Court Opinion

ID: 5220582
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:33:03.437035+00
Date Added: 2024-06-11T08:27:22.775484
License: Public Domain

Smith, P. J.
(dissenting):
In Gould v. Cayuga County National Bank (86 N. Y. 75) the head note in part reads: “ One who seeks to rescind acom-*18promise of a disputed claim on the ground of fraud must promptly, on the discovery of the fraud, restore or - offer to restore to the other party whatever he has received by virtue of it, if of any value; the tender must be without qualifications or conditions.
“ In an action at law upon the original claim,' plaintiff must show that he rescinded the fraudulent compromise prior to the commencement of'the action; if no-rescission is shown a final determination by the court .that plaintiff was entitled to more than the sum paid, is no answer to the objection.
“ It seems that the rule is different where the compromise was of an undisputed claim.
'“ It seems also that an equitable action to rescind may be brought without such restoration, the plaintiff offering, in his complaint, to restore, if not entitled to retain what he has received.” •
In that.case' the opinion (at p. 88) reads: “ But the defrauded party need not rescind and sue in an action at law for the consideration parted with upon the fraudulent contract. He may bring an action in equity to rescind the contract, and in that action may have full relief. Such an action does not proceed as upon a rescission, but proceeds for a rescission. In such a case it is sufficient for the plaintiff to offer in his complaint to restore to the defendant what he has received, and the rights of the parties can be fully regülatéd and protected in the judg- . ment to be entered. Such was the case of Allerton v. Allerton (50 N. Y. 670).” At page 8 A Judge Earl states his conclusion in these words: “ One situated like the plaintiff can rescind by ■tendering or restoring what he has received, and then commence his action. He may keep what he has received and sue to recover damages for the fraud; or he -may commence an action in equity to rescind and for equitable relief, offering in his complaint to restore,, in case he is not entitled to retain, what he has received. These actions are all fundamentally different.”
In McMichael v. Kilmer (76 N. Y. 36) the rule is stated: “Where an amount is paid expressly as a compromise of an account, and not because it was conceded to be duej the party receiving the payment cannot set. aside and. cancel a release *19given by him, on the ground of fraud, and yet retain the whole consideration therefor; if the release is to he cancelled the parties should be put in statu quo as far as possible.”
In Cleary v. Municipal Electric Light Co. (47 N. Y. St. Repr. 172), in an action brought for injuries received by the negligence of the defendant, the defendant set up a general release upon payment of a certain sum of money. The court charged: “That if plaintiff received the money in settlement or knowingly executed the release he could not recover; but if there was no agreement to compromise and he signed the release under a statement that it was a mere receipt for wages or gratuity, it was no bar, and refused to charge on request that if plaintiff executed the release he could not recover. Held, Ho error. ⅜ ⅜ ⅜ The rule that where a party seeks to rescind a contract on the ground of fraud or imposition he must tender a return of what he received under it before he can maintain an action, does not apply where he does not seek a rescission, but denies making such contract and claims that his signature was obtained by deceit as to the contents of the paper. ” Justice Cullen, in writing the opinion in that case, says: “ Therefore, in this case, if the plaintiff had admitted the compromise or his execution of the release, but claimed that he had been induced to make the compromise by fraud, duress or imposition, he would have been bound to return the consideration received before he could maintain his ■ action. But that was not the issue in the case. Plaintiff did not seek to avoid the contract of compromise. He denied making any such contract.” That case was affirmed by the Court of Appeals (in 139 N. Y. 643) upon the opinion of Justice Cullen. Among all the cases cited by my learned associate in the prevailing opinion there is not one which holds a contrary doctrine. In the case of Reynolds v. Westchester Fire Ins. Co. (8 App. Div. 193) the complaint offered to restore what had been received under the contract. In the other cases cited either the question was not raised and discussed; by the opinion, or a'distinction was found as appears in the Cleary case above cited. ’
In the light of these rules, of law the plaintiff’s complaint seems to me clearly - defective. It first states the cause of action for insurance; it then states that the plaintiff was *20induced to compromise the same, by the fraud and duress of one of its officers. There is no question that the release was signed and the compromise made. The plaintiff only seeks relief by rescinding the compromise. This she does-not claim to haye done, hut asks in her complaint specifically “that the so-called alleged release and settlement made between said defendant and said plaintiff as aforesaid be rescinded, vacated and set aside,” and this without any offer whatever to return the $500; but she asks that said $500 maybe credited upon the amount subsequently found due to her and she have judgment for the remaining $500. If upon the conceded facts there was at least $500 due to her this would be a sufficient complaint; but no facts are here conceded which would entitle her to the $500 paid if the compromise be set aside. This is made by the plaintiff a cause of action in equity, and within the authorities above cited the complaint would seem to be defective in not alleging an offer to return the $500 received upon the compromise.
Interlocutory judgment affirmed, with costs, with usual leave to appellant to withdraw demurrer and answer upon payment of costs of demurrer and of this appeal. ■