Court Opinion

ID: 5481468
Source: CourtListenerOpinion
Date Created: 2022-01-10 01:56:42.171737+00
Date Added: 2024-06-11T08:33:37.248676
License: Public Domain

Desmond, J.
(dissenting). The complaint alleges that while the parties were wife and husband, the latter, by means of intentionally false statements as to the value and amount of *111Ms property, induced plaintiff to consent to a separation agreement by the terms of wMch she agreed to accept, and accepted, $20,000 in satisfaction of all her property rights against her then husband, including support and maintenance. The action is at law, and money damages are demanded. The question is as to whether such a suit lies. That question Special Term answered in the affirmative, but the Appellate Division in the negative. I see no impediment to the bringing of such an action.
The complaint avers further that the parties are residents of this State, that they were married here in 1917, that plaintiff obtained a decree of divorce against defendant in New Jersey in 1944, and that, while that action was pending, the parties entered into a written agreement, a copy of wMch is annexed to the pleading. That agreement recited the pendency of the divorce suit and that the parties desire to settle their property rights for all time. The husband therein promised to pay the wife various sums of money on stated dates, the total thereof being $20,000, and the wife covenanted, in consideration of those sums, to release all claims as to support, dower or community rights, or to elect against defendant’s will. There was a clause in that agreement that the wife was to have the custody of the infant daughter of the marriage, and that the husband would pay a weekly sum for the child’s support. Another paragraph of that separation agreement said that if either party should thereafter obtain a valid decree of divorce against the other, then the agreement should “ have the same force and effect as though inserted at length in any such final decree.” However, the New Jersey divorce decree thereafter granted to plaintiff (copy annexed to the complaint in the present action) contained no reference of any kind to the separation agreement nor any allowance for support, so the language just above quoted from the separation pact, has no legal effect at all. Elsewhere in the complaint are further allegations, referred to more fully at the end of this opinion, that defendant stated his financial worth, to plaintiff, at a figure one tenth as large as the actual sum thereof.
It seems to me that the complaint, summarized above, includes all the necessary elements of a suit in fraud for money damages. *112That it is of an unusual type should not be an argument against its sufficiency (see discussion in Rozell v. Rozell, 281 N. Y. 106, 114). That a support agreement like the one annexed to this complaint creates binding contractual obligations is undisputed (see Goldman v. Goldman, 282 N. Y. 296, 300). It is equally well settled that where “ a person has parted with something of value as the result of a contract induced by fraud ”, he has his choice of three courses, one of which is to “ ‘ retain what he has received and bring an action at law to recover the damages sustained ’ ” (Goldsmith v. National Container Corp., 287 N. Y. 438, 442, 443). I see no reason why that choice is not as open to this plaintiff as to any other contracting party, who, by misrepresentations, has been persuaded to assign or release a claim, or right, or chose in action, for an inadequate consideration.
Section 57 of our Domestic Relations Law, as amended in 1937 (L. 1937, ch. 669) to overrule such cases as Schultz v. Schultz (89 N. Y. 644) and Allen v. Allen (246 N. Y. 571), announces that a married woman has a right of action against her husband for his wrongful or tortious acts resulting in injury to her property, as if they were unmarried. That radical change in our State’s public policy conferred on married women a new substantive right to maintain such suits, and to recover damages therein (see Coster v. Coster, 289 N. Y. 438, 442). The right to fair and adequate support is a property right, and one of great value and importance. Procurement of a release thereof, by fraud, should be penalized by the courts in the same way as other such frauds.
The Appellate Division, following its own earlier and similar holding in Walsh v. Walsh (276 App. Div. 753) held that (p. 357) “ questions of support cannot be raised in the form of actions on the case for deceit ” and that “ the sole remedy is to attack the validity of the agreement by way of rescission.” (276 App. Div. 355, 356.) That ruling that plaintiff, though alleged to be a defrauded contracting party, does not have all the choices Usted in Goldsmith v. National Container Corp. (supra) seems to be based entirely on an interpretation, which I cannot accept, of Johnson v. Johnson (206 N. Y. 561). The J ohnson case contains nothing, by way either of holding or dictum, on the question we have here. Mrs. Johnson did not sue for damages for fraud. *113She did not even seek a rescission or reformation of her separation agreement. She simply prayed the court to increase the amount fixed in the agreement for her alimony. The courts, when asked in that suit to award plaintiff a counsel fee, decided two things, and two things only: first, that counsel fees could not be allowed because it was not a matrimonial action, and second, that the complaint stated no cause of action at all since it asked no more than that a new alimony figure be put by the court into the subsisting separation agreement. That the Johnson case did not, and was never intended to, go any further than that, was later stated in so many words by this court in Stoddard v. Stoddard (227 N. Y. 13, 20, 21). The Johnson and Stoddard opinions were both written by Judge (later Chief Judge) Hiscock.
Of course, Johnson v. Johnson (supra) could not have dealt with the validity of a common-law fraud suit such as this one, and there is no suggestion in the J ohnson opinion that the court was making any such (gratuitous) effort. Indeed, there is a statement in the Johnson opinion which, given its logical application to our situation, would uphold this complaint. On page 567 of 206 New York, Judge Hiscock, writing for the court, and after noting that plaintiff J ohnson could have sued in equity to set aside the separation agreement, had this further to say: “ But such an action would rest on the same general principles as a similar action affecting any contract. The plaintiff would be allowed to maintain it not because the agreement related to the marital relation but because she had been persuaded by fraud or duress to enter into a contract impairing her legal rights.” In other words, fraud which persuades a wife to give up her marital rights, makes available to her the same remedies as if the contracting parties were not husband and wife, and as if the rights impaired were not those appertaining to marriage.
Defendant argues that plaintiff here is really asking the court to do what Johnson v. Johnson (supra) says no court can do: take jurisdiction solely to increase the alimony fixed by a separation agreement. In a sense that may be true, since plaintiff, if she wins, will have more money, and she can use that money for her support. But a similar objection could be made, and a similar label applied, to any cause of action for fraudulently inducing any plaintiff to enter into a contract to give up any *114kind of property right. If one has a claim or chose in action against another and releases it for a price to which his consent is obtained by fraud, his successful suit for damages would, in one way of looking at it, be a fixation by the court or jury of a price, higher than the parties had agreed on, for the release. But suits for fraud have never, until now, been dismissed because the giving of damages to a contracting party means that he receives, ultimately, more than he bargained for. He sues, not so that the court may up the price he agreed to take, but to get what he lost through the fraud. All this is equally true of this plaintiff’s plight, and she should not be barred from the remedies which the law gives to all others similarly situated.
Again, defendant says that plaintiff cannot sue for fraud as to this contract, because in so doing, she is merely attacking the alimony terms thereof and leaving the rest of the document intact. But that is exactly what she is permitted to do by Goldsmith v. National Container Corp. (supra) and the cases and authorities cited in the Goldsmith opinion at page 443 of 287 New York.
We agree with the United States Court of Appeals for the Tenth Circuit, which, as to this very question, said: “it is difficult to see why such a contract would be any different than a property settlement contract between two partners, and why the parties in an action thereon could not assert the same rights or the same defenses against each other that partners could in disputes arising out of a partnership property settlement contract.” (Schoonover v. Schoonover, 172 F. 2d 526, 529.) Another recent case confirming the right to bring this sort of suit is United States Nat. Bank v. Bartges (120 Col. 317, certiorari denied 338 U. S. 955).
Defendant argues that the complaint contains no factual allegations to support a claim for damages. I think it does. It tells us that defendant falsely and fraudulently represented to plaintiff that his entire estate consisted of a half-interest, worth $50,000, in a certain corporation, whereas in truth, says the complaint, he had holdings in various corporations, which holdings were of the value of $500,000. Plaintiff alleges that she released her rights against her husband for $20,000 in reliance on his false statement that he was worth $50,000, *115whereas Ms real financial worth was ten times as great as he represented. The amount of her damage is stated as $100,000. I think that sufficiently avers damage. We need not now consider, on such an appeal as this, any questions as to the amount of damages recoverable, or as to the methods, or possible difficulties, of proof thereof (see, on this precise question, United States Nat. Bank v. Bartges, supra, 120 Col. at pp. 334-336).
The judgment should.be reversed, and the motion denied, with costs in all courts. The certified questions, being unnecessary, should not.be answered.
Loughban, Ch. J., Conway, Dye, Fuld and Fboessel, JJ., concur in opinion by Lewis, J.; Desmond, J., dissents in opinion.
Judgment affirmed, etc.