
    Joseph A. Duffy, Respondent, v. Arthur L. Meyer, Appellant.
    First Department,
    December 13, 1907.
    Evidence — varying written instrument by parol—rule not applicable in action for deceit.
    The rule that parol evidence is not admissible to contradict or vary the terms of a written instrument has n.o application in an action based on fraud in procuring the contract. - . "
    Thus, where the action is based on the deceit and misrepresentation of the defendant in inducing the plaintiff to pay the purchase price of certain stocks,' a receipt for the purchase money executed by the defendant does not render evidence incompetent which tends to show freedom from fraudulent intent.
    Motion by the defendant, Arthur L. Meyer, for a new trial upon a case containing exceptions ordered to be heard at the' Appellate Division in the first instance upon the verdict of a jury in favor of the plaintiff, rendered by direction of the court at the New York Trial Term in March, 1907.
    Also an appeal by the defendant from so much of an order entered in the office of the clerk of the county of New York on the 22d day of March, 1907, as grants-to the plaintiff an extra allowance.
    . Abraham Benedict, for the appellant.
    
      Edward W. S. Johnston, for the respondent.
   Lambert, J. :

The complaint alleges .as a- cause of action, that the defendant, with, intent' to cheat , and defraud the plaintiff, falsely and fraudulently represented to this plaintiff that the North American Lumber and Pulp Company was a corporation duly organized under the laws of New Jersey; that it had property of the value of its capital stock, and that the company had issued bonds secured by a mortgage covering its property, and that said bonds were valid existing obligations of said company, and were reasonably worth- the face value thereof, and that the said, defendant then had in his possession twenty allotments of stock and bonds-of said North American Lumber and Pulp Company, each allotment consisting of one bond and twenty shares of stock of said company, each bond being of ¡the par value of $1,000 and each share of stock of the par value of $100; that acting and relying upon such false and fraudulent representations of the defendant the plaintiff paid $10,000 upon the purchase price of said bonds and stocks ;. that the representations were false, and the other allega-' tions necessary to a cause of action for the fraud, the defendant never being able to deliver the said bonds and stocks. For a second cause of action the plaintiff alleges the payment of the same $10,000 on account of the purchase of the same stocks and bonds, and a refusal of the defendant to repay the same on demand, and his theory is that the defendant thus converted the money.

In the disposition of this case it is not material to consider whether this last cause of actionxwas one in tort or on contract, for the court, by directing a verdict on both causes of action, and the judgment being in accord with such direction, it is clear that there must be a,reversal of the same.

Upon the trial of the action the defendant offered to -prove a series of facts relating to the transaction between the parties, which if believed, would negative or tend to negative the plaintiff’s theory of fraud; but all of this evidence, notwithstanding the plaintiff’s theory of fraud, was excluded on the ground that a certain receipt given bv the defendant to the plaintiff constituted such a written contract as could not be varied by parol evidence. The receipt is as follows:

“ New Yobk, March fflth, 1902.
“■This is to certify that I have this day received from Joseph A. Duffy ten thousand dollars on account of the purchase price of twenty allotments of the stock and bonds of the North American Lumber & Pulp Company, each allotment consisting of one bond and twenty shares of stock of said company, which said allotments are deposited with'me'subject to the payment of the balance of the purchase price thereof of ten thousand dollars, with interest.”

This receipt was signed by the defendant only, and it seems to us clear that this is. not such a mutual contract as is contemplated by the rule under which the defendant’s evidene was excluded. It does not bind the plaintiff to do anything; it does not pretend to be an agreement between the parties; it is purely and simply a receipt for a sum of money on account, and in an action based upon tort it would be a strati go role if the plaintiff could be permitted to hide behind this receipt and prevent the defendant from showing a state of facts which,, if believed, might constitute a complete defense. There is no fraud alleged in reference to this receipt. The evidence offered by the defendant tended tó show that the name of the company was inadvertently inserted in the receipt, and that the plaintiff was fully aware of the exact transaction which was contemplated, and. which the defendant was at all times prepared to perform.. Fraud- is never to be presumed. It must be proved, .and where. there is a charge of fraud' in relation to a transaction, evidence relating to the transaction, and which lias a tendency to show that it is free from fraudulent intent-, is clearly competent, even though it should vary the language of a moi^p formal ..contract than the one now before the court. The rule, relied upon by the court below would probably be applicable to an action upon a contract, because it.iseconclusively presumed that the parties expressed their intention in the writing, but it has no application in an.action where the plaintiff charges fraud in the procuring of the contract. That is an • issue going to the integrity of the party. It is quasi-criminal, and he has a right to go to the jury upon the question of fraud after all. of the facts connected with the transaction have been, placed in evidence.' If there was no fraud in the representations or by concealment of facts on the part of the defendant prior to the giving of this receipt, then there is, nothing fraudulent in the transaction, and if-was proper to show that the "plaintiff, in taking the receipt, understood that he was not to have the particular stock mentioned,'but another stock having relation to this company. The rule is that the jury is to.determine, as a question of fact, whether there has been any representations or concealment of facts by'the party charged vidth the fraud, and whether the representations were false and relied upon as an inducing element of the fraud alleged and relied upon. (14 Am. & Eng. Ency. of Law [2d ed.], 206 ; Bigler v. Atkins, 7 N. Y. St. Repr. 235, 239 ; affd. on opinion below, 118 N. Y. 671.) .In the ' case cited the court say that, before the-plaintiff could recover , against the defendant, the law required the “further fact to be established that the defendant knew .the representations - to be untruthful, or at least that he did not know them, to -be truthful, and that they were made with intent to deceive the plaintiff, and in that manner induced him to purehase -the ship when he would not have done so if the truth had been known to, or discovered by him.”

It follows that the transactions had by the parties relating to the sale and purchase of the stock mentioned was the subject of both material and competent evidence, and that it was reversible error to exclude it over the objection and exception of the defendant.

The exceptions should be sustained and the motion for a new trial granted, with costs to defendant to abide the event. This disposes of the order granting an extra allowance. The order should, therefore, be reversed.

McLaughlin and Laughlin, JJ., concurred; Patterson, P. J., concurred in result.

Houghton, J. (concurring):

The first cause of action alleged is for fraud and deceit, and the second for conversion by refusal to repay-the $10,000 which plaintiff had been induced to part with by defendant’s alleged fraud. Both -causes of action, therefore, are in tort, and the rule that a written contract cannot be varied by parol evidence has no application. The action is not upon the contract itself, but for a wrong perpetrated against plaintiff. The contract is evidence of that wrong and very cogent evidence, and the defendant may and probably will have, great difficulty in inducing a jury to believe that bonds other than the ones stated in the writing were to be delivered; but nevertheless he has the right" to make proof of that character. False representations may be verbal or- they may be in writing. The fact that they are reduced to writing does not conclude the person who signs the writing from proving that the representations were modified by parol, or that wholly different representations were made and relied upon by the. party who claims to have been defrauded. The writing is evidence of - a highly probative kind, but it is not conclusive. ...

For these reasons I concur in the result.

Exceptions sustained, new trial ordered, costs to defendant to ■ abide event. Order granting extra allowance reversed. Settle order on notice.  