Cohen v. Cohen

• Court: New York Supreme Court — Appellate Division
• Writing for the Court: PER CURIAM; BREITEL; VALENTE
• Citation: Cohen v. Cohen, 151 N.Y.S.2d 949, 1 A.D.2d 586 (N.Y. App. Div. 1956)
• Decision Date: 22 May 1956
• Parties: Molly COHEN, Plaintiff-Appellant, v. William COHEN, Defendant-Respondent.

Page 949

151 N.Y.S.2d 949

1 A.D.2d 586

Molly COHEN, Plaintiff-Appellant, v. William COHEN, Defendant-Respondent.

Supreme Court, Appellate Division, First Department.

May 22, 1956.

Harry Balterman, New York City, of counsel (Harold S. Lazar and Harry Fromberg, New York City, with him on the brief; Fromberg & Fromberg and Harold S. Lazar, New York City, attorneys) for plaintiff-appellant.

Morris Gottlieb, New York City, for defendant-respondent.

Before PECK, P. J., and BREITEL, BOTEIN, FRANK and VALENTE, JJ.

PER CURIAM.

Plaintiff wife has brought this fraud action against her husband, alleging that in reliance upon his fraudulent misrepresentations she was induced to discontinue three pending lawsuits and assign to him her interests in a partnership and in certain corporations. The sole and only misrepresentation attributed to defendant is that he stated 'he would effect a reconciliation with plaintiff, return to live with her and their children permanently, and permanently resume their marital relationship'. The agreement that was allegedly executed by plaintiff in reliance upon this representation contained the following paragraph:

'11. The parties hereby covenant and agree that neither has made any warranties or representations to the other, including any representations or warranties as to the continuation of the marital status (the parties have reconciled their differences and are now living together), outside of those expressed in this agreement, and that this agreement contains the entire agreement and understanding of the parties.' (Emphasis supplied.)

It is significant that the only representation attributed to defendant in the complaint is the one above quoted and that the only specific disclaimer of any representation contained in the separation agreement is as broad as the alleged representation and completely refutes it. The settlement agreement is annexed to the complaint and must be read in conjunction with it. It was signed not only by the parties but by their attorneys, and reflects the latters' careful draftsmanship. There is no allegation in the complaint that plaintiff did not read or did not understand the agreement; in fact, she initialed the agreement in the margin opposite the very paragraph disclaiming the alleged representation. Nor is there any claim that any form of duress was exercised to procure her consent to the settlement arrangements.

Just as in Ernst Iron Works, Inc. v. Duralith Corp., 270 N.Y. 165, 169, 200 N.E. 683, 684, the plaintiff here 'points to the cases which hold that a person cannot exempt himself from liability for fraud by inserting in his contract a blanket or merger clause. Bridger v. Goldsmith, 143 N.Y. 424, 38 N.E. 458; Jackson v. State, 210 App.Div 115, 205 N.Y.S. 658; Pearson & Son, Ltd., v. Lord Mayor of Dublin, (1907) A.C. 351. See 5 Wigmore on Evidence [2d Ed.], § 2439.' But the question in this case is not whether the conventional merger clause in the settlement agreement precludes plaintiff from introducing testimony to show that false inducing representations were made by defendant. The question rather is whether plaintiff can possibly prove she relied on the misrepresentations, since such reliance is an essential ingredient of her cause of action. We given plaintiff the benefit of every fair intendment and inference that can be drawn from the complaint and annexed agreement; but it seems to us that the specific disclaimer in the agreement of the representation alleged in the complaint effectively destroys plaintiff's allegation that she executed the agreement in reliance upon defendant's representation. The order dismissing the complaint for insufficiency should be affirmed.

Order affirmed, with $20 costs and disbursements to the respondent.

BREITEL and VALENTE, JJ., dissent and vote to reverse and deny the motion; dissenting opinion by BREITEL, J. Order filed.

All concur except BREITEL and VALENTE, JJ., who dissent and vote to reverse and deny motion.

BREITEL, Justice (dissenting).

I dissent and vote to reverse and deny the motion to dismiss the complaint for insufficiency.

Special Term held and the majority of this court is now holding by implication, albeit very much qualified, that one who fraudulently obtains a written agreement may obtain immunity for his fraud by including in such agreement a clause denying that any representation was made with respect to the matter alleged to constitute the fraud. This is decided on the pleading alone, the allegations of which we are bound to take as true.

That has never been the law in this state, and except for a minority rule that, onetime, but no longer, had its principal foundation in Massachusetts, it has not been the law in most of the other states, nor in England. The minority rule has been expressly repudiated in our courts and criticized by leading jurists who have addressed themselves to this precise subject, Bridger v. Goldsmith, 143 N.Y. 424, 38 N.E. 458; Ernst Iron Works, Inc., v. Duralith Corp., 270 N.Y. 165, 200 N.E. 683; Angerosa v. White Company, 248 App.Div. 425, 290 N.Y.S. 204, affirmed 275 N.Y 524, 11 N.E.2d 325; 3 Williston on Contracts [Rev. ed.], §§ 811-811A; 3 Corbin on Contracts, §§ 578, 580; 9 Wigmore on Evidence [3rd ed.], § 2439; Restatement, Contracts, § 573; Richardson on Evidence [8th ed.], § 586). ¹

In the Bridger case it was said:

'I assume that there is no authority that we are required to follow in support of the proposition that a party who has perpetrated a fraud upon his neighbor may nevertheless contract with him, in the very instrument by means of which it was perpetrated, for immunity against its consequences, close his mouth from complaining of it and bind him never to seek redress. Public policy and morality are both ignored if such an agreement can be given effect in a court of justice. The maxim that fraud vitiates every transaction would no longer be the rule, but the exception. It could be applied then only in such cases as the guilty party neglected to protect himself from his fraud by means of such a stipulation. Such a principle would in a short time break down every barrier which the law has erected against fraudulent dealing.' 143 N.Y. at page 428, 38 N.E. at page 459.

In the Angerosa case, a leading case in this field, the immunity rule was discussed and rejected in these words:

'The rule laid down in the above-cited authorities, however, has been repudiated in New York state. In this jurisdiction protection is given to one who is injured by falsehood or deception; fraud vitiates everything which it touches, and destroys the very thing which it was devised to support; the law does not temporize with trickery or duplicity. A contract, the making of which was induced by deceitful methods or crafty device, is nothing more than a scrap of paper, and it makes no difference whether the fraud goes to the factum or whether it is preliminary to the execution of the agreement itself.' 248 App.Div. at page 431, 290 N.Y.S. at page 213, supra.

It is urged that this is a special case which merits exception.

The complaint alleges that the parties, husband and wife, had been separated, and had been engaged in a number of litigations which were still pending when the parties entered into the written settlement agreement in suit. Plaintiff wife alleges that, as an inducement to making this contract, the husband represented to her that they would be reconciled, and that he intended to remain permanently reconciled and live together with her. She alleges further, in effect, that, when he made these representations, the husband was lying and that she relied on these representations and in reliance thereon, she signed the agreement in question.

It is, of course, elementary in this state that misrepresentation as to one's state of mind, even when promissory in form, may supply the requisite element in fraud, Adams v. Gillig, 199 N.Y. 314, 92 N.E. 670, 32 L.R.A.,N.S., 127.

The special circumstance in this case is that the agreement recites, and it is so alleged in the complaint by virtue of the annexation and incorporation of the written agreement, that the husband was making no representations other than those contained in the agreement and particularly with...