Craig v. Ward

By the Court, Johnson, J. The action is brought to recover damages for false and fraudulent representations made by the defendants to the plaintiff, by which he was induced to purchase of them a certain bond and mortgage executed by one Davis, on the 6th of September, 1855. The first question raised by the defendants’ counsel is upon the exception to the ruling at the trial admitting the evidence of the representations of the defendant Clark that the mortgage was a bona fide mortgage well secured, and that the mortgagor had a clear title to the land, and this mortgage was the first lien, and that there was no usury or other defense to it. This evidence was objected to by the defendants’ counsel on the ground that there was no averment of any such representation, in the complaint, and the evidence was therefore immaterial and incompetent. This raises simply the question of variance between the pleadings and proof. This particular misrepresentation is not specifically alleged in the complaint. The complaint, on this subject, avers, that the defendants stated and represented “ that the said mortgage was a good and valid security in the hands of said defendant William H. Ward,” and “ that there was no usury therein or other defense thereto,” This is a variance which might have been material under the former system of — 382 — practice, but cannot be regarded as such under the code. No variance between the allegation in a pleading, and the proof, can now be deemed material, unless it have actually-misled the adverse party, to his prejudice. (Code, § 169.) When it has not not thus misled, the court may direct the fact to be found according to the evidence, or may order an immediate amendment without costs. (Id. § 170.) And this applies to all actions and defenses. (Catlin v. Gunter, 1 Kern. 368.) When it appears that the party was not, and could not have been thus misled, the variance may be disregarded without amendment. (Bennett v. Judson, 21 N. Y. Rep. 238. Harmony v. Bingham, 1 Duer, 209.) This I think necessarily results from the provisions of the code. There is nothing in the case to show that the defendants have been misled by this evidence, to their prejudice. It was directly in support of the cause of action alleged, to wit, fraudulent misrepresentations in regard to the subject of the sale. It is not a case of failure of proof, of the cause of action, provided for by § 171 of the code. A more important and difficult question arises upon the question of the introduction of the judgment record in evidence, in the action between Eliza M. Eathbone, plaintiff, and these defendants, and others, who were also defendants, for the purpose of establishing the matters therein determined. The object of that action, as appears by the record, was to have the mortgage in question decreed void on the ground that it was fraudulent and invalid; and to have the premises described therein sold, and the avails applied in satisfaction of the plaintiff’s mortgage. The plaintiff became the purchaser and assignee of the mortgage in question, during the pendency of that action, and thus became bound and concluded by the judgment, the same as though he had been a party to the record. (Harrington v. Slade, 22 Barb. 161. Sedgwick v. Cleveland, 7 Paige, 287. Cook v. Mancius, 5 John. Ch. 89. Edwards on Parties, 79.) He stood the same as though he had been actually a co-defendant, with — 383 — these defendants, in that action. They were all concluded hy the judgment in that action, as between them and the jDlaintiff, and all persons claiming under the jfiaintiff by title subsequent. But the question here arises whether the judgment in that action is conclusive between the defendants in it, in another action between themselves, involving the same matters there adjudicated. I think there can be no doubt that it is so, as far as the matter in the two actions is identical, upon well established principles, although I do not find that the precise question has ever been directly presented and adjudicated. A familiar case is that of an action brought by a third person against the vendee of a chattel, claiming title. If the vendor appears and defends, or if the vendee gives him. notice so that he has the opportunity to do so, the judgment against the vendee is conclusive in an action by the latter against his vendor, on the implied warranty of title, although the vendor was no party to the action. And the rule is the same in regard to all persons who stand in such a relation to each other that the matters determined in an action brought by a third person against one, will necessarily again come in question, in proceedings between him and the other, as vendees, assignees, grantees, sureties, persons acting-under an agreement for indemnity, and the like. (See American notes to Duchess of Kingston’s case, 2 Smith’s Lead. Cas. 552, 553, and cases there cited.) It is not necessary that the parties should be the same, in the second action, or that they should occupy the same relative positions, of plaintiff and defendant, as in the former action, or that the form of action should be the same. The test is whether the party against whom the former judgment is sought to be used was, or had an opportunity of being heard, and the matter litigated is the same, and the parties are in privity as to such matter. (Castle v. Noyes, 14 N. Y. Rep. 329. Doty v. Brown, 4 Comst. 71. Kingsland v. Spalding, 3 Barb. Ch. 341. Embury v. Conner, 3 Comst. 511. Ehle v. Bingham, 7 Barb. 494. Cowen & Hill’s Notes, 824, 975.) It is unnecessary to multiply — 384 — authorities upon a rule so well established. It cannot be denied that the plaintiff in regard to the subject matter of both actions, stands in legal privity with the defendants. And it seems to me equally clear that the questions in respect to the vahdity or invalidity of the mortgage in question, by reason of the fraud, are identical. The question of the fraud, and its effect upon the validity of the mortgage as a lien or incumbrance upon the land, was then tried and determined, and that precise question is in litigation here. It may be that the record, when introduced, established only one fact, which the plaintiff was required to prove, in order to maintain his action, but to whatever extent it went as an adjudication on the questions here tried, the plaintiff was entitled to the benefit of it, on this trial. This being an action of fraud, the plaintiff of course was required to prove, in some way, that the defendants practiced a fraud upon him, in the transfer; and this fact the record itself would not establish, because that fraud was not litigated in the other action. But I do not understand from the case that it was introduced for that purpose, or that any such effect was given to it as evidence. The representations were made out by other evidence, and the previous fraud only, and consequent invalidity of the mortgage, established by the record. For this purpose and to this extent it was strictly legitimate. This was the matter directly adjudicated, and necessarily involved, in the determination in that action, and that was the only effect the judge gave to it in his charge. This covers both the exception to the admission of the evidence, and to the charge of the judge on the subject of its conclusiveness, neither of which was well taken. Had the representations proved been contained in the covenant in the assignment, and the action been brought on the breach of the warranty, there can be no doubt, I think, that the record would have been entirely conclusive as evidence of the breach. It is no less conclusive in this action as to the fact that the representations were untrue. The form of the ac — 385 — tian does not affect the competency of the evidence, if the fact it establishes is pertinent, nor its conclusive character in regard to such fact. The action for fraud can be maintained for a false representation in a written instrument, as well as for one made verbally, and there is nothing in the exception to that part of the charge. The exception to that part of the charge as to the liability of the defendant Ward, if the representations were unrue, although he did not know they were so at the time, but knew facts which in the exercise of ordinary sense and prudence would have led him to such knowledge, is not well taken. It does not involve the proposition of his liability, in case he actually believed the representations to be true at the time. It carefully excludes that fact, and only raises the question as to whether a party making a representation false in fact, should actually know it to be so, to render himself liable, in an action for fraud. That he is liable, or may be, in such a case, is fully established by the decision in Bennett v. Judson, (21 N. Y. Rep. 238,) before cited. Besides, in this case, the defendant Ward was bound, not only by the representations, but by the knowledge of their falsity, of his agent Clark, who made most of them. If a party makes a material representation, without knowing whether it is true or false, and it turns out to be false, the action lies for the fraudulent misrepresentation. In respect to the charge on the subject of the measure of damages, conceding it to be erroneous, it is difficult to see how it can be pretended that the error was prejudicial to the defendant. There is nothing in the case to show that the verdict could have been less, had the rule now insisted upon by the defendants’ counsel been laid down by the court as the true measure of damages. On the contrary, there is every reason to suppose it would have been much larger. • The exrception is of the most general character; and no request was made to the court to give any different instructions on that subject. If the error was beneficial to the defendants, the — 386 — exception is unavailing; and as nothing is shown or suggested hy the defendants’ counsel that it was, in fact, or could have heen otherwise, it will not be presumed that it was so. [Monroe General Term, March 3, 1862. Johnson, Smith and Welles, Justices.] On the whole, I am satisfied that there was no material error committed, either in the charge or in the rulings during the progress of the trial, or in the refusal to charge as requested by the defendants’ counsel. A new trial must therefore be denied.