Miller v. Zeimer
| Decision Date | 30 November 1888 |
| Citation | 18 N.E. 716,111 N.Y. 441 |
| Parties | MILLER v. ZEIMER. |
| Court | New York Supreme Court |
OPINION TEXT STARTS HERE1. Fraud; extent of recovery by innocent purchaser of usurious security.
The innocent purchaser of a usurious security, where the purchase is induced by fraud, may enforce the security against an obligor privy to the transaction, to the extent of the money advanced, or he may, on discovery of the fraud, rescind and recover back the money paid; but his recovery cannot, in any form of action, exceed this.
2. Case stated.
So held, in an action against alleged conspirators who transferred a bond and mortgage, representing the same to be valid and free from usury, and upon which an innocent purchaser in an action thereon was allowed to recover the amount paid by him, and a recovery was here sought for the expenses incurred in that action and the loss of the difference between the amount paid by the innocent purchaser for the bond and mortgage and the amount represented to be due thereon.
Appeal from the judgment of the General Term of the Court of Common Pleas of New York city entered upon an appeal from judgment of the trial court in favor of the plaintiffs.
The plaintiffs, Frederick W. Miller and Elizabeth Miller, as executor and executrix of Christopher Miller, brought this action against Samuel and Henry Zeimer, Solomon Stransky and Edward K. Raubitscheck, alleging in their complaint in substance that the defendants entered into a criminal scheme and conspiracy for the purpose of borrowing and obtaining money on worthless securities, that by reason of the defendants' fraud and fraudulent representations, the plaintiffs' testator was induced to purchase an invalid bond and mortgage, by reason whereof he was compelled to institute an expensive action involving counsel fees and the loss of the difference between the amount paid by him for the bond and mortgage and the amount represented to be due thereon, and for which expenses and losses judgment was demanded.
Upon the trial of the action the court dismissed the complaint; but on appeal therefrom the judgment entered upon the dismissal was reversed.
The Court of Common Pleas on that appeal held, that a vendee induced to purchase property which is less valuable than it is fraudulently represented to be by the vendor, may retain it or sell it for what he can get and sue the vendor for the damage he has sustained by the fraud (Reported in 12 Daly, 126).
A second trial of the action was then had and the plaintiffs recovered a verdict, which was sustained on appeal, the general term re-affirming the views expressed on the former appeal. (This decision is reported in 6 N. Y. State Rep. 229.)
From this decision the defendants appealed to the court of appeals.
A. R. Dyett ( Townsend, Dyett & Einstein attorneys), for the appellants.
I. The plaintiffs' testator received from Samuel Zeimer the full amount paid for the bond and mortgage with interest and costs; and that was all he could recover as damages for the fraud alleged in the complaint (Webb v. Odell, 49 N. Y. 583;Littauer v. Goldman, 72 Id. 506, 510;Ross v. Terry, 63 Id. 613;Fake v. Smith, 7 Abb. Pr. N. S. 106;Whitney v. National Bank of Potsdam, 45 N. Y. 303;Payne v. Burnham, 62 Id. 69, 72).
II. When a party is induced by fraud to enter into a contract he has two remedies: (1) to rescind it and recover the consideration, but no more; (2) to affirm it and recover damages for the fraud (Bowen v. Mandeville, 95 N. Y. 239). The latter remedy the plaintiffs here ask for, and consequently they must affirm the contract, which is an illegal one. This they cannot do.
III. Fraud by which a party is induced to enter into an illegal contract does not constitute a cause of action for damages sustained thereby .
Emile Beneville, for the respondents.--The purchase of an usurious instrument on the false representation that it was valid, does not make such a purchase an illegal transaction as to innocent parties, so as to relieve the guilty parties from responsibility for their fraud. In actions for fraud and deceit substantial damages are recoverable (Hart v. TenEyck, 2 Johns. Ch. 62;Hubbell v. Meigs, 50 N. Y. 480; Stiles v. White 11 Metc. 380; Sibley v. Hulbert, 15 Gray, 509).
The transaction, although in form of a mortgage, was nevertheless in contemplation of law, a loan of money to the extent of the consideration advanced, the mortgage not having had any inception until its transfer to the plaintiffs' testator. The mortgage was void for usury by force of the statute, notwithstanding the purchaser was innocent and had no intent to enter into a usurious transaction, but purchased the mortgage, supposing that it was a bona fide and valid security ...
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Hammelburger v. Foursome Inn Corp.
...but upon the mortgagor's representation by his certificate or by his conduct that the mortgage is valid and existing (Miller v. Zeimer, 111 N.Y. 441, 444, 18 N.E. 716; Weyh v. Boylan, 85 N.Y. 394, 397; Payne v. Burnham, 62 N.Y. 69, 72; see Union Dime Sav. Inst. of City of N. Y. v. Wilmot, 9......
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Vought's Estate, In re
...as successors in interest to the original assignees possess no better rights than the original assignees possessed (Miller v. Zeimer, 111 N.Y. 441, 18 N.E. 716; Sabine v. Paine, 223 N.Y. 401, 119 N.E. 849). There is no question of estoppel present in this case based upon decedent's personal......
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...in pais can be urged to obviate the effect of an act which the statute declares void. Payne v. Burnham, 62 N. Y. 69;Miller v. Zeimer, 111 N. Y. 441, 18 N. E. 716. We are not, however, called upon to go so far, and decide no more than is presented by the facts of this case, and that is that ......
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