Opinion
July, 1916.
Havens Havens (James S. Havens, of counsel), for demurrer.
Arthur W. Wile (Percival D. Oviatt, of counsel), opposed.
The records of this court show that judgments have been recovered in actions at law growing out of the same transactions upon which the present complaint is based. Downey v. Finucane, 205 N.Y. 251; Lane v. Fenn, 65 Misc. 336. It appears that other parties have found an adequate remedy at law for relief from transactions which the plaintiff claims it is necessary to resort to a court of equity to obtain. It is fundamental that no recourse to a court of equity will be permitted where a party has a full and complete remedy at law.
On this demurrer to the plaintiff's complaint the plaintiff must stand or fall upon the allegations contained in the complaint and cannot rest her right to relief in equity merely upon the demand for equitable relief. O'Brien v. Fitzgerald, 143 N.Y. 377, 381. If the allegations in the complaint are as consistent with a remedy at law as with one in equity the demurrer must be sustained notwithstanding that the plaintiff has demanded equitable relief. Bell v. Merrifield, 109 N.Y. 202; Schank v. Schuchman, 212 id. 352.
The evil of shifting the trial of the transactions set forth in the complaint without peculiar and sufficient reasons from a court of law to a court of equity lies in the fact that thereby the defendants will be deprived of their constitutional right to a jury trial. This will not be tolerated. Libmann v. Manhattan R. Co., 59 Hun, 428, 430. It is not alone the form of the relief asked for that serves to distinguish an equitable from a legal cause of action, but also the form of trial and if the cause of action is essentially one in which the defendants are entitled to a jury trial they cannot be deprived of it by giving the cause of action the form and semblance of one in equity. Reubens v. Joel, 13 N.Y. 388, 493.
The complaint does not state facts justifying a resort to equity. There are no facts alleged which bring the case peculiarly within the jurisdiction of equity. The gist of the action is one for rescission without which the plaintiff has no standing in equity. If the subscriptions are not to be rescinded her action is one at law. No rescission will be directed where it does not appear that such relief is necessary. No such allegations appear in the complaint. Nor is any necessity for an accounting shown. If the subscriptions are rescinded no accounting will be required. There is an allegation that the voting trust certificates accompanied the bonds but there is no allegation that any liability rests upon the plaintiff by reason of the ownership of these certificates. No liability of course rests upon her as a result of the ownership of the bonds. The only reason for demanding a rescission is to put the demand in the form of equitable relief. Leaving out the demand for relief the complaint might serve for an action at law for damages for fraud and deceit. There is no allegation of the necessity for avoidance of a multiplicity of suits and if there were the facts do not bring the case within that branch of equity jurisdiction. Marsh v. Kaye, 168 N.Y. 196, 201; Prospect Park Coney Island R.R. Co. v. Morey, 155 A.D. 347, 352. Avoidance of multiplicity of suits will not prevail against defendant's right to a jury trial. Marsh v. Kaye, 168 N.Y. 196. There is no fiduciary relationship to establish and no necessity for resort to equity to reach the funds in the hands of the Duffy testamentary trustees any more than there is to reach the funds in the hands of the executors. Indeed the testamentary trustees of Walter B. Duffy are also described as his executors. The claim against the Duffy legatees should not operate to deprive this defendant of his right to a jury trial. The date of the prospectus and advertisement attached to the complaint as exhibits is October 7, 1905, and the date of the summons is April 3, 1913, but nowhere is there an allegation in the complaint as to the date when the bonds were subscribed for, purchased or delivered. So far as the complaint shows the Statute of Limitations has run against any legal claim of plaintiff. An allegation that it has not run is necessary as it would be anomalous to allow her to resort to equity if her remedy at law has lapsed. National Bank v. Bussing, 147 N.Y. 665, 672; Borst v. Corey, 15 id. 505, 510. The complaint contains no allegation as to when the alleged fraud was discovered, the only statement being that "it was subsequent to July 1, 1907." This indefinite allegation is not sufficient. The complaint should allege when and how knowledge of the alleged fraud was obtained in order that the court may determine whether reasonable effort has been made to ascertain the facts and more distinctly aver when the fraud was discovered and how discovered so that the court may see whether or not by the exercise of ordinary diligence the discovery might have been made before. Hardt v. Heidweyer, 152 U.S. 547, 558. The reason for this rule is that if diligence has not been exercised in the discovery of the alleged fraud and in the assertion of the right to rescind on account thereof the plaintiff must fail in equity on account of laches. An offer to return the bonds promptly upon the discovery of the falsity of the representations is an element of plaintiff's cause of action. Canadian Agency, Ltd. v. Assets R. Co. No. 1, 165 A.D. 96. Where the complaint is as indefinite as it is in this case with reference to the discovery of the alleged fraud the court may well hold it to be insufficient and demurrable on the ground of laches. The statement that the discovery of the falsity of the representations was made subsequent to July 1, 1907, may mean that such discovery was made on the second day of July of that year so that it is possible that nearly six years have expired since the discovery of the fraud. Not only have plaintiff's assignors been guilty of laches but they have affirmed the transaction complained of by their assignment to plaintiff. She cannot ask to rescind after affirmance by her assignors. Schiffer v. Dietz, 83 N.Y. 300, 308; Pryor v. Foster, 130 id. 171, 175.
The plaintiff has not brought her case within any of the recognized heads of equitable relief but on the contrary it appears that she has a full and complete remedy at law, but if the complaint be treated as stating a cause of action at law the demurrer must be sustained because causes of action have been improperly united. Dennin v. Wood, 212 N.Y. 602.
The complaint therefore does not state facts sufficient to constitute a cause of action, causes of action have been improperly united and the demurrer must be sustained, with costs.
Demurrer sustained, with costs.