Dambman v. Schulting

This action was brought to set aside and annul a release on the ground of the defendant’s alleged fraud in its procurement. It appeared by the complaint that a preceding action had been brought for the recovery of the debt, and the release *252answered as a defense. For that reason the demurrer was sustained. The plaintiff insisted that the decision made was erroneous, for the reason that he cannot avoid the effect of the release by proving the fraud in that action. In that the learned counsel for the plaintiff is very clearly mistaken. Fraud invalidates all instruments, however solemn, both at law and in equity. And as no reply is either required or provided for, unless directed by special order of the court to the defense of a release, the plaintiff may avoid and overcome its effects by evidence, showing it to have been procured by fraud. The provision of the Code upon this subject is that the allegation of new matter in the answer, not relating to a counterclaim or of new matter in a reply, is to be deemed controverted by the adverse party as upon a direct denial or avoidance, as the case may require. Code, § 168. And it is so broad that it secures to the plaintiff the benefit of every possible answer to the defense made by way of new matter not constituting a counter-claim as fully as though it were alleged in the most complete and artistic form. He may avoid it by any evidence properly attended with that result, under the principles of either law or equity.

This was held to be the right of the plaintiff under the present system of practice when a reply was required to new matter in the answer. Phillips v. Gorham, 17 N. Y. 270. And the principle has been held to be equally as applicable since the reply to such defense has been, dispensed with. Sheehan v. Hamilton, 2 Keyes, 304. In deciding that case it was stated by Leonard, J., who delivered the opinion of the court, that no reply to an answer is necessary unless it sets up a counter-claim, but the plaintiff is permitted to prove any matter in denial or avoidance of the answer where it sets up new matter, as the case may require. Id. 306.

The right of the plaintiff to avoid the release by proof of fraud in the action prosecuted for the recovery of the debt is further confirmed by the conclusion stated by Judge Alles.íu deciding the case of Dobson v. Pearce, 12 N. Y. 156, and which was concurred in by the court. “ The intent of the legislature is very clear that all controversies respecting the subject-matter of the litigation should be determined in one action, and the provisions (of the Code) are adapted to give effect to that intent.” Id. 165. To the same general effect, also, are the cases of Crary v. Goodman, id. 266, and Foot v. Sprague, 12 How. 355.

The plaintiff’s right to be relieved from the effect of the release *253on the ground of fraud was, under these principles, included in the preceding action.

This action, to secure that result, was, therefore, improper, and the decision sustaining the demurrer to the complaint was right and should be affirmed, with costs.

Order affirmed.