Livoti v. Elston

Gulotta, P. J. (dissenting).

In my opinion, a finding of fraud is not indispensable to a holding that a third party is liable for inducing the breach of a voidable contract for the sale of real property where, concededly, the terms of the agreement would have been fulfilled absent the interference of that third party. It is true that the leading case on this subject involved fraud on the part of the wrongdoer (see Rice v Manley, 66 NY 82 ). However, in view of the heightened recognition now given the doctrine of tortious interference with a contract in this State, I do not believe that fraud must necessarily be held to be a sine qua non to recovery.

Actually, fraud has no logical relationship to the holding if tortious interference is regarded as an independent wrong in its own right. It has no more relevance to a nonbinding contract than it has to a binding one. In the latter case, it is well settled that fraud plays no role (see Lamb v Cheney & Son, 227 NY 418 ).

In my view, the significant point of difference when dealing with a voidable contract vis-á-vis a binding one, is the willingness on the part of the promisor to perform but for the *448 wrongful intervention of the defendant. It is that element which makes it equitable and just to treat with it as though it were a binding contract so far as third parties are concerned. In the Lamb case the Court of Appeals made the following interesting observation as to the meaning of the word "malicious” as used in these cases (p 422): "The act is malicious when the thing done is with the knowledge of plaintiff’s rights and with the intent to interfere therewith. In a legal sense it means a wrongful act, done intentionally, without just cause or excuse. (Mogul Steamship Co. v McGregor, 23 Q. B. D. 598.) It does not mean actual malice or ill-will, but consists in the intentional doing of a wrongful act without legal justification. (Cumberland Glass Mfg. Co. v. De Witt, supra.) The gist of the action is not the intent to injure, but to interfere without justification with plaintiff’s contractual rights with knowledge thereof; or, as was very tersely stated by Lord Macnaghten in Quinn v. Leathern (supra), where he said, referring to Lumley v. Gye (supra): 'Speaking for myself, I have no hesitation in saying that I think the decision was right, not on the ground of malicious intention,—that was not, I think, the gist of the action,—but on the ground that a violation of legal right committed knowingly is a cause of action, and that it is a violation of legal right to interfere with contractual relations recognized by law if there be no sufficient justification for the interference.”

I can see no reason why this language should not be equally applicable to one who deliberately seeks to exploit a deficiency in a contract between two other people, for his own financial benefit.

Of course, where the initiative for repudiating the contract originates with the party who has the right to disaffirm, the situation is different. Under such circumstances, no just claim of tortious interference can be made. To hold otherwise would be to interfere with both the right of the promisor to cancel without penalty and to deal with someone else. As Prosser notes (Law of Torts [4th ed.], p 934): "In order to be held liable for interference with a contract, the defendant must be shown to have caused the interference. It is not enough that he merely has reaped the advantages of the broken contract after the contracting party has withdrawn from it of his own motion. Thus acceptance of an offered bargain is not in itself inducement of the breach of a prior inconsistent contract, and it is not enough that the defendant has done no more than *449 enter into one with knowledge of the other, although he may be liable if he has taken an active part in holding forth an incentive, such as the offer of a better price or better terms.”

In tracing the origins of the action, Prosser notes that it arose from a desire to protect an economic relationship such as existed between a master and his servant and did not require a contract to support it. With respect to the specific problem which concerns us herein, he states (supra, p 932): "The agreement need not, however, be enforceable by the plaintiff as a contract. Even under the old Statute of Labourers, from which the remedy is descended, labor was compulsory, and it was interference with the relation which was the essence of the tort, so that no binding agreement for service was required. The law of course does not object to the voluntary performance of agreements merely because it will not enforce them, and it indulges in the assumption that even unenforceable promises will be carried out if no third person interferes. Accordingly, it usually is held that contracts which are voidable by reason of the statute of frauds, formal defects, lack of consideration, lack of mutuality, or even uncertainty of terms, or harsh and unconscionable provisions, or conditions precedent to the existence of the obligation, can still afford a basis for a tort action when the defendant interferes with their performance.”

The case of Warner Bros. Pictures v Simon ( 21 AD2d 863 , affd 15 NY2d 836 ), relied upon by the majority, is distinguishable from the case at bar in that it was not established in that case that the parties would have performed the contract but for the interference of the third party.

It is to be observed that it does little credit to the appellant that, in purchasing the property herein, he took advantage of his position as attorney to the seller and that, in an apparent attempt to conceal the transaction, he took title under his former name.

I would affirm the judgment insofar as it directed a conveyance, since I do not regard this as a judgment for specific performance, but rather as the suitable molding of a remedy to fit the situation by a court of equity. However, there should be a retrial on the issue of the alternative award of damages in the event a conveyance cannot be made. There does not appear to have been any basis in the proof for the quantum of damages fixed by the trial court.