Sharp v. Mayor of New York

Barnard, J. It must now be regarded as settled that if a party makes representations in such manner as to import a knowledge in him of facts, whilst in fact he has no knowledge of the facts, and the representations are made with the intent that another shall rely on them, and that other does rely on them, and those representations turn out to be false, it is as much a fraud as if the party making them knew them to be untrue. (Bennett v. Judson, 21 N. Y. Rep. 238.) Upon this principle (the character of the representations, the reliance of the plaintiff on them, the falsity of them, and whether the plaintiff was damaged thereby, having been submitted to the jury and by them found in the plaintiff’s favor,) the defendant here is clearly liable, provided the committee had authority to bind it, and provided there is no objection to a recovery by reason of the frame of the complaint, and also provided the oral proof of the representations introduced does not fall within the rule prohibiting a written instrument from being altered, varied or modified by parol evidence. As to the objections to the form of the complaint. This is on the ground that the complaint did not state any fraudulent, willful or intentional misrepresentation. The complaint however states the representations that were made, stating — 270 — them as representations of facts made by the defendants of their own knowledge, and not as expressions of opinion or belief; that those representations were false; that the plaintiff relied on them; and that he suffered damages thereby. Proof of these facts would be sufficient to entitle the plaintiff to recover, unless the defendant could in some mode justify 'the representations. Upon these facts the law adjudges fraud. It would undoubtedly have been more in consonance with the verbiage of the former system of pleading to have alleged fraud; but it seems scarcely necessary now to put in a pleading these sounding phrases which are the mere result adjudged by the law to arise on the facts alleged. But the omission of such an allegation as this does not substantially vary the cause of action. The whole frame of the complaint clearly'shows what the cause and nature of the action was intended to be. If material the complaint could have been amended at the trial by inserting this allegation as an allegation material to the cause of action mapped out in the complaint. In such case a judgment will not be reversed although the amendment has not been actually made. As to the objection that oral proof of the representations is inadmissible, on the ground that it tends to contradict &c. the written lease. This evidence was offered and admitted not for the purpose of showing that it was intended to pass something which by the terms of the lease was not passed, but for the purpose of showing what the terms of the lease would have passed, if the representations had been true. In this view the objection to this testimony, on this point, that a written instrument cannot be contradicted &c. by parol evidence, is untenable. (Whitney v. Allaire, 1 Comst. 308.) Indeed the case of Whitney v. Allaire is almost identical with the present case. That action was covenant brought for rent on an instrument in the following words : “ I have this day hired of Stephen Whitney the water lot and his right to the wharf on the east side of Market slip, for one year from 1st of May next at the yearly rent of $1000, and — 271 — taxes on said water lot whatever it may he, the rent to be paid quarterly, 9th February, 1837.” The defendant claimed damages by reason of representations made by the plaintiff respecting the extent of his right. Parol evidence was admitted to prove the representations, and such admission was held proper, notwithstanding the objection that the plaintiff demised only Jiis right. There is no essential difference between the expression “ all my right ” and the expression “ so much as belongs to me.” As to the authority of the committee to bind the corporation by representations. In Sandford v. Handy, (23 Wend. 267,) the defense consisted in false and fraudulent representations as to the cost, location and value of certain property made by one who was the plaintiffs’ agent to effect a sale of the property. On the trial the evidence of the representations was excluded. On appeal the evidence was held to be admissible. The court, in its opinion, says: “If the agent at the time of the contract makes any declaration, representation or admission touching the subject matter of the contract, it is the representation, declaration or admission of the principal. These principles are fully borne out by the authorities referred to, founded in good sense and with a just conception of the commercial and other business transactions of life from which they have been derived.” And again , court say: “The agent here had power to procure the subscription to the contract of sale, and in the absence of special instructions to the contrary, at least, does not this imply the right to use the ordinary means and inducements to accomplish the end ? Must not the plaintiff have expected that the agent would speak of the property, its situation, quality, etc ?” “This is laid down as a general principle, and upon reason and authority is applicable to both special and general agents.” And the point having been raised that the principal should not be held responsible for misrepresentations, as no authority to deceive, and defraud can properly be implied as one of the — 272 — means, the court say: “ There is undoubtedly much force in this view, and at a very early day it carried with it the judgment of the court. (Bro. Abr. Action on the Case, pl. 8.) But Lord Holt overruled that decision and held him liable. This has been approved law ever since.” Again, in the case of the Bank of the United States v. Davis, (2 Hill, 451,) this language is held: “Nor is there any thing novel or singular in the idea that an agent may be guilty of fraud and deception in transacting the business of his principal, or in the law that holds the latter responsible for the consequences, to third persons. The doctrine is very familiar and of every day application in the administration of justice.” No authority has been cited overruling these principles. Thus, unless a different rule obtains where a corporation is principal, the defendant here is bound by the representations of its committee. There can be no doubt but that the representations here were such as touched the very matter with which the committee was charged; equally so with the representations in 23 Wend. Now does a different rule obtain in this respect when a corporation is principal P The general principle that a corporation may delegate to agents the performance of any act which it can itself perform, is well established. Now there is no doubt but that the corporation might itself have entered into negotiations respecting the leasing of the slip, and have settled on the terms. That power then it could confide to its agents. Can there be any doubt but that if the corporation had negotiated this lease, and in the course of such negotiation had made these representations, it could escape liability on the ground that it had no power to make them ? The granting to a body aggregate certain powers, rights and privileges which it may use, possess and enjoy, will not give that body immunity from wrongs or unlawful acts committed by it in the carrying out of those powers, or in the execution of any act it may be authorized to perform. — 273 — The suggestion that a corporation cannot he liable for a fraud committed may be correct as to fraud not in any way connected with or committed in the course of, and tending to carry out, jsome power or act which it is authorized to perform. But it is not correct as to fraud so' connected or committed. A fraudulent representation is in effect a wrongful and unlawful action. And the argument is that a corporation has no power to commit a wrongful or unlawful act, and having no power to commit it, it is not liable therefor. But it is held that a corporation may be sued for an unlawful conversion of goods, and damages recovered if it be found to have unlawfully converted them. (Beach v. Fulton Bank, 7 Cowen, 485.) So, also, it may be sued and damages recovered for an unlawful refusal to permit stock to be transferred. (Bank of United States v. Davis, 2 Hill, 451.) In these cases the argument that the corporation was not invested by its charter, or by its stockholders, with power to commit any unlawful act or wrong, and that it could not by any wrongful or unlawful act affect the interests of the stockholders, was applicable to the same extent as it is in the present case; and those arguments were strenuously urged in the case in 7 Gowen. It is urged that a corporation will not be affected by any representation made by an agent, unless the agent was directly authorized by resolution to make the particular statement. The principal is liable for the false representations of the agent made in and about the matter for which he was appointed agent, not on the ground of express authority, given to the agent to make the statement, but on the ground that as to the particular matter for which the agent is appointed he stands in the place of the principal, and whatever he does or says in and about that matter is the act and declaration of the principal; for which the princij)al is just as liable as if he had personally done the act or made the declaration. The power of the agent to render the principal liable for representations flows from his mere appointment to do the — 274 — act or transact the business in and about which the representations are made. This is clearly the doctrine of the case in 23 Wend. There is no principle of the common law by which the incidents attaching to the appointment of an agent, when that appointment is made by a corporation, are more restricted than when the appointment is by a"n individual. No train of reasoning has presented itself which leads to the conclusion that there is any necessity or propriety in establishing the doctrine that when an agent is appointed by a corporation the incidents attaching to that agent are more restricted or of a different nature than in other cases. It is not meant to be asserted that a corporation can bind itself in all matters to the same extent as an individual can, or that by the appointment of an agent it can bind itself in matters as to which its own act would not bind. But it is meant to be said that where a corporation has power to do some act, and as incident to that act, to render itself liable for representations made in and about the doing of that act, it can appoint an agent to do that act, and from the mere fact of such, appointment the same powers will flow to the agent as if he had been appointed by an individual, provided only that the powers so flowing could have been exercised by the corporation itself. In this case the corporation had power to negotiate a lease of the slip, and in the course of such negotiation to render itself liable for any misrepresentation made in relation thereto. It had also power to appoint an agent to conduct such negotiation, and from such appointment there flowed to the agent the power to render the corporation liable for any misrepresentation. As to the representation made by the comptroller and corporation counsel. The point made by the appellant that the plaintiff took the lease with knowledge given him by its terms that there was a question as to the extent of the defendants’ right, is fully met by the evidence of what took — 275 — place between him and the comptroller and the corporation counsel. In this view that evidence was certainly proper. The resolutions of September 8,1852, and 4th October, 1852, and the survey of Ludlam, were properly received in evidence, for the reasons mentioned by the judge who presided at the trial, in his charge to the jury." This survey, and these two resolutions, were also admissible in another view, viz: to show ratification. Shortly prior to Sept. 8, 1852, the plaintiff communicated to the defendants’ officers the fact that his possession of the property which had been represented to him to belong to the city was obstructed. The defendants then passed a resolution directing the property to be surveyed. It was surveyed, and the surveyor made a map representing the property to belong precisely in accordance with the representations made to plaintiff. Thereupon, on the 4th October, 1852, another resolution was passed, reciting the survey, and that the lessee had been obstructed in obtaining possession, and directing the common council to put and keep the lessee in possession and enjoyment of the property, as laid down on the map. Reasonable intendments and presumptions are to be drawn from the acts, whether of individuals or corporations. Now, it is rather extraordinary, if the common council had not deemed the corporation obliged, in good faith, to protect the plaintiff in the possession of the whole of the premises, that this course should be pursued. If the only information on the subject which they had was what appears by the terms of the lease, they would at once have said what their counsel now urges us to say for them, “ we only leased you what we owned ; we neither contracted to put or keep you in possession of any specified portion of the slip ; you took the lease on your own responsibility, being well apprised that there was uncertainty as to the extent of our ownership. We are not obliged, either in law or in good faith, under these circumstances, to enter into any litigation on the subject.” If, on the contrary, they were informed of the representations made — 276 — Tby their committee, it was very natural for them to say: “ true, those representations were unauthorized, but you took the lease relying on them, and we consider ourselves bound by what our committees have represented, and will therefore do all in our power to put and keep you in possession of what our committee represented we owned.” It can be readily imagined that this was the line of argument urged in the debate respecting the adoption of these resolutions. The reasonable presumption and fair intendment is, that the common council, when they passed these resolutions, knew of the representations that had been made, and passed the resolutions in view of them. This is a ratification of the act of the committee in making such representations. This was the time for the defendants to rescind and make restitution. But instead of doing that, they chose to contest the claim of Murray, and by the passage of these resolutions not only ratified the representations of their committee, but in effect again represented that they owned the property. These views dispose of the objections to the admission of evidence of the representations made by the committee ; of .the resolution directing a survey ; of the survey ; and of the resolution of October 4, and of the first eight points made by the appellants, except the objection to the representations made by the street commissioner. This, if an error, is cured by the charge of the judge, who in effect directed the jury to disregard it. There are two remaining points urged by the appellants. 1st. That by reason of the plaintiff’s application for.a reduction of the rent, after the representation and after he knew of the adverse claim, and his acceptance of the reduction and the instrument by which it was made, he cannot recover; and this is urged on three grounds. (1.) That the reduction was in fact made in part by reason of the adverse claim. (2.) That the plaintiff in his petition suppressed the fact of this claim, which suppression must be deemed fraudulent. (3.) That by accepting the instrument — 277 — reducing the rent, he, knowing of the representation, has affirmed the lease to be good in every respect. The charge of the judge is very satisfactory on these points ; but there is an additional reason why they do not form an answer to this action. At the time of the application for a reduction of rent, and of the acceptance of the instrument reducing it, the defendants were defending against the plaintiff, in a suit brought in respect to this piece of property, which had not then been tried. The plaintiff’s calling on the defendant to put him in possession of the land which had been represented to belong to it, and to protect him therein, was a clear assertion of an intent to hold it responsible if it was unable to give him what he ought to have. The defendants, by the resolutions of September 8, 1852, and October 4, 1852, and the defense of the suit brought by Murray, for the reasons stated when speaking above of those resolutions, recognized the liability. Pending that suit, both parties must have considered the claim as in abeyance. Consequently there was no concealment, nor could the acceptance of the subsequent instrument be a waiver of a claim considered by both parties to be in abeyance. With respect to the objection to the rule of damages, it is only requisite to refer to the views expressed by the judge on the trial. The judgment should be affirmed with costs. Sutherland, J. concurred.