Urtz v. New York Cent. & H.R.R. Co.

Citation202 N.Y. 170,95 N.E. 711
CourtNew York Court of Appeals Court of Appeals
Decision Date16 May 1911
PartiesURTZ v. NEW YORK CENT. & H. R. R. CO.

OPINION TEXT STARTS HERE

Appeal from Supreme Court, Appellate Division, Fourth Department.

Action by Rose M. Urtz, as administratrix of Richard M. Urtz, deceased, against the New York Central & Hudson River Railroad Company. From a judgment of the Appellate Division (140 App. Div . 915,124 N. Y. S. 1132), affirming a judgment for plaintiff, defendant appeals. Reversed, and new trial ordered.

The action is to recover the damages sustained by the plaintiff through the false representations made to her by the defendant. April 9, 1906, the plaintiff's husband and intestate was killed at a highway crossing of defendant's railroad through a collision between an engine of the defendant and a wagon in which the intestate was riding. The team of the intestate was also killed and his wagon demolished. One McCormick was a division claim agent of defendant, and it was his duty to investigate the accident and report the facts to its chief claim agent with his opinion as to its liability. He investigated the circumstances surrounding the accident, and then entered upon a series of misrepresentations to both the plaintiff and defendant . The result of those to the defendant was that on April 17, 1906, he was authorized by it to settle with the plaintiff on the best terms he could within the sum of $2,500, and on April 27th the defendant forwarded to him its check for $2,250, payable to the order of and to be delivered to the plaintiff upon the execution by her of a voucher and a general release of her claim. On April 30th McCormick told the plaintiff that he had looked up all the facts and talked with everybody who knew anything about the case. He had found out that the intestate was drunk, and when a man told him that the train was coming he said he could take care of himself, and he did not care whether the train was coming or not. The train was going eight miles an hour, and the bell was ringing and the whistle blowing. One could see up and down the track for half a mile at the point of the accident. He would pay well for the team and wagon, but not for killing the intestate, as the law was now that they would not have to pay for anything, only property. The team and wagon were worth about $200, and the defendant wanted to be liberal and made it $500, and that was all it would pay. The plaintiff on that occasion accepted $500 in full settlement of her claim and signed the voucher and release. She subsequently brought this action, alleging by her complaint that all the representations made by McCormick were false and fraudulent and induced her to make the settlement, and demanding judgment for the damages she had thereby sustained. At the trial the plaintiff introduced evidence in proof of the false and fraudulent nature of the statements of McCormick and her reliance thereon, and the defendant introduced opposing evidence. The trial judge in his charge instructed the jury in substance that if they found that the statements made by McCormick were misrepresentations of facts, and were fraudulently made and were relied upon by the plaintiff, then she was entitled to recover as damages ‘the amount the plaintiff could reasonably obtain on a settlement where nothing but the true facts were given or relied upon; deduct from that the amount paid, and the residue would be the recovery. In other words, how much could the plaintiff reasonably have demanded and received from the defendant by way of settlement if these false representations had not been made?’ The defendant's counsel requested the judge to charge that the plaintiff, in order to maintain the action, must show, in the first instance, that she had a valid and existing claim against the defendant originally, and the judge responded, ‘I refuse to charge in that language. She must show that there was a claim which was disputed and contested; that she was alleging a claim based upon facts sufficient that she could reasonably apprehend that she had a just claim and that the defendant could also feel that she had a just claim.’ Proper exceptions thereto were taken. The verdict of the jury in favor of plaintiff was unanimously affirmed.Henry Purcell, for appellant.

Fred B. Pitcher, for respondent.

COLLIN, J. (after stating the facts as above).

[1] In an action for the recovery of damages caused by the fraud of the defendant, the plaintiff must allege and prove that he has been injured by the fraud which he charges. The essential constituents of the action are firmly fixed and are tersely stated in Arthur v. Griswold, 55 N. Y. 400, as, ‘representation, falsity, scienter, deception, and injury.’ Pecuniary loss to the deceived party is absolutely essential to the maintenance of the action. Fraud and deceit alone do not warrant the recovery of damages. Deceit and injury must concur. Taylor v. Guest, 58 N. Y . 262;Ettlinger v. Weil, 184 N. Y. 179, 77 N. E. 31.

In the action at bar the plaintiff was not defrauded by the transactions between herself and McCormick, unless, as a result thereof, she lost something of value. In case that result was a gain to her or purely negative, representing neither gain nor loss, clearly there is no room for the application thereto of any rule of damages; the enforcement of any measure of damages, when loss and damage are wholly lacking, is impossible and inconceivable. Dung v. Parker, 52 N. Y. 494;Hicks v. Deemer, 187 Ill. 164, 58 N. E. 252. In Hicks v. Deemer, supra, the action was to recover the damages sustained by the plaintiff because of the false representations on the part of the defendants, in that they induced the plaintiff to convey his interest in certain land under the erroneous belief created by defendants' deceit that he owned only a life estate therein, whereas, as he alleged, he was the owner in fee simple. At the trial the plaintiff gave evidence supporting his absolute ownership and the defendants sought to prove that his sole estate was an interest for his life. The court held that plaintiff's right of action depended upon his ownership of the fee, and that the trial court erred in refusing to charge the jury that, before they could find injury and damage to the plaintiff, they must find that he was the owner in fee simple of the land.

The jury in the case here found that the deceit of the defendant moved the plaintiff to release unto the defendant, in consideration of the sum of $500, whatever right or cause of action she had against it through the killing of her husband. Unless the right of action had a value and a value greater than $500, the plaintiff was not defrauded. If what she parted with had a value less than or only equal to the value of that which she received, she was not injured; if greater, she was injured and in a sum equal to its excess of value. The basic principle underlying all rules for the measurement of damages in actions for fraud and deceit is indemnity for the actual pecuniary loss sustained as the direct result of the wrong. Krumm v. Beach, 96 N. Y. 398. Neither advantage nor disadvantage resulting to the plaintiff from the settlement enters in any way into our consideration. The question is what was the value of that with which plaintiff parted and what was the value of that which she received? If the plaintiff's claim against the defendant had been based upon an alleged promissory note made by defendant, and McCormick had effected a compromise thereof by false and fraudulent statements as to defendant's solvency and the existence of a counterclaim, she, in an action to recover her damages caused by the fraud must have given evidence in proof of the validity of the note to afford the jury a starting point for the measurement of her damages, and, if they found that the note was forged and not made by defendant, they would find also that she had sustained no damage and could not maintain the action. Unless she had the valid note of the defendant, she had and released in the compromise nothing of value. Resuming the discussion of the present case, the jury were bound, having found the fraud, to determine whether the plaintiff was injured through the fraud, and, if injured, the sum of her damages. In case the right of action had no value, she had gained by the transaction and was not injured. It had no value whatever if the true state of facts disclosed that it was invalid and nonexisting claim, or, in other words, that the defendant was not negligent, or, if the defendant was negligent, that the intestate was not free from contributory negligence. If, however, the true state of facts would have established that the defendant was negligent and the intestate free from contributory negligence, then the plaintiff had a valuable right of action, the acquirement of which through the fraud may have injured her. Until the jury found the real...

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