Case Name: Sylvanus Mayo, App'lt, v. Delorme Knowlton, Resp't
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1892-10-01
Citations: 47 N.Y. St. Rep. 748
Docket Number: 
Parties: Sylvanus Mayo, App’lt, v. Delorme Knowlton, Resp’t.
Judges: 
Reporter: New York State Reporter
Volume: 47
Pages: 748–751

Head Matter:
Sylvanus Mayo, App’lt, v. Delorme Knowlton, Resp’t.
(Court of Appeals, Second Division,
Filed October 1, 1892.)
1. Stocks—Rescission of purchase of—Tender.
Plaintiff authorized defendant to purchase certain mining stock for him, which stock he afterwards exchanged for stock in another company to which the assets of the mining company had been conveyed. Thereafter claiming that defendant had delivered to him stock belonging to himself and not secured by purchase, he tendered to him mining stock of the old company borrowed from other persons for that purpose, and demanded back the purchase price. In an action brought therefor, Held, that having borrowed the stock for that purpose, he had the right to transfer it to the defendant and give him good title thereto.
3. Same—Tender—Laches.
Although the plaintiff purchased the stock in 1883, and did not attempt to rescind until 1886, as he claimed that he did not discover that defendant had delivered his own stock until that time, the question as to whether he had rescinded promptly was one of fact that should have been submitted to the jury.
3. Same—Pleading—Election oe remedies.
Plaintiff’s first cause of action was based upon a rescission of the contract by reason of the fraudulent performance thereof and for its purchase price, whilst the second cause of action was based upon an affirmance of the contract by a retention of the stock, and to recover damages for false representation as to value, etc. The court submitted the second cause, but refused to submit the first. Held, error; that the court should have required plaintiff to elect as to which he would have submitted.
Appeal from a judgment of the general term of the court of common pleas, affirming a judgment entered upon a verdict.
Charles N. Morgan, for app’lt; John R. Tresidder, for resp’t.
Reversing 31 St. Rep., 558.

Opinion:
Haight, J
—The complaint alleges two causes of action. The first allegation is in substance that at various times between the 1st day of June and the 1st day of September, 1882, the defendant agreed to purchase for the plaintiff as his agent 4,000 shares of the stock of the Silver King Mining Company; that in pretended fulfillment 'of such agreement, and with the intent to deceive and defraud the plaintiff, the defendant caused to be transferred to the plaintifE the stock of the company belonging to himself, and received and retained to his own use the money paid therefor; that in the month of J une,' 1886, the plaintifE first became informed of the facts, and thereupon tendered to the defendant the stock received from him, and demanded the return of the money paid. The second cause of action in substance alleges that the plaintifE purchased of the defendant the stock in question, and that in order to induce such purchase, the defendant falsely and fraudulently represented the stock to be of a value largely in excess of the sum paid per share, and that a dividend of ten per cent had been declared thereon, and demanded the damages sustained by reason of such false and fraudulent representations.
Upon the trial evidence was given in support of both causes of action. At the conclusion of the evidence the court submitted to the jury the question of fraudulent representations embraced in the second cause of action alleged in the complaint, after which the plaintifE asked to have the first cause of action alleged submitted to the j ury, and upon the refusal of the court took an exception thereto. The jury found for the defendant, and the judgment entered upon such verdict has been affirmed by the general term upon the ground that the evidence'did not establish a rescission of the contract by the plaintifE by reason of his failure to tender to the defendant the-stock received from him
The first cause of action alleged in the complaint is based upon a rescission of the contract by reason of the fraudulent performance thereof, and is to recover the purchase price of the stock, whilst the second cause of action is based upon an affirmance of the contract -by a retention of the stock and is to recover the damages sustained by the plaintiff by reason of the false representations made by the defendant in reference to its value, etc. The two claims are based upon conflicting or inconsistent theories, and the plaintiff was not entitled to recover upon both. Six of the jurors might find in his favor upon the first and against him on the latter, whilst the other six jurors might find in his favor upon the latter and against him upon the former. If.entitled to recover back the purchase price of the stock, he would not be entitled to recover for the damages sustained by reason of its being of less value than that which he paid for it. If he was entitled to recover damages for the false representations made in reference to its value, etc., he would not be entitled to recover the purchase price. So that he did not have the right to have both causes of action submitted to the jury. The court might properly have required him to elect as to which one he would have submitted, but instead of doing this, the court saw fit to submit the second and refused to submit the first, thus electing for him. This the court should not have done.
If, as is claimed, the defendant agreed to purchase for the plaintiff as his agent 4,000 shares of the stock of the Silver King Mining Company, and in the pretended fulfillment of such agreement, and with the intent to deceive and defraud the plaintiff, the defendant caused to be transferred to him the stock of the company belonging to himself, and received and retained to his own use the money paid therefor, the plaintiff upon the discovery of the fraud had the right to rescind the contract, because of its fraudulent performance, and recover back the purchase price paid. Taussig v. Hart, 58 N. Y., 425; Conkey v. Bond, 36 id., 427.
We are thus brought to the question as to whether there is evidence that the plaintiff rescinded. It appears from his testimony that in the latter part of the year 1882 the property and assets of the Silver King Mining Company were conveyed to the Silver King Mining & Tunnel Company, and by agreement the stock of the former company was convertible into the stock of the latter company; that the plaintiff had procured his stock to be so converted; that upon the discovery of the fraud practiced upon him he borrowed four thousand shares of the stock of the Silver King Mining Company, which had not as yet been so converted, and tendered the same to the defendant and demanded the repayment to him of the purchase price, with the interest that had accrued' thereon ; that the stock so borrowed by the plaintiff was borrowed for the purpose of making the tender to the defendant. f
Undoubtedly when the purchaser of personal property capable of identification and description has sold and parted with the same before the discovery of fraud practiced upon him in the purchase, he will be left to an action for damages. Having parted with the property, he can no longer rescind by tendering back that which he had received. But the stock had no ear-mark one share was the same as another, and could not be identified or distinguished therefrom. Each share represented an equal interest in the property and assets of the corporation, so that if the defendant had accepted the four thousand shares of the stock tendered to him, he would have had the same interest in the property and assets of the company as that sold by him to the plaintiff. Horton v. Morgan, 19 N. Y., 170-173.
True, a new company had been organized and the assets of the old had been transferred to the new company. The plaintiff had converted his old stock into the stock of the new company, but it is not seen how this should deprive him of his right to rescind, provided he is able to do so. He found stock of the old company which had not as yet been converted, and borrowed it for the purpose of making the tender. Having borrowed it for that purpose, he had the right to transfer it to the defendant and give him a good title thereto, thus restoring him to all the rights .and. property parted with. We fail to see any reason why this may not be done.
In the case of Champion v. Joslyn, 44 N. Y., 653-658, the trial court, in charging the jury upon the question of a tender, said : " It must be stock to which he has a right, not stock the certificates of which he has borrowed, having no title to the stock, simply to go through the form of a tender." To this an exception was taken, and on review the court says in reference thereto that " if the defendants had lawfully obtained the certificates and were invested with the power to transfer them, it was of no consequence to the plaintiff whether they had borrowed them or were the unqualified owners." See also Burrall v. The Bushwick R. R. Co., 75 N. Y., 211; Barclay v. Culver, 30 Hun, 1; Nourse v. Prime, 4 Johns. Ch., 490.
A purchaser of property, in order to rescind, must do so promptly upon the discovery of the fraud. Cobb v. Hatfield, 46 N. Y., 533.
The plaintiff purchased the stock in the summer of 1882.and he did not attempt to rescind until the year 1886, but he tells us that he did not discover that the defendant had delivered his own stock until that time. Whilst this fact might have been found against him, we think the question was one that should have been submitted to the jury.
The judgment should consequently be reversed, and a new trial ordered, with costs to abide the event
All concur.