
    ISAAC INNESS, Appellant, v. BENJAMIN A. WILLIS, Respondent.
    
      Land contract—action by vendee to recover moneys paid under, on ground of fraud—implied warranty of title.—Pleading.
    
    A complaint which alleges defendant’s lack of title; his hopeless insolvency at and since the time of making the contract; that defendant concealed his want of title with fraudulent intent, “ knowing that he could not convey to plaintiff said premises as agreed in the contract;” that plaintiff was ignorant of defendant’s lack of title, &c., contains sufficient allegation of fraud to justify rescission of a contract for the purchase of real estate, and to support a recovery of damages to the amount paid on the contract and for searching title, &c., this, though defendant be not actually in default under the contract. It makes no difference whether the fraud consisted in positive representations, or concealment of things the vendor was bound to disclose. The vendor in an executory contract for the sale of land, in the absence of express statements to the contrary, represents and warrants that he is the owner of the property.
    Before Sedgwick, Ch. J., Freedman and Russell, JJ.
    
      Decided April 3, 1882.
    Appeal from an order sustaining a demurrer to the complaint, and from a judgment entered thereon.
    The complaint was as follows: “I. That on or about the 19th day of May, 1880, in the city of New York, the defendant, Benjamin A. Willis, an attorney at law, in said city, made with the plaintiff a certain agreement or contract in writing, wherein, in consideration of the sum of $24,000, to be paid to him as therein set forth, by the plaintiff, the said Willis did contract and agree with the plaintiff to sell to said plaintiff three certain lots of ground on the south side of Ninety-fourth street, in the city of New York, situate 11 feet 8H inches west of Madison avenue, and together in size 76 feet 8 inches front, by 102 feet 2 2-3 inches in depth, and said Willis did further contract and agree therein to execute, acknowledge and deliver to the plaintiff or his assigns, a deed containing a general warranty and full covenants" for the conveying and assuring to him or them the fee simple of said premises, free from all incumbrance, which deed should be delivered on the 12th day of June, 1880, at 12 o’clock M., at the office of said Willis, at No. 51 Chambers street, in the city of New York. II. That upon the making and execution of said contract, as aforesaid, the plaintiff paid the defendant, as a part payment thereon, the sum of $750. III. That at the time of the making and execution of said contract, as plaintiff is informed and believes, said Willis was not the owner of the aforesaid premises, and had no title to the same. IV. That the said Willis has not acquired title to the said premises at any time subsequent to said contract, as plaintiff is informed and believes. V. That the said Willis, at the time of executing the aforesaid contract, had and still has numerous unsatisfied judgments, aggregating at least the sum of $40,000, docketed against him in the city and county of New York, as plaintiff is informed and believes. VI. That at the time of executing the aforesaid contract, the defendant, Willis, was and now is wholly insolvent and irresponsible, as plaintiff is informed and believes. VII. That all the negotiations attending the making and execution of said contract were made by the said Willis'with one J. H. Inness, who acted as this plaintiff’s agent, attorney and legal adviser. VIII. That the defendant, Willis, did suppress and conceal from the said J. H. Inness and also from plaintiff the fact, that he was not the owner of the aforesaid premises, and had no title to the same at the time he executed the aforesaid contract with this plaintiff. IX. That said Willis did suppress and conceal from plaintiff and his agent and adviser the fact, that he was not the owner and had no title to the premises aforesaid, fraudulently and with intent to deceive this plaintiff and his said agent and adviser, and to induce plaintiff to enter into the said contract and to pay the said sum of $750, said Willis well knowing that he could not convey to the plaintiff the said premises, as agreed in said contract, as plaintiff is informed and believes. X. That the said J. H. Innes, plaintiff’s agent and adviser as aforesaid, relying entirely upon the contract hereinbefore set forth, the same having been drawn and offered by said Willis, and relying upon said Willis’s ownership of the said premises, and ignorant of his want of title thereto, as plaintiff is informed and believes, did advise plaintiff to enter into said contract, as a safe and binding one, and to pay said $750, as aforesaid, which the plaintiff did, relying upon such advice, and wholly ignorant of said defendant’s want of title. XI. That upon discovering the fraud and deceit of defendant, plaintiff repudiated and rescinded the aforesaid contract and demanded of the defendant the return of the aforesaid part payment of $750, but that the defendant neglects and refuses to pay the same. XII. Plaintiff further alleges, that he has paid to his counsel, J. H. Inness, for services rendered, about and under the aforesaid agreement, and for making an examination of title to the premises aforesaid, and for counsel and advice in regard to the same, the sum of two hundred dollars, which this plaintiff claims against the defendant, as special damages. Wherefore, plaintiff demands judgment against the defendant for nine hundred and fifty dollars, with interest on the sum of seven hundred and fifty dollars, from the 19th of May, 1880, together with the costs of this action.”
    The defendant demurred to the complaint on the ground that it did not state facts sufficient to constitute a cause of action. The demurrer was sustained at special term, the judge delivering the following opinion : “ The defendant is entitled to judgment on the demurrer. The performance of the plaintiff was a condition precedent to that of the defendant. No demand was made for the deed when it was to be given, nor did plaintiff show he was prepared to take title. Order to be settled on notice.”
    
      M. L. Hollister and J. H. Inness, for the appellant.
    
      William Settle, for the respondent.
   By the Court.—Horace Russell, J.

At the argument of this appeal, I was strongly inclined to concur in the view of the learned judge who sustained the demurrer, but a careful examination of the complaint has led me to a different conclusion. He treated this case as if the plaintiff had, for no reason, rescinded an executory contract, and, while himself in default, had sued to recover the moneys paid as a deposit on account of the purchase. If that were the case, of course the plaintiff could not recover. The argument, and authorities cited by the counsel for defendant, relate only to cases of that character (Brown v. Weber, 38 N. Y. 187; Watt v. Rogers, 2 Abb. Pr. 261; People ex rel. Taylor v. Brennan, 39 Barb. 522; Sinclair v. Tallmadge, 35 Barb. 602).

But an examination of the complaint (and the demurrer is to be determined solely by its allegations) shows that the action sounds in fraud, for which the plaintiff claims he had a right to rescind upon discovery of the fraud, and, having rescinded, to recover the moneys paid on account of the contract: The only question is whether the complaint alleges such fraud as, if proved, would authorize rescission and recovery.

There can be no doubt that, as fraud vitiates every contract, a party to an executory contract into which he has been induced to enter by fraud, may, if he choose, rescind upon discovery of the fraud, and bring his action to recover any moneys or property paid or transferred by him on account of the contract. “ If a vendor should sell an estate, knowing that he had no title to it, or knowing that there were incumbrances upon it of which the vendee was ignorant, the suppression of such a material fact, in respect to which the vendor must know that the very purchase implied a trust and confidence on the part of the vendee, that no such defect existed, would clearly avoid the sale on the ground of fraud” (1 Story Eq. Jur. § 208). And to the same effect, Bigelow on Fraud, 401; and the " rule at law is the same as in equity” (Selden, J., in Burwell v. Jackson, 9 N. Y. 535).

It makes no difference whether the fraud consisted in positive representations or concealments of things which a party was bound to disclose, for representations and such concealments are to be treated alike, and give the same right of rescission. It is the same that a party concealed the fact that he was without title to the property which he assumed to sell, as that he made a positive false representation as to that fact, provided that, under the circumstances of each particular case, he was bound to disclose that which he concealed, and he concealed it with a fraudulent intent to defraud the other party.

The vendor in an executory contract for the sale of lands, in the absence of express statements to the contraryrepresents and warrants that he is the owner of the property which he assumes to sell (Burwell v. Jackson, 9 N. Y. 535; Story v. Congor, 3 Trans. App. 213 ; Smith v. Babcock, 36 N. Y. 169 ; Thomas v. Bartow, 48 Id. 198; Leggatt v. Mu. L. Ins. Co., 53 Id. 398 ; Bensel v. Gray, 6 J. & S. 449 ; Green v. Chandler, 25 Texas, 148).

The law on this subject is the same as on sales of personal property, where the vendor is in possession of the property which he undertakes to sell. In such case it is well settled that the vendor warrants and represents that he is the owner of the property sold (Benj. on Sales, 523; Burt v. Dewey, 40 N. Y. 283 ; McGiffin v. Baird, 62 Id. 329; 101 Mass. 42). The law implies the warranty from the representation. In the sale of real property, the parties are, in contemplation of law, on the land at the time of the sale (Harsha v. Reid, 45 N. Y. 418 ; French v. Carhart, 1 Comst. 107); so that the analogy between sales of real and personal property is quite perfect (Selden, J., in Burwell v. Jackson, supra). If, upon a purchase like this, a vendee should rely only upon the warranty, as such, and should seek to disaffirm a sale before the time for the transfer of title arrived, he could not do so. There would be no breach at that time nor until the time for the delivery of the deed. But the plaintiff here does not count upon a warranty, but upon a fraudulent concealment. While a concealment of want of title would not be per se fraudulent—for the vendor might intend and have it in his power to acquire title before the time of the execution of the contract should arrive—it is fraudulent when accompanied with a fraudulent intent to deceive and defraud, and with a positive knowledge that he cannot acquire title to the property sold, and that he cannot deliver to the other party what he has contracted to sell.

The complaint in this case alleges the hopeless insolvency of the defendant; that he did not have, and has not since acquired, title to the property sold; that he concealed his want of title with a fraudulent intent “ and well knowing that he could not convey to the plaintiff the said premises, as agreed in said contract.”

•This seems to me a sufficient allegation of fraud to justify a rescission and the recovery sought.

The judgment should be reversed, with costs, and the demurrer overruled, with costs, with leave to the defendant to answer upon payment of such costs.

Sedgwick, Ch. J., and Freedman, J., concurred.  