Drake v. Gaffney — 183 A.D. 577

Majority

p. 577

John Sterling Drake, Appellant, v. James E. Gaffney and Others, Respondents.

Second Department,

June 21, 1918.

Headnote

Real property — vendor and purchaser — suit for specific performance — failure of vendor to insure title as agreed bars specific performance — counterclaim — recovery of earnest money on' inability of vendor to insure title.

Where a vendee, having an option to purchase lands within a specified time, insisted as a new condition that the vendor should insure the title with a specified title company and the vendor accepted said condition it became part of the contract.

Where the vendor at the day set for passing title did not furnish the insurance aforesaid he cannot maintain a suit for specific performance. Moreover, where the vendee was willing to accept title under the option, except for the fact that the vendor was unable to insure the same as agreed, the vendee performed her part" of the contract and when sued for specific performance is entitled to recover on a counterclaim for earnest money paid although it was to be retained by the vendor as liquidated damages if the vendee did not exercise the option to purchase, and she may also recover for moneys paid out on account of the title. Blackmab. J., dissented in part.

Appeal by the plaintiff, John .Sterling Drake, from a judgment of the Supreme Court in favor of the defendants, entered in the office of the clerk of the county of Richmond on the 22d day of January, 1917, dismissing the complaint and granting defendant Grace Wire affirmative relief on her counterclaim, upon the decision of the court after a trial at the Richmond Special Term.

Charles E. Hughes, Jr. [Allen S. Hubbard with him on the brief], for the appellant.

Frederick T. Kelsey, for the respondents.

A proposed vendor sues the proposed vendee for specific performance. The plaintiff gave an option to the defendant Grace Wire for a consideration. When the option was put in use, the defendant insisted upon the new condition that the plaintiff’s title should be insured without exceptions by a

p. 578

specified title company. The proof justified the conclusion of the court that the plaintiff accepted this condition. Therefore, it became part of the contract. (See James Op. Cont. § 713, citing Cleaves v. Walsh, 125 Mich. 638 .) The proof justified the findings that on the law day the plaintiff did not and could not furnish such insurance; that the refusal of the title company was neither fraudulent nor collusive, and that time was of the essence of the contract. We think that the conclusion of the court that the plaintiff should not be afforded the relief of specific performance should not be disturbed. (Flanagan v. Fox, 6 Misc. Rep. 132 ; affd., on opinion below, 144 N. Y. 706 ; Allen v. McKeon, 127 App. Div. 277 .)

We think that the judgment upon the counterclaim should be affirmed. That judgment is for moneys paid by the defendant to the plaintiff under the option and paid out by the ■ defendant on account of the title. The option provided that the defendant could purchase the premises within 30 days from the date of the agreement, and could have an additional option for SO more days thereafter, provided that on or before the expiration of the first 30 days she paid the additional sum of $1,500, and “ In case said option is not exercised and the purchaser fails to pinchase said premises for the price hereinafter stated, all sums paid for said options shall be kept and retained by the Seller as liquidated damages * * *. If the option is exercised and the purchaser takes title to said premises the sum * * * shall be allowed as part payment on the purchase price.” The court justifiably found that on the law day the defendant performed her part of the contract. The plaintiff cannot retain the moneys upon the theory that they are a part of the purchase price, and he cannot retain the moneys upon the theory of damages, for the purchaser did, so far as it was in her power, exercise the option, and did not by any shortcomings fail to purchase said premises. The court in effect found and concluded that the fault of non-performance was wholly in the plaintiff. To permit retention of the money by the plaintiff is to pay a premium upon his default, out of the moneys of the defendant. (See Boyd v. De Lancey, 17 App. Div. 573 .) The defendant “ exercised ” the option, for “ to exercise ” is “to put in action ” (Century Dictionary), and the defendant did not “ fail to

p. 579

purchase ” in the sense that failure was attributable to her. The moneys expended upon the title are recoverable. (Northridge v. Moore, 118 N. Y. 419 , 422; 3 Joyce Dam. § 1730; Maupin Mark. Tit. Real Est. [2d ed.] § 93.)

The judgment is affirmed, with costs.

Thomas, Mills, and Putnam, JJ., concurred; Blackmar, J., dissented as to the counterclaim.

Judgment affirmed, with costs.

Cases cited

Flanagan v. Fox 6 Misc. Rep. 132 N.Y.C.P. 1893-12-04 p. 578
Brown v. Richter 144 N. Y. 706 N.Y. 1895-02-05 p. 578
Northridge v. Moore 118 N. Y. 419 N.Y. 1890-01-31 at 422 p. 579