135 N.Y.S. 653 | N.Y. App. Term. | 1912
This action was brought upon a written contract. Upon the trial, the plaintiff proved that he was the owner of a second mortgage for $1,100 on the premises 719-721 East Two Hundred and Thirteenth street in the city of Hew York. ■ The person holding the first mortgage upon the property had commenced an action to foreclose his mortgage, and the plaintiff in this action was named as a party defendant. That action resulted in a judgment of foreclosure in favor of the plaintiff, and the premises were sold at public auction on February 5, 1911. On February 5, 1911, and before the sale had taken place, the defendants stated to the attorney for the plaintiff that the defendant Ficarrotta was the owner of the third mortgage upon the premises in question, and that, if the plaintiff would agree not to bid at the public sale, and would permit the defendants to buy the property, they would pay the plaintiff the sum of $1,100 due upon his second mortgage, together with the interest, costs and expenses which he had incurred in the foreclosure suit. The plaintiff accepted this offer, and the following instrument was signed and delivered by the defendants:
“We Hatale Ficarrotta and Lore do hereby agrée that if the premises under foreclosure in action Kahle v. Oolletti, &c., situate on 213 Street near White Plains Boad are bought in by us and in order to secure the payment due Martino Delisi, under his mortgage, that we will pay said Delisi, on the closing of the title under the terms of sale, the full amount of balance under his mortgage together with interest, costs and expenses under his foreclosure less amount turned over by. the receiver.
“ Dated “ H. Ficarrotta.
" Frank P. Lore.”
The plaintiff attended the sale, but refrained from bidding. As a result of the sale, the plaintiff received from the receiver who had been appointed in the foreclosure action only the sum of $454.90. The property was purchased at the foreclosure sale by these defendants. The plaintiff instituted
The plaintiff certainly had a right to bid at the public sale, and his abandonment of this legal right was a .sufficient consideration for the promise of the defendants; Hamer v. Sidway, 124 N. Y. 538. The only question which requires discussion is, whether or not the consideration for the contract was legal or illegal. The early rule of law condemned without discrimination all agreements between persons not to bid. at judicial or public sales. This rule has, however; been modified, and it is now well settled in this state that, where such agreements are made for an honest purpose, and designed, to protect the existing interests, they are valid. The questions as to whether the agreement in such a.case was entered into with honest motives is for the jury to determine. Phippen v. Stickney, 3 Metc. 384; Marsh v. Russell, 66 N. Y. 288; Marie v. Garrison, 83 id. 14; Hopkins v. Ensign, 122 id. 144; People v. Stephens, 71 id. 527; Myers v. Dorman, 34 Hun, 115. 'The rule which declares void as against public policy agreements, the necessary operation of which tends to restrain competition at a public*sale, is now made dependent upon the intent of the parties. Thus, in Phippen v. Stiekney, supra, the court, after reviewing the authorities upon the subject, said: “ The extent to which the doctrine of invalidating such contracts can be safely carried would rather seem to embrace within the rule all cases of fraudulent acts, and .all combinations having for their object to stifle fair competition at the biddings, with the design of becoming the purchasers at a price less than the fair value of the property. Beyond this, the application of the principle contended for may be found productive of mischief and an unwarrantable interference with the course of business in auction sales. We are therefore of opinion, that an agreement between A. and B., that A. will permit B. to become the purchaser of certain property about to be
In Harsh v. Russell, supra, the Court of Appeals of this state declared that the trae rule governing this subject was laid down in Phippen v. Stickney.
In Marie v. Garrison, supra, the court, 'by Andrews, J., said: “ This was not the case of a combination between persons having no prior interest in the property to suppress bidding at a judicial sale for speculative purposes. The arrangement made was, so far as appears, a' reasonable and honest attempt on the part of the plaintiffs to save their property from being sacrificed on the foreclosure. The other stockholders and bondholders were at liberty to bid -on the sale. The mere fact that an arrangement, fairly entered into, with honest motives, for the preservation' of existing rights and property, may incidentally restrict competition at a public or judicial sale, does not, we think, render the arrangement illegal. The question of intent, at all events, is one for the jury, upon the whole facts as they shall appear on the trial.”
In Myers v. Dorman, supra, the court, after stating the general rule, said: “ But there are cases holding that the fact that an agreement has the .effect to prevent competition at a public sale does not necessarily render the agreement void; it depends on the intent;”
In People v. Stephens, supra, Allen, J., after stating the general rule, said: “Agreements between two or more persons, that all biit one should refrain from bidding, and permit that one to become the purchaser, are not, however, necessarily and under all circumstances vicious. They may be entered into for a lawful purpose and from honest motives, and in such cases may be upheld, and will not vitiate the purchase. * * * ¡Neither do they necessarily, and under all circumstances, vitiate the completed contracts to which they refer, and in respect to which they are made.”
In this case it is"clear from the authorities that,, if the statement made by the defendants that Ficarrotta was the owner of the third mortgage was true, the defendants would have had such an interest in the property as would preclude the contract from being declared void as a matter of law, unless the parties were actuated by a dishonest intent. The representations which the defendants made as to the ownership of the third mortgage, were false, and were known to the defendants at the time they made them to be false. The representation was made to induce the plaintiff to believe it to be true, and to change his position in consequence of his belief in its truth. The plaintiff did believe it to be true, and abstained from bidding in consequence of the representation and the contract which was made pursuant to it. Under these circumstances, I think that the defendants are estoppped from denying the truth of the assertions which they made. “ Wherever,” says Mr. Herman, “ a man has made a false assertion calculated to lead others to act upon
Even the respondents concede that, if Ficarrotta had owned the third mortgage on the property, and the parties had been actuated by honest motives, the contract would have
The authorities, however, recognize another class of cases where the object of the agreement is innocent, and there is an unlawful-intention on one side only, of which the- other
In Cammerer v. Muller, supra, it was held that an action might be maintained upon a married man’s breach of con-, tract to marry, provided the contract was entered into by the woman in ignorance of the promisor’s existing marriage. In reference to the claim that such an action would not lie, Van Brunt, P. J., said: “ It seems to us that this claim is entirely without foundation. Such a rule would be offering a premium upon villainy. It cannot be that where a man induces a woman to enter into a promise of marriage, she knowing of no disability,' that she cannot recover damages for the breach of such contract if it turns out that he is incapable of fulfilling it. * • * * Our attention has been, called to no Case holding that, because one party enters inno
To the same effect also is Kerns v. Hagenbuchle, 17 N. Y. Supp. 367. In Bixley v. Boynton, supra, the court said: “ The intention of the parties gives character to the transaction, and if either party contracted in good faith, he is entitled to the benefit of his contract, no matter what may have been the secret purpose or intention of the other party.” In Williams v. Tiedemann, 6 Mo. App. 269, in discussing whether or not an agreement was a wagering contract, the court said: “ If one intends a bona fide sale or purchase, while the other means only a gambling risk upon prospective differences, there will be no propriety in depriving the former of the benefit of his contract because of a secret reservation in the mind of the latter. As every contract, to be enforced, must be upon the mutual understanding of the parties,- so a contract, to be denied enforcement because of its illegitimate composition, must have been so contrived in the common interest of the makers, or at least in the interest of him 'who is to be precluded of its benefits.”
In Whiteside v. Hunt, 97 Ind. 191, 210, the court said: “And if either party contracts in good faith, he is entitled to the benefit of his contract, no matter what may have been the secret purpose or intention of the other.”
From these authorities, we think it is evident that'the plaintiff, prima facie, established a cause of action,' and that it was error to dismiss the complaint.
• Lehman and Page, JJ., concur.
Judgment reversed, and a new trial'ordered, with costs to the appellant to abide the event. ' . . - . -