Whittemore v. Farrington

We must first notice that the court does not find, as alleged in the complaint, that there was an agreement to give a warranty deed. It is found only that there was an agreement to exchange the two pieces of land for the saw-mill property, and to pay $300. And that there was mutual mistake and ignorance of the existence of the mortgage. Nor is it found that the plaintiff refused to accept the quit-claim deed.

Nor is it suggested that there was any fraud or misrepresentation on the defendant’s part. The defendant had bought the premises at a foreclosure sale only a few days previously, and had taken a sheriff’s deed.

The negotiations between the plaintiff and the defendant began before the sale, when the defendant was only the holder of the mortgage under which the property was to be sold. And it was suggested, when the agreement was made, that the plaintiff should take the sheriff’s deed. The plaintiff had also a mortgage on the same premises, subsequent to that which was foreclosed, and under which the defendant purchased. And the plaintiff hoped by this exchange to save something on his mortgage.

“ It is well settled, that where the title to real estate fails the purchaser has no remedy in equity to recover back the price, unless there was fraud or deceit in the same. If he has taken the precaution to require covenants as to his title, before paying the price, his remedy is in the courts of law.” (Banks v. Walker, 2 Sand. Ch., 344 ; 2 Kent Com., 473.) “ Where the purchaser has neglected to take such covenants, and there is no fraud or misrepresentation in the case, he has no remedy to recover back the purchase money upon a subsequent failure of title.” (Bates v. Delavan, 5 Paige, 300.) The same doctrine is found in Tallmadge v. Wallis (Ct. of Er., 25 Wend., 106 ).

The plaintiff urges that a contract made under an injurious mistake, is voidable and will be set aside. But the cases whicli he cites are not analogous to the present. Boyd v. De la Montagnie (8 S. C. N. Y. [1 Hun], 696), was a case of misrepresentation by the husband to the wife. Gillett v. Borden (6 Lansing, 219), was a case where in the written contract, by mistake, forty-four feet instead of fifty-four were reserved. The contract was reformed so as to express the agreement of the parties. Nevius v. Dunlap ( 33 N. Y., 676 ) was the case of reforming a contract. In Baverly v. Becker ( 4 N. Y., 169 ), the defendant, in consideration of the conveyance to him by Dietz, agreed to pay a judgment owing by Dietz to the plaintiff'. The parties had supposed it to be a lien when it was not. The plaintiff recovered, for the defendant was bound to pay the consideration of the conveyance. In Graves v. Brinckerhoff (6 N. Y. S. C. R., 630), there had been a sale at so much per acre. The surveyor had made a mistake in the computation of the number of acres. The plaintiff had therefore paid too much, which he was allowed to recover back, as money paid by mistake. In Belknap v. Sealey ( 14 N. Y., 113 ), there was a contract to purchase, for a definite sum, land said to contain eight acres. It proved to contain only four. The contract was set aside, no deed having been executed, and the plaintiff was allowed to recover back the part of the purchase money which he had paid. One ground of the decision given by the court is, that the contract was still executory.

Now, it will be seen that not one of these cases is opposed to the doctrine of Banks v. Walker (ut supra), and of the cases similar to that. The cases cited by the plaintiff are those where, for mistake, an executory contract has been set aside, or reformed, or where money paid by mistake has been recovered back, or where there has been some fraud. No case is cited where after a conveyance has been executed, and in the absence of fraud or deceit, the grantee

There is another difficulty in this case. The plaintiff seeks to have the contract rescinded. This means to replace the parties as they were before the contract; but the judgment does not do this; he has recovered a judgment against the defendant for over $500, so that instead of rescinding the contract, the court is altering the original contract and enforcing it as altered. But the plaintiff may say that the decision gave the defendant the option to rescind. Not at all. It gave him the option to exchange back again the parcels of land, and to pay the plaintiff for the improvements lie had put on the saw-mill. But the defendant may not wish for these improvements, he may not be able to pay for them, they may be useless to him, or even worse than useless. It is no reinstating the parties in their former condition, when one is compelled to pay the other some $1,300. Furthermore, when this action was commenced, the plaintiff had leased the property, and the lessee was in possession ; and the plaintiff could not restore actual possession. And to see that this would be inequitable, we must remember that the defendant has been guilty of no concealment, fraud or deceit. Why should he be punished ? As is said by Judge Story : “ Where each party is equally innocent, and there is no concealment of facts which the other party has a right to know, and no surprise or imposition exists, the mistake or ignorance, whether mutual or unilateral, is treated as laying no foundation for equitable interference.” (1 Story Eq. Jur., § 151.) “A like principle applies to cases, where the means of information are open to both parties.” (Id., § 149.) A recorded mortgage is as open to one party as the other.' Again, there was no binding contract between these parties, except the deeds themselves. Every thing before the deeds was oral. What, then, is to be reformed? The quit-claim deed? But the plaintiff knew it was a quit-claim; objected, and then accepted it. The defendant says that the plaintiff had agreed to take the sheriff’s deed, which would have been only, in effect, a quit-claim, and that, therefore, he accepted the quit-claim of the defendant. At any rate, it was accepted knowingly. Can the court now reform it, or compel the defendant to give a warranty deed, a thing which he never agreed to do? I think not. If the plaintiff

The judgment should be reversed and a new trial granted, costs to abide the event.

The judgment directed by the learned judge at Special Term cannot, I think, be upheld. Even admitting that it was expressly agreed between the parties that the plaintiff was to have a warranty deed, and if the defendant be held to answer as if his deed to the plaintiff contained a covenant of warranty as to title, still there has been no eviction. The plaintiff has not yet been disturbed in his possession, nor has he been compelled to pay any sum whatever to secure and retain his possession. There was no ground, therefore, for a money judgment against the defendant. Nor was it, nor is it, practicable to frame a decree, recognizing the defendant’s rights and yet compelling him to pay the plaintiff for his improvements, put on the premises since he entered into possession. Eor those improvements the defendant cannot, in any view of the case, be compelled to pay. They were put on without his privity by the plaintiff, and at the peril of the latter, in so far as he can have a right to claim compensation for them from the defendant. The most that the plaintiff can claim is to have his title to the land assured to him. The details of the judgment are, therefore, manifestly erroneous. The only question is, whether justice and equity may not be worked out by a modification of the decree. According to the findings of the court at Special Term (and these findings, I think, are supported by the proof), the parties contracted in mutual ignorance of the mortgage which rested on the defendant’s lands, and with the understanding, on the part of both, that the plaintiff should have a good title from the defendant, free from incumbrances. The agreement to exchange property, and its execution in so far as it was executed, were based on this understanding. The deed from the defendant to the plaintiff was accepted by the latter with the understanding, on the part of both, that it did convey such title. Other

It was held in Johnson v. Hathorn (3 Keyes, 126), that a vendee, who accepts a conveyance in pursuance of an oral agreement, is bound, on his part, to comply with the terms of such agreement, though it might otherwise have been invalid under the statute of frauds; and further, that an executory contract, whether written or oral, is not merged in a subsequent writing by way of partial execution, unless the latter is accepted in substitution or in full performance of the original contract. The plaintiff accepted the deed (holding him to an acceptance) with the understanding, on the part of both parties, that it carried good title. The defendant received full consideration and still holds it, on the faith of such understanding. He is therefore bound in justice and equity to make it good. Then how can this result be effected? It may be effected by a modification of the decree, so as to require the defendant to give a warranty deed of the premises, as of the date of his quit-claim, and, by its terms, to have effect as of that date. It can be readily drawn thus to limit its effect. But this can be required only on the payment to him by the plaintiff of the $300, and interest to be computed from that time. The delivery of the deed and the payment of the money were, in so far as we are able to see, to be simultaneous acts. It may be said that this will leave the plaintiff without indemnity against the mortgage covering the property, save under the warranty deed. But this was all he contracted for, and is all the court can give him. All he can claim is that he have a deed with covenant of warranty, or its equivalent. He must look to that for his indemnity.

In my opinion the judgment should be modified as above suggested.

Present — Learned, P. J., Bookes and Boardman, JJT.

Judgment reversed, new trial granted, costs to abide event.