Smith v. Ryan

• Citation: 191 N.Y. 452,84 N.E. 402
• Parties: SMITH et al. v. RYAN et al.
• Decision Date: 31 March 1908
• Court: New York Court of Appeals

191 N.Y. 452

84 N.E. 402

SMITH et al.

v.RYAN et al.

Court of Appeals of New York.

March 31, 1908.

Appeal from Supreme Court, Appellate Division, First Department.

Action by Mary Smith and others against Michael Ryan and others. From a judgment of the Appellate Division (116 App. Div. 397,101 N. Y. Supp. 1011) affirming a judgment of dismissal, plaintiffs appeal. Reversed, and new trial granted.

Louis H. Hall and Henry B. Twombly, for appellants.

Edward W. S. Johnston, Charles E. Le Barbier, and James A. Boylan, for respondents.

CULLEN, C. J.

The action was ejectment to recover premises in the city of New York. The plaintiffs claimed as heirs at law of one Michael L. Flynn, concededly at one time seised and possessed of the premises, who died January 14, 1889. Defendants claimed title through a deed executed by said Flynn, bearing date January 25, 1887, to John Dollard, and another made by said Dollard on January 27th of the same year to Mary M. Flynn, the wife of said Michael L. Flynn. They also claimed title through a will of said Michael L. Flynn made on March 13, 1885. The complaint alleged that the plaintiffs were entitled to the immediate possession of the premises, and that the defendants wrongfully withheld the possession thereof. The answers of the several defendants set forth the deeds and will above recited. On the trial the plaintiffs proved the possession and ownership of Michael L. Flynn, his death, and that they were his heirs at law. The defendants put in evidence the deeds and will. In rebuttal the plaintiffs sought to prove that at the time of the execution of those instruments Michael L. Flynn was of unsound mind and incompetent. This evidence the court excluded on the ground that, as the said Flynn had not been judicially declared incompetent, the deed executed by him could be avoided only in equity, and thereupon directed a verdict for the defendants. It was conceded that the validity of the will might be assailed for lack of competency on the part of the testator, but an attack on the will would have been profitless as long as the deed remained unimpeached. The judgment entered on that verdict was affirmed by the Appellate Division by a divided court.

The law is settled in this state that the deeds and contracts of a person of unsound mind, who has not been judicially declared incompetent, are voidable, not absolutely void (Blinn v. Schwarz, 177 N. Y. 252, 69 N. E. 542,101 Am. St. Rep. 806), and the same doctrine generally prevails throughout this country and in England. This, however, by no means proves the proposition that such deeds or contracts can be avoided only in equity. As to personal property the law is clear that, where a party has the right to rescind or avoid a contract, he may do so either at law or in equity. The most familiar instances of this rule are contracts obtained by fraud. Such contracts are not void, but merely voidable. A vendor, defrauded into selling his goods, may repudiate the contract, and sue in replevin for the goods sold. If on the sale he has received anything from the vendee, he must tender a return of what he has received before bringing suit; while in equity it is sufficient that in his bill of complaint he offer a restoration. This is substantially the only difference betwen the two procedures. Gould v. Cayuga Co. Nat. Bank, 86 N. Y. 75; s. c., 99 N. Y. 333, 2 N. E. 16. There are cases of constructive fraud and those arising from false representations of a promissory character, in which relief can be had only in equity. Where, however, the fraud is of such a nature as would sustin a common-law action of deceit, it may safely be said that the contract may be avoided either at law or in equity, at the election of the defrauded party, provided only that at law the offer to rescind must precede the institution of the action.

Some text-writers, while conceding that this doctrine is true of personalty, contend that a different rule obtains in the case of real estate. Mr. Bigelow, in his work on Frauds (vol. 1, p. 76), writes: ‘If, however, the property sought is realty, the case will be different, according to the general view of the common law. The guilty party acquires indeed only a voidable title, as in the case of personalty; but the title of real estate can be conveyed only by deed, and it follows that it can be divested only by deed. Tender and demand would not then restore the legal title to the defrauded vendor. He would have no right to enter. He could not then expel the purchaser, and he could not maintain an action of ejectment, for that requires a legal title.’ The authorities cited by the learned author in support of his position (Pearsoll v. Chapin, 44 Pa. 9;Mitchell v. Moore, 24 Iowa, 394;Blaney v. Hanks, 14 Iowa, 400;Nicholson v. Halsey, 1 Johns. Ch. 417) hold merely that, where a deed has been duly executed and delivered, a subsequent surrender or destruction of it will not divest the estate conveyed, but that a reconveyance should be tendered. In Ferret v. Hill, 15 C. B. 207, the only proposition decided was that representation as to the intended use of premises leased from the defendant being merely promissory and collateral could not defeat the tenant's right to possession in an action at law. The author concedes that the law in Massachusetts is the reverse of that stated by him. Bassett v. Brown, 100 Mass. 355. In this state it has been held that a judgment creditor may, without resort to equity, sell on execution lands conveyed by his debtor in fraud of creditors, and that the purchaser at the sale may recover the lands in ejectment (Chautauque Co. Bank v. Risley, 19 N. Y. 369, 75 Am. Dec. 347); and it has never been the practice with us, when resort is had to equity, either in a case of a deed fraudulent as to creditors or in one where the deed has been obtained by fraud on the grantor, to do more than to declare the deed fraudulent and void, not to require a reconveyance by the grantee.

Accepting, however, the distinction made by the learned text-writer between the principle applicable in realty and that applicable to personalty, there nevertheless are unquestionably certain kinds of fraud for which a deed can be avoided at law. It is said in Story's Equity (section 60): ‘Thus, for example, although fraud, accident, and trust are proper objects of courts of equity, it is by no means true that they are exclusively cognizable therein. On the contrary, fraud is in many cases cognizable in a court of law. Thus, for example, reading a deed falsely to an illiterate person, whether it be so read by the grantee or by a stranger, avoids it as to the other party at law’-citing Thoroughgood's Case, 2 Coke, 9. The same is true as to a deed executed by a blind man. Shulter's Case, 12 Coke, 319. There are two kinds of fraud which differ essentially in their character. In the one the grantor is induced to convey his property by fraudulent representations as to the value, nature, or character of the consideration he receives for the conveyance. This is sometimes called fraud in the consideration. In the other case the grantor is deceived into the execution of an instrument of the contents of which he is ignorant. This is sometimes called fraud in the execution of the deed. The distinctionbetween the two cases lies just here. It is elementary law that the assent of the parties is necessary to constitute a binding contract. In the first case the assent of the party, though obtained by fraud, is nevertheless obtained, not only to the execution of the instrument, but to the contract which it evidences. In the second case there is procured only the signature to, and execution of, the written instrument, but not assent to the contract therein stated. In cases of this latter class the deed can be avoided at law. Wilcox v. American Telephone & Telegraph Co., 176 N. Y. 115, 68 N. E. 153,98 Am. St. Rep. 650. It seems to me plain that a deed by an incompetent person falls within the second class. The ground on which such deeds are avoided in case of fraud is that the party has been misled by deception, and has never assented to the contract. The ground on which the deed of an incompetent is avoided is that by infirmity of intellect he is incapable of giving assent. The element that avoids the deed is the same in the two cases-lack of assent-and it is not material whether it exists through deceit or through imbecility. The earlier authorities in this state so considered it. In Jackson v. Hills, 8 Cow. 290, where a defense of fraud was ruled out, it was said by the Supreme Court: ‘The defense was that the lease was obtained by fraud, not that the defedant was incompetent, by reason of age, infirmity, or mental imbecility, to make a valid contract, or that she was ignorant when she executed the lease of its nature and effect, but that the lessor was guilty of a misrepresentation as to a part of the consideration or inducement as to the making of the lease.’ This case is cited with approval in Osterhout v. Shoemaker, 3 Hill, 513, where again the distinction is pointed out between fraud in the consideration of a...