Pierce v. Hellenic American Realty Co.

Bijub, J.

The defendant having made an agreement with one Koch, whereunder defendant agreed to sell to Koch two lots in Hew Jersey for $620, payable in instalments, after Koch had paid $460, plaintiff undertook to purchase this agreement from him, and, at an interview with defendant’s president, Koch’s contract was surrendered to the defendant and a new contract for the lots made with plaintiff, whereunder plaintiff agreed to pay the balance of $160, by paying $20 in cash at the time and the remaining $140 in monthly instalments of $5 each. Thereafter, plaintiff paid $70 in instalments, making a total of $90 on account of the $160. Plaintiff alleged that, at the interview at which her contract with defendant was negotiated, defendant’s president made representations as to the improvements upon the tract upon which said two lots were situated which were knowingly false, and that she had thereby sustained damage for which she asked judgment.

Five hundred dollars damages were awarded to her.

Plaintiff’s 'remedy, on ascertaining the fraud, was substantially two-fold. She might rescind and "proceed either in equity or in law to recover what she had paid in reliance upon the defendant’s representations, or she might, as it is called, affirm the contract and sue to recover her damages, which in this case would be the difference between the value of the lots as represented and their value as they actually were — in other words, as it is put in some cases, she "might recover the" true “value of her bargain.”

The opinion of my learned colleague proceeds on the theory that in a case like the present, where the contract provided for payment for the property in instalments, the latter form of relief was not open to the plaintiff at least until she should have paid up all the instalments and become entitled to a conveyance of the land. For this doctrine I find no authority. On the contrary, the theory of the action is that plaintiff proceeds to recover for the tort practiced upon her, namely, the fraud. This fraud was consummated, the damage incurred and the cause of action born the moment plaintiff signed her contract, for she then had agreed to pay $620 for lots represented to her to he of a character entitling them to that valuation, whereas, in point of fact (as we must assume from the finding of the learned trial judge), they were worth only $120. She was entitled to a contract whereunder on payment of $620 she would receive lots of that value — she received a contract whereunder, upon payment of $620, she would ‘receive lots worth only $120. Her damage at that moment then was $500, and for that difference she was entitled to recover forthwith. It is true that she must proceed as upon affirmance of her contract, hut not upon performance of her contract. She has not disaffirmed the contract, the claim is merely that she has not fully performed it. If that be because the time for performance has not yet arrived, it is entirely indifferent. If the failure to perform in whole or in part is the result of her default, that may he a circumstance to be taken into consideration in determining whether she has affirmed or repudiated the contract; but it is by no means determinative of that issue. If she has affirmed the contract and is, nevertheless, in default in payment of instalments, defendant has its ordinary remedy on contract by way of action or counterclaim, without prejudice to plaintiff’s right to recover for the tort,practiced upon her.

While these precise points have not been determined in this state, the doctrine has, at least, been recognized in People v. Stephens, 71 N. Y. 527; hut the question has been adjudicated in Fames v. Morgan, 37 Ill. 260, 275; Grady v. Jeffries, 25 Fla. 743, 747; Weaver v. Shriver, 79 Md. 530, 533 (where it is fully discussed). See also 20 Cyc. 92. It may he that, if hv the terms of the contract the plaintiff was entitled upon defendant’s default to rescind or cancel the contract and had done so, the plaintiff’s cause of action would thereby he destroyed; hut as there is neither allegation nor proof of such fact in the case, it need not he considered. I think, therefore, that the rule of damages applied by the learned court below was correct.

I think also that the proof of the respective values was sufficient, though perhaps not as complete and exact as it might he.

Defendant makes the further point that the representations of defendant’s president were without the scope of his authority.

First. Because they were made beyond and in addition to specific representations made in the pamphlet or circular published by the defendant describing this tract of land.

Second. That the transaction was beyond the reasonable scope of the president’s authority inasmuch as it was not a sale of land but the acceptance by the defendant of a different purchaser upon a contract previously entered into by it with another. It seems to me, however, that the business of selling land naturally and necessarily involves the selection of the purchaser; and, if the seller elected to release one person from the obligation and accept another in his place, such a transaction appears to me to be entirely within the normal business of the seller, particularly when, as here, a payment on account of instalments, apparently then already due, was made by the new purchaser.

Judgment affirmed with' costs.,

Guy, J. concurs.