Royal Realty Co. v. Levin

69 N.W.2d 667, 244 Minn. 288, 1955 Minn. LEXIS 580
CourtSupreme Court of Minnesota
DecidedApril 7, 1955
DocketNo. 36,416
StatusPublished
Cited by1 cases

This text of 69 N.W.2d 667 (Royal Realty Co. v. Levin) is published on Counsel Stack Legal Research, covering Supreme Court of Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Royal Realty Co. v. Levin, 69 N.W.2d 667, 244 Minn. 288, 1955 Minn. LEXIS 580 (Mich. 1955).

Opinion

Dell, Chief Justice.

Action for damages for fraud in inducing breach of contract and in the alternative for breach of contract. Plaintiff appeals from an order dismissing the action.2

Plaintiff, a real estate company, made the following allegations in its complaint. On September 8, 1952, it negotiated an agreement with Anna and Ann Lynam for the purchase of their home in St. Paul. On that date the plaintiff’s agent, Samuel Lechtman, met with the Lynams at their home together with the defendant Albert D. Levin, one of the Lynams’ attorneys. An oral agreement on the terms of the purchase was reached, after which Albert Levin, by telephone, called the defendant Abe I. Levin, also an attorney for the Lynams, and explained the agreement to him. Lechtman talked to Abe Levin, and the latter told Lechtman that he approved the contract but wanted to execute the earnest money contract the following morn[290]*290ing in Ms office because be was not familiar with tbe written terminology of tbe contract for tbe purchase of real property used by tbe plaintiff and would prefer to use his own. In reliance on Abe Levin’s promise to execute tbe earnest money contract the next morning, plaintiff deferred further action that evening in closing tbe purchase. When Lecbtman appeared at tbe Levins’ office tbe next morning, prepáred to execute tbe written contract, be was informed that tbe property bad been sold the previous evening to another party. Tbe Lynams sold tbe property to Doris Appelbaum, who was acting as agent for tbe Levins, and she in turn transferred it to Abe Levin and his wife, Rae Levin. Tbe Levins paid $7,100 for tbe property, tbe same price plaintiff was to have paid, and resold it for $10,500.

Plaintiff alleged as its first cause of action that tbe representation made by tbe defendant Abe Levin that tbe transaction would be closed tbe morning of September 4, 1952, was false and was made with tbe intent to deceive and defraud plaintiff and that said representation was made as a part of a conspiracy on tbe part of tbe defendants to defraud tbe plaintiff. For its second cause of action plaintiff alleged that Abe Levin and Albert Levin failed to perform their agreement to complete tbe contract. Defendants’ motion to dismiss was granted on tbe ground that tbe complaint failed to state a claim upon which relief could be granted against tbe defendants and that there was no genuine issue as to any material fact.

Tbe only question before us is whether tbe complaint sets forth a legally sufficient claim for relief. It is immaterial to our consideration here whether or not tbe plaintiff can prove tbe facts alleged. Rule 9.02 of tbe Rules of Civil Procedure, which embodies tbe previously existing law in this state,3 provides that where fraud is alleged tbe circumstances constituting tbe fraud must be stated with particularity. Tbe complaint avers that tbe defendant Abe Levin falsely represented to tbe plaintiff’s agent that tbe transaction would be closed tbe morning of September 4; that tbe misrepresentation was made with tbe intention of deceiving tbe plaintiff; that [291]*291plaintiff refrained from taking action in reliance upon the misrepresentation ; and that the plaintiff suffered damages. It is also essential, however, in an action for deceit that the damage suffered be “proximately caused” by the false representation.4 It appears from the complaint that plaintiff’s damages here resulted from the failure on the part of the Lynams to perform the alleged oral contract. The representation made by the defendant merely induced plaintiff to postpone the completion of the transaction, and there is nothing to indicate that the brief delay had any bearing on or relation to the Lynams’ decision to breach the contract. Either the Lynams decided to breach the contract themselves, or were induced to do so by the defendants or some other party. The complaint, however, contains no allegations to the effect that the defendants made false representations to the Lynams upon which they relied in taking the action which they did.

It is clear that the misrepresentation relied upon by plaintiff, namely, that the transaction would be completed the next morning, was not the proximate cause of the plaintiff’s damages. Nor does the complaint allege any other misrepresentations which might proximately have caused the damages claimed to have been suffered. The complaint does not state a claim for relief based on fraud and deceit.

Throughout their briefs the parties have referred to plaintiff’s asserted claim for relief as one for fraud and deceit in inducing breach of contract. While fraud is frequently involved in actions for interference with contract or inducing breach of contract,5 the latter is a separate and distinct tort which may be actionable notwithstanding the absence of fraud.6 According to the vast majority [292]*292of decisions, even though the means employed in procuring the breach are in themselves lawful, where the inducement is without justification it may nevertheless be actionable.7 If the complaint here, which must be liberally construed in light of the new rules of civil procedure, fairly gives notice of a claim for inducing breach of contract and permits the application of the doctrine of res judicata, it is sufficient.8

Recovery may be had for inducing breach of contract by establishing (1) the existence of a contract; (2) the alleged wrongdoer’s knowledge of the contract; (3) his intentional procurement of its breach; (4) without justification; and (5) damages resulting therefrom.9 The primary contention of the defendants is that, since the alleged oral contract between the plaintiff and the Lynams was void because of the statute of frauds, the first element is lacking, and hence the complaint does not state a claim upon which relief can be granted. With few exceptions, the authorities agree that noncompliance with the statute of frauds does not relieve the interfering party of liability for inducing breach of the contract.10 This has [293]*293been said to be true even though the statute involved renders the contract “void,”11 as does M. S. A. 513.05.12 The rationale behind the prevailing view is that there is nothing inherently illegal in an oral agreement and, if the parties so desire, they may abide by its terms. The basis for the contrary view is not clear. In Levy v. Ross, 81 N. Y. S. (2d) 472, the court, apparently after examining previous New York decisions, held that a claim for interference with contract cannot be predicated on a contract void because of the statute of frauds. It concluded however that, if fraudulent representations were made in inducing the breach, the statute of frauds would not bar recovery since the action is based on fraud. An examination of the cases supporting the majority view reveals that in some instances fraud was involved in inducing the breach. However, in determining this particular question there is no sound reason for distinguishing cases in which the means used to induce the breach are fraudulent from those in which the means used are not in themselves unlawful. If the contract is void for all purposes, the plaintiff cannot recover regardless of whether the action is predicated on fraud since there is no contract to interfere with and hence no resulting damages.

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Royal Realty Co. v. Levin
69 N.W.2d 667 (Supreme Court of Minnesota, 1955)

Cite This Page — Counsel Stack

Bluebook (online)
69 N.W.2d 667, 244 Minn. 288, 1955 Minn. LEXIS 580, Counsel Stack Legal Research, https://law.counselstack.com/opinion/royal-realty-co-v-levin-minn-1955.