Sinclair v. Higgins , 93 N.Y.S. 195 ( 1905 )

Gaynor, J.:

I do not see how the motion can he granted. The plaintiff failed at all points.

The complaint is that the defendant is an attorney and counsellor at law; that he was and had been for several months the plaintiff’s legal adviser, and advised him about investing his money, and that while acting in that relation he “ falsely and fraudulently represented to the plaintiff that he was interested in and about to acquire control of a large water company in the county of Westchester, in the city of New York, and in order to procure from plaintiff the sum of $10,000, falsely and fraudulently promised and agreed that upon the delivery of said sum of $10,000 by plaintiff to defendant, defendant would immediately invest the said $10,000 in said water company and obtain control thereof for the benefit and profit of the plaintiff ”; that each of these representations was false and known by the defendant to be false; that plaintiff believed them -to be true, and in reliance thereon paid the $10,000 to the defendant, who converted the same to his own use, and did not invest the same in the said water company, and that there was no such company.

1. The plaintiff had to admit in'the witness box-that the allegation that the defendant was his legal adviser was a fabrication ; in fact that he never met him until the day of the transaction sued on. If, therefore, the case rests upon that allegation, it would have to be dismissed for failure of proof on that head alone. An action for a constructive fraud cannot be sustained by evidence of an actual fraud (Haynes v. McKee, 19 Misc. Rep. 511; Taylor v. Guest, 58 N. Y. 262).

2. The plaintiff’s evidence of the false representations (and he was the only witness on this head) fell far short of the complaint. It was as follows:

“ Well, they spoke about they had some water' company that they wanted somebody to put some money into, for the purpose of tying it up so they could get control of it; somewhere in Westchester. He said if I would put $10,000 into this thing, they could tie it up and get control of it and make considerable money out of it, and that they would give -me a $10,000 profit from, the proceeds.”

Thereupon,'without a question, the plaintiff says he gave the defendant $10,000 to so invest. He did not ask for the name of the water company, in what town, village or city it was located, how much capital was invested in it, whether it was supplying water, what its assets or revenues were, who were the officers of it, or anything. No reasonable being would invest money in that way in a transaction in which he was dealing at arm’s length (and that was the plaintiff’s case). The representations must be “such as to mislead a reasonably cautious or prudent man, in regard to the existence of a fact forming the basis of or contributing an'inducement ” (Bigelow on Fr. Vol. 1, p. 461). The plaintiff was given no - fact, except that his money was to be invested speculatively in buying into some unnamed water company, in an effort to “ tie it up ” and get control of it, and in the event of success the plaintiff was to get $10,000 of the profits. Instead, there 'might be no profits, or his money might be lost. The law will not predicate fraud on such loose statements. On the contrary, it says that no one should rely upon the like, but should get such specific statements as people ordinarily require.

3. By the plaintiff’s own evidence it appeared that he did not give the defendant the money to invest at all, but that he loaned it to him. He took back for it a promissory note by the defendant for $20,000 payable in six months, made for form sake to a third person as" payee and endorsed to the plaintiff, and ten bonds of the Tinten Manor Water Company, of the par value of $1,000' each, as collateral security. The note has been renewed several times, and the plaintiff still holds the bonds. The letters and papers show that the note and bonds were taken for a loan of $10,000. Against this the plaintiff’s mere word that nothing was said about a loan cannot stand.

4. Moreover, the plaintiff did not testify that he believed the representations and acted upon them. That is an essential to be pleaded and also proved. It cannot be presumed.

The motion is denied.