Wright v. Duke

36 N.Y.S. 853, 98 N.Y. Sup. Ct. 409, 72 N.Y. St. Rep. 375, 91 Hun 409
CourtNew York Supreme Court
DecidedDecember 18, 1895
StatusPublished
Cited by6 cases

This text of 36 N.Y.S. 853 (Wright v. Duke) 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
Wright v. Duke, 36 N.Y.S. 853, 98 N.Y. Sup. Ct. 409, 72 N.Y. St. Rep. 375, 91 Hun 409 (N.Y. Super. Ct. 1895).

Opinion

O’BRIEN, J.

This is an action to recover damages for deceit alleged to have been practiced by the defendants on the plaintiff at the time of and in connection with a sale made by him to them, his copartners, of his interest in the assets and business of the firm of W. Duke, Sons & Co., manufacturers of tobacco and cigarettes. The sale was made on September 16, 1885, for the “lump sum” of $39,750, the plaintiff giving a deed of conveyance of such interest, as well as a release under seal of all claims and demands against his copartners. The office and principal factory of the firm was at Durham, N. C. James B. Duke had general oversight of the operations of the firm. George Watts had charge of the office at Durham, and acted as cashier, secretary, and treasurer in a general way, being assisted by B. N. Duke. B. L. Duke took no active part in the business. Plaintiff’s duties were traveling, introducing the firm’s goods, and establishing agencies, in the course of which he traveled at different times over nearly all the world. He had nothing to do with the office of the company, and very little with the manufacturing. The articles-of copartnership between plaintiff and defendants had expired by limitation on January 1,1885, and negotiations for a fuller term with increased capital were in progress from that time to the time of the sale, the affairs of the partnership meanwhile drifting along as if the firm was still in existence. During this time, from February to April, 1885, negotiations were pending between James B. Duke, on behalf of the firm, and a Mr. Strouse, representing the Bonsack Machine. Company, for a more favorable license to the firm than the one then existing respecting the use of machines for making cigarettes, the patents for which were owned by the Bonsack Company. It is undisputed that plaintiff was aware of and consulted concerning these negotiations, and was informed by James B. Duke of the proposition made by the Bonsack Company to reduce the royalty to 24 cents a thousand on cigarettes made upon the machines, and that plaintiff objected, and said he thought better terms ought to be, obtained. The conditions of the contract, being determined upon in New York between James B. Duke and Mr. Strouse, were communicated by the former in a general way by letter to Benjamin N. Duke [855]*855at Durham, who went to Lynchburg, Va., on June 11th, for the purpose of meeting Mr. Strouse, and executing the contract. Accordingly, on that date, a writing was drawn up by Mr. Strouse purporting to contain all the provisions of the agreement arrived at between him and James B. Duke, and signed by Mr. Strouse and B. FT. Duke on behalf of their respective companies. It was then taken to the office of the firm at Durham, and put in the safe. The rate therein stated was 24 cents a thousand. After the terms of this agreement had been arrived at between J. B. Duke and Mr. Strouse, exceedingly strained relations arose between plaintiff and his copartners, which were accentuated by an attempt to adjust a personal debt owing by plaintiff to W. Duke, the father of the defendants Duke. The outcome was a suit by plaintiff to dissolve the firm, and for a receiver, and a notice sent by the other members of the firm to the plaintiff and to all their customers on July 2, 1885, that the firm was dissolved. Plaintiff’s interest was transferred on September 10th, after which he had no connection with the firm. During none of the negotiations leading up to the purchase by defendants of plaintiff’s interest in the firm was this contract with the Bonsack Company mentioned or referred to between them, and it is upon the alleged concealment of its existence that he bases his right to recover.

The plaintiff admitted that in or about February, 1885, J. B. Duke told him that he was trying hard to get from Strouse a more favorable agreement than any other firm for the use of the Bonsack machines, and that the latter had made a proposition to reduce the royalty to 24 cents a thousand. But it is evident from the proofs that plaintiff was unaware of the execution of a contract such as was entered into. He himself so testifies. B. L. Duke says he did not know of its existence. B. FT. Duke says he told no one of its execution, except, perhaps, his partner, Watts. Watts testified that he certainly believed that plaintiff knew nothing about it, because the written article had been in his possession since its execution, and that plaintiff never had asked for it, nor had it been shown to any one; and J. B. Duke does not say that he told plaintiff of its execution, but simply that some months prior to the contract being signed he informed plaintiff of the terms being agreed upon for which the contract afterwards provided. But, even had the plaintiff, prior to the transfer of his interest in the firm, read or been told the contents of the written memorandum of agreement, he would not thereby have become aware of the vital feature of the contract between his firm and the Bonsack Company, which provided that the firm should always have 25 per cent, lower rate than anybody else; because, though it had been agreed upon between J. B. Duke and Mr. Strouse before the contract was signed, it was not reduced to writing until January, 1886, when this hitherto unexpressed condition was written in at the instance of J. B. Duke.

The learned judge below has found as a fact “that the plaintiff was informed by James B. Duke, at the time of negotiating the said oral contract, as to what terms Mr. Strouse, the president of the Bonsack Machine Company, was willing to have provided in said contract.” Upon the question whether or not this finding is correct, the whole case turns. If the plaintiff, though ignorant [856]*856of the execution of the contract, was informed at the time of its negotiation, as claimed by J. B. Duke, of all the terms and conditions that were to be embraced therein, he could not hope to establish his cause of action, because, with the knowledge that such an important arrangement was in progress, it would be as much his duty as that of the defendants, while discussing the subject of the sale to them of his interest in the firm, to call attention to it as being of value in determining the amount he should receive; and plaintiff’s claim of a fraudulent and intentional concealment would be unavailing, and the judgment should be affirmed. If, to our minds, an examination of the record shows that such finding was unwarranted, compelling the inference that, while plaintiff was informed of some of the terms of the agreement, he was kept in ignorance of its most important condition, and that this was done designedly, then the conclusion follows that such concealment was a fraud upon the plaintiff, requiring that the judgment dismissing the complaint upon the merits should be reversed. Upon this point we have on one side the unsupported statement of J. B. Duke that he told plaintiff at the time of his having agreed with Mr. Strouse for the 25 per cent, preference to his firm. On the other side we have, besides the denial of the plaintiff, the whole course of circumstances and events prior and subsequent to the sale, as tending to discredit the accuracy of Mr. Duke’s recollection in this respect. The plaintiff had regarded the use of the machines favorably, and was anxious to have them adopted by the firm. The reduced royalty proposed or agreed to be paid for their use, however, he did not regard as advantageous. If that had been all there was of the contract, and he had known it, during the negotiations to buy out his interest in the firm, it undoubtedly would have had no influence upon him in fixing the value of his share at any higher figure than he was induced to accept.

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Cite This Page — Counsel Stack

Bluebook (online)
36 N.Y.S. 853, 98 N.Y. Sup. Ct. 409, 72 N.Y. St. Rep. 375, 91 Hun 409, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wright-v-duke-nysupct-1895.