ailed by the failure of the sugar crop ( Pearson v. McKinney, 160 Cal. 649; Howell v. Coupland, 1 Q.B.D. 258; 3 Williston on Contracts, ยง 1949) or by the ravages of war ( Matter of Badische Co., 2 Ch. 331; Horlock v. Beal, 1 A.C. 486) or conceivably in some circumstances by unavoidable strikes ( American Union Line v. Oriental Navigation Corp., 239 N.Y. 207, 219; Normandie Shirt Co. v. Eagle, Inc., 238 N.Y. 218, 229; Delaware, L. W. Co. v. Bowns, 58 N.Y. 573; and cf. Blackstock v. New York Erie R.R. Co., 20 N.Y. 48; also 2 Williston on Contracts, ยง 1099, pp. 2045, 2046). We may even assume that a like result would have followed if the plaintiff had bargained not merely for a quantity of molasses to be supplied from a particular refinery, but for molasses to be supplied in accordance with a particular contract between the defendant and the refiner, and if thereafter such contract had been broken without fault on the defendant's part ( Scialli v. Correale, 97 N.J.L. 165; cf., however, Marsh v. Johnston, 125 App. Div. 597; 196 N.Y. 511). The inquiry is merely this, whether the continuance of a special group of circumstances appears from the terms of the contract, interpreted in the setting of the occasion, to have been a tacit or implied presupposition in the minds of the contracting parties, conditioning their belief in a continued obligation ( Tamplin S.S. Co. v. Anglo-Mexican P.P. Co., 2 A.C. 397, 406, 407; Blackburn Bobbin Co. v. Allen Sons, Ltd., L.R. [1918] 1 K.B. 540; Lorillard v. Clyde, 142 N.Y. 456; 3 Williston on Contracts, ยง 1952). Accepting that test, we ask ourselves the question what special group of circumstances does the defendant lay before us as one of the presuppositions immanent in its bargain with the plaintiff?
( Pumpelly v. Phelps, 40 N.Y. 59; Mack v. Patchin, 42 N.Y. 167; Bulkley v. Rouken Glen, Inc., 222 App. Div. 570, affd. 248 N.Y. 647.) Assuming plaintiff's knowledge of the terms of the leases, it is irrelevant on the measure of damages. ( Marsh v. Johnston, 125 App. Div. 597.) Margraf v. Muir ( 57 N.Y. 155) denied the vendee the loss of his bargain because the vendor was without knowledge of an outstanding tax lien and the inadequacy of the price in respect of a sale requiring court approval because of the interest of minor children in the property. In Margraf the vendor's lack of knowledge demonstrated her good faith, which served to preclude recovery by the vendee of the loss of his bargain; the vendee's knowledge of the facts unknown to the vendor emphasized the inequity of his claim.
If (a) the seller arbitrarily refuses to perform, (b) knowingly contracts beyond his power, or (c) has been guilty of fraud or bad faith, the purchaser may recover special damages for loss of bargain. ( Schwimmer v. Roth, supra; Pumpelly v. Phelps, 40 N.Y. 59, 66, 67; Cockcroft v. New York Harlem R.R. Co., 69 id. 201, 204; Marsh v. Johnston, 125 App. Div. 597.) The evidence demonstrates that Moody, the executive officer of the defendant, who dealt with the plaintiff, knew that as to the Knollwood Drive frontage (plot 33 aforesaid), the same was subject to the aforesaid restriction prohibiting more than one dwelling house upon that entire frontage of 292.53 feet.
If the following propositions are not conceded by my brethren, nevertheless I believe them to be sustained by ample authority, (1) that the lease from defendant to plaintiff's assignor implied a covenant of quiet enjoyment ( Boreel v. Lawton, 90 N.Y. 293; Mack v. Patchin, 42 id. 167); and (2) that inasmuch as the lease was not made subject to the mortgage then a lien upon the premises, the failure on defendant's part to disclose the existence of such mortgage evidenced a degree of bad faith sufficient to entitle the lessee (plaintiff's assignor) to recover compensatory damages. ( Jacobs v. Schulte, 153 App. Div. 693, 694; Mack v. Patchin, supra, 167, 172; Marsh v. Johnston, 125 App. Div. 597; affd., 196 N.Y. 511; Friedland v. Myers, 139 id. 432, 436.) The privilege to the lessor to subordinate the lease to a "new mortgage" should not be construed as the legal equivalent of a lease subject to an existing mortgage.