## Facts

- Catherine Adams owned vacant lots on Elmwood Avenue in Buffalo in an exclusively residential area and sought to protect the value of her remaining property.
- Alexander L. Gillig negotiated to buy part of one lot and represented to Adams and her agents that he wanted the land for “residential purposes” and intended to build dwellings.
- Adams relied on those statements and conveyed the parcel to Gillig by deed for $5,525.
- Gillig’s statements were found false when made; his actual, then-existing intention was to build a public automobile garage on the parcel.
- Soon after receiving the deed, Gillig had garage plans prepared and entered a construction contract with contractors doing business as George Kempf’s Sons.
- After learning of the intended garage, Adams sought to unwind the sale; when Gillig refused to reconvey, she sued for equitable relief to set aside the conveyance and obtain reconveyance.

## Issues

1. Whether a buyer’s false statement of intent about future land use can constitute a misrepresentation of an existing material fact when the buyer’s present intention is otherwise.
2. Whether equity may rescind a deed and order reconveyance based on such fraud even though the deed contains no written restrictive covenant and oral use restrictions are generally barred by merger and the parol evidence rule.

## Decision

- The Court of Appeals affirmed the judgment for Adams ordering reconveyance.
- The court treated Gillig’s assurances of residential use as actionable misrepresentations because they falsely stated his then-existing intent and were made to induce the conveyance.
- The absence of a written restrictive covenant did not bar rescission; the action sought avoidance of a fraudulently induced conveyance, not enforcement of an oral land-use covenant.
- The contractors’ appeal did not alter the result; the equitable decree stood.

## Legal Principles

- A contract or conveyance induced by fraud as to a material matter is voidable at the election of the defrauded party.
- A knowingly false statement of present intention, made to induce a transaction, may be treated as a misrepresentation of an existing material fact (as distinct from a later change of mind).
- Promissory statements about future conduct ordinarily must appear in the written agreement to be enforceable as contractual obligations, and oral covenants affecting conveyed land are generally merged into the deed.
- The parol evidence rule and merger doctrine do not prevent equitable rescission where the oral statements are used as proof of fraud in the inducement rather than as additional contractual terms.

## Conclusion

The court upheld rescission and reconveyance because the buyer procured the deed by fraudulently misrepresenting his present intent to use the property for residences, and equity could undo the conveyance without enforcing any unwritten restrictive covenant.


Adams v. Gillig, 199 N.Y. 314, 92 N.E. 670 (N.Y. 1910)