
    Leonard M. Gage, Respondent, v. Henry Peetsch, Appellant.
    (City Court of New York,
    General Term,
    February, 1897.)
    1. Sale — Fraud — Kennedy of vendee.
    A vendee, upon discovery of a fraud in the sale, may elect to cancel the contract and recover back the purchase price, or the value of the property taken or lost to him by reason of the alleged fraud.
    2. False representations — Proof of.
    False representations as to the incumbrances upon goods sold cannot be proved by testimony of a witness as to statements eis to indebtedness made to him by the bookkeeper of the alleged creditor.
    Appeal from judgment in favor of the plaintiff.
    Johnston & Johnston, for appellant.
    William F. Randel, for respondent.
   McOabthy, J.

This action is brought to recover damages for false and fraudulent representations in the sale of a certain saloon, lease and fixtures subject to a certain mortgage.

Of course, the plaintiff must prove either by himself or his authorized agent the making of the material representations and -that they were false; that he relied on them and that he knew they were untrue or assumed to know the truth or untruth of the same or intended to convey that he had actual knowledge of the statements made by him.

The plaintiff upon the discovery 'of the fraud can elect to cancel the' contract and recover back the contract price or the value of. the property taken or lost to him by reason of the alleged fraud.

The mortgage among other things provides as follows:

“ Upon the condition, that if I, the said party of the first part, shall and do well and truly pay unto the said parties of the second part, their, successors or assigns, the sum of nine hundred and fifty dollars ($950) lawful money of the United States, with interest thereon, together with all sums which said party, of the first part may at any time become indebted unto the said parties of the second part for goods sold or advances made, these presents being intended and given as a continuing security for any indebtedness now existing or that may hereafter be incurred by the said, party of the first part, and on payment, of which, then, these presents shall be void,” but any indebtedness over and above the nine hundred and fifty dollars existing against Coleman at the time of .the transfer must be shown by proper evidence, and more particularly since it is the gravamen of this complaint.

The plaintiff attempts to prove by the evidence of O’Loughran that the representations of the defendant were untrue, and as follows:

• Thomas J. ■ O’Loughran, sworn for the plaintiff, testifies as follows: .

“ In September, 1893, I was a salesman and collector for the Stevenson Brewing Company. I know Mr.' Gage, Mr" -Follett, Mr. Peetsch and Mr. O’Connell. I conducted the transactions respecting the mortgage held by the brewery company with a saloon at No. 11 Third avenue personally. I made the sales and the collections. Q. ‘Paid by James McClenahan and James D. Smith as executors, and Suanee M. Stevenson as executrix of the estate of David Stevenson, of the city of New York, and doing business in- the city, county and state of New York.’ Were you employed by these people? A. Yes,-sir, and acting for them, and in that capacity I conducted the business between that' saloon and them. Q. State, if you know, the amount that was due from that saloon to' these people on the 28th day of September, 1893. Defendant’s counsel objects as calling-for a conclusion, as incompetent and irrelevant and immaterial. Q. Do you know? A. Yes. Qi How much? Defendant’s counsel objects as incompetent, irrelevant and immaterial and not within the issues and as calling for a conclusion. Admitted. Defendant excepts. A. $1,444.10, including Mr. Coleman’s indebtedness. Q. Did you collect the money? A. No, sir. Q. Upon whom did you make the demand? A. Of Mr. Gage. Q. Did he pay? A. No, sir. Q. What was done respecting the mortgage after the demand was made? Defendant’s counsel objects as immaterial and incompetent and not within the issues. Objection overruled. Defendant excepts. Q. Was the mortgage foreclosed? Same objection, ruling and exception. A. The mortgage was foreclosed afterward.

“ Cross-examination:

“ I was in the employ of the David Stevenson Brewing Company in September, 1893, when I made a demand for the mortgage. I made it on behalf of the David Stevenson Brewing Company, and on behalf of no one else, and the David Stevenson Brewing Company is a corporation. Defendant’s counsel: Now I ask to have the evidence of the witness stricken out. It is now admitted that he made no demand on behalf of the mortgagees. Motion denied. Defendant éxcepts. The David Stevenson Brewing Company commenced business years before I went into their employ. I sold ale and lager for the David Stevenson Brewing Company. I sold ale and lager to Mr. Coleman. That ale and lager I sold for the David Stevenson Brewing Company. Q. And you did not sell it for the executors of David Stevenson? A. I sold it for the corporation. Q. And this money that you said was due at the time you made the demand on Mr. Gage was money that was due to the David Stevenson Brewing Company? A. Tes, sir. Q. You had no authority from the executors as individuals to collect money, did you? A. I had from the company. Q. But only for the company? A. From the president of the company, Mr. Clenahan. Q. Who was the president of the David Stevenson Brewing Company? A. Yes, sir. Q. There is no mistake about this fact, that this four hundred and forty-four dollars was for ale and lager that was sold and delivered to P. J. Coleman by the David Stevenson Brewing Company? A. Yes, sir. Q. And how do you know that' amount? A. From the books in the brewery. Q. Did you keep the books? A. No, sir. Q. You did not make the delivery of the ale and lager, did you? A. No, sir. Q. And all the knowledge you had on the subject was what the bookkeeper of the brewery told you? A. That was all, sir. Q. And that was the bookkeeper of the David Stevenson Brewing Company? A. Yes, sir.-' Q. Who told you that there was four hundred and forty-four dollars and ten cents due over and above the amount of the mortgage? A. Yes. Q. For ale and lager sold to Coleman? A. Yes, sir.

“ Bedirect-examination:

“ Q. Did you represent or take any part in the placing of the mortgage itself? A. Yes. Q. What part did you take? A. I transacted that business with Mr. Coleman and tbe brewery. Q. On which this mortgage was made? A. Yes, sir. Q. And the money for which you demanded of Mr. Gage was money due under this mortgage? A. And for goods delivered.

By the Court: And for goods delivered subsequent to the making of that mortgage? ' A. Yes, sir; after.

“Becross:

“ Q. But the goods that were delivered after the making of the mortgage were ale and lager? A. Delivered to Mr. Coleman. Q. By the David Stevenson Brewing Company? A. Y'es, sir. Defendant’s counsel: Now I renew my motion to strike out the testimony of the witness, on the ground that there is no competent testimony to prove the amount of any indebtedness over and above the amount of the mortgage in the mortgagee by the mortgagor. Motion denied. Defendant excepts.” •

It is clear from the foregoing that there is a lack of proof here, and that such would not bind Patrick J. . Coleman as between him and the David Stevenson Brewing Company, and the liability not being properly proven cannot certainly bind this defendant in order to prove the falsity of an alleged representation.

The date of sales, credits or delivery of and the number of such transactions that go to make up this additional liability of Coleman are not given, and he knows nothing about these transactions nor their sale and delivery, and all he knows is hearsay from the bookkeeper. Dayton v. Parke, 142 N. Y. 391.

For all that appears, Coleman may have another place of business and these particular, sales and deliveries may be made to. another place or to another man of the same name and the repre1-sentations were true.

• The fact that the brewery foreclosed the mortgage does not prove the debt nor the falsity of the defendant’s representations.

The plaintiff must therefore prove by Coleman or other competent testimony or evidence the indebtedness * or liability for this extra $444.10 over the mortgage.

Nor is there any legal evidence as to the falsity of the daily receipts, that portion at folio 64 was hearsay and was on motion stricken out at folio 82.

There are many other serious objections presented, but we think, without going into the other questions, this was error for which a new trial should be granted.

Judgment is, therefore, reversed and a new trial granted, with costs to the appellant to abide the event.

Eitzsimons, J., concurs.

Judgment reversed and new trial granted, with costs to appellant to abide event.  