Opinion
September 11, 1962.
Langan, Kinney Langan; Syracuse; for plaintiffs, John P. Kinney, Syracuse, of counsel.
Byrne Costello, Syracuse, for defendant, Donald J. Kemple, Syracuse, of counsel.
Plaintiffs move for a declaratory judgment on the pleadings. Defendant seeks the relief requested in its answer. (Rules of Civil Practice, rule 112.) Attached to the complaint is a deed from the plaintiffs granting certain premises in perpetuity to the defendant together with three easements. The deed contains what appears to be a covenant whereby defendant agreed to annual payments of One Hundred Dollars and Four Hundred Dollars for the easements and as part of the consideration for the conveyance. The deed also contains what appears to be a condition although the traditional words "on condition" do not appear. If there be default, the easements are to terminate after ten days' notice. The defendant is in default and its position on this motion is that the plaintiffs are entitled to relief, but not the types requested, as being mutually exclusive.
The complaint seeks a rescission of the easements for breach of a condition and a recovery of a portion of the purchase price for a breach of covenant in the nature of specific performance. True it is that procedural barriers retarding complete relief in one action are now eliminated. Nevertheless, the legal and equitable principles separately governing judicial remedies survive. A condition as known in the law of realty is a qualification or restriction annexed to a conveyance of lands whereby it is provided that in case a particular event does or does not happen, or in case the grantee does or omits to do a particular act, an estate may be defeated. Munro v. Syracuse L.S. N.R.R. Co., 200 N.Y. 224, 93 N.E. 516. Conditions tending to destroy estates are not favored in the law and are strictly construed. A covenant is simply a contract of a special nature. Clark v. Devoe, 124 N.Y. 120, 26 N.E. 275. Covenants are promises and are usually enforced by actions at law for money damages for their breach, or in case of covenants running with the land, by specific performance. Conditions may be enforced when breached by an action under Real Property Law, § 500 et seq., by cancellation of the grant or by an action in ejectment. (1 Warren's Weed New York Real Property, p. 583.) In seeking the sums unpaid, the plaintiffs appear to rely upon the deed as a basis for specific performance of the covenant. By seeking forfeiture, they appear to repudiate a portion of the deed. A person invoking equity may reasonably be deemed to have waived a remedy when he seeks others knowing they are exclusive. The elective choice was with the plaintiffs.
Equity will mold its decrees to suit the needs of the particular case. The complaint and attached deed indicate that the plaintiffs have and may assert a so-called grantor's lien. The sums to be paid are by the terms of the deed part of the consideration therefor or part of the purchase price. Where the vendor of land has conveyed title to his vendee without receiving the full consideration, there arises by weight of authority in the United States an equitable lien or mortgage in favor of the seller called a "grantor's lien." (4 Pomeroy's Equity Jur. sec. 1249, [5th ed.]; 4 American Law of Real Property, sec. 16.19.) Whether it arises by operation of law or by agreement implied in fact or whether it is termed a grantor's lien, an equitable lien, or an equitable mortgage is not as important for the purposes of this motion as is the fact that there is such a device which "is too firmly established in the jurisprudence of this state to need any justification in this day and generation." Zeiser v. Cohn, 207 N.Y. 407, 415, 101 N.E. 184, 186; 47 L.R.A.N.S., 186, Hubbell v. Henrickson, 175 N.Y. 175, 67 N.E. 302. The significant factor of such a lien is that it is enforced by foreclosure and treated in the same manner as a mortgage foreclosure. Cf. Charles v. Scheibel, 128 Misc. 275, 218 N.Y.S. 545 (Sup.Ct.Onon.Co.), affd. 221 App.Div. 816, 222 N.Y.S. 784 (4th Dept.)
The import of the above is that such a lien is surrounded by the two safeguards which enlightened equity has placed around foreclosure through the years: the right to a public sale and the right to redeem. It can be argued that the deed itself provides its own remedy, i.e., forfeiture in the nature of a penalty. The specific language of the deed is no more controlling than the language in a purchase money mortgage which calls for forfeiture upon failure to pay specified amounts.
Even an absolute grant by deed may have the effect of being at best a mortgage. (Real Property Law, § 320.) In short, the plaintiffs have parted with the property and easements without receiving the full purchase price. The deed indicates an intention that there be some security therefor, and if that be so, this intention can be fully carried out in such a manner as to afford the plaintiffs relief without the denial of a right to redeem. An additional punitive intention would not affect this ultimate conclusion. The main intention remains unchanged. "Wherever a penalty is inserted merely to secure the performance or enjoyment of a collateral object, the latter is considered as the principal intent of the instrument, and the penalty is deemed only as accessory, and therefore as intended only to secure the due performance thereof or the damage really incurred by the nonperformance." (3 Story's Equity Jur., [14th ed.], sec. 1726.) The same doctrine has been applied to lease cases where forfeiture had been stipulated, and in cases of this sort admitting of compensation there is rarely any distinction allowed in courts of equity between conditions precedent and conditions subsequent. The true test by which to ascertain whether equitable relief can or cannot be had is to consider whether compensation can be made or not.
The easements here are granted "forever," but there is no limitation on the payments and these presumptively could continue forever. There is an interesting phase of the law in New York State initiated by the so-called Van Rensselaer manorial perpetual leases wherein the Van Rensselaer family conveyed their vast holdings by absolute deeds to certain grantees who agreed to pay a yearly sum as "rent" in perpetuity. The deeds contained covenants and conditions similar to the deed in this case. Cf. Van Rensselaer v. Read, 26 N.Y. 558; Bradt v. Church, 110 N.Y. 537, 18 N.E. 357. Thus there is such a device as an absolute grant with a perpetual rent reserved. The line of Van Rensselaer cases was cited in Munro v. Syracuse L.S. N.R.R. Co., supra, 200 N.Y. 224, 93 N.E. 516, and applied and compared to the grant of an easement where conditions and covenants applied. In that case, a right of way was given to a railroad absolutely on the condition that the grantor's family be given annual passes. In return for the easement, the railroad covenanted to give such passes and to pick up freight and passengers on the grantor's farm. If the condition was not performed, there was to be a forfeiture. The Court of Appeals held that such a grant was not a lease in the ordinary sense, but it was in the nature of a lease reserving perpetual rent, the rent being the acts which the grantee agreed to perform. The instant case may well be considered as a further and more striking example of a perpetual lease based on an absolute grant.
That courts of equity from time immemorial have relieved against forfeiture is elementary (19 Am. Jur., Estates, sec. 89), and will only award that which is, ex aequo et bono, or justly due. Nor does it confine its relief to cases for which there is a precedent precisely in the situation presented to the court. The jurisdiction is not exercised arbitrarily, and an underlying principle is that such action effectuate the real intention of the parties. It is concluded that forfeiture be decreed unless within thirty days tender or payment of the arrears with accrued interest be made to the plaintiffs or their counsel, together with ten dollars costs.
Submit order.