Pirsson v. Arkenburg — 29 N.Y. St. Rep. 529

Majority

p. 529

Sarah J. Pirsson et al., App’lts, v. Oliver M. Arkenburg, Resp’t.

(New York Superior Court, General Term,

Filed February 6, 1890.)

Headnote

Vendor and purchaser — Moneys deposited to secure payment op ASSESSMENTS.

On the execution of a contract of sale of real property to defendant, plaintiffs’ assignor deposited a sum of money with a trust company to secure payment of an assessment thereon, which he was endeavoring to have vacated, and directed the trust company to pay said sum to defendant at a certain time, provided he had paid the assessment. The assessment was reduced and defendant paid the reduced amount. Held, that the transaction constituted a contract of indemnity only, and that the balance of the sum over the amount necessary to extinguish the assessment could he recovered hy plaintiff.

Appeal from judgment in favor of defendant entered upon a verdict directed by the court, and from order denying plaintiffs’ motion for a new trial.

Plaintiffs’ assignor contracted to sell defendant certain property, on which there was an unpaid assessment, which Bronson, the assignor, was endeavoring to have vacated, and to secure the payment of which he had deposited $1,700 with an insurance company, a mortgagee of the property. Upon the contract of sale an agreement was entered into between Bronson and the defendant, which directed the insurance company to pay the defendant said deposit and accrued interest thereon to the defendant on or after March 22, 1884, unless the said assessment should have been sooner paid or vacated, and upon condition that the said defendant should have paid said assessment on or after March 22, 1884. It is admitted that the assessment was reduced to the sum of $790, and that the defendant paid the same and interest thereon, amounting to the sum of $806.36. The difference between this sum of $806.36 and the amount of the deposit with the insurance company and interest thereon the plaintiff seeks to recover in this action.

p. 530

The court directed a verdict for the defendant and from the> judgment entered thereon plaintiffs appeal.

John Alexander Beall, for app’lts; Robert F. Little, for resp’t.

Upon the whole case, the contract under which $1,700 remained on deposit as security for the payment of the-assessment subject to which Willett Bronson conveyed the lots to the defendant, must be gathered from four different papers executed by Bronson. These papers are:

1. The contract of sale.

2. The deed to defendant.

3. The agreement between Bronson and the New York Life-Insurance Company for the deposit as security; and

4. The agreement between Bronson and the defendant.

They are so intimately connected that they must be construed together in order to ascertain what the real contract was. When thus construed they clearly establish a contract of indemnity, and not a contract for the absolute forfeiture of the whole deposit in excess of what might be necessary to pay the assessment in case Bronson failed to pay or to procure the vacation of the assessment within one year. A forfeiture is not favored in the law, and it is, therefore, a rule in the construction of contracts under which forfeiture is claimed that, if it can be fairly done, the conclusion shall be avoided that a forfeiture was intended. In the case at bar the conclusion can be readily avoided, for the surrounding-circumstances fairly show that all that was intended in fact was, ample indemnity.

The plaintiffs, to whom all the right, title and interest of Bronson in and to the moneys so deposited were transferred by several assignments, are, therefore, in a position to maintain the action for the recovery of the balance remaining unexpended after the payment and extinguishment of the assessment by the defendant, and it was error on the part of the trial judge to direct a verdict for the defendant.

The judgment and order should be reversed, and a new trial ordered, with costs to abide the event. N

Sedgwick, Oh. J., concurs.

I agree with Judge Freedman as to the construction of the contracts.

The money deposited with the trust company was Bronson’s, deposited before the contract with the defendant was made as a fund from which the assessment was to be paid. It is nowhere transferred to defendant nor is there anything that would show that the parties intended the defendant should be entitled in any contingency to the money. It was provided that if the assessment was not paid by Bronson in one year, the money should be paid to defendant by the trust company, but it was paid to defendant, as the plaintiff’s money for the special purpose of repaying defendant the amount that he had been compelled to pay to discharge the assessment under the covenant contained in the deed.

The balance that remained after paying that assessment was

p. 531

still Bronson’s money, and Bronson was entitled to maintain an action for money had and received to recover such balance.

I think plaintiff was therefore entitled to recover, and that the judgment should be reversed.