Baldwin v. Wanagru Realty Corp.

Order denying plaintiffs’, motion to strike out amended answer and grant summary judgment affirmed, with ten dollars costs and disbursements. No opinion. Rich, Young and Tompkins, JJ., concur; Lazansky, P. J., and Hagarty, J., dissent with the following memorandum: This is an action upon a promissory note executed by the defendant. Defendant seeks to set up, as a defense and as a counterclaim for damages, fraud practiced upon it by the plaintiffs in an entirely separate and distinct transaction for the sale of real estate. It appears affirmatively, however, and indeed defendant does not dispute it, that the fraud, if any, upon which it relies was practiced upon one Grundy and not upon this defendant. That transaction involved a contract under seal, made by the plaintiffs with Grundy. An action for deceit, based upon a sealed contract, cannot be maintained by persons not parties to the instrument. (Denike v. DeGraaf, 87 Hun, 61; affd., 152 N. Y. 650; Henricus v. Englert, 137 id. 488; Van Allen v. Peabody, 112 App. Div. 57.) Such a contract does not bind the defendant. (Crowley v. Lewis, 239 N. Y. 264.) So it logically follows that fraud and deceit, inducing a sealed contract, is not available as a counterclaim to strangers to the instrument. (Elliott v. Brady, 192 N. Y. 221, 226.) Moreover, the defendant in its replying affidavit submits facts which indicate conclusively that its claim for fraud was settled.