Electrical Audit & Rebate Co. v. Greenberg

Leventritt, J. The complaint in this action alleges a contract in writing whereby the defendants agreed to pay the > plaintiff fifty dollars for inspecting their electrical installation for the purpose of determining the correctness of charges for electric current — payment to be made upon presentation of the certificate of inspection. The contract further provided that the plaintiff would, without extra charge, obtain-the lowest rates 'for the defendants’ electric current, test their meters, examine their meters whenever necessary, and audit their future bills, as also those of the preceding year and a half; and the plaintiff guaranteed “ to obtain at least forty per cent rebates on all overcharged bills to date or refund the fee paid under this contract.” The defendants in their answer allege that there was an oral agreement to the effect that the plaintiff should audit [516] their 'bills for a year, and that the fifty dollars should not be paid until the plaintiff had obtained a rebate of forty per cent on all their bills for the past year and a half. They then plead that they were induced to sign the paper on which this action is based through the misrepresentation of one Hirsch, the plaintiff’s soliciting agent, that the writing embodied the oral agreement; that they did not intend to make or deliver the agreement which they signed, and that they were induced to do so solely by reason of the “ deception, fraud and artifice ” practiced by such agent. In an effort to establish this plea, the following questions were addressed to one of the defendants on his direct examination: “ What statements did Mr. Hirsch make to you about the contents of the paper? Would you have signed the contract if you knew that it provided that you were to pay $50 for a simple certificate of inspection?” These questions were objected to .and the evidence sought was excluded by the trial justice. That exclusion was error. The defense was fraud in inducing the defendants to sign a contract to which they claim they had never agreed. What the real agreement was, what assurances Hirsch made that it was contained in the writing, and the mental attitude of the defendants respecting such assurances were all facts material to this defense. Thorn v. Helmer, 2 Keyes, 27; Strauss & Co. v. Welsbach Gas Lamp Co., 42 Misc. Rep. 184; Trankla v. McLean, ,18 id. 221. We have found frequent occasion to call attention to the rale that, in the Municipal Oourt, in actions upon written contracts, though fraud may not be proven as the basis for affirmative relief, it is always available as a defense to a claim founded on the contract. Pelgram v. Ehrenzweig, 51 Misc. Rep. 31; Smith v. Hildenbrand, 15 id. 129; Richards v. Littell, 16 id. 339; Malkemesius v. Pauly, 17 id. 371; Schollars v. Coghlan, 54 id. 612. The fraud may be either that which induced the contract or which induced the execution thereof. • The plaintiff relies upon cases supporting the rule which declares parol evidence inadmissible to vary the terms of a written instrument. But he cites no case which holds that [517] the court may not inquire or ascertain whether a contract sued upon was ever, in fact, made. In Koehler & Co. v. Duggan, 49 Misc. Rep. 100, we held that evidence which bears upon the intention of the parties to make any contract at all, when executing a writing purporting to be a contract, does not offend the rule. Here the defense interposed and sought to be proven was not to the contract, but to the instrument which purported to represent the contract. If the plaintiff’s solicitor who prepared the instrument in suit and who must, therefore, have been familiar with its contents, represented to the defendants that it conformed to the oral agreement, the defendants were justified in relying upon those representations; and they owed the plaintiff no duty of vigilant effort to discover their falsity. Brown v. Post, 1 Hun, 303, affd., 62 N. Y. 651. They were not called upon even to read the instrument signed. Wilcox v. American Telephone & Telegraph Co., 176 N. Y. 115. One who perpetrates a fraud is not permitted to say to the party defrauded that he ought not to have believed or trusted. Albany City Savings Institution v. Burdick, 87 N. Y. 40. It follows that the evidence which the defendants sought to introduce in support of their defense was admissible and should have been received. The judgment must be reversed, Gildersleeve and Erlarger, JJ., concur. Judgment reversed and new trial ordered, with costs to appellant to abide event.