Roessle v. Lancaster

119 A.D. 368, 104 N.Y.S. 217, 1907 N.Y. App. Div. LEXIS 3944

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: May 10, 1907
• Status: Published

Opinion

Scott, J.:

This action is against defendant as indorser of a promissory note made by Albert K. Keen to plaintiff. The making of the note and plaintiff’s, titje are admitted. x

The defense upon which defendant relies is that he was induced to become an indorser through false arid fraudulent representations made to him by plaintiff, and that but for such representations, which he believed to be true, he would not have indorsed the note.

The answer contains no allegation of rescission or offer to rescind, and there is no statement or allegation of damage* At the trial on the answer and the defendant’s opening a verdict was directed in favor of plaintiff, and this appeal is from the judgment entered upon that verdict.

We think that the learned court helow failed to observe the distinc- • tion-between an affirmative action for damages' for false representation wherein damage is a necessary allegation or an affirmative defense upon the same ground to an action upon an executed contract, wherein an offer to return or rescind is necessary, and an action like the present where, an action- upon an executory contract is defended upon the. ground that the contract was induced by false representations.

The contract ■ upon which defendant is now. sued and which he seeks to repudiate is his own contract with the payee of the note. He is not a joint contractor with the-maker and his contract is sepa- • rate and .distinct from and independent of the.maker’s contract as maker. ' Consequently. lie is not limited in his defenses to thosé which the maker might interpose if sued upon his contract, nor is the indorser’s liability dependent'entirely upon the'question as to whether, or not the maker is legally liable,

Therefore, in interposing the defense involved in this action it is not necessary to offer to rescind the maker’s contract or to restore that which the maker may have received as- consideration- for the note. It appears'from the answer and from the opening of counsel', that this defendant did not. receive any -part of the furniture which constituted *theconsideration for the note. So far as appears the ■ -defendant received no consideration from plaintiff, valuable or otherwise, unless the representations, now alleged to be false> can be considered as in tlie nature .of consideration. (Ripley v. Hazel-ton, 3 Daly, 329.) Having received nothing, there, is' nothing for the defendant to restore. That the representations were material is sufficiently shown by -the allegation that, save for them, defendant would not have indorsed, the note. If, then, there was‘no necessity to plead a rescission and an offer to.refund, the. only question remaining is whether or nót-the defendant should have specifically alleged damages. Injury is presumed from the falsity of the representations, and if the action were against the plaintiff for damages, or the defense was interposed to an executed contract,-an allegation of damage would be necessary. (Brackett v. Griswold 112 N. Y. 454.) The defendant’s contract, with plaintiff, evidenced by defendant’s- indorsement of the note, is in effect that of a.surety for the. maker of the note (1 Daniel Heg. Inst. [5th ed.] 632), and as'already pointed out is quite distinct from the contract of the maker. (Ross v. Jones, 22 Wall. 576 ; Moore v. Alexander, 63 App. Div. 100.)

■ In an action against a surety, upon his contract of suretyship, it " is a completé' defens.e to; show that he was induced to enter into the ■ • contract by false representations on the part of the plaintiff. ■ (Pay-lies Sur. & Guar,. 423; Brandt Sur. & Guar. [3d -ed.] §..447; Daniel Neg. Inst. ,[5th ed.]. §§ 1308,1309.) .An allegation of actual damage is not essential to such a defense, which rests upon "the ground that fraud vitiates all contracts, and -that contracts of guaranty and suretyship form no exception to the rule: The' defense, ■ therefore, as pleaded, was sufficient, and it was error to direct a verdict for the plaintiff.

The judgment should be reversed and a new trial granted, with ■costs to appellant to abide the event.

Pattebson, P. J., Ingbaham, Laughlin and Clarke, JJ., ■concurred.

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