Summary
In Kreshover v. Berger (135 App. Div. 27), Mr. Justice SCOTT, speaking for a unanimous court, said: "It is well settled that a representation as to the rentals which are derived from real estate is a material allegation as to its value, and if false, may lay the foundation for an action for damages."
Summary of this case from Sedgefield H. Co., Inc., v. 440 W. End Ave. Corp.Opinion
December 3, 1909.
Louis Zinke, for the appellant.
A. Joseph Geist, for the respondents.
Plaintiff appeals from a determination of the Appellate Term affirming a judgment of the City Court in favor of defendants.
The plaintiff seeks to recover the sum of $2,000, being the amount he paid upon a contract for the purchase of land. He claims to have been induced to enter into the contract by fraudulent misrepresentations and elects to rescind the contract and to sue for the recovery of his down payment. The trial court refused to receive any evidence as to the representations or their falsity upon the ground that they would vary the written instrument and are cognizable only in equity. The Appellate Term recognized the fallacy of this position, but affirmed the judgment upon the ground that the contract itself contains provisions which negative the claim that the misrepresentations were relied upon. ( 62 Misc. Rep. 613.) Since all the evidence tending to show the representations and their falsity was excluded, the case comes before us as if the complaint had been demurred to. One representation has reference to the walls of the building and is to the effect that they are properly built and do not encroach upon the adjoining land or upon the street. The fact is alleged to be that one wall does encroach upon the adjoining land from one-quarter to one and three-quarter inches. It is obvious that the representation and the fact, as alleged, do not agree, and it cannot be said as matter of law that such a variance is immaterial. The contract, however, contains a provision that the property is bought "subject to state of facts shown on survey of Chas. A. Meyer and Son, dated Sept. 1, 1905." We think that the insertion of this clause indicated an intention to rely on the survey as to the lines of the property and possible encroachments, and is inconsistent with the contention that plaintiff relied upon the misrepresentation and was led thereby to make the contract. If the plaintiff did not rely upon the representation it is immaterial whether it was false or true.
The second representation is said to have been that the premises were leased as apartments to divers tenants on leases and that no free rents were given. The fact is alleged to be that leases had been made to tenants with the understanding that for one month out of twelve during the year said tenants need pay no rent. This representation may have been, if relied upon, most material. It is well settled that a representation as to the rentals which are derived from real estate is a material allegation as to its value, and if false, may lay the foundation for an action for damages. If plaintiff agreed to buy the property on the faith of a statement that no free rents had been allowed, whereas the actual rent agreed to be paid by each tenant was only eleven-twelfths of the apparent rent, it is difficult to say that the misrepresentation was not material.
The third representation which we consider it necessary to notice is to the effect that the Lawyers' Title Insurance and Trust Company had accepted a loan for $70,000 upon said premises. The fact, as alleged, is that the company had declined to pass a loan for $70,000 by reason of the construction of the easterly wall of said premises. It is suggested that declining "to pass" is not equivalent to declining to "accept." This is, we think, hyper-criticism. The representation appears to be material both as bearing upon the value of the property and also upon the facility with which plaintiff could complete the purchase which involved mortgaging the property for $75,000 or $70,000.
Upon the face of the complaint the two representations to which we have referred seem to be material, and the plaintiff should have been allowed to prove that they were made, were false and were relied upon.
It follows that the determination of the Appellate Term and the judgment of the City Court must be reversed and a new trial granted, with costs to appellant in this court and the courts below to abide the event.
INGRAHAM, McLAUGHLIN, LAUGHLIN and HOUGHTON, JJ., concurred.
Determination of Appellate Term and judgment of City Court reversed and new trial ordered, with costs to appellant in this court and in the courts below to abide event.