Stauss v. Title Guarantee & Trust Co.
| Decision Date | 08 October 1940 |
| Citation | 284 N.Y. 41,29 N.E.2d 462 |
| Court | New York Court of Appeals Court of Appeals |
| Parties | STAUSS v. TITLE GUARANTEE & TRUST CO. |
OPINION TEXT STARTS HERE
Appeal from Supreme Court, Appellate Division, First Department.
Action by Albertine Stauss, as trustee for Eugene J. Stauss, for Gertrude A. Stauss, and for Marie A. Stauss, under a deed of trust dated April 1. 1926, against the Title Guarantee & Trust Company for money had and received. From a judgment entered upon an order of the Appellate Division, First Department, 258 App.Div. 874, 16 N.Y.S.2d 1018, unanimously affirming a judgment of the Supreme Court, New York county, entered February 21, 1939, awarding to the plaintiff the sum of $8,145.95, defendant appeals by permission of the Court of Appeals. A motion for reargument or for leave to appeal to the Court of Appeals was denied by the Appellate Division, 258 App.Div. 944, 17 N.Y.S.2d 863, which granted a motion for a stay pending the granting or final refusal by the Court of Appeals of leave to appeal upon appellant's filing the undertaking required by section 593 of the Civil Practice Act.
Judgments reversed and complaint dismissed.
RIPPEY and CONWAY, JJ., dissenting. Flynn L. Andrew, William J. Junkerman, and Eugene Z. DuBose, all of New York City, for appellant.
Martin D. Jacobs and John J. Boyle, both of New York City, for respondent.
The plaintiff has thus far prevailed in this action at law for money had and received which is based upon her executed rescission of the purchase of three mortgage participating certificates alleged to have been induced by fraudulent representations by an agent of the defendant.
The complaint alleges in substance that in April, 1926, the plaintiff advised a representative of the defendant that she desired to invest the sum of $6,000 ‘* * * in a safe investment in such a way so that upon her death her children would be entitled to the investments;’ that she was induced by the defendant's agent to purchase mortgage participating certificates which were represented as a safe and proper investment for trust funds, secured by a mortgage on buildings and guaranteed by the defendant. Such representations, it is alleged, were made by the defendant with intent to deceive and defraud the plaintiff and were false in that the mortgage against which the participating certificates were issued was an unauthorized and improper investment for trust funds; that the mortgage was not upon a building but upon unimproved land and that the payment of the certificates was not guaranteed by the defendant but by a subsidiary of the defendant whose financial responsibility was uncertain. It is also alleged that the last payment received by the plaintiff upon the certificates was a partial payment of interest due August 15, 1933, and that after discovering the true facts relating to the transaction she offered to return the certificates thus purchased, tendered all sums received by her from the investment and demanded return of the purchase price.
The answer denies the material allegations of the complaint except defendant admits that the plaintiff purchased the three mortgage participating certificates in question and alleges as an affirmative defense that long prior to September 29, 1935, the plaintiff had knowledge of the facts but made no attempt to rescind the purchase prior to that date and, therefore, must be deemed to have ratified the same.
At the close of the plaintiff's evidence her counsel stipulated that ‘* * * the only question that should be submitted to the jury will be whether there was a representation that there were buildings on the premises.’ Accordingly we pass at once to the evidence submitted upon that narrow question. The plaintiff testified that on the first occasion, when she went to one of the defendant's branch offices, she made the following inquiry of a man whose name she did not know: She made no purchase at that time, her statement being, * * *’ On the following day, according to her testimony, the plaintiff returned to the defendant's office where she delivered $6,000 to the same man to whom she had talked on the previous day. After giving her a receipt for that sum there were prepared and later delivered to her by the defendant, three mortgage participating certificates of two thousand dollars each due February 15, 1929, with interest at five and onehalf per cent per annum payable February 15th and August 15th. The three certificates were issued to the plaintiff as trustee for her three children respectively. Each certificate, according to the undisputed proof, entitled her to an undivided share, equal to the amount of two thousand dollars with interest, in a certain bond of the obligor, Avenue D Building Co., Inc., and secured by a real estate mortgage of $35,000 covering one hundred and six lots having a fair market value on April 1, 1926, of $75,300. In connection with the three certificates there were also prepared at plaintiff's request and then executed by her under date of April 1, 1926, three written declarations of trust for the benefit of her three children, the terms of which are immaterial here.
Thereafter for a period of more than seven years the plaintiff received in full the interest due upon each certificate. Meantime, in 1929 and again in 1932, on the dates when they became due and payable, she applied for an extension and renewal of each certificate. There came a time, however, on August 15, 1933, when there was paid on each certificate only seventy-five per cent of the interest then due. This fact prompted the plaintiff to inquire at the defendant's office and elsewhere as to the reason why the full amount of interest was not paid. In the course of such inquiries and upon an occasion in February, 1934, she claims to have received at the defendant's office her first information that the real property covered by the mortgage to which her participating certificates attached was unimproved land.
(1) There may be doubt whether the evidence outlined above was sufficient to establish fraud on the part of the defendant. However, we find it unnecessary to consider that...
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