Van Slochem v. Villard

• Decision Date: 18 March 1913
• Citation: 207 N.Y. 587,101 N.E. 467
• Parties: VAN SLOCHEM v. VILLARD et al.
• Court: New York Court of Appeals Court of Appeals

207 N.Y. 587

101 N.E. 467

VAN SLOCHEM

v.VILLARD et al.

Court of Appeals of New York.

March 18, 1913.

Appeal from Supreme Court, Appellate Division, First Department.

Action by Herman Van Slochem against Harold G. Villard and others. From an order (154 App. Div. 161,138 N. Y. Supp. 852) affirming an interlocutory judgment which overruled a demurrer to the complaint, defendants Edward Ashford and others, by permission, appeal. Affirmed.

See, also, 138 N. Y. Supp. 1147; 101 N. E. 1124.Abram I. Elkus and M. H. Cardozo, Jr., both of New York City, for appellants.

Henry L. Scheuerman, of New York City, for respondent.

CULLEN, C. J.

[1][2] The action was brought to recover damages for fraudulent representation of the defendant by which the plaintiff was induced to purchase stock of a corporation called the British Columbia Railway & Development Company, of which the defendants were the promoters. The representations charged in the complaint to have been made are that the stock was fully paid, nonassessable, and of great value, each of which is charged to have been false and known so to be by the defendants, and to have been made with the intent to cheat and defraud the public or such persons as might purchase the stock. It is contended that the representations, even if fraudulently made, will not support an action for deceit. The claim is well founded as to the representation of value, for it has been decided by this court in Ellis v. Andrews, 56 N. Y. 83, 15 Am. Rep. 379, that a false statement of the value of property made by the vendor for the purpose of obtaining a higher price will not sustain an action for fraud.

[3][4] The representation that the stock was nonassessable may present a mixed question of law and fact which can only be determined on the trial. If it should appear that it involved merely the expression of opinion on the liability of the stock to assessment under the law of Delaware, then its falsity would not support a cause of action; but if it should appear that the stock was assessable, and assessable because the defendants had not complied with a plain mandate of the statute requisite to give the stock immunity from assessment, then we think it would support the action. The allegations of the complaint in this respect we think are sufficient. It alleges the falsity of the representation and that the defendant knew it to be false. If the question were of liability under the laws of this state it would be one of law, and could be decided as such despite of the allegations of the complaint. But foreign law is a matter of fact, and we cannot say that it is impossible that under the laws of Delaware the stock can be assessed.

[5][6][7][8] As to the remaining allegation, that the stock was fully paid, it is the settled law of this state that the cost of a thing is a material allegation well adapted to affect the action or judgment of the purchaser, for a false statement of which an action will lie. Sandford v. Handy, 23 Wend. 260;Van Epps v. Harrison, 5 Hill, 63, 40 Am. Dec. 314;Fairchild v. McMahon, 139 N. Y. 290, 34 N. E. 779,36 Am....