123 Misc. 64 | N.Y. Sup. Ct. | 1924
Upon facts set forth in the complaint and admitted in the answer, the parties ask for a declaratory judgment under section 473 of the Civil Practice Act determining their rights.
It appears that for some time prior to September 10, 1923, defendant board of education owned and was in possession of premises on Lake avenue in the city of Saratoga Springs on which were situated a high school building and two other small structures of comparatively little value. The building had become unsuitable
On this state of facts plaintiff asks that the contract of September 10, 1923, be specifically performed by defendant, by a conveyance of the title to the real estate and by application of the insurance money upon the purchase price. Defendant declines to do this, but offers to return to plaintiff the $3,000, with interest paid by him upon the execution of the contract.
In view of these facts, what are the rights of the parties? Plaintiff contends that the insurance- money is impressed with a trust in his favor because of the loss of the building; that defendant
Defendant’s reason for refusing to carry out the agreement is that it is no longer possible for it to perform the contract, in that it cannot, as the contract requires, deliver the property in as good condition as it was when the agreement was signed. But that is something of which defendant cannot complain. Plaintiff might be heard to object on that ground, if defendant were seeking to compel him to take the property. A person cannot profit from his own' wrong. Neither can defendant take advantage of a fortuitous circumstance affecting the property to escape performance if the other party is content to perform. Clearly defendant’s reluctance is because it now sees an opportunity for a better bargain. If it can keep $28,000 of insurance money and disaffirm the contract, it can make more out of the property, because the large tract of land on which the schoolhouse stood is undoubtedly worth materially more than $2,000. But that is not equity. Defendant sold the property for $30,000. It is entitled to receive that for it. It is not entitled to any more. Plaintiff agreed to pay that amount for the property. He wants to complete his bargain. If the property has increased in value, that is his good fortune. And that is doubtless what he expected. Otherwise he would not have bought it. But if it had decreased in value he would have had to stand the loss. If there had been no insurance, or insurance in an inadequate amount, and there had not been the clause in the contract requiring delivery in good condition, he would have had to bear the loss by fire, or damage caused by any other agency. Defendant could have compelled him to perform, even in the face of material loss, if he had not been protected by the contract. We may take another viewpoint, and assume that the property surrounding this, between the date of the contract and the time when the deed was to be given, had been subject to a great public improvement which vastly increased the value of the school site and buildings, and also that in the process a small and unimportant part of the schoolhouse site had been taken. Could defendant have' refused to perform because it could not convey precisely all the land described in the contract? If plaintiff was satisfied to take what was left, could defendant be heard to object? It seems clear it could not. And would not such a situation be analogous?
Defendant was in occupancy of the property which it had sold.
This is in accord with equity and with the great weight of authority among the text writers and the decisions in the various states. But the question presented appears never to have arisen squarely in this state. It would be futile to quote from or discuss the many authorities cited by counsel in exhaustive briefs, and the others examined. Reference to but few must suffice.
It has been long established in this state that from the time of entering into a valid contract for the conveyance of land, the estate vests in equity in the vendee and the vendor retains the legal title as a mere lien or security for the unpaid purchase money. “ The vendor remains a mere trustee, and his interest is in the proceeds and not in the land; and the vendee becomes trustee of the vendor for the purchase money.” Gerard Titles to Real Estate (5th ed.), 499; Williams v. Haddock, 145 N. Y. 144. Where buildings upon premises under contract of sale are accidentally destroyed by fire, the loss must be born by the vendee. Sewell v. Underhill, 197 N. Y. 168. And this is true whether the vendor or the vendee be in possession. Pellegrino v. Giuliani, 118 Misc. Rep. 329. In 39 Cyc. 1641, it is stated: “ The rule supported by the weight of authority is that since a purchaser under a binding contract of sale is in equity regarded as the owner of the property, he is entitled to any benefit or increase of value that may accrue to it, and must bear any loss, injury, or depreciation which it may sustain, unless occasioned by the negligence or default of the vendor; and if there is a valid and binding contract between the parties, the application of the rule is not affected by the fact that the purchase-price has not been paid, or that the purchaser is not in possession, or that under the provisions of the contract possession is not to be delivered until a date subsequent to that when the loss or injury occurred.”
In regard to the rights of the parties to insurance money in case of loss by fire, 39 Cyc. 1644 states: “ So if, * * * the
In Pomeroy’s Equity Jurisprudence (4th ed.), vol. 5, § 2283, the rule is thus stated: “ On principle it would seem clear that in all jurisdictions throwing the loss- by fire on the vendee, the insurance money should go to the vendor in trust for the vendee, to be paid when the vendee should satisfy the security lien of the vendor. Such is the view of the American courts which have passed upon the question.”
In Williams v. Lilley, 67 Conn. 50, property under option was partly destroyed by fire. The damage was repaired and thereafter the vendee elected to exercise his option to purchase and claimed a credit for the amount of insurance money left over after repairing the building. After considering the equities of the case the court said: “ We conclude, then, that if in the case before us, the property, at the time the plaintiff demanded the conveyance, had remained as it was after the fire, without reparation, while the money received for insurance was unexpended and unpledged for repairs in the hands of the defendants, the plaintiff would have been entitled to receive Such money as part and parcel of the property, which it would have been the duty of the defendants to convey to him. "Being money, it of course amounts to the same thing to deduct it from the stipulated purchase price.”
A similar doctrine is held in Skinner & Sons Co. v. Houghton, 92 Md. 68; Russell v. Elliott, 45 S. D. 184; McGinley v. Forrest, 107 Neb. 309; Brakhage v. Tracy, 13 S. D. 343; Kaufman v. All Persons, 16 Cal. App. 388, and other cases. No one of the authorities in this state relied upon by defendant presents a situation similar to the case under consideration. Thus in Trumbull v. Bombard, 171 App. Div. 700; affd., without opinion, 225 N. Y. 638, at the time of the loss the relationship of vendor and vendee did not exist between the parties. They were landlord and tenant, though there was an option to purchase which at the time of the fire had not been exercised.
The conclusion seems inevitable, from both reason and authority, that as defendant after the execution of the contract was trustee of the property — both the land and the buildings — for plaintiff, when the fire occurred the situation was not changed; defendant continued to hold the property including the insurance money in place of the building destroyed, in the same trust capacity.
Plaintiff is entitled to judgment declaring his right to a conveyance of the property, to the application of $27,000 of the
Judgment accordingly^_