Newell v. Chapman

PUTNAM, J.

The action was brought to recover damages for-alleged false statements of defendant as to the value of a bond and. mortgage, relied on by plaintiff, and by which the latter was induced to take such security in part payment for a lot of real estate. In such an action the measure of damages is the difference between, the value of the bond and mortgage as they were and the value if the representations made had turned out true. Vail v. Reynolds, 118 N. Y. 297, 23 N. E. 301. If the bond was of no value, and the mortgage a good security for the amount due, plaintiff sustained no damage. So, if the real estate covered by the mortgage was of insufficient value, and the bond collectible. The transfer to plaintiff was of the bond and mortgage to secure a mortgage debt. If the payment of that debt was secured to plaintiff by either the bond or mortgage, he sustained no damage. I am not satisfied, after a careful examination of the case, that any sufficient evidence-was given on the trial to show that the bond could not be collected of its makers. No action had been commenced thereon, and it was-not proved that Jane and Jerome Sullivan were irresponsible. The bond and mortgage were transferred together as one security. The bond represented the debt, and, the mortgage being executed to-secure the payment of the bond, if the bond was a valid and collectible security, defendant could not be said to have made any false-representations. Nor can plaintiff be deemed to have sustained any damage. I am inclined to think, therefore, that plaintiff should have shown that the makers of the bond were irresponsible.

Again, I think, the court erred in refusing to charge as asked by the defendant in his fifteenth request, viz.:

“That if the plaintiff delivered his deed of the land relying upon the verbal! guaranty of defendant,—-that he would guaranty the payment or collection of" the mortgage,—there was a present consideration and parting with property on the strength of the promise, and the guaranty or promise is valid and: binding, and can be enforced against defendant.”

The court refused to so hold or charge, defendant excepting. This guaranty of the defendant, under the circumstances, was not within the statute of frauds, and was binding on him. Brown v. Curtiss, 2 N. Y. 225; Cardell v. McNiel, 21 N. Y. 337; Milks v. Rich, 80 N. Y. 269; Allen v. Eighmie, 14 Hun, 559. To establish a cause of action against defendant, plaintiff was not only bound to show the fraudulent representations, but also that the representations-were relied upon by the plaintiff, and induced him to take the bond and mortgage. Arthur v. Griswold, 55 N. Y. 400-405. In considering this question as to whether plaintiff relied on the alleged false representations of defendant or not, and whether or not he was induced by those representations to take the bond and mortgage, the jury should have been instructed that the defendant was liable on his verbal guaranty. The plaintiff testified that he understood the defendant was a man of responsibility. If the jury had been instructed, as requested by defendant, that his agreement to guaranty the mortgage was valid, and made him responsible for its payment or collection, they could well have reached the conclusion that the plaintiff, having a- valid guaranty, by a responsible man, securing the payment of the bond and mortgage, relied rather on that guaranty than upon the other representations of defendant as to the value of the security. I think, also, that the defendant was entitled to the instruction asked for on the question of his alleged fraud. The fact that defendant, a responsible man, made himself liable for the payment of the bond and mortgage on its transfer to defendant, tends to show the absence of a fraudulent intent. For these reasons, I think the judgment should be reversed, and a new trial granted; costs to abide the event.

HERRICK, J., concurs.