Opinion
10-03-1901
ACKERMAN v. BEGRISCH et ux.
David D. Ackerman, for complainant. Isaac F. Goldenhorn, for defendants.
Original bill by James T. Ackerman against Frank Begrisch and wife. Bill dismissed.
David D. Ackerman, for complainant.
Isaac F. Goldenhorn, for defendants.
PITNEY, V. C. (orally). This is a bill filed by James T. Ackerman against Frank Begrisch and wife for the purpose of reforming two sealed instruments: First A deed of conveyance of 86 lots of land made by Begrisch to Ackerman, dated and executed onJuly 31, 1900. The reformation asked for in regard to that document is that it should include 125 lots of land, being all the lots which the complainant owned in that neighborhood, and which he derived by conveyance to him from one Riedel, hereafter to be referred to. Second. A sealed contract between the parties, made and dated on the same day, which was executed in duplicate and cross delivered to each. The reformation of this contract which the complainant asks is that, while on its face it reads as a defeasance of the deed of conveyance, making it a mortgage, it should have been so framed as that it would give to the defendant a mere right to a reconveyance of the lots within a specified time, and so that it could not have the effect of making the deed of conveyance a mere mortgage. The contract is as follows: "This indenture, made the thirty-first day of July, in the year of our Lord one thousand nine hundred, between Prank Regrisch, Jr., of the borough of Manhattan, in the city, county, and state of New York, party of the first part, and James T. Ackerman, of the borough of Midland Park, in the county of Bergen and state of New Jersey, party of the second part, witnessefh as follows: Whereas the party of the first part has this day borrowed from the party of the second part the sum of three thousand dollars, to be repaid within thirty days from this date, with interest at six per cent. per annum, upon the agreement and contract that, if said sum shall not be repaid at said time, the party of the second part shall become the owner in fee of the premises described in a deed from the party of the first to the party of the second part, bearing even date hereof and conveying eighty-six lots at Maywood and Hackensack, N. J.: Now, therefore, in consideration of the premises and of the sum of one dollar by each to the other in hand paid, it is hereby covenanted and agreed between said parties as follows: (1) That the party of the first part shall, and he does hereby, execute and deliver to the party of the second part, simultaneously with this agreement, a deed conveying to the party of the second part eighty-six lots at Maywood and Hackensack, New Jersey, as security for the payment of said sum of three thousand dollars loaned as aforesaid, with interest at six per cent per annum, on or before thirty days from this date, and if said party of the first part shall repay said loan, with interest as aforesaid, on or before thirty days from this date, the party of the second part hereby agrees to reconvey said premises to the party of the first part by bargain and sale deed, with covenant against grantor's acts, free and clear from all incumbrances of his making. (2) If the said party of the first part shall not repay said loan, with interest at the time above mentioned, the aforesaid deed shall be absolute, and the party of the second part shall have the right to convey the aforesaid premises and in all respects treat them as his own. (3) The party of the first part has the right and privilege of selling any of said lots during said period of thirty days, provided he shall pay the party of the second part the sum of one hundred dollars for each lot so sold, or the proper proportion of the purchase price of said lot based upon a sale of said eighty-six lots at three thousand dollars; and if said lots are so sold, and said money paid to the, party of the second part as aforesaid, the party of the second part agrees to execute and deliver to the party of the first part a proper deed of said lot or lots so sold, and any moneys received from such sales shall be applied on said principal sum of $3,000. (4) It is further stipulated and agreed that, upon failure of the party of the first part to repay said loan at said time, the party of the first part authorizes and empowers the party of the second part to enter up a judgment against him for any deficiency which there may be due him upon said loan, after applying the value of said lots, to wit $3,000, on account of any sums then due. This agreement shall apply to and bind the heirs, legal representatives, and assigns of the respective parties hereto. In witness whereof the parties hereto have hereunto set their hands and seals the day and year first above written." The deed of conveyance was recorded on the 2d of August, 1900, but no copy of the contemporaneous contract was recorded. The relief sought is that the defendant shall convoy to the complainant absolutely 20 lots of land, and that the complainant may be decreed to hold the title to all the lots free from any right of redemption.
The circumstances of the case are these: Mr. Begrisch, at and before the date of the documents in question, was the owner of about 125 building lots, situate at a place called Maywood, in the county of Bergen, in this state, which he had obtained in the first instance by deed of conveyance of those and other lots from one Gustav Peetz, dated some time before the transactions here in question, and which vested the title of these with other lots in Begrisch and Riedel as tenants in common. Subsequently, on June 5, 1900, pending a suit for partition between the parties, Riedel and Begrisch came to an agreement by which they mutually released to each other certain lots. Riedel released or conveyed to Begrisch the 125 lots above mentioned. That deed was recorded on June 6. 1900. A Mr. Doremus, an attorney and counselor living in Bergen county and having an office in New York City, was solicitor of and counsel for Mr. Begrisch in that partition suit, but did not participate in the carrying out of the actual partition. In that actual partition Mr. Goldenhorn, solicitor for the defendants in this cause, acted for Begrisch; but there was no concealment of what was conveyed, because the deed was immediately recorded. Subsequently, in July, Mr. Begrisch desired to raise $3,000 in cash, andapplied to Mr. Doremus, his previous solicitor, to ascertain if he could raise the money on the Peetz property. Mr. Begrisch, it appears, owned other lots in the immediate neighborhood. Mr. Doremus was well acquainted with Mr. Ackerman, the complainant, and applied to him for a loan for Begrisch of $3,000 on this property. Mr. Doremus swears that he understood from Begrisch that he was willing to mortgage all the lots which he derived as part of the Peetz property to secure the loan, and so informed Mr. Ackerman. Mr. Ackerman then had an interview with Mr. Begrisch to ascertain in particular what the property was, and he swears that Begrisch handed him (Ackerman) a slip of paper indicating to him generally what the property was, as follows: "Office of Frank Begrisch, Jr. Homes in the Suburbs. 130 Broadway, New York. Passaic Str. Pleasant Ave. Park Ave. Grove Ave. Maple Str. Elm Str. Known as Maywood Park. Peetz property. Old Van Saun property." Part of the Peetz property in Maywood had been laid out in building lots and plotted, and maps made for distribution among would-be purchasers, and Begrisch swears that he handed Mr. Ackerman one of those maps, with pencil lines run diagonally across the particular lots which he proposed to raise the money on. This map included all the lots which he owned under the deed from Riedel, as well as those which had been released by him to Riedel. Mr. Ackerman denies that Begrisch handed him any map of that character, and says he did not see any at that time at all, but that Mr. Begrisch did hand him a piece of paper, a half sheet (quoted above), which mentioned the names of the streets upon which his property faced, to wit, Passaic street, Pleasant avenue, Park avenue, Grove avenue, Maple street, and Elm street,—three streets and three avenues; all, as I understand, mere paper streets and avenues,—and that the number of lots was not mentioned. Mr. Ackerman swears that he then told Mr. Begrisch that he (Ackerman) might have the money to loan, but that, if he did have it, he could only loan it for a short time; that it belonged to an estate, or was in such a situation that he must have it back in a very short time; and that he would require that the transaction should be put in a very severe shape. I believe the evidence on the part of Mr. Ackerman was that he wanted what might be termed an "ironclad agreement," different from a mortgage, and that he could not afford the time necessary to foreclose a mortgage. Mr. Begrisch did not admit that a definite statement of just exactly what the character of the contract was to be was made by him (Ackerman) at that time. However, he learned from Mr. Ackerman that a very hard agreement would be required of him. Ackerman further swears that he learned from Doremus that all of the Peetz lots which Begrisch owned were to be included in that transaction, and that
Begrisch assented thereto. This Begrisch denies, and says that they were confined to the lots, 86 in number, marked upon the map which he handed to Ackerman. Mr. Ackerman at the end of the interview said to Begrisch that he would go and look at the property, and if it was satisfactory he would have Mr. Doremus draw the papers. Ackerman went and looked at the property, made up his mind to loan the money, and called at Mr. Doremus' house, near Maywood, to give him instructions. Mr. Doremus was not at home, and Mr. Ackerman sat down in Doremus' house and prepared written instructions, stating what kind of an agreement he required.
Now, with regard to the question whether Ackerman had in his hands a map with all the lots on the Peetz tract laid out upon it, and those marked off which Begrisch was willing to give as security for the loan, when he went on that day on the premises, I have to say that that is one of the questions of fact in the case upon which I make this remark: Mr. Begrisch swears that he did hand Ackerman the map, with all the lots laid out upon it, and marked those—86 in number—which he intended to convey by way of security; and Mr. Ackerman denies it. But we must bear in mind that he went there on the land. There was no proof to show that any of these streets mentioned in the paper which Begrisch handed to him were marked on the ground, with signs to show where they were situate, or which of the lots upon them belonged to Begrisch and which to Riedel, in a shape that could have been of any use to him whatever, unless he had a map to show where those lots were. There is no proof on that subject. But it does seem somewhat difficult to suppose that Ackerman would have gone on the ground to form an opinion as to the value of certain lots which he was going to take as security for a loan, without having in his bands something besides the mere names of the streets and avenues to indicate what particular lots he was to see. Besides, there is no reason why Mr. Begrisch should not hand him such a map. They were made in large numbers and were inexpensive. But he did go there to see the lots, and I am unable to understand how he could have derived much benefit from going on the ground with only this memorandum, which he swears he received from Begrisch, and without a map designating each of the lots that belonged to Begrisch. The indication of my mind is to adopt Begrisch's evidence on that subject.
Now, the written instructions given to Mr. Doremus as to the character of the papers to be prepared by him in order to carry out Mr. Ackerman's wishes have been lost. Mr. Ackerman has given us his recollection of the terms of that agreement and it was undoubtedly intended to be what he termed an "ironclad agreement." It was not to bea mortgage. It was to be an absolute deed. And he says that was the agreement between him and Begrisch. Now, I stop right there. They—Ackerman and Begrisch— were talking about a mortgage as distinguished from an absolute deed; but it does not appear whether either understood the distinction, from the view of an equity judge, between a mortgage and an absolute deed, and it does not appear whether they understood a deed, absolute on its face, could be turned into a mortgage by a defeasance given at the time, or whether either of them understood the difference between an absolute deed with a separate defeasance and a conveyance which was a mortgage on its face and so termed, or that in their interview they each understood the other as distinguishing between a conveyance which never could be held by a court of equity to be a mortgage and an ordinary mortgage. Mr. Begrisch may well have understood that what Mr. Ackerman meant was an absolute deed of conveyance, with a very severe restriction with regard to the right of redemption; and Mr. Ackerman may well have thought that Begrisch expected to give an absolute deed, without any right of redemption. However, Begrisch did understand that it was not to be an ordinary mortgage; that it was to be a very strong document, in which Ackerman would have a great deal more power over him than he would by an ordinary mortgage. There can be no doubt about that But that either of them had any clear idea of the effect of a right of redemption for 30 or 60 days, or any short time, being declared by a court of equity to render the whole transaction a mere mortgage, and subject to the equitable maxim, "Once a mortgage, always a mortgage," may well be doubted. However, whatever were the terms of the written instructions left by Ackerman with Doremus, the latter, when he arrived home and found the paper which had been left for him by Ackerman, sat down immediately and drew the agreement in question from Ackerman's instructions, and without any prompting from Begrisch. But, before preparing the deed, Doremus either called upon or wrote to Begrisch for his deed of the lots, to save him the trouble of going to the clerk's office to get the description. Begrisch swears that Doremus asked him for the old deed from Peetz to Begrisch and Riedel. That was the deed Doremus knew about, because he had filed the bill for partition based upon it and he knew it contained a reference to the map and the lots laid out on it and he had not seen the deed from Riedel to Begrisch, although there was evidence to the effect that before it was executed it was sent to Doremus for inspection. But Doremus was not as familiar with the Riedel deed as he was with the old deed, and did not know whether it referred to the old deed by lots, and all that sort of thing.
In answer to the demand of Mr. Doremus, Begrisch wrote this letter under date of July 13, 1900: "Mr. C. Doremus: Inclosed please find deed of Gustav Peetz to Dr. Riedel and myself, as requested by you, in order to draw the deed to Mr. James T. Ackerman. I also send map of all the lots to be transferred to Mr. Ackerman,—total number being 86." Now, Mr. Begrisch swears that the sending of the old deed was in direct answer to Doremus' request for that deed. On the other hand, Doremus thinks he asked him for the new deed. He thinks Begrisch did not send him the new deed purposely, and there is a pretty strong argument against Begrisch to be drawn from that which suggests itself to my mind at once. Why did not he send him the new deed that showed all the lots he had? Why did he send him the old deed? Now, that would have considerable effect on my mind, among other things; but in point of fact he sent him that old deed, and also a map of the premises, such as he swears he had already handed Ackerman, with the 86 lots that he intended to mortgage plainly marked in red ink (which is produced), and then he adds: "I also send map of all the lots to be transferred to Mr. Ackerman,—total number being 80." Now, there is a distinct statement by him, before anything is put in writing or signed by anybody, before a dollar has changed hands,—an open, clear, clean statement that he was to mortgage 86 lots. Whatever had been previously said between them, or either of them, there was in that letter a plain statement to Doremus, who was acting as solicitor for both parties, as conveyancer,—and notice to him was notice to Ackerman,—that those 86 lots, marked plainly on the map, were all that he was ready to convey. Now, granting that Ackerman is truthful when he says that the verbal agreement was that Begrisch was to convey all of the Peetz lots that he owned, still Begrisch might very well feel: "Well, here; this man means to get an ironclad agreement from me. He is going to put me in a tight place,—in a vise where I can't turn myself. He is a hard man. He requires $50 for his services, and I am justified in receding from any verbal promise I have made, and say distinctly that I will convey 86 lots as marked on that map, and no more." Now, that is what he did, in effect say to Mr. Doremus in that letter. That as I have said, was notice to Ackerman, through Doremus, of what he was willing to do. Now, see what Doremus did on receipt of that letter, and I think it significant He had it in his power to go at once to the clerk's office and look up the Riedel deed, or to say to Begrisch: "I want the Riedel deed. I must have the Riedel deed, containing a list of all the lots to which you got title in the partition contract." He might have done that. He could have gone to the clerk's office and obtained the information.
He had the opportunity. He was acting for both parties. He had Begrisch's letter before him, plain as could be, saying, "I will give so many lots, and no more."
Now, Mr. Doremus says he understood that the mortgage was to cover all the lots; but I repeat here, what I said in the course of the argument, that the mention in the letter of the number of 86 was an indication that there might be more, because why mention the number 86 at all, if there were not any more? Besides, we must recollect that the number 86 was written by Begrisch with full knowledge that the Riedel deed was on record, and within reach of Doremus, and, if Doremus then had felt sure in his mind that the verbal contract was that all the lots should be included, he should have gone at once to the clerk's office and ascertained which lots they were. But this he did not do. He drew the deed, including those 86 lots and no more, and he drew the contract of defeasance in the form in which we find it, and he drew it with Ackerman's written instructions before him. There is a very strong presumption, then, that a lawyer of Mr. Doremus' experience and standing would follow the instructions as far as equitable, and I have no doubt he did so; and, taking the instruments together, I have no doubt that their result was to give the defendant the right of redemption, which would have brought the transaction subject to the maxim, "Once a mortgage, always a mortgage." There is, confessedly, some clerical mistake in the fourth section of the agreement; the last line or two of the fourth section, "after applying the value of said lots, to wit, $3,000, on account of any sums then due." But that does not affect the general tenor of the instrument, which shows that the conveyance was made for the purpose of securing a loan of $3,000. In the meantime Ackerman had sent to Doremus a check for $3,000, and Doremus took the deed of conveyance which was prepared, and the contract of defeasance, to Begrisch, who executed both of them, and upon such execution and delivery Doremus handed to Begrisch the check for $3,000, and said to him to hold it a little while until he could get Ackerman to sign the contract and approve the transaction, which Begrisch did. Mr. Doremus then took the papers to Ackerman, and Ackerman accepted the deed and signed one copy of the contract of defeasance, which was in due course delivered to Begrisch. Now, right there, the deed on its face at the time of its delivery shows what lots were conveyed. It does not give the number. The fact that it does not give the number was not the fault of Begrisch. But each lot is mentioned by its number, and in order to ascertain the number conveyed it was only necessary to count them. Ackerman, before he accepted that deed, had both papers before him, and he could have inspected both documents. He saw the deed of conveyance, had an opportunity to see both, and he could have seen to it that the deed covered all the lots. Doremus had the map furnished by Begrisch, with the 86 lots plainly marked upon it. Ackerman had been on the ground, and with the aid of the map, which Doremus presumably showed him, could judge of the value of the security he was getting. He could have seen to it that the contract complied with his expectations. But he accepted them both without question. He procured the deed to be recorded, and Begrisch was at liberty to use, and did use, the check.
I ask, then, on what basis of law or equity can I disturb that transaction? There was no such mistake made as this court can rectify. That Mr. Ackerman did not get a conveyance of all the lots that he expected to get does not entitle him to a reformation. It must appear, also, that Mr. Begrisch was willing to convey the increased number, or that he practiced some fraud upon Mr. Ackerman by which he induced Ackerman by unfair contrivance to take a conveyance for less than he knew Ackerman expected,—less than according to the verbal contract between them he had a right to expect. I do not mean to say that even upon those facts the complainant would be entitled to a reformation; but I do say that he is not entitled to a reformation on anything short of them. Now, where was any fraud or trick practiced by the defendant upon the complainant? I am unable to find any, either in the number of the lots or in the verbiage or tenor and effect of the contract. He distinctly, as we have seen, wrote to Mr. Doremus that he was willing to convey 86 lots. That was clear and distinct notice. If he had said, "They are all the lots I have," and not mentioned the number, or anything of that kind, the case might have been different; but, to hold that the number of lots mentioned in the deed was a fraud on the part of Begrisch, I must hold that he understood positively and definitely, which he denies, that there was a contract between him and Ackerman to give him the 125 lots under that ironclad agreement, because it is not sufficient that originally Begrisch was willing to give an ordinary mortgage on the whole of those lots for $3,000. The complainant must show that he was willing to give the ironclad agreement or kind of contract that Ackerman required on the whole of those lots. That is where the complainant's difficulty arises; and that willingness on the part of Begrisch must be proved to me so clearly under the well-settled rules of equity that there can be no mistake about it Here the proof fails, because it is not sufficiently clear that Begrisch so agreed.
But there is another difficulty. The complainant by his bill asks—First, that the deed of conveyance shall be reformed by adding therein 20 additional building lots, defendantto convey the same to complainant; and, secondly, by having the contract of defeasance so reformed that it shall be only a contract for reconveyance, and shall not be construed as a defeasance. The result will be that, as the defendant did not pay the $3,000 within 30 days, the complainant will obtain absolute title to 20 additional lots; for it must be observed that the defendant has Dever recorded his contract of defeasance, and the complainant's title to the 80 lots conveyed is, so far as the record goes, perfect. The defendant does not ask to redeem. He is content to let the complainant keep the 86 lots in payment of the $3,000 loaned. Now, as I have already held that the contract of defeasance rendered the transaction a mortgage, unless the complainant can succeed in reforming that contract, he can have no relief under his bill as framed, even though be has established the mistake in the number of lots conveyed; for he does not offer to treat the whole transaction as a mortgage, and to hold the 86 lots, together with the 20 lots not included in the conveyance, as a security for the $3,000. But at the close of his argument, under pressure of some questions put by me to him, he changed his position and offered to amend his bill in that particular; and though it appeared in the evidence that, three days after the defendant filed his answer in this cause (by which it appears plainly enough that he made no claim of the right to redeem the whole or a portion of the 86 lots), the complainant conveyed those lots for a valuable consideration to his sister-in-law, he says he can recover them and hold them subject to the order of the court. The defendant resists this offer on the part of complainant, on the ground that he has come here to answer the complainant's bill, and has succeeded in his defense, and that the complainant ought not to have any aid of the court in changing his ground. I am of the opinion that the defendant's position is a proper one. If the complainant's conveyance to his sister-in-law was bona fide, as he declares it is, he desires no aid from the court to perfect his title to the 86 lots; for that title cannot be disturbed by the defendant at this late day putting his defeasance on record. In order to allow the complainant to amend his bill, I ought to be satisfied that he has just ground for a reformation of, the deed itself by including in it the additional lots; and on this point my opinion is decidedly against him. I need not repeat the reasons which I have already given. Besides, taking the whole case together, the complainant comes into this court asking the court to enforce what, from his own standpoint, equity jurists call a hard bargain. To show that that bargain is a hard one, it is not necessary to restate the facts. They speak for themselves.
I will advise that the bill be dismissed, with costs.