Court Opinion

ID: 5504931
Source: CourtListenerOpinion
Date Created: 2022-01-10 03:08:26.334428+00
Date Added: 2024-06-11T08:34:01.477815
License: Public Domain

INGRAHAM, J.,
(dissenting.) I concur with the presiding justice in Ms opinion except as to the effect of the release or agreement of March 3, 1887. The action was brought to recover the damages sustained by plaintiff in consequence of his investment of certain sums of money specified in the complaint with Grant & Ward, which investments were induced by false and fraudulent *159representations made by the defendant. These investments with Grant & Ward are alleged in the complaint to have been made between March 1 and May 5, 1884, and Grant & Ward failed on May 6, 1884. The particular representations made by defendant upon which plaintiff bases his cause of action are that the firm of Grant & Ward were very wealthy; that each of the members thereof was very wealthy; that said firm had certain very valuable and profitable contracts with responsible third parties, upon which large sums of money were to become due and payable to said firm from time to time during the year 1884, the performance and payment of which said contracts the said firm guarantied to investors therein; and that said firm had, at defendant’s request, taken an interest in said contracts for and on behalf of this plaintiff upon which there would become due and payable about 8 per cent, of the cost thereof as profits every 30 days during the time the said contracts were to run, respectively, together with the sums invested at the maturity of the said contracts; and that as matter of fact said guaranty made the investment perfectly safe, because of the wealth and responsibility of the said firm, which were well known to defendant; and that defendant wanted the sums before stated at or about the times above stated to pay to the said firm for plaintiff for an interest in said contract which had been taken by said firm for plaintiff at the defendant’s request as aforesaid. Whatever cause of action plaintiff had against Work existed at the time of the execution of the March 3d agreement, and, so far as appears, the only fact that he subsequently discovered was that Work had received from Grant & Ward sums in excess of those he had accounted for to plaintiff upon former contracts between plaintiff and Grant & Ward; but I do not see how these facts had any relation to the liability of the defendant to plaintiff for the investments made in March, April, and May, 1884. The main facts represented by defendant to exist were the wealth of the firm of Grant & Ward, the existence of the contracts, and that his moneys were invested therein. The failure of Grant & Ward showed conclusively that the representations as to their wealth were untrue, and- plaintiff says that in 1885 he discovered that no contracts could be found, but that at that time Work told him he believed that they would be found; but they never were found. Long before the 3d of March, 1887, Ward had been convicted and sent to the state prison, and a judgment had been entered against Warner for about $1,300,000 for money that he had received from Grant & Ward prior to their failure; and plaintiff states that he had seen statements in the newspapers that Work and Warner had received large profits upon the investments which they had made with Grant & Ward, but that Work had contradicted those statements. Prom this testimony it would appear to be clear that plaintiff had knowledge of the falsity of the representations upon which he now bases his cause of action prior to the 3d of March, 1887, when the agreement now under consideration was executed. This agreement is as follows:
*160“New York, March 3, 1887.
“Memorandum of understanding and agreement between E. O. James and J. H. Work. E. C. James is to assign at any time, on demand, or hold subject to order of J. H. Work, as to collection, release, or other disposal thereof, all his claims upon obligations of Grant & Wardj or for moneys paid therefor, and all claims arising out of his dealings-with said firm, and all the members thereof, as against said firm and the individuals thereof, and all other persons and bodies.corporate; this transfer being intended to be'of the most comprehensive character, and to be evidenced and effectuated by all such instruments in writing as may be necessary. J. H. Work is to provide the moneys to pay and take up the obligations of E. 0. James held by Thos. M. Rainliard as the same mature, to wit, the sum of twenty-five thousand dollars ($25,000) and interest. Said J. H. Work will also pay, or cause to be paid, to said James, the sum of five thousand dollars cash ($5,000) on or before September 1, 1887.
“E. O. J.
“J. H. Work.”
■“$10,000.
“Received this third day of March, 1887, the sum of ten thousand dollars .($10,000) on account of above memorandum.
“Edward O. James.’*
It seems to me clear that this agreement directly included any ■demand that the plaintiff might have against Work,' based upon his investment with Grant & Ward. In it the plaintiff agrees to assign at any time on demand, or hold subject to the order of Work as to collection, release, or other disposition thereof, all his claims upon, obligations of Grant & Ward, or for moneys paid therefor, and all claims arising out of his dealings with said firm and the members thereof as against said firm and the individuals thereof and all.other persons and bodies corporate. This claim against the defendant was certainly a claim arising out of the plaintiff’s dealings with Grant & Ward, and the agreement stated that the transfer was intended to be of the most comprehensive character, and to be evidenced and effectuated by all such instruments in writing as may be necessary, and for this agreement Work paid to plaintiff $30,000.. The agreement, therefore, contemplated the necessity ■of the" execution in the future of assignments or releases, and in order to effectuate the expressed intention of the parties, and plaintiff by it agreed to hold, subject to Work’s, order as to collection, release, or other disposition thereof, his claims arising out of his dealings with the said firm, and was to execute such other instruments in writing as, would be necessary,, and thus the subsequent request by defendant that plaintiff would’ execute a formal assignment of his claim against Grant & Ward was- not evidence’ that the defendant understood that the agreement related only to the plaintiff’s claim against Grant & Ward. This was simply, one of the instruments contemplated, and it was asked for so as to avoid the necessity of filing the original agreement of March 3, 1887, with the receiver. If any other instrument became1 necessary to effectuate the agreement of March 3d, plaintiff was bound to execute it, but, so far as the agreement itself had the effect to release or ■discharge a claim or demánd that existed, or in other respects itself effectuated the expressed intention of the parties,' then- it operated itself without the necessity of the execution of other instru*161ments. The fact that at this time plaintiff’s relations with Work were friendly, and plaintiff believed that Work had acted in good faith, would not prevent this agreement from operating to release whatever claim he had against Work, in the absence of proof that Work had knowledge that plaintiff understood the agreement as expressing any meaning other than that naturally to be inferred from the language used, or that Work took any unfair advantage of the plaintiff when the agreement was executed.
Under these circumstances, if plaintiff subsequently discovered that he had a claim against Work that was included within the release of this agreement which he had not in mind when he executed it, and therefore had not intended to include within it, he could have relief only by an action to reform the agreement, or, if there was fraud on Work’s part, disaffirm the agreement, and repay the money that he had received under it. He did neither, but on February 11th, just before the commencement of this action, plaintiff called upon Work, and made a demand for an accounting for the money that Work had received for plaintiff, and which he had not paid to plaintiff; and when Work insisted that this agreement covered all claims that the plaintiff had against Work, and that plaintiff should repay the $30,000 that Work had paid to him upon the execution of the agreement before he could enforce any demand that existed in consequence of the dealings with Grant & Ward, plaintiff expressly stated to Work that he had not come to undo that transaction, viz. the agreement of March 3, 1887, and he expressly reaffirmed it, and in his complaint in this action he alleged the making of the agreement of March, 1887, and the receipt by him of $30,000 thereunder. Thus, after all of the facts upon which he bases his cause of action had come to his knowledge, he expressly reaffirms the contract of March 3, 1887, and makes no claim that the same did not correctly state the intention of the parties, or that its execution was induced by any fraud upon the part of the defendant. The defendant, in his answer, denies that the $30,000 was paid to plaintiff or received by him on account of any money obtained by defendant from plaintiff, as alleged in the complaint, but alleges as a separate and complete defense to the action‘that the plaintiff entered into an agreement in writing with defendant, whereby, in consideration of the sum of $30,000, the plaintiff agreed with the defendant to finally settle, adjust, and release and transfer all of plaintiff’s claims of every nature and character, including all transactions had with this defendant, and that said sum of $30,000 was duly paid to plaintiff.
It may be that, the release or agreement having been pleaded by the defendant as an affirmative defense, the plaintiff would be deemed to have controverted such defense by traverse or avoidance, as the case may require, and that he would have the benefit of any evidence he could produce to sustain said traverse or avoidance. See Kirchner v. Sewing Mach. Co., 135 N. Y. 182, 31 N. E. Rep. 1104, where it is stated:
“If the plaintiff can show that by mutual mistake of the parties, or, by what 5s its equivalent, a mistake on his part and fraud upon the partof his adversary, *162the present cause of action is embraced in the release, contrary to the intent of the parties, or contrary to his intent in case fraud is proven, he is entitled to an instruction to the jury to the effect that the release does not bar his right to recover.”
But the mistake which would warrant a court of equity in reforming an instrument in writing must be one made by both parties to the agreement, so that the intent of neither is expressed in it; or it must be the mistake of one party, by which his intention has failed of correct expression, and there must be fraud in the other party in taking advantage oi obtaining a contract with the knowledge that one dealing with him is in error in regard to what a,re its contents. See Bryce v. Insurance Co., 55 N. Y. 240, where the court says:
“Whatever may have been the intention of the insured or his agent, there is nothing in the finding nor in the evidence which shows, or has a tendency to show, that defendant or defendant’s agent proposed anything else than to insure property in section 6 of the Patterson stores. Such being the case, it is not in the power of the court to reform the instrument, for thereby violence will be done to the intention of the defendant.”
See, also, Paine v. Jones, 75 N. Y. 593, where the court, reiterating the principle, held that the evidence authorized the finding of the trial court that the assignor of defendant without fraud obtained first the contract which it from the first intended to ask and have, and which it demanded, and therefore it failed to show-fraud or mistake authorizing the reformation of the contract.
No claim to reform this agreement appears to have been made by plaintiff in the court below. As before stated, he sets up the agreement in the complaint, alleging there that it was a mere transfer of his claim against Grant & Ward to Work. The court below, in its charge to the jury, declined to hold as matter of law that the instrument was an actual and absolute release to Work by plaintiff, and left it to the jury to say whether or not the parties intended that there should be an entire relinquishment of any claim that plaintiff might have by any possibility against defendant, and left it to the jury to say whether it was really intended by plaintiff to do anything more than simply to assign what claims he had against Grant & Ward, in order to put them in the hands of Work, that he could aggregate and get together all these claims, and get out of them what he could for the benefit of himself or other persons in interest; the court then adding:
“I leave that to you upon all the testimony, without recounting it, or referring to it further as to whether or not there wras such an arrangement and such an agreement made outside of the terms of the writing, and whether there should be a discharge and satisfaction of these claims.”
The finding on this question thus submitted to the jury in favor of the plaintiff would not justify a court in reforming the instrument, for the jury might find under these instructions that plaintiff did not intend or have in mind at the time the relinquishment of any claim of the plaintiff against defendant, and consequently the plaintiff's claim was not discharged; but this finding would not have justified the court in directing a reformation of this agreement, for it is only where there is a mistake that is common to *163both parties, or a mistake of one party and fraud on the other, that will justify the reformation of the contract.
But, assuming that there was a finding of fact that would justify a reformation of the contract, I am unable to find any evidence in the case to sustain such a finding. The plaintiff testified that the first talk of the assignment occurred in the spring of 1886, when Work had spoken to plaintiff about purchasing his claim against Grant & Ward. On August 11, 1886, the plaintiff writes a letter to Work about taking up certain notes that Work had procured one Bheinhardt to discount for plaintiff, and upon plaintiff’s return to New York, in September, plaintiff and defendant had further negotiations about the purchase of plaintiff’s claim against Grant & Ward. Plaintiff endeavored to ascertain the value of the claims, and ascertained that they were not marketable in Wall street, and nobody could tell him what they were worth; in other words, he could find no purchaser, and subsequently Work agreed to give him $30,000 for them. That the agreement was finally made on the 3d of March, 1887, and plaintiff says he went over to Work’s office, “and he (Work) stated that he would give me $30,000 for these claims that we had been negotiating about. We sat down and wrote this paper, and he signed it, and I signed my initial to it before he signed it, and then he gave me his check for $10,000, and I signed my name to the receipt which appeared on the paper.” It appeared that the original agreement was in Work’s handwriting. Work thus wrote the agreement out in plaintiff’s presence, plaintiff signing it, and, after signing it, receiving $10,000 of the $30,000. Work then gave the original agreement to plaintiff, who took it back to his office, copied it out, signing the copy, and sent it back to Work. It was upon the execution of this agreement that Work was willing to pay and did pay to plaintiff $30,000. Plaintiff, a lawyer of experience and ability, thus executed the agreement not only after reading it, but after he had copied it cut; and it is clear from all the testimony that the defendant did intend to include any claim that plaintiff might have against him. The mere fact that when the plaintiff signed this agreement and received this $30,000 he did not have in mind the fact that the instrument that he executed would release Work from any claim that he might have against Work would not justify, under any of the authorities, a court of equity in reforming the agreement. If the intention of Work when he signed the agreement was in doubt, it seems to me the defendant should have been allowed to answer the question asked him on his redirect examination, which, upon objection taken by plaintiff, was excluded, and to which defendant excepted, when he was asked: “Question: What did you, at the time that paper was drawn, understand was being transferred to you?” But, as before stated, there was no evidence that I can find after a careful examination of the whole record to show that this contract did not carry out Work’s intention at the time it was executed, or that Work knew that plaintiff understood the agreement in any other sense, or that plaintiff was induced to sign it *164by any fraud or.deceit on Work’s part. There was, therefore, no finding in this case by the jury that there was either a mutual mistake of the parties in the execution of the agreement, or that there was any fraud on Work’s part, nor was there any evidence to sustain such a finding.
The defendant, at the end of the plaintiff’s case, and also at the end of the whole case, moved that the complaint be dismissed, on the ground that any claim plaintiff may have had against defendant was released by the instrument of March 3, 1887. That motion was denied, to which the defendant excepted, and I think that motion should have been granted, and the complaint dismissed. I think, therefore, the judgment should be reversed, and a new trial ordered, with costs to abide the event.