Hayward v. Wemple

This action was brought for the partition and! sale of three pieces of property, two of them situated in the borough of Manhattan and one in the borough of Brooklyn. On November 11, 1911, a judgment was entered by which, among other things, a referee was appointed to make the sale. One of the pieces of property described as parcel No. 1 was situated on the northwest corner of Broadway and Spring streets in the borough of Manhattan. At the sale, held February 29, 1912, said parcel was struck down to the Esseff Realty Company for $132,000. The judgment, in accordance with the terms of which the sale wás had, provided that the referee should sell each of said parcels free and clear from anytand all general and specific liens or incumbrances whatsoever, excepting the lien of the mortgage of the East River Savings Institution. This mortgage affected parcel No. 1. Upon that mortgage, at the date of the sale, the sum of $75,-000 of principal was due, with interest from February 1, 1912. The notice of sale contained a statement as follows:

“The premises above described as parcel No. 1 will be sold subject to a mortgage held by the East Biver Savings Institution, on which there is now due the sum of $75,000, with interest thereon at the rate of five per centum per annum from February 1, 1912.”

[1] A bid at a foreclosure sale “when accepted so far constitutes a contract that a bidder may not withdraw his bid except under circumstances that will justify the rescission or reformation of an ordinary contract for the sale of land.” Continental Insurance Co. v. Reeve, 135 App. Div. 737 , 119 N. Y. Supp. 901 ; appeal dismissed 198 N. Y. 595 , 92 N. E. 1081 .

[2] The purchaser does not now claim a right to reform the contract. It does seek a rescission thereof. There is no suggestion of fraud in the case, but appellant urges rescission upon the ground of mistake, which, however, was not mutual. A mistake on one side only may be ground for rescinding, but not for reforming a contract. City of New York v. Dowd Lumber Co., 140 App. Div. 358 , 125 N. Y. Supp. 394 ; Hearne v. Marine Ins. Co., 20 Wall. 488 , 22 L. Ed. 395 ; Moffett, Hodgkins & Clarke Co. v. Rochester, 178 U. S. 373 , 20 Sup. Ct. 957 , 44 L. Ed. 1108 .

[3] The respondents contend that, if the purchaser had any right of rescission, it has been lost by reason of the form of the application for relief. A party to a contract may hot at the same time affirm it in part and rescind it in part. If he elects to affirm, he must affirm it in all of its terms. Wald’s Pollock on Contracts (3d Ed.) 707.

[4] An election once made with knowledge of all the facts is final and conclusive. Moller v. Tuska, 87 N. Y. 166 ; Follett v. Brown, 188 Ill. 244 , 58 N. E. 943 ; Wylie v. Gamble, 95 Mich. 564 , 55 N. W. 377 . Taking steps to enforce a contract is a conclusive election not to rescind on account of anything, known at the time. Wald’s Pollock on Contracts, 708; Conrow v. Little, 115 N. Y. 387 , 22 N. E. 346 , 5 L. R. A. 693 ; Bach v. Tuch, 126 N. Y. 53 , 26 N. E. 1019 . If the appellant had sought in the first instance to compel a delivery of the deed upon payment of the sum bid, less the amount of the principal and interest of the mortgage, and had failed to establish that such was the contract between the parties, it may be that because of such election it could not afterward be heard upon an application to rescind the contract upon the ground of a mistake upon its part.

[5] But in this instance the primary relief asked for was a cancellation of the bid. It is true that coupled with this there was a suggestion of alternative relief. But we think that this alternative should not be construed as anything more than an offer upon the part of the purchaser to make a new contract upon the basis thereof if the other party to the contract so desired.

[6] But, to rescind a contract upon the ground of mistake by one

[7] Considering, then, the application upon its merits, we think that the learned court at Special Term correctly found as a fact that there was no honest mistake as to the terms and conditions of appellant’s bid. In the affidavit verified by its president at the time that the motion was originally made, he asserted that, before bids were invited by the auctioneer, he stated that “the amount of the mortgage on the property held by the East River Savings Bank would be allowed from and out of the bid or purchase price.” As to this he is corroborated by no one, for the evidence of his brother, the secretary and treasurer of the Realty Company, is weak and evasive upon this point. It is that “to the best of his knowledge and belief, and as deponent understood it, the reader stated that'the $75,000 mortgage to the East River Savings Bank would be allowed from and out- of the purchase price.” He is contradicted by the referee who made the sale, by one of the attorneys for the plaintiff, and by two of the attorneys for the parties defendant. Each of these persons was present at the sale. He was also contradicted by the husband of the plaintiff, who attended for the purpose of bidding, and who did bid upon the property, and also^ by the auctioneer and his assistant. When it clearly appeared that the secretary and treasurer of the Realty Corporation which purchased at the sale and who was present at the time had seen and examined the notice of sale before the date of the auction, and that the terms of sale were distinctly read before bids were invited, the purchaser then shifted' its ground, and contended that it was the custom when sales of real property were made at auction at the Real Estate Exchange in the borough of Manhattan, even where the property is declared to be sold subject to a mortgage, unless such mortgage is not to be deducted from the purchase price, for the auctioneer to announce that all bids will be over and above such mortgage, and that in this case no such announcement was made. As to this fact, the recollection of the learned referee who made the sale does not accord with that of the president and secretary of the purchasing corporation, and there is a conflict of evidence as to the existence of such a custom.

[8] But parol evidence of a custom may not be received to add new terms to a contract inconsistent with the terms actually expressed therein in writing. Wald’s Pollock on Contracts (3d Ed.) 315; 1 Greenleaf on Evidence (15th Ed.) § 292; Bigelow v. Legg, 102 N. Y. 652 , 654, 6 N. E. 107 ; Hedden v. Roberts, 134 Mass., 38 , 45 Am. Rep. 276 ; In re The Schooner Reeside, 2 Sumn. 567 , Fed. Cas. No. 11,657; De Witt v. Berry, 134 U. S. 306 , 312, 10 Sup. Ct. 536 , 33 L. Ed. 896 . In the Reeside Case Justice Story said:

“I apprehend that it can never be proper to resort to any usage or custom to control or vary the positive stipulations in a written contract, and, a fortiori, not in order to contradict them. An express contract of the parties is always admissible to supersede, or vary, or control, a usage or custom; for the latter may always be waived at the will of the parties. But a written and express contract cannot be controlled, or varied, or contradicted by a usage or custom, for that would not only be to admit parol evidence to control, vary, or contradict written contracts, but it would be to allow mere presumptions and implications properly arising in the absence of any positive expressions of intention to control, vary, or contradict the most formal and deliberate written declarations of the parties.”

This language was quoted with approval by Mr. Justice Lamar, speaking for the United States Supreme Court, in the case of De Witt v. Berry, supra. The practical construction put upon the contract by the acts of the parties immediately after the property was struck down militates against appellant’s present contention. By the terms of sale 10 per cent, of the purchase money was to be paid to the referee at the time and place of sale, and the residue on the delivery of the deed. If appellant’s contention were correct, the purchase money to be paid was not $132,000, but $132,000 less $75,000, with interest thereon for a period of about two months. Yet we do not find the purchaser paying 10 per cent, of this reduced sum, amounting to a little more than $5,000, but, on the contrary, $13,200. If this is 10 per cent, of the purchase price to be paid, a sum nine times as great will be the residue thereof.

The order appealed from should be affirmed, with $10 costs and disbursements. All concur.