Court Opinion

ID: 9786680
Source: CourtListenerOpinion
Date Created: 2023-08-31 00:00:37.293981+00
Date Added: 2024-06-11T07:36:47.503350
License: Public Domain

McGivern, J.
(dissenting). I would affirm. This case is a classic type which fully illustrates the soundness of the rule which limits the power of an appellate court to reverse a finding of the trial court.
Although the Appellate Division may have the right to come to a new judgment contrary to that of the trier of the facts, it is sparingly used. (9 Carmody-Wait, New York Practice, p. 604, § 177. Williams Eng. & Contr. Co. v. City of New York, 222 N. Y. 1; Caldwell v. Nicolson, 235 N. Y. 209.) The reluctance' of appellate courts to make new findings has been noted: 11 Evaluations and determinations reached de nova at the appellate level, amounting, in effect, to complete redeterminations of basic issues, are usually best avoided. (Cf. Power v. Falk, 15 A D 2d 216, 218, supra; Kundla v. Symans, 9 A D 2d 1021.) It must be observed, however tritely, that the Trial Judge, having observed the witnesses, having viewed the premises and having gouged the proof as it was 'developed, is better qualified to weigh the determinative facts.” (Conklin v. State of New York, 22 A D 2d 481, 483).
But the majority herein have reversed the Trial Judge out of hand, without finding any .application of an erroneous theory of law or an erroneous ruling in the admission or exclusion of evidence, and they have found no failure to give conflicting evidence the relative weight which it should have. Thus, there is no basis for the substitution by this court of its own speculative assessment for the findings of fact and corollary conclusions made by the Trial Judge after a long trial lasting some three weeks.
This is particularly so here where the personal relationships of the parties, involving reliance on statements made, and disputed, played a crucial part in the litigation." Contrary to the view of the majority, I believe credibility was a proper foundation of the Trial Judge’s disposition, and not as the majority of this court would have it — upon the isolated dissection of one provision of that agreement, wherein representation was made that the evaluation of the inventories to be taken control of by P & F, through the medium of its subsidiary Press, “ were reflected at the lower of cost or market ”, and the assumption that if the Stuyvesant stockholders had not in fact used such method for the evaluation of the inventory then, as a matter bf law, P & F, which was in actual control of Press, was entitled to rescind the contract with the Stuyvesant stockholders. Only *145thus does the majority of this court try to escape the issue of credibility, which lies at the heart of this case, and upon which a correct disposition must be made.
In .short, what the majority of this court erroneously rejects and the trial court properly considered, was the materiality of the representation, as reflected not alone by its containment in the agreement, but by the conduct of the parties; also whether the indifference of, and failure to object to the given method of evaluation by the officers of P & F, after having had made available to them all of the books and records of Stuyvesant, whose financial operations they were in charge of during the entire period in excess of two months intervening the making of the contract and the “ closing ” of the contract on May 15, 1969, in effect constituted a waiver of any right it might have had by timely objection. Particularly, where such claim of preach of warranty continued not to be asserted for a further period of some four months after the closing, up until September of 1969, when, for reasons of its own, P & F no longer finding the contract advantageous sought to walk away from the obligations it had assumed. This, after the making of wholly unfounded and reckless charges and threats of criminal prosecution for fraud against the Stuyvesant stockholders.
Although the record is not clear whether the evaluation given was the lower of cost or market, it is clear that P & F failed to submit proof — the burden of establishing which was upon it — that the lower of cost or market had not been used. Notwithstanding, even if a reading of the record warranted a conclusion that it had not been, which is the assumption of the majority, considerations beyond that, as above indicated, are and were imperative to a correct disposition of this case.
That such additional elements could not be readily dismissed was fully recognized by P & F when it commenced its action for a judicial rescission, following imprudent previous declarations of a unilateral rescission, whereby it announced that it had no intent to abide by its contractual obligations whereby it guaranteed performance of the obligations assumed by its subsidiary, Press, including the requirement that Press furnish certain financing, such as funds to acquire a new printing press known as the Hantsho Press. The complaint in this action was predicated upon a charge of fraud in the inducement of this contract. That fraud in the inducement was the gravamen of its action, is evidenced by its having procured, on the basis of its charges, an ex parte attachment upon property of Stuyvesant. The entire trial was predicated upon this claim of fraud in the inducement. *146P & F’s attack was concentrated not upon the method of evaluation, but upon (1) a claimed erroneous representation of the quantity and character of the inventory, based solely upon an inventory undertaken by one of its officers, of questionable experience, made four months after the closing of the agreement, following which, much of the inventory was consumed and used in the course of normal business operations, (2) a claimed failure to disclose obligations for commissions to salesmen, and (3) a claimed erroneous statement in respect of the stockholders’ equity in Stuyvesant.
Having failed to establish by a preponderance of the evidence scienter, intent to defraud, it tacitly abandoned a claim to rescission based upon fraud by moving at the close of the trial to conform the pleadings to the proof. This, undoubtedly, in reasonable anticipation of the trial court’s ultimate rejection of its claim to rescission based upon the charge of fraud. Thus, it rested its claimed right to rescission upon the bare fact of a simple unintentional misrepresentation of the method used to evaluate the inventory. This, after admitting at the trial, upon cross-examination, that its verified complaint exaggerated by many thousands of dollars what it conceived to be the true value of the inventory. The other charges warrant no consideration, having been clearly shown to lack merit. The claim by P & F’s officers that they were unaware of any obligations owing for commissions to salesmen by Stuyvesant was so patently untrue^ in view of the schedule annexed to and part of the reorganization agreement, as to properly cause any Trial Judge to bristle and question their good faith.
Now, on appeal, P & F, abandoning its effort to establish fraud, adverts this court’s attention to what it considers to be the proper consequence of a simple misrepresentation, stripped of any intent to defraud; and also, it hopes, stripped of considerations of materiality in fact, stripped of considerations, affecting waiver of rights, that might otherwise be assertable. Its failure to make timely objection to facts readily available by simple diligence may not be ignored in considering a possible finding of waiver, nor in passing upon the question as to whether the representation was in fact material.
A contract must be read in its entirety and particular provisions must often give way to the true intendipent of the parties as reflected in their treatment of them. As stated by now Chief Judge Fulo ‘ ‘ intent and meaning are to be gathered, not alone from the language and terms of the instrument itself, but also from the conditions and circumstances extrinsic to it.” *147(Spencer v. Childs, 1 N Y 2d 103,107.) There is, as was noted by Learned Hand, and recalled by then Judge Fuid, “ ‘ No more likely way to misapprehend the meaning of language * * * than to read the words literally, forgetting the object which the document as a whole ’ seeks to achieve ” (pp. 106-107). And we must not lose sight of the fact that the officers of P & F were sophisticated businessmen. We do not here deal with misrepresentation made to a naive or neophyte investor.
Some of the testimony of the officers of P & F was so patently and so palpably untrue as to understandably cause the Trial Judge to find no equitable basis for a judicial rescission and to observe that evidence in support of Stuyvesant’s claim for tortious interference with contract and neglect of fiduciary duty, and in support of the Manettes’ claim for breach of contract, to be “ overwhelming ”.
Thus, I can find no valid basis for disturbing ahd usurping the function of the trial court. The majority of this court, on the cold record alone, by substituting its judgment for that of the trial court, as to its findings of fact, has not only usurped the function of the Trial Judge, but in so doing, in my view, acted beyond its scope of its statutory grant of power, as regulated by. the general rules of law pertaining to appeals to this court. (People ex rel. MacCracken v. Miller, 291 N. Y. 55, 61.)
And as for the damages awarded, it need only be observed that the respective amounts awarded to Stuyvesant and the successful individual plaintiffs, were well within the ambit of the proffered testimony found to be credible. Absolute precision in the measurement of damages, particularly in cases involving assaults upon, and attempted scuttling of, business privileges and opportunities, as has been frequently noted in cases involving unfair competition, and unlawful diversion of business, is a requirement neither achievable nor necessary. If there be a gray zone, he who tortiously interferes with or trespasses upon the rights of another, must be held liable to account and not the person wronged. In any event, I find little to suggest there is truly a gray zone, and the damages awarded against P & F, under no erroneous theory of law, were justifiably found to have been the product of its tortious conduct.
In sum, I do not think the facts as developed before the Trial Judge were insufficient as a matter of law to sustain the judgment ; nor do I think the majority opinion contains the requisite new findings of specific and ultimate facts, necessitated when the Appellate Division decides to discard the conclusion of a Trial Judge and go in a completely opposite direction. (Caldwell v. *148Nicolson, 235 N. Y. 209.) The majority would have been better advised to have ordered a trial de nova, with costs to abide the event. (Power v. Falk, 15 A D 2d 216, 218.)
Stevens, P. J., Markewich, Nunez and Lane, JJ., concur in Per Curiam opinion; McGtvern, J., dissents in opinion.
Judgment, Supreme Court, New York County, entered on August 2, 1972, insofar as appealed from, reversed, on the law and the facts in all details thereof, and defendant-appellant-respondent P & P Industries, Inc. should have judgment for rescission of the agreement of March 3,1969, by reason of misrepresentation in the inducement thereof, and return to status quo by judgment against defendant-respondent Stuyvesant Press Corp. for $150,000, with interest from the date of advance of each portion thereof, and against defendant-respondent-appellant Alfred Manette for $40,000, with interest from the date of payment to him, and otherwise the judgment should be affirmed, without costs and without disbursements.
Settle judgment on notice.