.
Where a complaint in an action based on the fraud of the defendant in inducing the plaintiff to release for an inadequate consideration royalties due for the production of a play, annexes the contract to pay royalties, which was written in the German language and executed by an agent of the plaintiff without a seal, the fact that a translation of said contract also annexed by the plaintiff purported to have been sealed by the agent, does not make the action one upon a sealed instrument so as to preclude the plaintiff as principal from suing thereon.
Although said contract provided that “ In case of a dispute, both contracting parties agree to submit to the jurisdiction of the Vienna courts,” the action lies in the courts of this State because, first, an action based on the fraud in procuring the plaintiff to release royalties due for an inadequate consideration is not an action on a “dispute” arising out of the contract itself; and, second, because the clause aforesaid did not purport to give the foreign courts exclusive jurisdiction.
Appeal by the defendant, The Shubert Theatrical Company, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 23d day of October, 1914, sustaining a demurrer to the first affirmative defense in the answer.
Walter H. Pollak, for the appellant.
Melville H. Cane, for the respondents.

Opinion:
Hotchkiss, J.:
The complaint alleges and the answer expressly admits that the plaintiffs and the defendant entered into a contract' in the German language, a copy of which in that language is attached to the complaint. What the complaint alleges to be " an English translation " of that contract is also attached to the complaint. Although the correctness of this translation is not admitted by the answer, its correctness as a translation is not disputed on this appeal and was not, so far as the record discloses, disputed below. The German copy does not purport to bear any seal, nor in its text is any reference made to a seal. In the "translation," opposite the signature of "Dr. 0. F. Eirich," who, in fact, as the document recites, acted in plaintiffs' behalf as agent, appears the word "seal." In this state of the record we do not think it is open to defendant to argue that the original contract is, as to plaintiffs, a sealed instrument, and that, hence, plaintiffs may not sue thereon or claim any benefit arising therefrom. We treat the contract as unsealed. By the contract plaintiffs sold to defendant certain exclusive rights to produce a play called ".The Blue House," for which defendant was to pay royalties. Thereafter, by means of representations which are alleged to have been fraudulent, defendant is alleged to have induced plaintiffs, for an inconsiderable sum, to release to defendant their rights to all such royalties, and this action is to recover the damages suffered by plaintiffs because of the alleged fraud. Among the provisions of the contract is the following: " In case of a dispute, both contracting parties agree to submit to the jurisdiction of the Vienna courts." The counsel for the appellant in a very interesting and instructive brief urges us to hold that this clause of the contract not only applies to the present action, but that it is valid and enforcible, and that because of it his client is immune from pursuit with respect of any matter connected with the contract in any jurisdiction save that of the city of Vienna in the Kingdom of Austria. It is not necessary for us to pass upon the question whether an agreement to submit to the jurisdiction of the Viennese courts exclusively would or would not under the circumstances be enforcible in this State. For two reasons we think this record does not present the question. First. We construe the words ' ' in case of a dispute " to refer to disputes arising upon or out of the contract. This action does not so arise. As before stated, it is an action for damages for the fraud alleged to have been committed upon the plaintiffs in inducing them to release their rights under the contract. The relation the contract holds to the action is to afford evidence of the rights of the parties and to measure the damages plaintiffs may have suffered. The foundation of the action is the alleged fraud. (Rich v. N. Y. C. & H. R. R. R. Co., 87 N. Y. 382.)
Second. By the clause in question the parties do not agree to submit their disputes to the jurisdiction of the Viennese courts and to those courts only. There is nothing exclusive in the language used. They do agree to submit to the Viennese jurisdiction, but they say not a word in restriction of the jurisdiction of courts elsewhere, and whatever may be said on the subject of the legality of contracts to submit controversies to courts of certain jurisdictions exclusively, it is entirely plain that such agreements should be strictly construed and should not be extended by implication.
For these reasons the order appealed from should be affirmed, with ten dollars costs and disbursements.
Ingraham, P. J., McLaughlin, Scott and Dowling, JJ., concurred.
Order affirmed, with ten dollars costs and disbursements.