Court Opinion

ID: 5214166
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:19:13.746281+00
Date Added: 2024-06-11T08:27:24.960914
License: Public Domain

McLaughlin, J.:
The facts are set out in the opinion of Mr. Justice Laughlin, and it is unnecessary to repeat them. It is mot disputed that by the settlement of the two actions of McOwen v. Whalen and Whalen v. French the assets of the firm were thereby increased many thousand dollars, and that plaintiff’s share in such increase alone was considerably more than the $3,000 which the defendant paid him for his entire interest. Nor is the fact disputed that several days before tbe defendant acquired the plaintiff’s interest the two actions had been settled by the defendant without .the knowledge of the plaintiff, and there is an abundance of evidence to *606justify the"finding of the jury -that "he did'not know of- such settlement at the time he delivered the assignment Thé defendant, of-course, could purchase the interest of the plaintiff in the; firm, hut he could only do so hy fully and fairly disclosing to his copartner all the knowledge which he had bearing upon the‘value of the interest to be purchased. ( Wright v. Duke, 91 Hun, 409.) The relation existing between them was one of trust and confidence, ahd each was bound to act with the utmost good faith, to wards the other. (Butler v. Prentiss, 158 N. Y. 49 ; Mitchell v. Reed, 61 id. 123.) When, therefore, the defendant acquired plaintiff’s interest, without disclosing to him that the two actions had been séttled, it was a fraud upon the plaintiff- which entitled him to some relief. If, when the information was acquired, the contract had been fully executed by the delivery of the. assignment and the acceptance of the check, the plaintiff had two remedies —die could bring an action' iir equity to rescind, returning or offering in the complaint to return the .check, or keep the check and commence, an action" at law to recover the damages sustained by'reason of the fraud. (Gould v. Cayuga County National Bank, 99 N. Y. 333.)
As already ’said, the verdict of the jury — sustained by an abundance of evidence — establishes the fact that the plaintiff did not learn of the-settlement of the two .actions until after he had executed and delivered the assignment and received the "check in exchange therefor.. How it can be said, under such circumstances, that the plaintiff, in any way, waived his right to maintain ■ this action I am unable to perceive. Nothing then remained to be done so far as the contract was concerned ; it had been entirely executed. .On discovering the fraud, as I understand the la.Wj the plaintiff was not" obliged to disaffirm the Contract, and I am unable to" see how the fact that he did not do so can be tortured into a wai-ver or ratification "of the. fraud practiced upon him. Where á contract has not been fully performed a party who discovers the '"fraud,: Snd thereafter acquiesces in the full performance, may be deemed to have waived a claim for damages by reason of the fraud, but here, as w.e have seen,- the contract had .been fully performed by the delivery of the assignment and the check, and it is of no- importance, whether the fraud were discovered five minutes or five years thereafter. The time when such discovery was made in no way. affected th.Q *607rights of the parties. Plaintiff then was entitled to treat the contract as valid and maintain this action. None of the authorities cited in the opinion of Mr. Justice Laughlin, as I read them, are to the contrary; on the other hand they support this view.
It is of no importance whether or not the rule of damages adopted by the ti’ial court were the correct one, because the rule was the one which counsel for both parties apparently agreed was the correct one to be applied to the facts as proved. The verdict is fully supported by the evidence and, I think, it should not be disturbed.
For these reasons I am of the opinion that the order appealed from should be reversed and the verdict reinstated, with costs to the plaintiff.
Milleb and Dowling, JJ., concurred; Ingbaham, P. J., and Laughlin, J., dissented.