Deerfield Communications Corp.
v.
Chesebrough-Ponds

Not overruled or negatively treated on appealinfoCoverage
Court of Appeals of the State of New YorkNov 13, 1986
68 N.Y.2d 954 (N.Y. 1986)
68 N.Y.2d 954502 N.E.2d 1003510 N.Y.S.2d 88

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Summaries written by judges

Summaries

  • holding that a false promise to not resell goods outside a specific geographical area "constitute[d] a misrepresentation" for purposes of fraud where geographical restrictions were not contained in the written agreement for the purchase of those goods

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  • holding that "a promise [not contained in the written agreement] made with a preconceived and undisclosed intention of not performing it . . . constitutes a misrepresentation" for purposes of a fraud in the inducement cause of action (quoting Sabo v. Delman, 3 N.Y.2d 155, 160, 143 N.E.2d 906, 908, 164 N.Y.S.2d 714, 716 (1957))

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Decided November 13, 1986

Appeal from the Appellate Division of the Supreme Court in the First Judicial Department, Burton S. Sherman, J.

James J. Higgins for appellant. Alan E. Golomb for respondents.


MEMORANDUM.

The order of the Appellate Division should be affirmed, with costs.

Defendant stated three counterclaims: (1) for breach of contract in failing to pay the balance due of the purchase price, (2) for breach of contract in violating geographic restrictions on resale allegedly agreed to orally, and (3) for fraud in the inducement in that plaintiff had no intention of abiding by the geographical restrictions orally agreed to. The second counterclaim was dismissed because the restrictions were not contained in the written contract and the jury returned a verdict of $170,000 on the first counterclaim and $130,000 on the third. The Appellate Division affirmed, without opinion.

The trial court properly denied plaintiff's motion to dismiss the third counterclaim. As we stated in Sabo v Delman ( 3 N.Y.2d 155, 160) "a promise * * * made with a preconceived and undisclosed intention of not performing it, * * * constitutes a misrepresentation". Involved in defendant's third counterclaim, therefore, is not a mere promissory statement as to what will be done in the future (see, Channel Master Corp. v Aluminum Ltd. Sales, 4 N.Y.2d 403; Sabo v Delman, supra). It alleged rather "a representation of present fact, not of future intent" (Citibank v Plapinger, 66 N.Y.2d 90, 94) collateral to, but which was the inducement for the contract, and thus was neither duplicative of the second counterclaim (see, Sager v Friedman, 270 N.Y. 472, 479) nor barred by the general merger clause contained in the contract (Danann Realty Corp. v Harris, 5 N.Y.2d 317; see, Citibank v Plapinger, supra).

Moreover, review of the jury charge makes clear that there was no duplication of damages in the jury's awards on the first and third counterclaims. The measure of damages recoverable for being fraudulently induced to enter into a contract which otherwise would not have been made is "indemnity for [the] loss suffered through that inducement" (see, Sager v Friedman, 270 N.Y., at p 481, supra). Here the jury was properly allowed to award damages to defendant on the third counterclaim for the costs to locate the goods, the costs to repurchase the goods, storage fees and disposal costs, and under the first counterclaim for the balance remaining due on the purchase price for the goods sold and delivered.

The court concludes that plaintiff's remaining allegations of error are without merit.

Chief Judge WACHTLER and Judges MEYER, SIMONS, KAYE, ALEXANDER, TITONE and HANCOCK, JR., concur.

On review of submissions pursuant to section 500.4 of the Rules of the Court of Appeals (22 N.Y.CRR 500.4), order affirmed, with costs, in a memorandum.