Jewish Center of Sussex Cty. v. Whale
432 A.2d 521 · Supreme Court of New Jersey · 1981
Facts
The Jewish Center of Sussex County, a religious congregation, advertised for a rabbi in late 1977. Defendant submitted a resume listing his experience from 1970-1977 as "Administrator, Ministry of Education Foreign Student Department, Jerusalem, Israel." No references were requested, and the parties entered an employment contract on January 1, 1978. In April 1978, the plaintiff discovered that the defendant was also known as Louis P. Wolfish, had been convicted of federal mail fraud in 1975, and disbarred from law practice in New York in 1969 for professional misconduct. Defendant had been a fugitive from 1972-1974 and served time in a federal penitentiary. Upon learning these facts, the plaintiff's Board of Trustees resolved to rescind the employment contract and notified the defendant. Plaintiff then filed suit to rescind the contract and enjoin the defendant from performing rabbinical functions.
Procedural history
The trial court granted the plaintiff's motion for summary judgment, ruling that the defendant's failure to disclose his past amounted to fraudulent concealment. A divided Appellate Division panel affirmed this decision. The defendant then appealed as of right to this court.
Issue
Did the defendant's resume, which omitted his prior criminal conviction and disbarment, constitute fraudulent misrepresentation justifying the rescission of his employment contract as a rabbi?
Holding
Yes, the court affirmed the judgment, finding that the defendant engaged in a misrepresentation amounting to actual equitable fraud, which justified the rescission of the employment contract.
Rule
Equitable fraud requires a material misrepresentation of a presently existing or past fact, made with the intention that the other party rely thereon, resulting in reliance by that party to his detriment. Unlike legal fraud, equitable fraud does not require scienter (knowledge of falsity or intent to obtain undue advantage). Actual financial loss is not a prerequisite for equitable remedies like rescission; equity focuses on preventing the perpetrator from retaining an unjustly conferred benefit. The court found the defendant's false representation on his resume about his past activities was material to his qualifications as a rabbi, and the plaintiff's reliance on this misrepresentation resulted in an unfair advantage for the defendant, justifying rescission.
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