STAR STEAMSHIP COMPANY against MITCHELL

STAR STEAMSHIP COMPANY against MITCHELL. New York Common Pleas ; General Term, April, 1865. Pleading.—Action of Deceit. A pleading intended to set up “deceit” should contain an averment, in substance, that the representations complained of were “falsely,” “fraudulently,” or “ deceitfully ” made, or that the defendant relied on, or was deceived by them. The statement that the person making them knew otherwise, and made the representations “ to induce the party to purchase,” is not sufficient. A defect in this respect cannot be cured by amendment after verdict. The plaintiffs, in February, 1858, brought this action against the defendant fbr four thousand dollars, being the balance of the price of the steamship “ Star of the South,” which, in August, 1857, had been sold by the plaintiffs to the defendant for the sum of thirty-two thousand five hundred dollars. The only defence material to the decision, was an averment that three of the owners of the vessel, in order to induce the defendant to purchase it, “ represented and stated to the defendant that the engirie, machinery and propeller of said vessel was in perfect order, and all complete; that everything Avas complete, except that, the vessel wanted-new boilers; and on such representations, and trusting to such statements, the defendant purchased the vessel. * * * That on pumping out some Avater that was in the vessel, the defendant discovered that the engine was not all complete ; that the bed-plate was cracked, and the machinery otherwise badly damaged, and the propeller out of order, and injured. That such injuries were known to the persons who had possession of and oAvned such vessel, and Avere concealed from the defendant, and that to repair such injury and damage to the engine and propeller, and make them complete, the defendant expended the sum of fourteen thousand dollars.” There Avas evidence given to shoAv that the ship had been built in 1853 or 1854, at a cost of one hundred and twenty thousand dollars, and, at the time of her sale to the defendant, was Avorth several thousand- dollars more than the price at which die Avas sold. Upon the trial it was alleged that Captain Marks fiad, by his representations, prevented an examination of the bed-plate, etc. It was conceded that the defendant’s agent had hilly examined the hull, and evidence was given to shoAv that they had abundant opportunity to examine all the machinery, except the bed-plate, etc., which, it was alleged, was under water. The evidence of the plaintiffs showed that the bed-plate could also be seen. The court charged as follows : That a buyer is bound to examine what he is about to purchase whenever opportunities for examination are offered him, but there are exceptions to this rule, as where a party takes a warranty or purchase by sample; there is still another exception, as, if the seller be guilty of fraud in effecting the sale, such sale may be avoided. The defendant in this case does not set up a warranty; the defence on which he relies is that of fraud. The steamer and her machinery might have been examined, and it was the duty of the purchaser to examine her, and procure the aid of competent persons for that purpose, or to obtain a special' warranty; but if the purchaser, or his assistants, were prevented by artifice, or by any representation on the part of the plaintiff’s agents from malting a complete examination, the purchaser would he entitled to return the vessel, and avoid the sale, or, as he claims in this action, to retain the vessel and deduct enough from the purchase money to compensate himself for any damages he may have sustained. In this case the first representation relied on by the defendant, is that contained in the schedule. “ Engine department all complete.” The jury are to pass upon the meaning of the word complete, as applied to the engine department of a steamer- in its ordinary and common signification. In that view it means full—indicates that there is nothing deficient; that all the parts are there; not the condition of each particular part, or as to their being new or old, or the degree in which they may be worn, but that they are all there like the different parts of a watch. This is my understanding of that term, but the jury are at liberty to give it their own construction. But the defendant, did not rely upon this representation; he sent his brother with competent assistants to examine the vessel and her machinery. Every part of the machinery was examined except the portion under water, and it is claimed that they were prevented from examining that part of the machinery by the statement of Captain Marks, that it was in perfect condition, or all right, etc. The whole inquiry would, therefore, seem to be confined to the part of the machinery under water, and the representations in respect to it, and if the jury find that any artifice was resorted to on the part of plaintiffs’ agents, either by allowing the water to remain in the vessel and cover ^ the bed-plates, or otherwise, or if they should find that, the statements of „Captain Marks were made for the purpose of deceiving and misleading the defendant and his agents as to the real condition of the machinery under water, or if anything were said by Marks, Stanton, or by any other person to deceive or mislead the defendant, he would be entitled to reduce the amount of the claim against him to the extent of the repairs and damages to that part of the machinery which he was prevented from examining, but the jury must be satisfied that the representations were false, and that they had the effect of misleading the defendants. But although Captain Marks made statements which were untrue, yet if the jury find that the vessel and her machinery were worth all that was agreed to he paid for the same by the defendant, in other words, the defendant received the full value of the money, and did not sustain any damage by reason of such misstatements, they, in this action, become of no importance; they would have entitled the defendant to rescind the contract, if he had seen fit, but, as he elected to retain the vessel, he is only entitled to such deduction from the price as will equal the damage he sustained, and in this aspect of the case the jury should take into consideration the testimony as to the value of the steamer at the time of the sale to the defendant. That these were all questions for the consideration of the jury. If they found that the defendant was defrauded, they would make such a deduction from the plaintiffs’ recovery as would compensate him for the condition of and the repairs to the machinery which was under water, and the jury must determine the amount to be allowed to defendant in that event. The defendant’s counsel excepted to that portion of the charge contained in the last two paragraphs. The jury found a verdict for the plaintiff for three thousand one hundred and twenty-three dollars and fifty-seven cents, being the deduction of one thousand three hundred and thirty-five dollars and seventy-five cents, from the amount claimed by the plaintiff. From the judgment entered upon the verdict, the defendants appealed. Beebe, Dean & Donohoe, for appellants. I. The court erred in the statement of the rule of damages. The correct rule is, that the damage is the difference between the value, if the ship was as represented at the time of the sale, and the actual value at that time, with the defects proved (Voorhees v. Earle, 2 Hill 288; Cary v. Gruman, 4 Hill, 625; Muller v. Eno, 14 N. Y. [4 Kern], 597). That is the rule of damages in case of sale with' warranty, and there is no reason for any different rule when the purchaser has been induced to enter into a contract by the known false representations of a party as to the condition of the article purchased. The law gives to the person who has been induced to purchase by false representations, the right to rescind; but where, as in this case, he could not rescind, it does not offer, as a premium to fraud, the certainty of no loss, and the chance of keeping more than the value, nor does it prevent a purchaser from a fraudulent vendor from making a profit. The action is on a contract; the defence is a breach of that portion of the contract which represented the quality or condition of the article purchased. It is fundamental, that “ the contract itself furnishes the measure of damages ” (Sedgwick on Damages, 200; 2 Parsons on Contracts, 44). If the damage is limited to the expense of repairing, he loses the whole use of .his vessel during the time, and the interest on the money paid (Driggs v. Dwight, 17 Wend., 71). II. The counter-claim in this case is on a warranty, if an action on the case had been brought on it—averring the warranty and the scienter—the rule of damages would have been the same as if on the warranty in assumpsit (Sedgwick on Damages, 206). (a) No particular form of words is necessary to constitute a warranty; any declaration made by the vendor during the negotiation for the sale on which the purchaser relies, in reference to-the condition of the article sold, is a warranty (1 Cow. Trea., 313; 1 Parsons on Contracts, 462). (5) Parties often elect as to whether they will bring case or assumpsit; but if the action is on a contract, though in form for a tort, the rule of damages is as in cases for breach of contract (Campbell v. Perkins, 8 N. Y. [4 Seld.], 430; Trull v. Granger, 8 N. Y. [4 Seld.], 115). III. The rulings of the court on the admissibility of evidence were founded on the same theory as to the rule of damages as the charge, and for this reason erroneous. Martin & Smith, for respondents. I. There was no error in any ruling upon the admission or rejection of evidence. It was alleged that the defendant was deceived in respect to the state of the machinery. In answer, it was certainly competent to prove that he knew, or must have known, that it was in a very bad state. The effect of the employment of the ship, all of ' which was known to the defendant, was competent for this purpose. IT. The charge correctly stated that the defendant did not set up any warranty, but relied upon the defence of fraud, and left it to the jury to construe the phrase, “ Engine department all complete,” to which there was no objection. It then told the jury, in substance, that if Captain Marks’ statements were not true, as to the state of the machinery, that circumstance was not material, if the defendant sustained no damages by reason thereof, but that even then the defendant might have rescinded the contract. The exceptions to the charge cover essentially the same ground. The point is the same, whether the party complaining is plaintiff or defendant. A party cannot recoup unless he has a cause of action upon which he may maintain an action as plaintiff. If the plaintiff were suing, his action would be “ deceit.” In such an action it is perfectly well settled that two things must concur, or no action will lie, viz.: fraud and damage. Heither, without the other will avail. It is no answer to this to say that a jury may, in a proper case, give a sum in addition to the actual damage, as smart money. So they may—but they cannot do this until, first, the cause of action is made out—until both the fraud and the damage are proved. The charge, in effect, says, that deceit will not lie unless the party complaining has been injured thereby, and the charge was right. And if deceit will not lie, the same facts will not make a good recoupement (Per Buller, J., Pasley v. Freeman, 3 T. R., 51-56; also, pp.'61, 62, 64; Benton v. Pratt, 2 Wend., 389; White v. Merritt, 7 N. Y. [3 Seld.], 352-356, citing the cases above from, 2d Wend.; Upton v. Vail, 6 J. R., 181; Addington v. Allen, 11 Wend., 374). III. There is another technical, but none the less conclusive answer to these exceptions. It is, that the answer stated no case under which the defendant was legally entitled to give proof of false representations. To make the answer good for this purpose, the defendant must aver that the representation was made with intent to deceive and defraud. It was so held in Adding-ton v. Allen, even after verdict (11 Wend., 374). The precedents contain the words “ falsely, fraudulently and deceitfully represented,” and these words are essential .(2 Chitty's Pleadings, 703, 704; Young v. Covel, 8 J. R., 23; Cropsey v. Robinson, 5 Leg. Obs., 20; 1 Bab. Ac., fit. Actions on the Case, p. 125, f). Before the Code, the point would have been too plain for argument. How there is only room for discussion upon the question whether § 173 of the Code is applicable. And upon that it is clear, that no power exists to amend a pleading after judgment, so as to make the judgment erroneous. To sustain a judgment, the court will “ conform a pleading to the facts proved,” but not to overthrow it (Williams v. Hall, 6 Bosw., 674, 678; Gasper v. Adams, 24 Barb., 287; Englis v. Turnis, 3 Abb. Pr., 82 ; Brazil v. Isham, 2 N. Y. [2 Kern.], 17; Field v. The Mayor of New York, 6 N. Y. [2 Seld.], 179, 189; Brown v. Colie, 1 E. D. Smith, 226, 270). IV. The court, in substance, told the jury, that if the representation did not influence the defendant, he was not entitled to recover upon it; and so is the reason of the thing, and so are the authorities (Bronson v. Wiman, 8 N. Y. [4 Seld.], 182, 186, 188, 9). The point before made, is equally applicable to this exception, viz.: no proof of false representations was admissible under the answer. [MAJORITY — Cardozo, J. Brady, J.] Cardozo, J. That a declaration in an action for deceit must, under the common law system of pleading, contain an allegation that tiie representation was falsely or fraudulently made, is too well-settled to admit of cavil (see 2 Chitty PL, 703, 704 ; Evertson v. Miles, 6 J. R., 138; Young v. Covel, 8 J. R., 23; Cropsey v. Robinson, 5 Leg. Obs., 20; 1 Bac. Ab., Tit. Actions on the Case, 125, F.; Allen v. Addington, 11 Wend., 374). In the last mentioned case it was held that, even after verdict, a declaration in such an action would be fatally defective if it did not contain that averment. In Zabriskie v. Smith (13 N. Y. [3 Kern.], 322), Dsmo, J., adverting to the rifle which I have mentioned, and commenting upon Allen v. Addington, said: “ Under our present system oí pleading, I conceive that a complaint should contain the substance of a declaration under the former system.” He holds that, although the concise averments given in the form-books would be better pleading, and more in accordance with the spirit of the Code, yet, if the language employed, though in-artificial by reasonable intendment, makes out an allegation of bad faith and evil intention, it will be sufficient. Tested by this rule, I think the answer of the defendant is fatally defective; and that, under it, the defendant could not claim to give proof of false representations. If this be so, it will be-unnecessary to examine the- other questions presented on .the argument. The answer in this case, which, of course, must contain all that would be necessary to make a perfect complaint for deceit, does not contain any averment that the representation or the concealment of fact chsrged was with any false or fraudulent intent, nor any language from which such an intent can fairly be inferred. In Zabriskie v. Smith, the averment was that the representation made by the defendant, was “ false and deceitful,” and that the defendant knew the plaintiffs would rely on it, and that they did in fact rely upon it, and would not have trusted the debtor, had not the representation been made. Taking all the averments together, that complaint was held to be good. But the answer in this case is very different. It avers that the injuries complained of were known to the parties having possession of the vessel, and were concealed from the defendant. But whether such concealment was fraudulent or honest, as it may very well have been, is not averred. Hor does the answer say that the representations alleged were either “ falsely,” “ fraudulently,” or “ deceitfully ” made, or that the defendant either relied upon or was deceived by them. It only charges that the representations'were made “ to induce ” the defendant to purchase, but it is not averred that they had that effect, or that the defendant would not have bought, had the representations not been made, or had no concealment been had; nor, indeed, but that, notwithstanding the representations and the concealment, the defendant perfectly well knew the condition of the machinery. Such an answer is, I think, entirely defective, whether judged by the rules of common law pleadings or the more lax ones prevailing under the Code. The power of amendment does not aid the defendant. An amendment after trial may be made "to sustain the judgment, but not to reverse it. The cases on this point are collated and reviewed in Williams v. Hall (6 Bosw., 674). For these reasons I think the judgment should be affirmed, with costs. Brady, J. In addition to what Judge Cabdozo has said in his opinion, I deem it proper to say that in this case the alleged improper statements of Captain Marks related only to the bed-plate which was broken, assuming those statements to have been made under such' circumstances as would make the plaintiffs liable for then* falsity. The other parts of the vessel and her machinery were accessible to the defendant’s agents sent to examine them, and upon whose report he determined to purchase. For the expense of repairing or replacing the bed-plate the jury made the defendant an allowance, and substantial justice has been done in this case. The whole case warrants no charge of fraud against the plaintiffs, and none was averred in the answer, as suggested hy my associate. The defendant’s requests to charge, and the exceptions taken, were based upon an element not present, which is a sufficient answer to them, but aside from that, the charge contained all the propositions in the, defendant’s favor, to which he was entitled. The judgment should be affirmed. , Daly, J., concurred.