Opinion
February 3, 1928.
Appeal from Supreme Court of New York County.
Russel H. Kittel, for the appellant.
David W. Kahn, for the respondent.
The complaint sustained below alleges that defendant agreed to sell and plaintiff to buy certain described real estate; that at the time of the signing of the contract the defendant represented that the rentals of the described premises were a stated amount; that these representations were "incorrect;" that the plaintiff had pursuant to the contract conveyed to the defendant certain real estate in New Jersey as part of the consideration for the purchase of defendant's property. The prayer for relief is that specific performance be decreed with an abatement in the purchase price in the proportion "that the actual rental value of said premises is less than the rental value represented to the plaintiff and set forth in the contract." There are no allegations of scienter or of reliance by the plaintiff upon the alleged false representations.
We do not believe that the doctrine of specific performance with abatement should be extended to cover defects other than deficiencies in title or in the area of the land to be conveyed. (See 40 Harv. Law Rev. 476, 478.) In Rutherford v. Acton-Adams (L.R. [1915] A.C. 866, 870) Viscount HALDANE said that the purchaser "may elect to take all he can get, and to have a proportionate abatement from the purchase-money. But this right applies only to a deficiency in the subject-matter described in the contract. It does not apply to a claim to make good a representation about that subject-matter made not in the contract but collaterally to it. In the latter case the remedy is rescission, or a claim for damages for deceit where there has been fraud, or for breach of a collateral contract if there has been such a contract."
In effect the plaintiff here, by way of diminution of price, seeks damages for false representations, which he could not get in an action at law, since he has failed to allege scienter and reliance. Without scienter he could at most secure rescission. He cannot accomplish in equity by indirection what he could not accomplish in an action at law. Nor does the circumstance that he has already conveyed his own land to the defendant change the legal situation. If he requires and is entitled to equitable relief in respect to this conveyance, his remedy would be either to demand a reconveyance to himself as on a rescission, or, if that were impossible, to declare a vendee's lien for the value of the property conveyed by him upon the property of the defendant.
The order appealed from should be reversed, with ten dollars costs and disbursements, and the motion granted, with ten dollars costs, with leave to plaintiff to serve an amended complaint upon payment of said costs.
DOWLING, P.J., MERRELL and MARTIN, JJ., concur; O'MALLEY, J., dissents.
I dissent and vote for affirmance. We are here concerned with a question of pleading merely and not with the matter of ultimate relief. The English authority cited in the prevailing opinion is readily distinguishable. Here the representation was not collateral to, but a part of the contract. Under present-day conditions when the value of property, particularly when bought for investment purposes, is based largely upon its income-producing power, equity should assume jurisdiction and decree specific performance with abatement in the circumstances here disclosed. (3 Williston Cont. § 1436; Pom. Spec. Perf. [3d ed. 1926] §§ 436, 441.) Moreover, the action being by a vendee rather than a vendor, equity is more liberal in the exercise of its jurisdiction. ( Waters v. Travis, 9 Johns. 450, 464, 465.)
Order reversed, with ten dollars costs and disbursements, and motion granted, with ten dollars costs, with leave to the plaintiff to serve an amended complaint within twenty days from service of order upon payment of said costs.