Bach v. Kidansky — 106 A.D. 502

Majority

p. 502

Myer Bach and Max Jorrisch, Appellants, v. David Kidansky and Louis J. Levy, Respondents.

Headnote

yendor’s lien on real property — enforced where property contracted to be sold subject to a certain mortgage is conveyed subject to a mortgage for a less amount — subrogation.

A contract for the sale of land fixed the purchase price at the sum of $101,000 to be paid as follows: $1,500 in cash upon the execution and delivery of the contract, $6,500 cash upon the delivery of the deed, the remaining $93,000 being represented by certain mortgages covering the premises contracted to be sold. One of such mortgages was a third mortgage of $18,000 which provided that $3,000 of the principal thereof should become due and payable upon a sale of the property. The indebtedness represented by such third mortgage was also secured by a collateral mortgage upon other premises. ■ This collateral mortgage contained a provision that when $4,000 should have been paid on account of the principal mortgage the collateral mortgage should be canceled,

After the execution of the contract, but before the closing of the sale, the $13,000 mortgage was purchased by the wife of one of the vendees. In the meantime, the vendors had also contracted to sell the property incumbered by the collat

p. 503

eral mortgage free and clear of such collateral mortgage. On the day fixed for closing the first-mentioned contract of sale, the vendee, whose wife had pur. chased the $13,000 mortgage, acting in the interest of such wife, refused to deliver a release of the collateral mortgage upon payment of the $3,000 from the vendees and the sum of $1,000 from the vendors, and to execute a writing subrogating the vendors to an interest of $1,000 in the $13,000 mortgage. Thereupon the vendors paid $1,000 to the owner of the $13,000 mortgage, and her husband then delivered a release of the collateral mortgage. The contract was then closed, with the result that the vendees only paid in cash and by the assumption of mortgages $100,000 instead of the $101,000 which they had agreed to pay.

■Held, that the vendors had a vendor’s lien upon the property conveyed for the sum of $1,000 exacted as a condition of executing a release of the collateral mortgage, as such $1,000 was essentially a part of the purchase price which the vendees were bound to pay;

That the delivery of the deed to the vendees did not operate as a waiver of the right of the vendors to demand payment of the entire purchase price.

Quaere, whether the vendors had a remedy by way of subrogation or not.

Appeal by the plaintiffs, Myer Bach and another, from a judgof the Supreme Court in favor of the defendants, entered in the office of the clerk of the county of Hew York on the 23d day of February, 1905, upon the decision of the court, rendered after a trial at the Hew York Special Term, adjudging that the plaintiffs. have not established a vendor’s lien upon the premises described in the 1st paragraph of the complaint, and dismissing the complaint upon the merits.

Edward W. S. Johnston, for the appellants.

Manfred W. Ehrich, for the respondents.

This action was brought to establish a vendor’s lien in the sum of $1,000 upon certain real property. The facts, save in some unimportant details, are undisputed. On the 26th day of October, 1903, the plaintiffs entered into a contract with the defendants whereby they agreed to sell, and the defendants to purchase, the real property known as Hos. 321, 323 and 325 Madison street in the borough of Manhattan, the defendants agreeing to pay therefor the sum of $101,000, as follows: $1,500 upon the execution and delivery of the contract; $6,500 cash upon the delivery of the deed, such de»«*

p. 504

to be subject to mortgages in the sum of $93,000, as follows: A first mortgage of $47,000 upon a portion of the premises, and a first mortgage of $23,000 upon the remaining portion; a second mortgage of $10,000 upon all of the premises, and a third mortgage of $13,000 upon the entire premises. The third mortgage of $13,000 was held by one Schweitzer. After the execution of the contract, but before the closing of the sale, the last-mentioned mortgage was purchased by Flora Levy, wife of the defendant Louis J. Levy. This mortgage provided that $3,000 of the principal should become due and payable when a sale of the property was made. The indebt- . edness secured by this $13,000 mortgage was also secured by a collateral mortgage upon the premises known as Nos. 185, 187 Allen street in the borough of Manhattan, city of New York. The collateral mortgage contained" a provision that when $4,000 should have been paid on account of the principal mortgage covering the Madison street property, the collateral mortgage should be canceled. After the execution of the contract with the defendants, the plaintiffs also contracted to sell the Allen street property to Jonas Weil and Bernard Mayer, free and clear of this collateral mortgage.

On the adjourned day for closing the contract between the plaintiffs and the defendants, Levy appeared and acted for and on behalf of Flora Levy, his wife. He had with him a release of the collateral mortgage, but refused to deliver the same upon payment of $3,000 from the defendant Kidansky and the sum of $1,000 from ihe plaintiffs, with interest, conditioned upon his executing a writing , which had been prepared and produced by counsel for the plaintiffs, subrogating the plaintiffs to an interest of $1,000 in said mortgage-on the premises the subject of sale between the plaintiffs and defendants. Thereupon Weil and Mayer, the plaintiffs’ vendees of the Allen street property, made a check for $1,000 to the order of the plaintiffs, which was indorsed over to Mrs. Levy and handed to her husband for her. Levy then delivered a release of the collateral mortgage. -The title to the property in question was then closed by the defendants taking a deed of the same, subject to the two first mortgages of $47,000 and $23,000; the second mortgage of $10,000, and the third mortgage of $13,000, now reduced to $9,000 by payment as aforesaid, and the other payment in cash as provided for in the contract. Thereupon the plaintiffs demanded of the defendants.

p. 505

the sum of $1,000, or that an instrument be executed to them showing that they were subrogated to that sum in the $13,000 mortgage. Compliance with the demand was refused.

The foregoing facts are established by the undisputed testimony.either by averments and admissions in the pleadings or by oral testimony given upon the trial. So far as the court has found facts inconsistent therewith, they are either not found in the evidence or are against the evidence, averments and admissions, Stripped of all verbiage, it is made to appear that the defendants have obtained title to property for which they agreed to pay in cash and by the assumption of mortgages $101,000, but, in fact, they have only paid and assumed to pay $100,000. The difference is represented by the $1,000 which Levy exacted as payment before he would execute a release of the collateral mortgage which he then controlled. The defendants, therefore, have never paid the whole of the purchase price in manner as provided in the contract. This they were obligated to do, in order to consummate and carry out their contract of sale. The failure to pay this sum gave the plaintiffs a direct interest in the property, as such payment was essential in order to protect their property rights, and equitable rules may be invoked for their protection. (Koehler v. Hughes, 148 N. Y. 507 .) The $1,000 exacted by Levy and paid by the plaintiffs was essentially a part of the purchase price, which the defendants were bound to pay, and they not having paid it, the plaintiffs, under well-settled principles, became entitled to a vendor’s lien. (McWhorter v. Stewart, 39 App. Div. 212 .)

The execution and delivery of the deed to the defendants did not waive the right of the plaintiffs to demand payment of the entire purchase price. (Maroney v. Boyle, 141 N. Y. 462 ; Binghamton Savings Bank v. Binghamton Trust Co., 85 Hun, 75 .) In nowise did this change the terms of the contract of sale. The defendants doubtless had the right to have the conveyance made to them upon making their cash payments and assuming the mortgages ; but by the terms of the contract they became obligated to assume a $13,000 mortgage, but as the matter now stands they have assumed an obligation for only $9,000, where they should have assumed, in order to complete the contract, an obligation for $10,000. It is not essential now to determine whether the plaintiffs

p. 506

have a remedy by subrogation or not. It is enough to say that they are entitled to the remedy which they have pursued.

The judgment should, therefore, be reversed and a new trial granted, with costs to the' appellants to abide the event.

O’Brien, P. J., Patterson, Ingraham and McLaughlin, JJ.r concurred.

Judgment reversed, new trial ordered, costs to appellants to abide event.

Cases cited

Koehler v. Hughes 148 N. Y. 507 N.Y. 1896-02-18 p. 505
McWhorter v. Stewart 39 App. Div. 212 N.Y. App. Div. 1899-03-22 p. 505
Maroney v. Boyle 141 N. Y. 462 N.Y. 1894-02-27 p. 505