Haire v. Baker — 5 N.Y. 357

Majority

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Haire v. Baker.

Headnote

Reformation of Contract. — Demurrer.

A defendant may set up, by way of defence, that he is entitled to a reformation of the contract, and that, so reformed, the plaintiff has no cause of action ; but he cannot have affirmative relief, without a cross-action.^[1]

A general demurrer, on the ground that the complaint does not state facts sufficient to constitute a cause of action, is good.

Appeal from tbe general term of the Supreme Court, in the seventh district, where a judgment in favor of the plaintiff, on demurrer to the complaint, had been reversed, and the complaint dismissed,.with costs.

This was an equitable action, to restrain the prosecution of a suit at law, and to reform a deed of conveyance, so as to make it conform to the agreement of the parties.

The complaint alleged, that James ITaire, the plaintiff, on the 3d February 1843, sold to Daniel Baker, the defendant, a farm in Yates county, for the sum of $1000, or thereabouts, on which there was an existing purchase-money mortgage, given by the plaintiff, bearing date the 23d March 1839, to secure the sum of $680, with interest. That Baker agreed to pay the said mortgage-debt, and interest, as part of the purchase-money, and that, at the *^me ^16 execution of the deed, the amount thereof was, accordingly, deducted from the purchase-money. That on the 3d February 1843, the plain

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tiff, in fulfilment of bis contract, executed to the defendant a conveyance of the farm in fee, with a covenant that the premises were free and clear of all incumbrances, omitting, through inadvertence and mistake, any mention of the mortgage, or of the defendant’s agreement to assume and pay the same. That the defendant omitted to pay the mortgage, and permitted his title to bo divested under a foreclosure thereof; and had subsequently brought an action against the plaintiff upon his covenant against incumbrances. That such suit was still pending, and that Baker was insolvent. He, therefore, prayed, that Baker might be restrained from the further prosecution of such suit, and that the deed (if necessary) might be reformed, so as to conform to the agreement of purchase.

The defendant demurred to the complaint, on the grounds — 1. That it did not state facts sufficient to constitute a cause of action: 2. That the facts stated were embraced in the pending action, and were not the proper subject of a distinct suit. The court at special term (Mullett, J.) overruled the demurrer, with leave to answer, *but no answer having been put in, judgment was perfected on the demurrer; this, however, was reversed at general term, whereupon, the plaintiff took this appeal.

Taylor, for the appellant.

Judd, for the respondent.

The first question presented is, upon the sufficiency of the demurrer. It is objected, that it does not distinctly specify the grounds of objection to the complaint. By the law in force when the demurrer was interposed, a defendant was authorized to demur, when either of six grounds of demurrer enumerated existed,

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and it was requisite, that the demurrer should distinctly specify the grounds of objection upon which it rested. The ground here specified is one of the six enumerated, viz., that the complaint does not state facts sufficient to constitute a cause of action. This, though general, is a compliance with 'the law, and fairly raises the question as to the sufficiency of the facts stated in the complaint.^[1]

The facts stated and conceded by the demurrer are': that in February 1843, the defendant purchased the appellant’s farm, agreeing to pay him therefor “ $1000 or thereabouts,” in part payment of which, he assumed and agreed to pay a mortgage given by the appellant, in March 1839, for $680 and interest, by which the farm ■ was then incumbered. That the appellant gave the respondent a deed for the farm, covenanting that the premises were “ free and clear of all incumbrancesthat by mistake, no mention was made of the mortgage, and it was not, therefore, excepted from the covenant in the ^ee<^ ’ ^&t ^le respondent omitted *to pay the mortgage, but permitted it to be foreclosed, and his title to the premises thereby extinguished, and that the suit brought by him for the breach of the covenant in the deed, rests entirely upon the fact of the existence- and foreclosure of the mortgage, which he agreed to pay, and which, by mere mistake, was not excepted from the covenants in the appellant’s deed to him.

That there was a clear mistake in the covenant in the deed, and that it has resulted in a suit which ought not to have been brought, is manifest. The respondent, however, insists, that it is not shown by the complaint, that he was entitled to recover in his suit, upon the covenant, not having suffered an eviction, or paid any part of the consideration for the premises; and that if he was entitled to recover, it was, at most, but nominal damages, and

2 Such general demurrer does not reach the question of the plaintiff’s right to sue. Fulton Fire Insurance Co. v. Baldwin, 37 N. Y. 648 ; People v. Crooks, 53 Ibid. 648 .

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that, in either case, the appellant was not entitled to the relief demanded.

The appellant covenanted that the farm was free and ' clear from all incumbrances; an eviction was, therefore, unnecessary to the right of the respondent to maintain his suit. (4 Kent 471.) Nor is it necessary that it should appear,, that the covenantee had actually paid any part of the consideration, in order to entitle him to recover. If the farm was incumbered, and the covenant broken, the right of action existed, although the recovery in such case would be nominal. But it is insisted, and so the court below seems to have held, that the complaint in this suit does not show that any consideration was expressed in the deed, or paid, and hence, that none but nominal damages could have been recovered; and for that reason, the relief demanded ought not to have been granted. The complaint, it is true, does not show whether or not any consideration was expressed in the deed, nor how much has been paid toward the consideration agreed to be given. If we were to adopt the very liberal rule of construction, which the appellant’s counsel insists the code enjoins, and from the premises stated, arrive at a conclusion as to the amount of consideration expressed in the deed, or paid, we should find *great difficulty in arriving at a satisfactory re-suit. The complaint does not state the amount agreed to be paid; it was “ $1000 or thereabouts.” The amount of the mortgage and interest was deducted from the purchase-price, but whether the balance was then paid or not, does not appear; nor does it appear, whether the farm, upon the mortgage-sale, brought enough to pay the mortgage and interest, or for what sum it was sold..

It is unnecessary, however, in the view I take of the case, to determine what was the precise recovery to which-the respondent was entitled. The only question here presented is, has the mistake resulted, or is it about to result, in such an injury to the appellant as to entitle

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him to tbe relief demanded ? If no consideration was expressed in tbe deed, tbe true consideration may be proved by parol. That a portion of tbe consideration, and not a mere nominal portion, has been paid, is beyond a doubt. The farm was the respondent’s property ; by the deed, he became seised in fee. It was sold . to pay the mortgage covenanted against; it is , immaterial, whether it was sold by him to raise funds to pay the mortgage, or by virtue of the mortgage, if the avails went to pay the mortgage which the appellant covenanted did not exist. In either case, the respondent made payment upon the mortgage, as much as if he had paid it with the avails of other property. This farm was worth, as the parties agree, $1000, and the presumption, without proof, is not to be indulged in, that it was sold for a mere nominal amount. We cannot, it is true, arrive at the amount, with legal certainty; it is, however, sufficient, that everjr presumption is in favor of the inference that it was sold for something approaching its value.

The objection that a nominal recovery only could be had upon the covenant, comes with ill grace from the respondent, who, if it be true, has not only taken advantage of a conceded mistake, and prosecuted his suit upon the covenant, in bad faith, but has evinced a disposition to harass the appellant by a suit, which he now insists must result in a nominal recovery *at the expense to him, as well of his own costs, as of those of the appellant.

The second ground of demurrer, which is substantially that there is another action pending between the same parties, for the same cause, is not in accordance with the fact; the other cause pending is for the recovery of money, this is for a reformation of the covenant sued upon. There is no good reason why the mistake in the covenant should not be made available as a defence at law; before the change in our judicial

Dissent

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system, we were not without authority for admitting such a defence at law. (3 Starkie, 3d Am. ed., 1818, note.) But the clear weight of authority must be conceded to be the other way, and against the admissibility of such evidence, except in a court of equity. If a bill had been filed in a court of equity, to compel the specific performance of a covenant, a mistake in reducing the agreement to writing might have been interposed, as a shield against being compelled to perform it. It is difficult to discover any good reason why the same defence should not be admitted at law, in a suit brought to compel the payment of money due upon the covenant; each suit is brought to compel the performance of the covenant. The question of mistake is one of fact simply, and as conveniently tried in the one court as the other. By the recent changes in our judicial system, the same court that now administers law, administers equity also; the reason, therefore,‘if any ever existed, no longer exists, for excluding such a defence to a suit, whether brought to compel the performance of a covenant by conveying land, or by paying money.

But the affirmative relief here sought, could not have been attained, by the admission of such a defence; an appropriate action and complaint for that purpose were necessary. (Pattison v. Hull, 9 Cow. 747 ; Carnochan v. Christie, 11 Wheat. 446 .) I am, therefore, of opinion, for the reasons stated, that the judgment of the supreme court at general term should be reversed, and that of the special term affirmed.

(Dissenting.) — At the entrance of the new and untried way, opened by the code, for the ascertainment of truth, and the application of the rules of law and equity to the contested claims of parties, a conspicuous guide-hoard has been erected by the legislature. There is written upon it, this marked direction — “ The distinction between legal and equitable remedies shall no longer'

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continue, and a uniform course of proceeding, in all cases, shall he established.” The further directions on the way are designed to, and generally do, accord with this one. Although it is nowhere in the code said, in terms, that if there is a defence in equity to an action brought to enforce a strict legal right, that defence shall be interposed by the answer, yet the whole spirit of the provision, regulating that branch of practice, speaks that language. It is, therefore, my opinion, that the equitable defence of the appellant, set forth in his complaint to the action of covenant commenced by the respondent’ against him, should have been presented in his answer to that action, so that the whole controversy between the parties arising from the same cause, viz., the purchase and sale of the farm mentioned in the complaint, might have been disposed of in one suit. It follows, from these views, that the subject of the present action is necessarily involved in the previous suit pending between the same parties, and that the second ground of demurrer is well taken.

The appellant contends that the respondent cannot set up the pendency of the former action on demurrer because it is not one of the causes of demurrer allowed by the code. In this he is mistaken. Conceding, for' the purpose of this opinion, that a demurrer cannot be interposed in any cases except those stated in the code (a proposition to which I am by no means prepared at present to assent), the third case mentioned in the code in which a defendant may demur, is, where “ there is an0^er *acti-ori pending between the same parties for the same cause.”

I understand it to be a clear and well-established rule, that a plea of the pendency of another action between the same parties, for the same cause, stands on the same principles, and is sustained by the same proofs, as a plea in bar of a- former recovery, where the second suit is commenced, after a recovery in the first, The two pleas

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perform the same office, and the only difference between them is, that one is interposed, while the first action is still pending, and the other, after it is determined. Under the former, the second suit is abated; under the latter, it is decided for the defendant. In the present case, the grounds, object and pendency of the first action, are fully set forth in the complaint, and also the grounds and object of the second or present action. It thus distinctly appears in the complaint, that, to the first action, which was on the covenant in the deed, the appellant had a valid equitable defence, resting on a mistake in the same deed, and which mistake is the subject-matter of the present action. The respondent’s course was clear: there being no additional facts necessary to his defence, an answer setting up the pendency of the former action was unnecessary and inappropriate, and a demurrer the appropriate remedy.

The question then arises, whether a matter, which the parties might have litigated and have had decided in the first action, can be the subject of a second one. This question has been definitely settled, not only in our own courts, but in those of England and several states of our Union. The rule is laid down by Radcltee, J., in the great case of Le Guen v. Governeur ( 1 Johns. Cas. 491 ), as follows — a recovery “is not only final as to the matter actually determined, but as to every other matter which the parties might litigate in the cause, and which they might have had decided.” Mr. Shepherd, in a full and learned note to this case, says, in reference to the principle just quoted: — “The general principle here stated has become *firmly fixed in the jurisprudence of the country.” He refers to numerous decisions by our own courts, the English courts, and the courts of severa. M our sister states, which fully sustain the principle and show a great variety of instances of its application.

In this case, the second ground of demurrer, instead

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of being stated in the true and simple language of the code, viz. — “Another action pending between the same parties for the same cause,” is stated in the language of the principle on which it rests, and is as follows:— “The facts and matters stated in the amended complaint, belong to and are embraced in the action pending at the commencement of this suit, and set forth in the said complaint between this defendant, as plaintiff, and this plaintiff, as defendant therein, and are not a proper subject-matter of another suit, while that is pending.” This is obviously nothing more, in substance and effect, than the cause of demurrer allowed by the code.

My brethren who are of opinion that the judgment ought to be reversed, think that the complaint in this action prays for a reformation of the deed, and thus asks relief beyond a defence against the covenant. I do not so understand the prayer of the complaint; it is for a perpetual injunction against the further prosecution of the suit on the covenant,"and that the deed “(if necessary) may be reformed.” By this, it appears to me, the appellant asks for a reformation of the deed only in case it is necessary to obtain a perpetual injunction against a further posecution of the action on the covenant, or in other words, to give him protection against that covenant.

For these reasons, I am of opinion, that the demurrer should be allowed, and judgment rendered absolutely for the respondent, and that the judgment of the supreme court should be modified accordingly.

Judgment reversed, and that of the special term affirmed.

Cases cited

Pattison v. Hull 9 Cow. 747 N.Y. Ct. Oyer & Terminer p. 339
Carnochan v. Christie 11 Wheat. 446 SCOTUS 1826-03-14 p. 339