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Fairchild v. Scarsdale Estates

166 A.D. 616 Court Second Department, Decision date 1915-02-19 English

Delivered by Thomas, J..

Contents

Majority

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Josephine M. Fairchild, Appellant, v. Scarsdale Estates, Respondent, Impleaded with White Plains Development Company and Guardian Trust Company of New York, as Trustee, Appellants, and The Equitable Trust Company of New York, as Trustee, and Others, Defendants. White Plains Development Company, Appellant, v. Emma E. Reed and Others, Defendants, Impleaded with Scarsdale Estates, Respondent.
Second Department,
February 19, 1915.

Headnote

Mortgage — assignee of part interest in mortgage — extent of recovery on foreclosure — execution of contract to convey lands — presumption that conditions of executory contract have been fulfilled — suit on contract under seal — assignment to plaintiff after action brought — covenant not running with land —practice — effect of failure of defendant to plead.
One to whom only a portion of a debt seemed by mortgage is assigned who does not plead and prove any greater interest is only entitled to a decree of foreclosure for the amount due to her; she has no concern with the ownership of the remaining interest in the mortgage.
Where a contract for the sale of lands on which the vendee was to give back a purchase-money mortgage, after describing the same by metes and bounds, provided that a certain sum should be deducted from the purchase price for every acre of shortage which might be found on a subsequent survey, the amount to be deducted from the sum to be secured by a second mortgage, it may be inferred that the parties when executing the contract did at that time that which was agreed to be done, in the absence of evidence of a change in the contract in that respect.
Where such contract of sale was under seal, the vendee alone can enforce any claim for shortage, although she took title for another person.
Where said vendee did not assign her rights under the contract to the person for whom she took title to the property, but subsequently assigned to another corporation, her assignee obtained no right to maintain a
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suit which it had previously brought in relation to the lands, nor could it found thereon a counterclaim on the assignment in a prior suit in equity. Where the grantee merely conveyed the lands purchased by her by a deed containing the usual warranties, she did not convey her cause of action in ease there was a shortage in the lands agreed to be conveyed, for the stipulation as to shortage did not run with the land.
A defendant which is in default by reason of its failure to plead cannot contest issues proffered by the plaintiff as to the rights of a codefendant.
Cross-appeals, in the first action, by the plaintiff, Josephine M. Fairchild, and the defendants, White Plains Development Company and another, from parts of a judgment of the Supreme Court in favor of certain of the defendants, entered in the office of the clerk of the county of Westchester on the 24th day of June, 1914, upon the decision of the court after a trial at the Westchester Special Term.
Appeal, in the second action, by the plaintiff, White Plains Development Company, from a judgment of the Supreme Court in favor of the respondent, entered in the office of the clerk of the county of Westchester on the 10th day of June, 1914, upon the decision of the court after a trial at the Westchester Special Term.
Suit to foreclose a purchase-money mortgage given by Eeed to the Scarsdale Estates, which was reduced by payments to $175,000.
One controversy arises over the ownership of a $25,000 subordinate interest in this mortgage. The Scarsdale Estates assigned the mortgage which, after mesne assignments, came to the plaintiff. The Scarsdale Estates claim the $25,000 interest, The plaintiff also claims it. The defendants the White Plains Development Company, as owner of the equity, and the Guardian Trust Company, as second mortgagee, claim that the $25,000 interest should be reduced by about $10,000, with interest, on account of shortage in the acreage. The defendant Scarsdale Estates served no answer, hut the question of shortage in acreage was tried and decided as if that issue had been raised by proper pleadings. A separate action has been begun by the White Plains Development Company against Eeed, Scarsdale Estates and others, to recover from the Scarsdale Estates the same sum of $10,000, with interest, for the same shortage. The defendant Eeed was never served
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■in this suit and was struck out as a party but remained a party to the other action. The separate action brought by the White Plains Development Company was tried at the same time as the foreclosure suit, and the issue as to shortage in acreage decided in favor of the Scarsdale Company.
It is undisputed that the plaintiff was entitled to $150,000, with interest, etc.
The contract for the sale of the lands on which the purchase-money mortgage was given, made between the Scarsdale Estates and the defendant Eeed, after describing the property by metes and bounds, provided that a certain sum should be deducted from the purchase price for every acre of shortage which might be found on a subsequent survey, the amount deducted to he secured by a second mortgage.
Elmer E. Cooley, for the appellant Fairchild.
William S. Bennet, for the appellants White Plains Development Company and Guardian Trust Company.
William L. Rumsey, for the respondent.

The trial court decided correctly that the plaintiff Fairchild purchased an interest in the mortgage limited to the principal sum of $150,000. Payment therefor with interest and no more is sought in the complaint; proof of such an interest and no greater was shown; judgment for such amount.was moved; the formal assignment of that interest and no more was made. It does not concern the plaintiff who owns the remaining interest. The Scarsdale Estates in its resolution authorizing the sale of the land contemplated a shortage of acreage, which the map long in its possession showed to exist, and for which there was a provision in the resolution authorizing the contract, while the contract itself provided that if upon survey a shortage of acreage should appear, there should be a deduction from the purchase price at the rate of a given price per acre, “such amount to he deducted from the sum to be secured by the second mortgage. ” The contract was made June 8, 1906, and the closing set for August second was adjourned to August tenth, and then had at a law office in the city of New York. Of the

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principal representatives of the parties, Hitchcock was dead and the other in prison, but several persons, including the lawyer for the Scarsdale Estates, were witnesses; but none of them had any recollection that the question of shortage was involved in the adjustment, although ten acres of land that the vendor was privileged to reserve were made a part of the sale at a price which a witness said was fixed at $20,000. But the purchase price was advanced only by $8,700, which was quite inadequate to meet the value of the ten acres. How the balance of the $20,000 was paid is not known, and it is the merest conjecture that the shortage was used to make up the deficiency. There was a map made in 1897 produced by the vendor at the closing and used therefor which showed the shortage. Nevertheless, the deed and mortgages which had been earlier drafted were redrafted, and yet the original full acreage was stated in them as if no treatment of the acreage had been had. It is clear enough that the vendee’s agent in charge had, before August 22, 1906, full opportunity to see a map made by its engineer which showed the true acreage, and the inference is justified that he did see it, as the engineer carried it when he went on the land with either Hitchcock or Jennings. It is a fair inference that at the closing the acreage was known. For several years the interest was paid on the mortgage, and finally, after financial embarrassments, Jennings and the vendor recast the arrangement for payments, and Jennings paid a large sum pursuant thereto. If a claim for shortage existed, it would have been too helpful to be disregarded by Jennings. The contract evidently intended that a new survey should be made and the shortage discovered thereby deducted from the sum “to be secured by the second mortgage. ” That shows intention that the deduction should be made before the mortgage was given. One fact is quite clear, and that is that whatever agreement was made at the closing was discussed between Jennings and Hitchcock, and that the lawyer drawing the papers took whatever they told him for that purpose. It is an allowable inference that the shortage was arranged, although knowledge of the basis of it did not extend beyond Jennings and Hitchcock, although such conclusion is quite inconsistent with the continuance of an incorrect recital of the acreage in the deed and
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mortgages. It is inferable that the parties did at the closing what the contract intended should be done at that time in the absence of evidence of change in the contract in that regard. Reed was the vendee under a contract under seal, and, although she took for the Anderson Eealty Company, she alone without assignment could enforce the claim for the shortage. (Henricus v. Englert, 137 N. Y. 488 ; Spencer v. Huntington, 100 App. Div. 463 ; affd., 183 N. Y. 506 ; Klein v. Mechanics & Traders Bank, 145 App. Div. 615 ; Durnherr v. Rau, 135 N. Y. 219 ; Case v. Case, 203 id. 263 .) She made no assignment of her cause of action until both of the present suits were brought, and then to the White Plains Eealty Company, which gave it no authority to maintain the suit earlier brought by it or to interpose a counterclaim in the equity suit also earlier begun. Eeed made no assignment to the Anderson Company, and it had nothing to assign to the White Plains Company. Eeed’s deed and the subsequent deed merely conveyed land with the usual warranties. The stipulation as to shortage did not run with the land. (2 Devlin Deeds [3d ed.], § 942.) The authority cited for this is Salmon v. Vallejo ( 41 Cal. 481 ), where it is so decided. There was similar decision in Pigeon River Lumber & Iron Co. v. Mims ( 48 S. W. Rep. 385 ).

The judgment in White Plains Development Company v. Scarsdale Estates should be affirmed, with costs. It is said that the Scarsdale Estates has not answered in the equity suit, but it did in the other action, and the cases were tried and argued together. In the action at law the judgment properly goes against the plaintiff. In the foreclosure action the Scars-dale Estates without any pleading has tried the case as if it had plead, and has been permitted to do so. The court has found that it owns the $25,000 interest; that the White Plains Company has no claim for shortage, and that nothing should be deducted from the mortgage. It is impossible to understand how the Scarsdale Estates can defeat those issues without pleading. All contesting parties are at fault for this condition of the record.

The judgment so far as it provides for a foreclosure of the mortgage should be affirmed, without costs; but so far as it decides the issues proffered by the White Plains Company, it

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should be reversed and a new trial granted, without costs. This will enable the Scarsdale Estates to apply for leave to plead as against the White Plains Company.

Jenks, P. J., Carr, Rich and Putnam, JJ., concurred.

In each case finding of fact No. 51 reversed. In the Fairchild case judgment of foreclosure affirmed, without costs, but judgment reversed so far as it decides the issue proffered by the White Plains Development Company and a new trial as to such issue granted, without costs. In the White Plains Development Company case judgment affirmed, with costs.

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