Opinion
January 17, 1908.
W.P. Prentice, for the appellants.
Benjamin N. Cardozo, for the respondent.
The defendants appeal from a judgment decreeing that they specifically perform a contract for the sale of real estate. The record presents apparently two decisions both signed by the trial justice, but on closer examination it will be found that there is really only one. Both parties submitted proposed decisions embracing findings of fact and conclusions of law. The justice, evidently with considerable care, allowed some of the findings and conclusions as presented by each party, modified others and allowed them in the modified form, and disallowed others, marking in the margin his disposition of each request. A fair copy was then made embracing all the conclusions and findings allowed by the justice, and this he signed evidently intending this to be his decision, and this we accept and treat as the decision upon which the judgment rests. It is true that the justice, doubtless inadvertently, appended his name to the proposed findings and conclusions submitted by the plaintiff, but there is no reason to suppose that he intended this paper to stand as his formal decision.
The plaintiff sues as assignee of one Nellie Duke who, on March 25, 1903, entered into a contract for the purchase from the defendants, executors of William F. Buckley, deceased, of a certain plot of land on Amsterdam avenue in the city of New York. It is this contract which is involved in the present action. On the same day Nellie Duke made another contract with the heirs and devisees of Mr. Buckley for the purchase of two lots, one on the Boulevard and one on West One Hundred and Fifty-seventh street. Title was taken to the lots on One Hundred and Fifty-seventh street some time in 1903, and they do not enter into the history of this litigation, which concerns only the Amsterdam avenue properties. By the terms of the contract the deed was to be delivered on July 1, 1903, but a number of adjournments were had by consent and somewhere about October 3, 1903, an indefinite adjournment was taken owing to the pendency of an action which had been begun attacking Mr. Buckley's title to the property. William F. Buckley had acquired title to the property through a quitclaim deed executed by one Sarah Harris, and confirmed by her will. In May, 1903, William Williams, claiming to be a nephew of Sarah Harris, but who had not been cited upon the probate of her will, commenced an action for partition involving the Amsterdam avenue property. He served a summons on defendants, but did not serve a complaint. He filed a lis pendens, however, and a verified complaint from which it appeared that he claimed that the deed from Sarah Harris to William F. Buckley, and her will in his favor had been induced by fraud and undue influence and were void. In the opinion of the title company, who were examining the title for the purchaser, the pendency of this suit constituted such a cloud upon defendants' title that they could not convey a marketable title. This view seems to have been acquiesced in at the time by the defendants' attorneys, or at least not seriously combated. It is now insisted, however, that this objection to the title was, even at that time, untenable. There can be no doubt, as we consider, that the pendency of the Williams action rendered the title unmarketable and justified the purchaser in refusing to complete the purchase until the cloud had been removed. The lis pendens alone would not have been sufficient, but the lis pendens and the complaint on file indicating the nature of the action did constitute a cloud, and the purchaser was neither bound to accept the title at her peril, or to seek out the evidence as to the validity or invalidity of the title. ( Simon v. Vanderveer, 155 N.Y. 377.) The defendants appeared in the Williams action and demanded service of a copy of the complaint, but their demand was not complied with, and on their motion an order was made by Mr. Justice DAVIS on August 25, 1903, directing that the complaint should be dismissed unless within five days a proper complaint should be served. Williams did not serve a complaint within the time allowed, but on August 31, 1903, obtained from Mr. Justice AMEND an ex parte order extending by ten days his time to serve his complaint. On September 8, 1903, Williams undertook to serve a complaint upon defendants' attorneys which they refused to receive and returned with their objection. Williams thereupon moved that defendants' attorneys be compelled to receive the complaint. This motion came on to be heard before Mr. Justice BISCHOFF, who expressed the opinion that while the ex parte order of Mr. Justice AMEND was irregular, it was not void, and until vacated justified Williams in claiming that he was not in default. He, therefore, granted the motion to compel the defendants to accept the complaint unless within two days they moved to vacate Mr. Justice AMEND'S order. The defendants accordingly moved to vacate that order and for a dismissal of the complaint. This motion came on to be heard before Mr. Justice BARRETT, and on October seventh his decision was published in the New York Law Journal granting the motion. The order upon this decision was not entered until October 12, 1903, the judgment of dismissal being entered on October seventeenth. As soon as the notice of Mr. Justice BARRETT'S decision was published and on October 7, 1903, an engagement was made between the attorneys representing the purchaser and the defendants for a meeting on the following day. It is found as a matter of fact (at defendants' request) that "the appointment to close the contract of sale of the property the subject of this action was to determine the relations of the parties and make tenders to fix their respective decisions, claims and demands," and this seems to accord with the evidence because it is apparent that it was not anticipated that the title would actually pass on that day. On October seventh the attorney representing the purchaser had distinctly notified the defendants' attorneys that the purchaser would not be prepared to accept a deed on the following day. The reason given was that the purchaser claimed that the two contracts executed on the same day constituted in fact and intent one transaction, the sale being "all or none" although embodied in two contracts; that the title to the Boulevard property still remained unmarketable and, therefore, the entire contract could not be carried out. The purchaser demanded the rescission of the entire transaction, a return of the amounts paid on the contracts and upon the transfer of the twelve lots that had already been conveyed, the purchaser reconveying them. The ground of objection to the title to the Boulevard lots seems to be that they also came through the deed and will of Sarah Harris, and although not included in the lis pendens and complaint filed by Williams, yet that lis pendens and complaint conveyed notice that the deed and will were claimed to be void. The defendants' attorneys promptly denied that the two contracts were interdependent and announced that they would be prepared to renew the tender of a deed for the Amsterdam avenue property on the following day. On October 8, 1903, the parties met. The defendants tendered a deed of the Amsterdam avenue property which the purchaser declined to accept, and renewed the demand conveyed in their letter of the preceding day that all the contracts be rescinded, the money paid be returned and both parties put where they originally stood. To this defendants declined to accede and claimed the right to retain, by way of penalty, the money which had been paid by the purchaser on account of the Amsterdam avenue property. The controversy turns in large measure upon this, the last meeting between the parties. It is clear that the defendants' title to the Amsterdam avenue property was still clouded and unmarketable, and that they could not then tender a title which the purchaser was bound to accept. Judge BARRETT'S decision did not get rid of the Williams suit nor remove the cloud which that action had created. Only a judgment of dismissal could do that, and no such judgment had been entered on October eighth. The defendants insist, on what ground we do not understand, that the order and judgment entered on Judge BARRETT'S decision were not appealable. Very clearly they were appealable, and under the provisions of section 1674 of the Code of Civil Procedure the lis pendens could not have been canceled until the time to appeal had expired and any conveyancer would have been well justified in declining to take title until that time. There is nothing to indicate that the purchaser waived the defect, and the mere fact that it was not insisted upon, in addition to the other objections that were made, is not equivalent to a waiver, because it was not an objection that could at the time have been obviated if insisted upon. ( Higgins v. Eagleton, 155 N.Y. 466.) That the defendants were unable to convey a marketable title to the Amsterdam avenue lots on October 8, 1903, when they tendered a deed therefor, is undisputable. It is now claimed by defendants that the purchaser at that time consented to a rescission of the contract, but this contention finds no support in the evidence. What she offered was to rescind all the contracts, not the Amsterdam avenue contract alone, and the defendants refused to accede to any rescission, standing upon the contract and insisting that the purchaser was in default. Under such circumstances they cannot now fall back upon the claim of a rescission. Among the conclusions of law found by the trial justice was one (proposed by defendants) which has occasioned much discussion, and upon which the defendants much rely. It is that "the contract the subject of this action was terminated by the parties thereto October 8th, 1903." The word "terminated" as used in this sentence is ambiguous. If it means, as claimed by defendants, that the contract then ceased to exist, so that neither party could thereafter claim anything under it, it is without support in the evidence or in the findings of fact. We do not find it necessary, however, to attribute to it any such meaning. What the learned justice undoubtedly meant, as was the fact, is that on October eighth the rights of the parties under the contract became determined, and that, as to whichever party was in default, the rights of the other had become fixed. As has been said, it was the defendants who were then in default and unable to fulfill their contract. On November 16, 1903, within the time an appeal might have been taken from the judgment dismissing his complaint in the first action, and consequently before the lis pendens in that action could have been canceled, Williams commenced a second action by filing a lis pendens and complaint similar to the one in the first action. On January 29, 1904, he filed an amended lis pendens and complaint. This action went to trial, and on April 14, 1904, resulted in a judgment for defendants, which was affirmed by the Appellate Division on January 20, 1905, and by the Court of Appeals on January 16, 1907, the lis pendens and the amended lis pendens having been canceled on June 27, 1905. Of course the pendency of this action constituted another cloud on defendants' title, so that the title remained continuously unmarketable from the date of the commencement of the first action until June 27, 1905, the date on which the lis pendens in the second action was canceled. In the meantime the purchaser persisting in the position which she had taken on October eighth, began an action on November 27, 1903, asking that the contract for the Amsterdam avenue property be reformed by inserting a clause to the effect that it was conditioned upon the fulfillment of the contract for the Boulevard and One Hundred and Fifty-seventh street properties, alleging that the defendants were unable to give a marketable title to the Boulevard lots, and asking judgment for the return of her deposit on the Amsterdam avenue property with her damages. This action came on for trial and the complaint was dismissed on the merits in so far as it asked for a reformation of the contract, and as to the demand for a return of the deposit with damages it was dismissed without prejudice to an action at law for their recovery. This judgment was affirmed in this court with the modification that it should not be a bar to an action by the purchaser, either for the specific performance of the contract or for the recovery at law of the amount paid by her upon the contract, together with the costs of examining the title. ( Duke v. Stuart, 105 App. Div. 376. ) Thereupon this action was begun. It is argued in behalf of defendants that either at the meeting of October 8, 1903, or by the institution of the action for the reformation of the contract, the purchaser elected to disaffirm the contract and has, therefore, waived the right to insist upon specific performance. We do not so understand. It is true that the purchaser sought a reformation of the contract, and because it could not be performed, if reformed, asked that she be awarded damages for the defendants' inability to perform. This, however, does not amount to an election of an inconsistent position ( Koke v. Balken, 15 App. Div. 415), and the defendants never acquiesced in the rescission of the contract upon the terms proposed by the purchaser, and even in their answer in the present action do not assert a rescission of the contract but affirm it, and stand upon it alleging that they at all times have been ready and willing to complete, and that it is the plaintiff, or his assignor, who has defaulted. Although the defendants' title remained unmarketable until June 27, 1905, the cloud upon it has been removed and it has now become marketable. Since equity renders judgment according to the situation at the time of the trial, a decree for specific performance may now be made. ( Haffey v. Lynch, 143 N.Y. 248; Rosenberg v. Haggerty, 189 id. 481.) It does not appear that there has occurred any change in the property or the situation of the parties which would render such a decree inequitable. The defendants lay much stress upon a provision in the contract that if the title should be rejected by two title companies as unmarketable the deposit paid on signing the contract shall be refunded with counsel fees not exceeding $250 paid and the contract be avoided. The applicability of this provision to the facts disclosed by the evidence is not apparent, as there is no proof of rejection of the title by both of the companies named. We have examined the record with care and find no errors therein justifying a reversal of the judgment, which must consequently be affirmed, with costs.
PATTERSON, P.J., INGRAHAM, LAUGHLIN and CLARKE, JJ., concurred.
Judgment affirmed, with costs.