Carr v. Nat'l Bank & Loan Co. of Watertown
| Decision Date | 04 June 1901 |
| Citation | 60 N.E. 649,167 N.Y. 375 |
| Parties | CARR v. NATIONAL BANK & LOAN CO. OF WATERTOWN. |
| Court | New York Court of Appeals Court of Appeals |
OPINION TEXT STARTS HERE
Appeal from supreme court, appellate division, Fourth department.
Action by Lillian Traver Carr against the National Bank & Loan Company of Watertown. From a judgment of the appellate division (59 N. Y. Supp. 618) affirming a judgment for plaintiff (52 N. Y. Supp. 61), defendant appeals. Affirmed.
This action was brought by the plaintiff for the rescission of a transaction, in which certain bonds belonging to the defendant were sold to and purchased by her. She recovered a judgment entitling her to disaffirm the transaction, and declaring the bonds to be the property of the defendant, subject to the payment of the amount of the plaintiff's recovery for their face value and unpaid interest, which judgment has been unanimously affirmed by the appellate division in the Fourth department. The findings of the trial court established the following facts: The plaintiff, upon the death of her husband, came into the possession of moneys, which were payable upon policies of insurance issued upon his life. George H. Sherman was the president and the manager of the defendant, and he induced the plaintiff to allow him to invest her moneys upon his representation that he could do so in sound and safe securities yielding 6 per cent. annually. The plaintiff assented, and, as the moneys were paid to her, turned them over to him, and he deposited them with the defendant bank. From time to time he withdrew them, and paid them to the defendant in purchase of certain bonds theretofore acquired by it, which were thereupon transferred to the plaintiff, and kept in the bank for her. In this transaction Sherman acted as the plaintiff's personal friend, and she relied wholly upon his representations and judgment, taking no active part in the purchase of the bonds, and having no knowledge in relation to them or as to their ownership. He stated to her, in response to inquiries, that they were ‘first mortgage bonds, first-class securities, as good as gold, and that he had gotten them expressly for her.’ These purchases were made by Sherman during the years 1892 and 1893. The bonds were, in fact, second mortgage bonds, and were not first-class securities, nor had they been expressly procured for the plaintiff's investment. In 1896 she discovered the falsity of Sherman's representations, and that he had been acting for the defendant in selling these bonds at a profit of 5 per cent. to it. Defaults occurred in the payment of the interest coupons upon the bonds, but the coupons maturing were taken up and cashed by the defendant, and plaintiff was informed that the default was due to temporary causes, and further representations of a reassuring character were made, whose falsity was also discovered. Upon the plaintiff's discovering the falsity of Sherman's representations and the bank's interest in the matter, she tendered all the bonds to the latter, and demanded their face value, which she had paid for them, with interest, etc.
John Lansing, for appellant.
Elon R. Brown, for respondent.
GRAY, J. (after stating the facts).
The unanimous affirmance by the appellate division of the judgment which was awarded to the plaintiff by the trial court conclusively establishes all the foregoing facts, and the legal question is whether they warranted the conclusionthat the plaintiff was entitled to disaffirm the sales of the bonds to her. The appellant argues that the facts did not establish any actual fraud on the part of the defendant. But that was not essential to the granting of the relief which plaintiff demanded. There was shown to have been such a condition of things in the situation of the parties, and in the ignorance in which the plaintiff was kept of material facts by ways of suppression or of misrepresentation, as, in equity, to warrant her in wholly repudiating the transaction. It is quite immaterial that there may have been no intention to actually defraud. Hammond v. Pennock, 61 N. Y. 145. The plaintiff supposed that she had enlisted the...
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