Tatum v. Farson

167 A.D. 581
CourtAppellate Division of the Supreme Court of the State of New York
DecidedApril 16, 1916
StatusPublished
Cited by2 cases

This text of 167 A.D. 581 (Tatum v. Farson) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Tatum v. Farson, 167 A.D. 581 (N.Y. Ct. App. 1916).

Opinion

Laughlin, J.:

In the original complaint the plaintiff in form pleaded two causes of action separately numbered; and in the amended complaint he has pleaded only one. In each count of the original complaint the plaintiff alleged that the defendants were jointly indebted to him upon contract for money had and received in the sum of $10,213.33; and by the amended complaint the plaintiff claims that the defendants Parson are jointly indebted to him on contract for money had and received in the same amount. In the first count of the original complaint the plaintiff alleged that by certain false and fraudulent representations made by the three defendants as partners, the plaintiff was induced to purchase from them twenty bonds of the par value of $500 each, for said sum of $10,213.33; that the false representations were contained in a notice or prospectus which the defendants caused to be prepared and freely and extensively circulated, inviting the [583]*583public to purchase from them all or any part of an issue of about $2,000,000 six percent “Municipal Water Bonds,” for the payment of which 80,000 acres of. land in the county of Logan, Colorado, “ owned by well-to-do people of Sterling and Denver in the State of Colorado * * * in tracts averaging one hundred and sixty (160) acres ” were represented to be pledged as security for the payment of the bonds, which it was further represented constituted a first lien thereon “ over any subsequent bond issue and any prior indebtedness of any character; ” that the lien of said bonds was in fact governed by the Constitution and certain specified laws of the State of Colorado relating to irrigation districts, which did not make the bonds a prior lien as represented, and that said issue of bonds “ was not and is not now under the laws of the State of Colorado secured by about eighty thousand (80,000) acres of land;” that “the said statements contained in the said notice or prospectus, together with other statements therein contained ” were false and were known by said defendants to be false, and were fraudulently made with the intention of deceiving those, including plaintiff, who were invited to purchase the bonds; and did so deceive them; that shortly before the commencement of the action the plaintiff discovered the falsity of the representations and the fraud, and elected to rescind and offered and tendered the bonds to the defendants, together with all payments of interest made on the bonds since they were received by the plaintiff, “ and thereby rescinded the said transaction, and demanded of the defendants ” the amount paid by him for said bonds, together with interest from the date of payment, with which demand the defendants wrongfully refused to comply; and the same offer and tender were made in the first count of the complaint. The second count of the original complaint contained substantially the same allegations with respect to the false and fraudulent representations by which the plaintiff was induced to purchase the bonds; and further alleged that the bonds were not municipal water bonds, and were not a lien upon 80,000 acres of land, but were a lien on not more than 40,000 acres of land in said county; that the bonded debt was not about $25 per acre, as represented, but was about $50 per acre; that the issue of bonds was not a lien upon 80,000 [584]*584acres of land, or upon any "land, “prior to any subsequent bond issue and any prior indebtedness of any character;” that the bonds delivered to the plaintiff were not the bonds described in the prospectus, and that the minds of the parties never met with respect to a sale of the bonds delivered to the plaintiff, and that the bonds were worthless, and differed so materially from those described in the prospectus that there was a failure of consideration; and that the plaintiff, on discovering the falsity of the representations and the fraud, elected to rescind for a failure of consideration, and offered and tendered the bonds to the defendants, as alleged in the first count, which offer was refused. It thus appears that each count was for the recovery of the consideration for the bonds and both were on the theory of rescission of the contract; but the one was predicated upon the theory of rescission for fraud only, and the other for failure of consideration.

The action was brought to trial on the issues arising on the original complaint, and the trial court ruled that the plaintiff could not show, under the allegation with respect to “other statements ” contained in the prospectus, any false representation other than those specifically alleged, and that the plaintiff could not show “fraudulent concealment of material facts in said prospectus,” not specifically set forth in the complaint; and thereupon permitted the plaintiff to withdraw a juror, upon payment of a trial fee and the disbursements for subpoenaing witnesses, including mileage, in order to move at Special Term for leave to amend. On the motion -for leave to amend it appeared that the action was originally brought on the theory that the three defendants were copartners but that the testimony of one of the defendants taken before trial showed that McElroy was not in partnership with the other defendants when the causes of action arose, and for that reason the plaintiff desired to have his name stricken from the title of the action.

The proposed amended complaint sets forth seventeen provisions of the prospectus, eleven of which it is alleged were false and fraudulent in thirteen particulars set forth. It is further alleged therein that the defendants intentionally concealed from the plaintiff at the time he purchased the bonds certain material facts set forth in three separate paragraphs; [585]*585and that the prospectus described the bonds as “County of Logan, Colorado Municipal Water 6’s,” and that the defendants thereby intended to and did induce the plaintiff to purchase the bonds believing that they were issued by, and were obligations of, the county of Logan; and “a prior lien upon all taxes levied upon over 80,000 acres of land ” in said irrigation district; whereas, they were issued by “North Sterling Irrigation District, in said County of Logan.” The amended complaint otherwise contains in substance the allegations contained in the original complaint with the exception that it omits the allegations with respect to the bonds being without value and the alleged rescission rests on an election for fraud only; but it contains in addition thereto further specific allegations with respect to the purpose of the defendants to deceive purchasers by the representations contained in the prospectus which are alleged to have been made without regard to their truth or falsity and under circumstances indicating that defendants knew that they were true, and further alleges that there were certain outstanding bonds which were liens upon the land equal or prior to the lien of the issue of bonds in question.

Sufficient has been stated to show that the plaintiff, under the amended complaint, claims to be entitled to recover on proof of facts, alleged therein which would not have been admissible under the original complaint, and on the theory that defendants fraudulently suppressed facts which was not presented by the original complaint. It was manifestly proper to allow the plaintiff to eliminate the name of McElroy. Where, however, a plaintiff deems it necessary to apply for and obtain leave thus materially to amend his pleading, he cannot insist, and the court may not require, that the defendant be confined to answering the amended pleading. (Code Civ. Proc. § 520; Fink v. Manhattan Railway Co., 15 Daly, 479.

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Cite This Page — Counsel Stack

Bluebook (online)
167 A.D. 581, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tatum-v-farson-nyappdiv-1916.