Gotthelf v. Stranahan

In, the division of the labor of our general term this cause was assigned to my learned associate to write the opinion therein. Differing in our conclusions, it devolves upon me to give the reasons for mine in favor of the affirmance of the judgment from which this appeal is taken. The trial court decreed specific performance, in favor of the vendee, of a contract for the sale of real estate, and the vendor complains of this decision on several grounds, which will be discussed hereafter. The judgment carries with it such weight as will cast upon the -appellant the task of showing that it is contrary to the rules of equity. The contract is the ordinary executory agreement dated January 7, 1891. It provides for the sale and purchase of certain city lands, having in view the division thereof by purchaser into many lots of 20 by 100 feet, for $22,500, to be, paid as follows, viz.: $2,000 on that date, and the balance on delivery of deed, $4,750 in cash, and $15,750 by mortgage containing a stipulation for the release of each lot from the lien thereof on payment of $400. It further provides that “ said sale and purchase shall be completed * * * on the 9th of February, 1891,” by delivery of the usual deed of warranty conveying the lands, “ title to be perfect in fee simple and free from incumbrance.”

There being no intimation of want of mental strength or business experience in either of the contracting parties, it must be assumed that both fully* understood and appreciated the terms of this simple and plain contract. Both, doubtless, thought they had made a good bargain. The words of the court in Seymour v. Delancy, 3 Cow.. 533 , are not inappropriate. “ Every member of this court must be-well aware how much property is held by contract ; that purchases are constantly made upon speculation; and that the value of real estate is fluctuating, and that there most generally exists an honest difference of opinion in regard to any bargain, as to its being a beneficial one or not To say, when all is fair, and the parties deal on equal terms, that a court of equity will not interfere “ to compel specific performance, on the ground of inadequacy of price, or because the bargain is not a good one for one of the parties,” does not-appear to me to be supported by authority.” The contract herein discloses that the purchaser, with the relatively small capital of $6,750, bought the lands on speculation, and largely on the credit of seller, expecting to realize a profit by sales from time to time of separate lots, which the seller agreed to release from the mortgage • lien on partial payments. Assuming that this property was sold for its fair and full value, the refusal to decree specific performance would nullify the whole object and purpose of the purchaser after he had taken the risk of

The vendor’s broker, before this contract was signed, told him that some assessments had been laid, and many assessments were to be levied on this property for improving these streets. Yendor says, in partial contradiction, “I have no recollection of that time; it might pass through my own mind. That is all I could say on the subject; that is all I recollect.”

In following the incidents of this transaction, it will be well to keep in mind that, after the contract was signed, all communications addressed to vendor were answered through agents.

January 9, 1891, two days after contract was signed, the defendant’s (vendor’s) agent, McCormick, wrote to plaintiff’s (vendee’s) agent, Bailey, that the buildings (some thirty-two in number) on the premises belong to the tenants, and conveyance should be made subject to their rights.

January 10, vendee’s agent, Bailey, wrote to vendor, “ If there are tenants on the premises, your contract requires you to remove them, and give possession to vendee.” _

At this time vendor.employed an attorney, Butcher, to attend to removal of tenants. Butcher visited vendee’s attorney, Garrison, two or three days after contract was signed, and asked him if he would accept title with tenants on the lands, and offered to allow $150 for it, giving as a reason therefor that vendor did not want his name connected with the removal of these poor people. The offer was refused, and Butcher was told $500 would not induce purchaser to accept it.

If Butcher, after this positive refusal-on January 9th or 10th of Garrison to accept his offer of $150 to take title subject to possession of tenants, had promptly taken steps to remove them, he could have done so long before the levying of the assessments hereinafter mentioned, which are the sole cause of complaint. Notwithstanding such refusal, Butcher waited till February 23 to-give notice to tenants to quit on or before March 1, and waited till April 16th to apply to court for a precept to remove them.

January 13th, a day or two after Butcher had been told the-tenants must be removed, McCormick, another agent of vendor, wrote to vendee’s agent, Bailey, that in the negotiation preceding-the contract it was understood that, “ in the discretion of the purchaser,” the tenants were to remain; that the tenants were thirty day tenants, and Butcher would so testify. Butcher did not so testify, for on the trial he said: “ I was in a good deal of a quandary what they were; ” these squatters came and went without consent or contract. Three' days before this letter, Butcher had been told vendee would not accept title subject to the rights of these squatters.

February 6th, vendee’s agent wrote vendor that there were defects of title that would have to be cured, and an adjournment might be necessary.

February 9th, time for completion of sale and purchase was extended to February 16th for curing such defects.

February 12th, time to complete purchase and sale was extended to March 10 to enable vendor to give possession.

March 2d, assessment on the premises of $901.13 for grading and paving Bush street was confirmed, and the commencement of the proceedings for the levying thereof must have considerably ante-dated the day fixed in the contract for the completion of the sale *nd purchase. See Brooklyn Charter, Laws 1888, chap. 583, tit. 19, §§ 2, etc. The vendor’s remonstrance might have defeated it. (Sec. 2.)

March 6th, Butcher writes, it is slow work to get off squatters, and intimates he will need further indulgence.

March 10th, time for completion of sale and purchase extended to April 1st

March 30th, time further extended to April 14th.

April 2d, vendee’s agent, Bailey, writes to Butcher complaining of his delay in removal of squatters.

April 13th, time for completion of sale and purchase was

extended to May 9, with the expressed agreement that it should

have the same effect as if it was written in contract originally, instead of February 9th.

April 28th, assessment on premises of $1,079.38 for grading and paving William street from Richards to Columbia street was confirmed. What has been said as to probable time of commencement of proceedings and effect of vendor’s remonstrance in relation to the other assessment applies to this one also.

These assessments were for improvements to be made, the nonexistence of which could have been observed by a view of the premises at the date of contract They became a lien at the respective dates of confirmation, March 2d and April 28th, and have a priority over all liens except those for taxes and water rates. Charter, Laws 1888, chap. 583, tit. 19, § 36. They amount to the sum of $1,980.51, which is about eight and one-half per cent of $22,500, the purchase price. If defendant is required to pay the assessments, he will realize eight and one-half per cent less than he would if plaintiff should be compelled to pay the same.

On May 4th vendor tendered deed of warranty free of incumbrances as of the date of February 9ill, the original date fixed in. ■contract for completion of sale and purchase, and demanded the balance of cash payment and mortgage. On May 4th vendee tendered the balance of cash and mortgage, and demanded deed of warranty free from incumbrances as that of date. The real dispute is that each party insists that the other should assume the burden of these assessments for $1,980.51. ' I believe my learned associate and myself are of the same opinion that the technical legal effect of this contract obligated the vendor to convey the premises free from incumbrances on May 4th. Any other construction of the terms thereof would lead to the absurdity that the vendor could have mortgaged or even sold the premises between February 9th and May 4th, and then tendered a convey

When an equity court is asked to compel him to make specific performance of his legal obligations, he admits that he still has the money, and reiterates his demand that the vendee be forced to make specific performance of the obligations on 'his part, on the compliance of vendor with his obligations less those he deems inequitably burdensome, or, if this be denied, then, that vendee’s complaint be dismissed, without an offer to return the money, and with costs. (See defendant’s answer setting up counterclaim, and requests to find). I agree with the learned trial judge that both vendee and vendor demanded, in court as well as out of court, .specific performance of the contract, the former claiming that the day fixed for the completion of the sale and purchase was on or before May 9 th, and the latter that the day fixed was February 9th, and that his agent, Butcher, had no authority to agree to the later date. His authority was not doubted by the trial court.

The policy of equity jurisprudence has ever been to uphold the- validity and enforce the specific performance of the legal terms of a written contract between adult parties of sound contracting mental powers, unless sufficient shall be shown for the reformation, rescission or non-enforcement of same for fraud, mistake or accident, or something intimately allied to one of these three grounds of equity’s interference. Equity never yearns to make-new contracts for such parties in the light of subsequent events which would or might have led one of the parties to make a different and more beneficial contract for himself, or none at all. Chancery has refused, under certain circumstances, to compel specific performance of contracts which it would not reform or rescind, for fraud, mistake or accident, on the ground that the-

But, on a critical examination of all the reported authorities bearing on this point, it will be seen that the inequity meant is something closely akin to fraud, mistake or accident, which is variously characterized, in .numerous opinions, as an unfair, unjust and unreasonable contract, or as an agreement not free from fraud, misrepresentation, accident or mistake, or as a hard or unconscionable bargain which would work gross wrong.

This vendor can perform his contract and, therefore, it will not be necessary to consider the most numerous class of reported cases on specific performance involving the inability to perform. There is not the slightest insinuation of fraud against this vendee, or the suggestion of suspicion that he made any misrepresentation, or was silent in the face of moral duty to speak, which did or might have misled the vendor. There was no mistake of law or fact; the contract was a written one, the terms of which were plain and simple and well known to both, neither party has suggested that he did not thoroughly understand them, and I doubt very much if either of them would not deem it a reflection upon his business experience for anyone else to make such a suggestion. If the vendor did not bring his mind to the active state of guessing or anticipating the exact date when these assessments would be levied after the making of the contract, this can hardly be raised to the dignity of a mistake of fact. Any owner of Brooklyn real estate, and much more, an expensive one, knows of the liability of such levies, not only from the notice that the law gives, but from its frequent and constant application. Besides his attention was called thereto by his broker just before signing the contract, and he says “ it might pass through my own mind.”

. It is plain that fraud or mistake, or their kindred incidents, cannot be invoked to relieve, this vendor from specific performance of his contract. Was there such accident as can be sueessfully relied upon, is alone left for consideration. The definition of accident found in Pomeroy’s Equity Jurisprudence (1 Ed. § 823), is in accord with the adjudications of our courts. “ Accident is an unforeseen and unexpected event, occurring external to the party affected by it, and of which his own agency is not the proximate cause, whereby, contrary to his own intention and wish, he loses some legal right or becomes subjected to some legal liability, and another person acquires a corresponding legal right, which it would be a violation of good conscience for the latter person, under the circumstances, to retain.”

The partymust have “an equity intrinsically superior to that of his adversary, and unaffected by his own negligence or other fault.” Id., § 830. The assessments can hardly be said to have been unforeseen by this vendor. He, being a large owner of Brooklyn real estate, a man of large experience and acumen in business and municipal affairs for many years, had the notice that

There is not a particle of proof that $22,500 is not a large price for this land; its full value, or more. Besides, it is a well known fact that the value of real estate cannot be estimated with such nice exactness as that of the ounce of silver, or standard articles of merchandise, as the barrel of flour or sugar. It is equally well known that the most expert appraiser of real estate would revel in pride if his estimated values always came within ten per cent, of the price the land would sell for, within a reasonable time, after the utmost diligence directed to that end. Under the proofs in this case, there is nothing to establish that the vendor would not, at least, realize the full value of his lands after paying these assessments. There is no evidence from which a probability can be inferred that he could sell it for $22,500 plus the assessments of $1,980.51. If there is no inadequacy of price, when measured with the true value, caused by the obligation of vendor to pay these assessments levied after date of contract, then the

It would seem that vendor’s alleged equity is not intrinsically so superior to that of the vendee as to shock the conscience. This is true, under the foregoing circumstances, even if it is assumed that the value of the lands could be exactly ascertained, and was, just before the levy of assessments,' exactly $22,500. There is no safe presumption that the value of the lands was or will be increased to the extent of the portion of the assessment levied upon it for the cost of grading the streets in question. It does not seem that the possibility that these lands may be increased in value by the grading and paving of the streets to the extent of the assessment, which is only eight and one-half per cent of the purchase price, creates such inadequacy of consideration as to shock the conscience. I have endeavored in research to examine all the reported authorities of our courts bearing upon this point, and fail to find any in which equity interfered where the inadequacy was less than thirty-three per cent and in most of them it was more, and even in these there were some other elements of inequity, such as misrepresentation, or silence in presence of good faith to speak. The following are fair illustrations of the most favorable action of our courts to the contention of this vendor. In Margraf v. Muir, 57 N. Y., 155 , it was held to be a hard and unconscionable bargain where a woman, living at a distance and unfamiliar with the value, sold, to one familiar with it, premises worth $2,000 for $800, under circumstances of concealment, which pointed to bad faith. In. Post v. Leet, 8 Paige Ch., 337 , the increase of price created by the levying of an assessment for the opening and macadamising of a street, between date of contract and date of execution, was thirty-three to fifty per

In Fitzpatrick v. Dorland, 27 Hun, 291 , specific performance had been prevented, without vendor’s fault, for fourteen years, and the property had greatly increased in value, and was heavily burdened with taxes and assessments, which, it seems, would have eaten up the purchase price.

No reference is made in the printed points to the exception taken at fol. 164 to the exclusion of testimony offered to show that, in the negotiations preceding the making of the written contract, there was some talk or understanding that vendee would accept transfer subject to the rights of tenants and squatters to occupation. On the oral argument, appellant’s counsel informed this court that the ruling was not error; and that it was not harmful error I agree with him. It was not included in the written agreement, and there is no contention that, by mistake or fraud, it was not so included, or that vendor did not know it was not so included. Besides, in McCormick’s letter of January 13, written by the authority and direction of vendor, he states that the understanding referred to was that the thirty day tenants were to remain “ in the discretion of purchaser,” who exercised his discretion promptly on the 9th or 10th of January to require vendor to perform this contract in giving possession, and vendor admitted and accepted his duty in this respect at once, and must have employed Butcher several days before to attend to the removing of the so-called tenants, some of whom were not tenants at all. Besides, such informal talk or understanding in the negotiations preceding the execution of a written contract, plain and simple in its terms, and understood and appreciated by both parties, will not magnify the alleged inequity sufficiently to make the agreement so hard and unconscionable as to violate good faith and conscience. If the vendor pays these assessments he will receive the amounts back in case they are canceled. Brooklyn Charter, -tit, 19, § 11. It should not be forgotten that the general belief entertained by each contracting party in agreements of sale, that he has made a good bargain, is the life of trade; and that the rule of caveat emptor forbids equity from interfering with the advantages of the fortunate one, unless the good fortune is acquired through means which shock good conscience. Wasburn on Real Prop., 4th ed., vol. 1, p. 545

The judgment must be affirmed, with costs.

(dissenting.)—On the 7th day of January, 1891, the appellant agreed in writing to sell to one Robinson a large plot of land located in the Twelfth ward of this city for the price of $22,500, and the deed was to be delivered on February 9, 1891. Subsequently Robinson assigned his interest in the contract to the respondent. At the date of the execution of the contract, January 7th, there were on said premises thirty-two

This is an action in equity, and the court may and should go behind the letter of the agreement and do what is just and fair between the parties. The case comes down to this single question : is it equitable that the defendant should pay the two assessments amounting to about the sum of $2,000 ? The date of the contract of sale was January 7, 1891, and the deed was to be delivered on February 9th. The assessment for grading and paving Bush street was confirmed March 3d, and the like assessment on William street became a lien on April 28th. Assessments in this city are levied in advance, and in December last neither Bush nor William street had been paved. On the facts as found, .it appears that the parties did not know that the assessment on Bush street was a lien when the contract was extended, and the assessment on William street was not levied until after the last extension. If the assessments had been laid for improvements which had been completed or were in progress, then the defendant clearly should pay them. Lathers v. Keogh, 109 N. Y., 583 , 590; 16 St. Rep., 178 .

The closing of the contract was postponed for the sole purpose of giving the defendant time to remove the tenants. In equity, it was postponed for no other purpose. If so, I do not think that the plaintiff should derive any other benefit than what was mutually intended by the parties.

The assignor of the plaintiff purchased the premises on January 7th, when the contract was made, and the purchase price was fixed, at that time, at the sum of $22,500. Bush street was then passable for vehicles, but was not paved, and William street could only be navigated by boats. The plaintiff did.not have in view that the assessments would be confirmed before February 9th. If the defendant pays the assessments, then, in effect, Bush and William streets were graded and paved when the contract was made on January 7th. In a court of equity, the time of sale of real property is when the contract is made, and not when the conveyance is delivered in pursuance of the contract. Simmons v. Cloonan, S. C., 47 N. Y., 3 , 13; 81 id., 557. If the defendant had contracted to sell the lots after the assessments were levied, and the

In this action it has been decreed that the defendant perform a contract which in its effect was never intended to be made by either party. It seems to me to be a clear case of mistake. As I understand the authorities, in an action where specific performance is sought the defendant may always show that there was a mistake, even though such mistake was not mutual, and if the evidence is clear, and the plaintiff has not suffered thereby, performance will be denied, unless there is gross negligence on the part of the defendant. The authorities on this question are collated in Pomeroy’s Equity Jurisprudence, § 860, and I quote from that work: “ A court of equity will not grant its affirmative remedy to compel the defendant to perform a contract which he did not make or which he would not have entered into had its true effect been understood.” “ A mistake which is entirely the defendant’s own, or that of his agent, and for which the plaintiff is not directly, or indirectly, responsible, may be proved in defense, and may defeat a specific performance.” Parol testimony is admitted in behalf of a defendant not for the purpose of contradicting or modifying a written agreement, but to defeat the equity of plaintiff. This rule is well settled by the text books and authorities. Sugden on Vendors, vol. 1, 160; Pomeroy’s Equity (1st ed.), § 860; Best v. Stow, 2 Sandf. Ch., 298 ; Stevens v. Cooper, 1 Johns. Ch., 425 , 429; Harris v. Pepperell, L. R., 5 Eq., 1; Martin v. Pycroft, 2 De G., M. & G., 785. It is claimed that the defendant must pay the assessments because the contract of sale so requires, but it clearly appears that the defendant did not so intend, and that the plaintiff never so expected when the contract was made, or when the extensions were given. The case of Post v. Leet, 8 Paige, 337, seems to me to be directly in point on the question involved in this case. See, also, Dowdney v. Mayor, 54 N. Y., 186 .

At folios 164 and 165 there are three, exceptions to the refusal to admit testimony whereby the defendant sought to show that, at the making of the contract, there was a verbal understanding between the assignor of plaintiff and the defendant, that the tenants should remain. In my opinion, the testimony should have

Judgment affirmed, with costs.