Dorwin v. Westbrook ( 1895 )

MERWIN, J.

After the decision of this case on a former appeal (71 Hun, 405, 24 N. Y. Supp. 955), the complaint was amended by adding allegations that the final estimates of the chief engineer Roberts were inaccurate and false to'his knowledge, and so made for the purpose of cheating and defrauding the plaintiffs, and that the defendant refused to appear with plaintiffs before the engineer for the purpose of obtaining correction of the same. The main issues litigated at the trial now under review were whether the action of the engineer was in bad faith and fraudulent, and whether the release of 8th April, 1892, signed by the plaintiffs was operative. Both of these issues were found in favor of the plaintiffs. The defendant claims that, as to the release, the verdict is against the evidence, and he also claims that the court erred in admitting in evideuce declarations of the engineer as to the character of the excavation in controversy, and also his acts in regard to classification of other excavations. The declarations of the engineer tending to show that he in fact knew that his final estimate was wrong would seem to be competent on the issue as to his fraudulent intent.

His acts as to other excavations with which the defendant was not connected present a different question. The plaintiff, called as a witness one Harvey, an engineer, who testified that in 1891 he was engaged on the railroad, though not at the particular place in question, and had been on the road, and examined the cuts and borrow pit in question; that he knew.what classification the engineer Roberts placed upon similar material to that taken out of this piece on other parts of that line; and the witness was then allowed to state, over the defendant’s objection and exception, that Roberts classified similar cuts as solid rock. This is claimed to be competent on the subject of the intent of the engineer in the classification of the plaintiffs’ work at a less rate for solid rock. It, however, called for the investigation of a subject outside of defendant’s contract, and which defendant would not be supposed to be prepared to meet. It did not appear that the contracts under which such classification was made were similar to the contract here. In some cases other contemporaneous acts of fraud are admissible on the question of intent. The rule is one that needs to be carefully applied, especially when the rights of third persons are involved. We think it should not be applied here, and that the evidence objected to was improperly admitted. Nor can we properly say that it was harmless.

The defendant also claims that the court erred in declining to charge that “the plaintiffs cannot recover by reason of any fraud or dishonesty of the chief engineer in the final estimate, without connecting the defendant with that fraud.” In Sweet v. Morrison, 116 N. Y. 19, 22 N. E. 276, which was a case quite similar to this as to the situation of the engineer, it was said, at page 34, 116 N. Y., and page 276, 22 N. E., that “in the absence of proof of corruption, bad faith, or misconduct on his part, or palpable mistake appearing on the face of the estimate, neither party can be allowed to prove that he [the engineer] decided wrong as to the law or facts.” The inference would be that, if bad faith and fraud on his part were shown, the estimate would not be conclusive. An award may be attacked for fraud on the part of the arbitrator. Masury v. Whiton, 111 N. Y. 679, 18 N. E. 638; Hoffman v. De Graaf, 109 N. Y. 638, 16 N. E. 357; Perkins v. Giles, 50 N. Y. 232; Morse, Arb. 539. If an architect’s certificate is refused in bad faith or unreasonably, a recovery may be had on proof of performance. Bowery Nat. Bank v. Mayor, etc., 63 N. Y. 336; Doll v. Noble, 116 N. Y. 233, 22 N. E. 406. We think that the court did not err in declining to charge as requested. If,, for any reason, in order to protect the rights of the defendant with the railroad company, the latter should be made a party to the litigation over the estimate of the engineer, the defendant should have taken the proper steps to have brought the company in. No defense on that line is set up.

Upon the subject of the release, the claim of the plaintiffs, in substance, is that its execution by the plaintiffs was fraudulently procured by the defendant or his agents. The plaintiffs were partners, and the release was signed by the plaintiff W. E. Dorwin, in the name'of the firm, and no question is made, about his authority to sign for the firm such an instrument. It was under seal, and that, as the court charged, and as we must assume, was conclusive evidence of consideration. Gray v. Barton, 55 N. Y. 71. Dorwin testified that he did not know the contents of the paper; that he was told that it and other papers he there signed were receipts, and signed them on that supposition. The court charged that “if Mr. Dorwin knew it was a release he was signing, or if Mr. Dorwin was not deceived by the statement made to him that it was a receipt, did not rely upon that statement, might as easily have read it as not, but was deterred from reading it only by the fact that he relied upon the statement that it was a receipt, it was his duty to know what he was signing, and he is barred by this paper”; that “he has got to satisfy you that he did not understand that he signed that paper knowing it to be a release, but that he was deceived purposely and intentionally by those parties who called it a receipt, and directed his attention from the true condition of affairs, and thereby got a discharge of the claim without his knowing it. The burden of proof is with him to satisfy you upon all those facts.” The jury in effect, therefore, found that Dorwin did not know that he was signing a release, and that the defendant or his agent purposely deceived him, and by artifice obtained his signature. The transactions between the parties on the 8th April, 1892, related to two contracts for railroad work. As to one there appears to have been no complaint at any time about the final estimate of the engineer. The other was the contract on which this action is based. Upon that occasion the plaintiff W. E. Dorwin signed eight papers, four as to each contract; there being as to each a receipt in full, a release under seal, a surrender in writing of the original contract, and an affidavit of no outstanding claims against the property. The papers were prepared by Mr. Husted, who was present, acting as attorney for the defendant, and the release, affidavit, and receipt of each set were attached to the original contract upon which the surrender was written. The receipt and surrender were signed, “W. E. Dorwin & Co.;” the release, “W. E. Dorwin & Co., by W. E. Dorwin;” and the affidavit, “W. E. Dorwin.” The releases were acknowledged and the affidavits sworn to before Mr. Husted, as notary public. A week or two before this, Mr. Dorwin called on the defendant, and, as Mr. Dorwin testifies, claimed that the estimate of the engineer was not correct, and wanted the defendant to go- to the engineer, and have it corrected, to which defendant replied that “he could not go, and told me to go and do the best I could, and he would be satisfied with whatever I did.” Dorwin saw Roberts the next day, but he refused to change the estimate. At the interview on the 8th April, nothing, so far as appears from the testimony of Dorwin, was said about his interview with Roberts. They figured up the amount due on the basis of the engineer’s estimate, and then the defendant, at the request of Dorwin, drew and gave him 11 “checks for different amounts, being amounts that plaintiffs owed to different parties. A statement of the account was prepared and given to Dorwin. This was headed, “W. E. Dorwin & Co., in Acc. with John E. Westbrook;” and the first item was a credit: “Mch. 29. By balance rendered, $7,431.70.” The 11 checks were then charged, each being described, and amounting in the aggregate to $6,286.81; and the last entry was. “By balance, $1,144.89.” This balance, as it seems to be conceded, was held by defendant to await the discharge of two liens understood to have been filed. After the checks were drawn, then, as Dorwin testifies, “Mr. Husted handed me over some papers, with one hand on the papers, and said, ‘Sign those receipts,’ and took the other hand, and turned them up, and showed me what to sign, and I read nothing and saw nothing read. There was not one single word read to me on that day. * * * I signed a number of times, because I was receiving a number of different checks. * * * Mr. Husted didn’t take any acknowledgment from me at that time, and I didn’t swear to any affidavit. * * * When I signed those papers, I had no knowledge of what the papers contained. I never had read them or heard them read, and their contents was not stated to me in any way. * * * I believed I was signing receipts for the money that I got for the several checks.” On the part of the defendant, it was shown by the testimony of the defendant himself, his clerk who drew off the account, and Mr. Husted, that all the papers, including the releases, were read over to Mr. Dorwin, and that there was then a complete and full settlement of both contracts. Taking the version of Mr. Dorwin to be correct, nothing was done to prevent his reading the papers. They were called receipts, but nothing was said that they were only receipts for the checks or the money represented by the checks. Dorwin made no reservation of his claim for wrong classification. The defendant testifies that Dorwin said he had concluded to settle on the basis of the estimate as made, and his acts, as testified to by himself, render that probable; and, besides, he does not deny that he made the statement as the defendant testified. The defendant had other railroad contracts, and Dorwin, prior to this occasion, had, as he admits, knowledge of the custom of defendant, on the settlement of his contracts, to require the execution of releases such as were executed here. He then must have known that, as.to the undisputed contract involved in this transaction, the defendant would be apt to require such a release. Dorwin says he supposed that all the papers he signed were ordinary receipts for the moneys represented by the checks, but the truth of this supposition is shaken by the fact that he signed in different ways. He was a business man of long experience. This supposition is also shaken by the fact that, in calling by letter on the 4th May following for the balance of the money reserved, he referred to it as being already receipted for.

The claim of the plaintiffs is, in substance, that the release and surrender were procured by fraud. The evidence does not, we think, sustain this claim. Written instruments, signed by parties^ who have full opportunity to know the contents, should not be stricken down unless the evidence is reasonably clear that, in obtaining their execution, a fraud has in fact been committed. The verdict in this case, to the effect that the defendant or his agents purposely deceived Mr. Dorwin, and by artifice obtained his signatures, and that he did not understand the true character of the papers, is, we think, against the weight of the evidence.

Judgment and order reversed, and new trial ordered; costs to abide the event.

HARDEN", P. J., concurs.