Sabo v. Delman

3 N.Y.2d 155, 164 N.Y.S.2d 714, 143 N.E.2d 906 (1957)

 

RULE:

While mere promissory statements as to what will be done in the future are not actionable, it is settled that, if a promise was actually made with a preconceived and undisclosed intention of not performing it, it constitutes a misrepresentation of "a material existing fact" upon which an action for rescission may be predicated.

FACTS:

Plaintiff patentee, while working for defendant employer, invented a machine and cutting device used in the manufacture of shoes. Defendant president arranged for the sale or lease of the machines for plaintiff and promised to pay plaintiff a portion of the proceeds. Plaintiff assigned his applications for letters of patent to defendant president and entered into written contracts concerning the assignment and sharing of profits. Defendant made false representations as means of inducing the assignment and contract. Plaintiff sued defendants for rescission. The trial court granted defendants' motion to dismiss for failure to state a claim. The appellate court affirmed. On further appeal, the court reversed and reinstated the complaint.

ISSUE:

Did the appellate court err in affirming the grant of defendant president and defendant employer's motion to dismiss plaintiff's complaint for rescission of a contract for failure to state a cause of action, where such contract was based on mere promissory statement but made with a preconceived and undisclosed intention of not performing it.

ANSWER:

Yes.

CONCLUSION:

The representations of the defendant in the instant case, that he would finance plaintiff's machine and use his best efforts to promote its sale and lease, related to something to occur in the future, but that did not prevent the plaintiff from relying upon them in an action brought to avoid the contracts which they induced. The statements and representations here relied upon and alleged were actionable, for here, there was specific affirmation of an arrangement under which something was to be done when the party making the affirmation knew perfectly well that no such thing would be done. A contractual promise made with the undisclosed intention not to perform it constituted fraud, and plaintiff is free to prove that he was induced by false and fraudulent misrepresentations to assign his patents and execute the agreements Therefore, the complaint had a cause of action and should not have been dismissed.

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