Wadick v. Mace — 118 A.D. 777

Majority

p. 777

Arthur H. Wadick, Appellant, v. Malinda G. Mace, Respondent.

First Department,

April 19, 1907.

Headnote

Vendor and purchaser — contract sufficient to warrant specific performance—when vendee entitled thereto—equitable powers of court.

Requirements of a contract to sell lands sufficient to authorize decree of specific performance stated.

Although the fact .that a title tendered may impose a law suit upon the vendee to establish the boundaries is not an incumbrance in a legal sense, the tender of such deed is not a compliance with a contract of sale requiring a “proper deed” assuring the grantee a fee simple free from all incumbrances.

A contract to give a “ proper deed” calls for a marketable title, which is defined as one free from reasonable doubt, and a title which must be defended by litigation is not free from doubt.

When a vendor has agreed to convey by proper deed a title in fee simple free from all incumbrances by specific metes and bounds and it develops that by ■ the bounds described access to other property of the vendor would be cut off, the vendee does not thereby lose his right to specific performance and is not in default by reason of a refusal to accept a deed which fails to set out the boundaries agreed upon.

It seems, that under such circumstances a court of equity in the exercise of its discretion may not compel the execution of a deed which will cut off the grantor from access to other lands, but may order a reference to determine an equitable performance of the contract which will be fair to both parties.

Appeal by the plaintiff, Arthur H. Wadiclr, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of New York on the 17tli day of July, 1906, upon the decision of the court, rendered after a trial at the New York Special Term, dismissing the complaint upon the merits.

p. 778

Arthur H. Wadick, the plaintiff, appeals from a judgment in favor of the defendant, Malinda G. Mace, in an action for the specific performance of a contract. The material parts of the contract are here set out:

“ Agreement made the 26tli day of January, 1905, between Malinda G. Mace, * ' * * party of the first part,, and Arthur H. Wadick, * * * party of the second part, in manner following:: The said party of the first part, in consideration of the sum of $1.15,000, to be fully ¡laid as hereinafter mentioned, hereby agrees to sell unto. the said party of the second part all that certain tract of land situate, lying and being in what was formerly the town of Westchester * * * but now a part of the Twenty-fourth Ward, Borough of the Bronx * * * and known as the most soutliérly twenty (20) acres of the Levi H. Mace Farm, nearest Bronxdale, and running from the White Plains Boad to Boston Bead and bounded and - described as follows: Northerly by the remaining portion of the said Levi H. Mace Farm; easterly by the Boston Boad ; southerly ■ by the Wolff Estate,' and westerly by the White Plains Boad.

“And the said party of the second part hereby agrees-to purchase said premises at the said consideration of $115,000, and to pay the same as follows: $1,000 upon the signing of the within contract,. the receipt whereof is hereby acknowledged; $27,750 in cash upon the closing of title and delivery of deed. . The balance of $86,250 to be secured by a purchase-money mortgage upon said premises to bear interest at the rate of five (5) per centum per annum, payable semi-annually, and to run for a term of five (5) years.”

It was further provided that if the party of the second part made default, that then the contract ceased,, and the deposit of $1,000 should be' retained by the party of the first part as and for. liquidated damages, and no suit should be maintained for specific performance or damages, and “ the said party of the first part, on receiving'such payment of $115,000, at the time and in the manner above mentioned, shall at her own proper costs and expenses, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered to the said party of the second part, or to his assigns, a proper deed containing a general warranty and the usual full covenants for the conveying and assuring to him or them the fee simple of the said premises, free from all encumbrance, except any

p. 779

tax or assessment becoming a lien after the date, of this agreement, * * * which deed shall be delivered on or before the 27tli day of March, 1905, at twelve o’clock, noon, at the office of Arthur H." Wadiclt.”

On the 4th day of March, 1905, the party of the second part paid to the party of the first part §500 for an extension of thirty days. After the delivery of the contract, the party of the first part agreed to have made a survey of the twenty acres, so as to locate the same by a definite boundary. That was never done. After much delay the party of the first part tendered to the plaintiff a' deed containing the identical description set out in the contract. This was refused by the party of the second part.

This action was then brought, and upon the trial the court dismissed the complaint upon the merits. From the judgment thereupon entered, the plaintiff appeals to this court.

Ernest Hall, for the appellant.

Ralph Hickox, for the respondent.

The contract in question meets all the requirements which the courts have laid down for the exercise of equitable power of enforcing specific performance. These requirements are summarized by Mr. Pomeroy in his work on Equity Jurisprudence (3d ed., § 1405), as follows: “ It (the contract) must be upon a valuable consideration. It must be reasonably certain as to its subject mattér, its stipulations, its purposes, its parties, and the circumstances under which it was made. It must be, in general, mutual in its obligation and in its remedy. The contract must be free from any fraud, misrepresentation even though not fraudulent, mistake, or illegality. * * * The contract must be perfectly fair, equal and just in its terms and in its circumstances. The contract and the situation of the parties must be such that the remedy of specific performance will not be harsh or oppressive. The vendor’s title must be free from reasonable doubt.”

The defendant does not suggest that,the contract is lacking in any of these elements. It certainly is upon a valuable consideration, for the plaintiff paid $1,000 upon the making and delivery of the eon-

p. 780

tract, and subsequently paid $500 to secure an extension of the time of performance. It is certain as to its subject-matter. It is mutual ' in its requirements and its remedies. The obligation on the part of the defendant is to deliver a proper deed ” upon the payment of the sums agreed upon and the execution and delivery of a purchase-money mortgage, and the obligation of the plaintiff is to make such payments and to accept “a proper deed,” or in default of such performance, to forfeit the payment of $1,000 which he made upon the delivery of the contract. It is true that the plaintiff has a right of action for specific performance, and that the defendant has waived her corresponding right by stipulation, but in lien thereof there was secured to her $1,000 for an option on the premises for a limited time. On the default of the plaintiff, she was entitled to retain the $1,000, and end her obligation under the contract. On the default of the defendant, the plaintiff was left to his remedies in the courts. Plainly stated, then, we have a contract for “ the most southerly twenty (20) acres of the Levi LI. Mace Farm,” at a given price per acre aggregating $115,000. No one intimates . that there was any mistake about this, though it developed upon the trial of the action that when the defendant came to make an investigation, it was found that the “ most southerly twenty (20) acres of the Levi H. Mace Farm ” carried the northern boundary over a certain highway known as Bleeker street or Allerton avenue, and that this would operate to cut the defendant’s remaining property off from the highway for a considerable distance- But the defendant knew ■ of this highway; she had been paid by the city of New York for the very premises involved in the change of this highway several years before, and the roadway was in course of construction at the time the contract was executed. There is nothing to show that the plaintiff knew of this situation more than the defendant, and while it is probably true that the parties at the time of making the contract did not contemplate the result as later disclosed, there is no valid reason, even if that be true, why the plaintiff should be denied the benefits of his contract as to all of this property, which has concededly increased in value since he assumed the risks of the purchase. • The result of the judgment, as it now stands, is to permit the defendant to violate the obligation of her contract to the detriment of the plaintiff, who has been and still is ready to perform his part of the

p. 781

agreement. In fairness and in equity, the plaintiff has a right to the benefits of his contract. He paid $1,000 down, and subsequently paid $500 for the privilege of having the time extended, and if he had not been prepared to perform his contract within a reasonable time, he would, by the terms of his agreement, have forfeited the deposit of $1,000, and it may be of the $500, wdiile if the defendant is called upon to specifically perform her contract, she will only be accepting the amount of money which she agreed was a fair price for the twenty acres involved in the transaction.

It developed upon the trial that, the defendant, after discovering the fact that the northerly boundary would carry the line north of the highway, put off the time of closing title, and finally tendered the plaintiff a deed in the language of the agreement, which failed to define the northern boundary; and this is made the basis of the decision adverse to the plaintiff by the learned court at Special Term. The opinion says that “ under the circumstances presented, the defendant performed her whole duty in tendering to the plaintiff a deed in accordance with the terms of their contract. Upon his failure to perform upon his part, she was entitled to terminate their relations.” It seems to us that this completely ignores the rights of the plaintiff. The deed, in the language of the contract, was not “ in accordance with the terms of their contract,” for the terms of their contract requii-ed that the defendant should deliver to the plaintiff or his assigns “ a proper deed * * * for the conveying and assuring to him or them the fee simple of the said premises, free from all encumbrance.” Counsel for respondent, in his brief, concedes that the deed tendered would have to depend upon judicial construction to identify the premises conveyed. Certainly such a deed was not what the parties had in mind in the use of this language. The respondent’s brief, after practically conceding that the purpose of the defendant was to back out of her contract when she found that the premises' would reach north of the highway, says: “ It did not seem to defendant’s attorney that plaintiff was entitled to an election as to what he would take, and plaintiff was tendered a deed'in the language of the agreement, accepting which he might have a judicial construction of the description, or if he was unwilling or unable to take up his option, he might receive back his money and the matter be ended. * * * On the other

p. 782

hand, this solution was apparently fair to defendant, no change in values having taken place, and a judicial construction of the descripotion presumably protecting defendant’s rights.” But why, if the plaintiff was unable or unwilling to take up his option, should he receive his money back ? His contract provided, if he failed to perform, that this money should be forfeited to the defendant, but the latter actually sent him a check for the advances made,-which was returned to the sender, and. this court is asked-to sanction the doctrine' that the tender of a deed which concededly imposed the burden of a law suit upon the plaintiff to establish his right was the tender of - “ a proper deed * * * for the conveying and assuring to him or them the fee simple of the said premises, free from all encumbrance.” While it is probably true that the entailing of an action in the courts would not be an incumbrance in a strict legal sense, it would, nevertheless, be a decided disadvantage, and a deed involving such a result would not constitute ^ a proper deed.” The fair construction of the language is that the defendant will give “a proper deed,” and thereby convey a marketable title, and ■ this has been judicially defined to be “ one that is free from reason- ' able doubt.” There is reasonable ■ doubt when, there is uncertainty as to some fact appearing in the course of its deduction, and the doubt, of course, must be such as to affect the value of the land, or will interfere with its sale. ' A purchaser is not to be compelled to defend by litigation. He should have a title that will enable him to hold llis land in peace, and, if he wishes to sell it, be reasonably sure that no fault or doubt will' arise to disturb its ■ market value. (Vought v. Williams, 120 N. Y. 253 , 257.) A deed in the language of the contract is not such a deed as the plaintiff contracted for, and the defendant, never having been ready and willing to tender “ a proper deed,” the plaintiff could not be in default, even though,' as urged- by the respondent, he did not have the necessary funds on the day when the transaction was to be closed. The obligation of the plaintiff to make further payments was contingent upon the defendant’s being able-and willing' to tender a ju-oper deed, and until that was done the plaintiff could not be in. default.- (Glenn v. Rossler, 156 H. Y. 161.) Apart from the legal conclusion that the plaintiff was not in default, it is apparent that

p. 783

the defendant did not consider him in default, and that is evidenced by the effort to refund his money when, under the terms of his contract, the money belonged to her if the plaintiff neglected or refused to perform his part of the contract. In this view of the case, it is not important to consider whether the defendant did or did not agree to furnish a survey. She never tendered a proper deed of the premises which the plaintiff contracted to purchase and she to sell, and whatever right she may have had to a reformation of the contract, upon the ground of mistake as to the effect of the sale of the most southerly twenty acres of the farm, she has no right to deprive the plaintiff of all the benefits of his investment and his foresight in purchasing the property. It may be, in the exercise of sound discretion, that the trial court upon a retrial will not compel execution of the contract by directing a conveyance which ivill include a strip of land north of Bleeker street, for the obvious reason that the parties did not have that in contemplation at the time of making the contract of sale. They no doubt acted upon the assumption that a conveyance of the southerly twenty acres would carry the northerly line to the southerly boundary of Bleeker street or some point south of it. This is matter to appear by the conduct of the parties. Upon a discovery that a conveyance of the twenty acres would extend the line about fifteen feet north of Bleeker street, the vendor refused to convey by definite boundaries, and the vendee offered to take a conveyance which would locate the line on the southerly line of Bleeker street and take compensatory land at some other point. It is the highest function of equity to carry into effect the intention of parties, where it can be done upon terms of equality. Support for such a determination as above indicated is also found in the well-settled principle of equity, that specific performance will not be decreed where its effect will be harsh, oppressive or damaging to one far beyond the benefits conferred upon another. In this case it is apparent that the deprivation of street frontage to the remaining land of the vendor would impose injury and damage incalculably in excess of benefits to be derived by the vendee. It may be assumed as a fact resulting from the situation that a strip about fifteen feet wide north of Bleeker street would not be of any value to the vendee, while its loss to the vendor would destroy the market value of lands lying north of it.

p. 784

These considerations are for the initial court. Upon the trial had the court held that a tender of a deed.in the language of the contract was a tender' of performance b'y the vendor, and its refusal by the vendee operated to discharge the obligations of the parties to the contract. By this decision and the judgment following it the defendant was.given affirmative relief Upon her contract obligations upon mere denial of some of the incidental allegations of the complaint, and as to all of which, so far as they are material, the evidence supports the contention of the plaintiff. This she is clearly not entitled to; she owes the plaintiff some duties under her contract, no part of which she has in good faith performed.

Upon the pleadings and proof taken, the plaintiff is entitled tesóme substantial measure of relief, and the case is returned to the court of equity, where the parties may be heard upon the equities. The questions under discussion have been sufficiently raised by exceptions, and the conclusion is reached that the judgment appealed from should be reversed and a new trial ordered, with costs to the appellant to abide the event. If the wisdom of the trial court so suggests, the English rule, approved in Phillips v. Thompson ( 1 Johns. Ch. 131 , 150), of appointing- a referee to work out and report a scheme of equitable performance of the contract, may be adopted.

Patterson, P. J., Ingraham, Clarke and Houghton, JJ., concurred.

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

Cases cited

Vought v. Williams 120 N. Y. 253 N.Y. 1890-04-15 at 257 p. 782
Phillips v. Thompson 1 Johns. Ch. 131 N.Y. Ch. 1814-08-29 at 150 p. 784