Fourth Department, March, 1910. * * * [Vol. 137 * * * compromise made; and that such value was fixed at $25,000, and no * Fourth Department, March, 1910. App. Div.] promise agreement is made so plain by these quotations that it cannot be mistaken. I have quoted as briefly as possible and refer to report itself for a more detailed statement of the language used. Of course, we can readily see that no such question of damages as this was submitted to the jury in this case. The verdict was for $3,000, less $500, or $2,500. To recapitulate: This action was brought to recover damages for fraud in a compromise agreement. As such an action it very likely could have been maintained. It was tried, however, as an action of negligence, and submitted to the jury as such, the compromise agreement being found by jury fraudulent and void, and, therefore, no bar to a recovery upon the original cause of action, the one compromised. This form of action could not be maintained, because the compromise agreement was not rescinded and money returned thereunder or tendered back before the action was brought. While the agreement remained unrescinded the original cause of action was absolutely discharged, and no action could be maintained thereon, and by reason of the Statute of Limitations. And certainly the action and trial could not be sustained as one for damages for fraud in the compromise agreement, because no such question of damages was submitted to or passed upon by the jury. I further suggest. The court held no action could be maintained without proof by plaintiff of a valid claim to be compromised. This can hardly be true. All the plaintiff had to do was to prove that an accident occurred, a death resulted and then that a claim of liability on the part of the defendant was made. It was a disputed, resisted claim that was compromised, not necessarily a valid claim. A compromise involved an uncertainty as to whether the claim could be enforced. If certainty existed a compromise would not ordinarily be made. All concurred. Judgment and order reversed and new trial ordered, with costs to appellant to abide event. Fourth Department, March, 1910. [Vol. 137. JOHN E. DUQUETTE, Respondent, v. THE NEW YORK CENTRAL AND HUDSON RIVER RAILROAD COMPANY, Appellant. Fourth Department, March 9, 1910. Fraud-release obtained by fraud - remedies. One who has been induced to release a cause of action for negligence on the payment of a certain sum by reason of the fact that the defendant's agent although in possession of a larger sum given him by the defendant to pay to the plaintiff, represented that the smaller sum was all the defendant would pay and converted the difference, may maintain an action based on fraud to recover of the defendant the sum retained by the agent. Under such circumstances the defrauded party has three remedies: (1) He may rescind the compromise and seek a recovery upon the original claim, in which case he must tender the sum received before action brought; (2) he may affirm the compromise, retain the money received under it and recover damages for the fraud; (3) he may sue in equity to rescind the compromise and for equitable relief, offering to restore in his complaint the amount received if he be not entitled to retain it. APPEAL by the defendant, The New York Central and Hudson River Railroad Company, from a judgment of the County Court of Jefferson county in favor of the plaintiff, entered in the office of the clerk of said county on the 29th day of June, 1909, upon the ver dict of a jury for $174, and also from an order entered in said clerk's office on the 1st day of July, 1909, denying the defendant's motion for a new trial made upon the minutes, with notice of an intention to bring up for review an order entered on the 29th day of June, 1909, denying the defendant's motion for a nonsuit. Henry Purcell, for the appellant. F. B. Pitcher, for the respondent. WILLIAMS, J.: The judgment and order should be affirmed, with costs. The action was brought to recover damages for fraud in the compromise of a claim for injuries alleged to have been caused by defendant's negligence. The compromise was made between the plaintiff and the claim agent of defendant, one McCormick. The fraud alleged was the Fourth Department, March, 1910. App. Div.] statement made by McCormick to plaintiff that the defendant would pay only $151 when it had already consented to pay $325, and had placed that sum of money in McCormick's hands to make the compromise with. The plaintiff accepted the $151, and signed release and McCormick pocketed the difference, $174. A year or two later the defendant discovered this and other like transactions, in which McCormick had misappropriated large sums of money. He paid the money back to the defendant, and was sent to State's prison for the crimes committed, and is now serving his term. The plaintiff upon discovery of the fraud practiced upon him brought this action. The questions involved are really legal in their nature. The plaintiff relied upon the cases of Gould v. Cayuga County Nat. Bank (S6 N. Y. 75 and 99 id. 333). The plaintiff there was defeated in the first action, and then brought the second one, in which he succeeded. In those cases the plaintiff sought to recover by reason of fraud in a compromise agreement, under which he received $25,000. The plaintiff did not return or tender back the money received. In the first case the action was at law upon the original claim compromised, and the court held that the action was based on a rescission of the compromise agreement, and no recovery could be had because there had been no return or tender back of the money received before the action was commenced. In the second case the action was for damages by reason of the fraud in the compromise agreement, and it was held such action was based upon an affirmance of the agreement and could be maintained without the return or tender back of the money received on the compromise. claim, the one compromised, was for breach of an return bonds loaned by Gould to the defendant bank. The amount of bonds loaned does not appear in the report of either case but we may assume it was largely in excess of the $25,000 paid upon the compromise. The plaintiff had the bonds on deposit with the bank for safekeeping. He loaned them to the bank upon an agreement that the bank would return or replace them before interest became due thereon. Plaintiff thereafter applied for his bonds, and was told there were none on deposit belonging to him. He made a claim under the agreement and the bank alleged the bonds had been returned or replaced by others and put in its vault, and the loss of The original agreement to Fourth Department, March, 1910. [Vol. 137. the bonds by the embezzlement of the cashier was plaintiff's and not the bank's loss, or at least the bank had not broken its agreement to return or replace the bonds. Negotiations were had for a compromise of plaintiff's claim and the bank officers represented as a matter of fact that the bonds had been so returned or replaced and put in its vault, whereas in truth there never had been any such return or replacement. Relying upon this false statement, Gould made the compromise agreement and accepted the $25,000. This was the fraud alleged and on account of which the Court of Appeals held a recovery could be had. In both cases the court held the original claim or obligation was extinguished by the compromise agreement so long as the latter stood, that the plaintiff had the choice of three remedies to enforce any rights he had. First. To rescind the compromise agreement, and seek to recover upon the original claim, in which case he must, before action brought, return or tender back the money received-the $25,000. Second. To affirm the compromise agreement, retain the money received under it, and seek to recover damages for the fraud. Third. To seek in equity to rescind the compromise agreement and for equitable relief, and offer in his complaint to restore the $25,000 if he was not entitled to retain it. He failed in his effort to enforce the first remedy, because he failed to return or tender back the money before action was brought. The second remedy was then sought. Some discussion in the opinion of the court in the later of the two cases will serve to indicate the application of that case to the case we are considering. I quote as briefly as possible, referring to the report itself for a more detailed statement of the language. Judge FINCH said: was the agreed "The $25,000 * * * obviously * * * value of a disputed right of action, but an agreed value won out of Gould by a false and fraudulent statement of the facts upon which such value depended. If no falsehood had been told him that value would have been greater in his judgment and so in his demand as a term of the compromise made; and that such value was fixed at $25,000, and no more was the direct product and result of the fraud. Gould did not receive just what he contracted for,' but contracting for the fair value of his disputed claim was induced by * * * |