Johnson v. Stone

42 N.Y. Sup. Ct. 380
CourtNew York Supreme Court
DecidedMarch 15, 1885
StatusPublished

This text of 42 N.Y. Sup. Ct. 380 (Johnson v. Stone) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Johnson v. Stone, 42 N.Y. Sup. Ct. 380 (N.Y. Super. Ct. 1885).

Opinion

Davis, P. J.:

This action was commenced by Francis E. Johnson, as committee of the personal estate of Cornelius Johnson, who had been declared a lunatic. Subsequently Cornelius Johnson died .and Francis E. Johnson was appointed administrator of his estate, and the title of the' plaintiff in the action was changed accordingly. In the month of February, 1881, Cornelius Johnson was, in proceedings duly had in this court, found by the jury to be a lunatic and incompetent to manage himself or his affairs; and to have been such lunatic on and since the 16th day of Dpcember, 1880. The inquisition in the matter was confirmed by this court on or about the 23d day of February, 1881, and Francis E. Johnson was appointed committee of the person and estate of said Cornelius, and said Francis duly qualified as such committee.

On the 28th of January, 1881, the defendants, in consideration of the sum of $60,000, then paid by said lunatic, sold and transferred to him 6,000 shares of capital stock in a mining company, known as the Jones’ Bonanza Mining Company, at the rate of ten dollars per share. The defendants did not then know that said Johnson was a lunatic, and the sale was made in the ordinary course of business and with no attempt at deception. The complaint alleges that, as the said defendants then well knew, the said-alleged mining stock had no market value ; that the sum obtained from said lunatic therefor was greatly in excess of its intrinsic or true value; that it was then worth little or nothing.

These allegations are not denied by the answer. , The stock' so purchased came into the hands of the committee of the lunatic, who, on or about the 1st day of March, 1881, offered to the defendants [382]*382the certificates for said shares, and to return and restore all that had been received bj the lunatic for said $50,000 paid to them by him ; and demanded that they pay and deliver over to said committee the sum of $50,000 so paid to them’ by the lunatic. The defendants refused to receive said stock and to return said money, and thereupon this action was brought.

In the further progress of the action several questions were by the court sent down for trial by a jury, in answer to which the jury found that Cornelius S. Johnson was, at the time of the purchase and transfer to him of the 5,000 shares of stock mentioned in the complaint, and the payment of $50,000 therefor to the defendants, a lunatic, and incompetent to manage his affairs. On the subsequent trial before the court at Special Term the questions and answers of the jury were received by the court in evidence and made a part of its findings. The court also found that the alleged purchase and sale of the stock, and the payment of $50,000, were made as averred in the complaint, and that the defendants transferred and delivered the said stock, and received the said $50,000, the said Johnson being at that time a lunatic and incompetent by reason of lunacy to manage his own affairs. It also found that the defendants at the time of the sale owned the stock sold in unequal proportions, the defendant Stone owning three-fourths and the defendant Done one-fourth thereof, and that the moneys paid by Johnson, after their receipt were divided between the defendants in that proportion. It also found that the subsequent tender and demand were made by the committee, as alleged in the complaint, and the refusal on the part of the defendants to receive the stock and repay the money. And at the request of the defendants the court further found that the contract of sale, and the payment of the money for the stock, were made in the ordinary course of business with no attempt at deception, and without notice or knowledge on the part of the defendants that Johnson was a lunatic and incompetent to manage his affairs. ,

No part of the evidence taken on the trial before the jury, or of the oral or other evidence (except the verdict of the jpry), taken on the trial at Special Term is included in the case. We are bound, therefore, to assume that the findings of fact were all supported by sufficient evidence on both of those trials.

[383]*383The principal question presented on the appeal is as to the light of the plaintiff to maintain this action without proving that the defendants were guilty of fraud and deceit in making a sale to the lunatic and receiving his money. This is based upon the idea that the action is in form and substance ex delicto. The complaint undoubtedly contains some allegations which would be entirely proper in an action at law for fraud and deceit. But it was obviously framed, not with a view to maintain an action of that character, but one in equity for the purpose of avoiding the alleged sale and recovering back the consideration upon a return of the stock; and in that view the allegations which are supposed to charge fraud are not improper, and do not, as we think, require any further proof than such as would call upon a court of equity to adjudge the transaction to have been unlawful and in that sense fraudulent, and, therefore, to set the same aside and require the restoration of the consideration paid. The "complaint does allege that the act of the defendants was wrongful and unlawful, but it nowhere alleges that tho-*e acts were done with intent to cheat or deceive the purchase)'. Fraud is not, therefore, the gravamen of the action, and inasmuch as dealings of this character with a lunatic are in equity regarded as wrong and unlawful to such an extent as to justify their rescission and the restoration of the parties to their previous condition, there are not, we think, any such allegations in the complaint as necessarily to make this action one at law for fraud and deceit. The findings, therefore, by the court, that there was no deception practiced by the defendants in making the sale, and that they did not know of the insanity of the person with whom they were dealing is not sufficient, as we think, to entitle the defendants to a dismissal of the complaint. A sale to a lunatic is void when the fact of lunacy existing at the time of the sale is established, whether the defendant had or had not knowledge of its existence. (Van Deusen v. Sweet, 51 N. Y., 378 ; Hicks v. Marshall, 8 Hun, 327; Diggs v. American Tract Society, 84 N. Y., 330; Mutual Life Insurance Co. v. Hunt, 79 id., 541.) This rule is subject to the qualification that where a sale is for the benefit of the lunatic or his estate, and is made in good faith, without knowledge of his condition, and the party who has made it cannot be put' im, statu quo, '& court of equity will not invalidate the transaction. But [384]*384these facts, in order to confirm the contract, must be alleged and proved by the defendants. The exception has no application to this case, because it is clear that the sale was not a transaction for the benefit of the lunatic or his estate ; and it is equally clear that, at the time of the tender of the stock and demand of the money, the defendants, by receiving the same back and refunding the money, would have been placed m statu quo. The stock is not shown at any time to have had any market value. There is no evidence to show that it had depreciated, or that it could not be sold at its real value, as well in March as in the previous February. After the lunacy had been adjudged to have existed at the time of the sale, that fact was made known to the defendants when the committee came with the stock and offered to restore it, and receive back the consideration paid.

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Related

Van Deusen v. . Sweet
51 N.Y. 378 (New York Court of Appeals, 1873)
Riggs v. . American Tract Society
84 N.Y. 330 (New York Court of Appeals, 1881)
People v. Raymond
37 N.Y. 499 (New York Court of Appeals, 1868)

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Bluebook (online)
42 N.Y. Sup. Ct. 380, Counsel Stack Legal Research, https://law.counselstack.com/opinion/johnson-v-stone-nysupct-1885.