Ritzwoller v. Lurie

• Court: New York Court of Appeals Court of Appeals
• Writing for the Court: HISCOCK
• Citation: Ritzwoller v. Lurie , 225 N.Y. 464, 122 N.E. 634 (N.Y. 1919)
• Decision Date: 07 February 1919
• Parties: CARL D. RITZWOLLER, Appellant, v. GUSTAV LURIE et al., Respondents.

225 N.Y. 464

122 N.E. 634

RITZWOLLER

v.LURIE et al.

Court of Appeals of New York.

Feb. 7, 1919.

Appeal from Supreme Court, Appellate Division, First Department.

Action by Carl D. Ritzwoller against Gustav Lurie and Gus Lurie & Co., Incorporated. From a judgment of the Appellate Division (180 App. Div. 934,167 N. Y. Supp. 1123), reversing an interlocutory judgment of the Special Term, which overruled separate demurrers to the amended complaint, and sustaining said demurrers and dismissing the complaint, the plaintiff appeals. Affirmed in part and reversed in part.

C. A. Winter, of New York City, for appellant.

Louis Maxwell Cohen, of New York City, for respondents.

HISCOCK, C. J.

This action was brought by the plaintiff seeking rescission of a subscription made by him for 100 shares of the capital stock of the defendant corporation and to have repaid to him the sum of $10,000 paid on such subscription, plus interest and less dividends; also to have rescinded a contract of employment made by him with said corporation with an accounting for damages claimed to have been sustained by him under said contract. This relief is sought upon the ground that the plaintiff was induced to make said subscription and contract by the fraudulent representations of the individual defendant acting in behalf of said corporation.

Each defendant has separately demurred to the complaint on various grounds of which the one that said complaint does not state facts sufficient to constitute a cause of action alone requires any serious consideration.

Scattered through a long and somewhat diffuse complaint are allegations to the following effect: Prior to January, 1907, plaintiff with other individuals was in the employ of a partnership composed of the defendant Lurie and another person. Said defendant represented to plaintiff that a corporation was to be formed to take over said business with a capital stock of $200,000, which was to be paid in full in cash and property; that said other individuals, who with plaintiff were the employés and associates of said defendant, were to take stock in the corporation and pay for the same in full in cash. Thereupon and in reliance upon said representations plaintiff subscribed for 100 shares of said capital stock, paying to the defendant Lurie $10,000 by him to be turned over to the corporation when organized for said stock, and said subscription on the organization of said corporation shortly thereafter was consummated, said money being paid to it and plaintiff receiving the stock scrip; that at the time he represented to plaintiff that subscriptions for said capital stock were to be paid in cash and property the defendant knew that this was not to be done, and that subscriptions were not thus to be paid, and intentionally and falsely misrepresented said facts to plaintiff; that as matter of fact nearly $40,000 of subscriptions to the stock by various individuals who had been mentioned by defendant to plaintiff were never paid, in some cases notes given therefor still remaining unpaid, and in some cases any obligation to pay for the stock being totally repudiated.

It is also alleged as bearing on the subject of employment that plaintiff while in the employ of the copartnership which preceded the corporation worked as a salesman and received compensation on a commission basis determined by his sales; that the defendant Lurie represented to plaintiff that the profits of the copartnership had been large, and that those of the corporation would be still larger, and that it would be to his benefit, in connection with...