37 N.Y.S. 1037 | N.Y. App. Div. | 1896
The defendant company has proceeded throughout" upon ant erroneous view of its rights. There never" was a forfeiture under;
It may he argued that the parties originally acted upon the theory that the law itself engrafted such an ad interim forfeiture and foreclosure clause upon the silverware' mortgage. The draughtsman’s phraseology, however, precludes any such theory or idea. The provision authorizing a sale upon default reads in this wise: And the said party of the first part * * * [do] covenant and agree to and with the said party of the second part * * *. that in case default shall be made in the payment of the said sum above ■mentioned, then,” etc. To aid the company in effecting an unconscionable forfeiture, we are asked tb give these italicized words a most elastic, strained and unreasonable, construction.
What is the said sum above mentioned ? The clause in which this sum is mentioned reads as follows :
“ Upon condition that if the said .party of the first part shall and -do well and truly pay unto the said party of the second part, their executors, administrators or assigns, the following promissory notes, to wit:
.Note dated N. Y., June 1,1893, at 6 mos. for........ $11,694 30
“ “ “ ' . “ “ “ 9 “ “ ........ 11,694 32
■“ “ “ ' “ • “ “ 12 '■ “ “ .....'.... 11,694 33
$35,082 95
then these presents shall be void.”
There are several sums' here mentioned, and there is one total sum. The sum referred to in the “ sale ” clause is clearly that total sum. The defendant would have us construe the sale clause as though it .■read the said sum, or any of the said sums above mentioned.” We
But this is not all. The words in question occur again in the quiet and peaceable possession clause. Here it is provided that, “ until default be made in the payment of the said sum of money, [the mortgagor is] to remain and continue in the quiet and peaceable possession of the said goods and chattels, and the full enjoyment of the same.” There is not a break in the entire condition from the quotation above unto the end. The covenants as to default and peaceable enjbyment follow the formal condition directly, and are part and parcel thereof. They must all be read together. So reading them, the condition is not broken until default is made in the payment of the entire sum specified therein. Thus it is upon default in
The rule, that where a mortgage is payable in installments the mortgagor cannot, redeem without paying the whole debt is, of course, inapplicable. The right to foreclose was by the express, terms of. the mortgage limited to default in the payment of the whole debt. Thus the operation which the law might otherwise, •have given to the naked condition (as suggested by the learned referee in Leadbetter v. Leadbetter, 32 N. Y. St. Repr. 890, and in Bragelman v. Daue, 69 N. Y. 74), is varied by the provisions of the contract itself. As there was no forfeiture, there was nothing to redeem. The mortgagee has simply taken possession unlawfully. Indeed, the installment rule has almost invariably been laid down in, cases where,, by the terms of the mortgage, the right "to foreclose is. expressly • granted upon default in the payment of any part of the-' debt; Such was the fact in the extreme case of Halstead v. Swartz (46 How. Pr. 291). The condition there was that the . plaintiff should pay the notes “ as they became due,” but in case of. non-payment “at. the time or times above "mentioned,” then the defendant was authorized to seize and sell. Só in Leadbetter v. Leadbetter (125 N. Y. 292, affg. 32 N. Y. St. Repr. 890) the condition, was, as said by O’Brien, J., “ that the defendant should pay the-.notes as they became due, and that, in case of default in the payment of tile notes or. cmy of them when due,” then the said sum of $3,000\ (the entire debt): should become due instantly, and the mortgagee or;. his assigns should have the right to take possession, etc.
It follows that whether the default clause in the silverware mortgage, or that of the Hormandie mortgage, governs, there was no forfeiture, and the defendants have acted unjustifiably throughout.
The question which runs through the cases on this head is whether atender of the whole amount due after forfeiture is sufficient in law to effect such a waiver.. The current of authority favors the conclusion that such a tender is insufficient to create a waiver; It is undoubtedly sufficient upon a bill to redeem. But to create a waiver there must be an acceptance by the mortgagee. The latter is not bound to accept the amount due and restore the property. He may insist upon his forfeiture and leave the mortgagor to his bill to redeem. On the other hand, he may waive his right of forfeiture, and he does so upon acceptance of the tender. (Hutchings v. Munger, 41 N. Y. 158; Van Loan v. Willis, 13 Daly, 281; Patchin v. Pierce, 12 Wend. 61; O'Rourke v. Hadcock, 114 N. Y. 550.)
Where the forfeiture results from the non-payment- of an installment the mortgagor cannot redeem without a tender of the whole "amount of the mortgage debt. A tender of the unpaid installment is insufficient either for redemption or to effect a waiver. To redeem there must be a tender of the whole debt. To effect a revesting of the title at law there must be a-tender and acceptance of the whole debt. But to effect a waiver of the forfeiture and the revesting of the original status under the mortgage, there need only be a tender and acceptance of the unpaid installment. The only case we have been able to find which militates against the latter doctrine is Patchin v. Pierce (12 Wend. 61). There, however, the court was dealing with the title at law. What the court really held was that the acceptance of a part of the money secured by the mortgage does not operate to -reinvest the title in the mortgagor so as to enable him to recover at law. It was assumed that the waiver of
Our conclusion is that, while, the acceptance by the mortgagee of an unpaid installment does not of itself effect the vesting of an abso,Itite legal title in the mortgagor, it does effect a waiver of the forfeiture and is a recognition of the mortgage, with all its terms and conditions, as still in force. The forfeiture is obliterated, and the original status restored. The legal, but defeasible title is continued -in the mortgagee, and the right to quief and peaceable possession is ■continued in the mortgagor. And the latter 'right can only be enforced in equity.
The plaintiff, however, does not rely wholly upon the legal effect of the defendants’ acceptance of payment of the only note as to which there was a claim of default. When that note was paid, the defendant distinctly recognized the plaintiff’s equity. The cgurt below "would have been quite justified in specially finding (had the
A more complete waiver both at law and in fact it would be difficult to conceive of.
In the view which we have last taken of this case, there can be no doubt of the plaintiffs right to appeal to a court of equity. She had in fact no other right. But even in our original view that there never was a forfeiture, there was still an undoubted right to equitable relief. What the plaintiff seeks is not a specific performance of a contract for the sale of chattels, but a specific performance of the covenant for peaceable possession and quiet enjoyment. Here the contract of sale was executed, and the goods were delivered. The mortgage was given to secure to the mortgagee the purchase-price of the goods, and the covenant was given to secure to the mortgagor continuous possession until default. Damages for the breach of such a covenant would be a most incomplete and unsatisfactory remedy. The measure of damages would be the value of the right of possession until forfeiture by breach of the cpndition of the mortgage, and the value of the property after payment of the mortgage debt. (Jones on Chattel Mortgages, § 437, and cases cited.) It would be practically impossible for the plaintiff here to prove the value of the right of possession. That would involve the value of the use of the property for hotel purposes. The deprivation of that special use goes to the very root of the transaction. The property was purchased and designed with reference to that special use in a new and important hotel establishment. The particular hotel for which it was purchased has been lost to the vendor by other causes, but the use in other hotel directions is equally essential. The silverware was especially adapted to hotel purposes. It was marked in two or three different ways. Part of it was marked “Hotel Hew Hetherland,” part with an initial C<H,” and part with a mono
- Hor would replevin afford an adequate remedy. The defendant ■could frustrate the possessory power of this remedy by the simple process of' rebonding. The effect would be to keep the plaintiff out of the possessory use pending the litigation. Meanwhile the property might be sold. In the end, whether the property was sold or not, the plaintiff, would be face to face with the original problem, namely, how to prove the value of the right of possession. He might •recover the property in specie, or, if it had been sold, its value. But .still he would be without adequate redress for the detention and for the loss of his possessory right. The breach of such a covenant might be far-reaching. If extended to the furniture, carpets, linen, glass and chinaware of the hotel, establishment, it would almost certainly work downright ruin. Even the sudden deprivation of any one of the various properties which make up the essential plant of such an establishment would jeopardise the entire business. It is clear that the casé for equitable relief is, upon the special facts, brought within the principles stated in Cushman v. Thayer Mfg. Jewelry Co. (76 N. Y. 369) ; Johnson v. Brooks (93 id. 343); Bennett v. Wright (77 Hun, 331); Ford v. Ransom (8 Abb. Pr. (N. S.] 416), and Sickels v. Combs (10 Misc. Rep. 552).
There is, however, still another consideration which amply supports the equitable remedy. The covenant for quiet and peaceable possession until default was a continuing' covenant. There is á daily breach while the defendants keep the plaintiff out of possession,. Ubis would lead to a multiplicity of suits, to prevent which a court •of equity may properly exercise its jurisdiction. The governing principle is the same as where a lessee covenants to occupy demised premises for a particular purpose and none other. There an injunction lies to restrain a deviation. (Steward v. Winters, 4 Sandf. Ch. 587:) In the latter case the vice-chancellor said it was unnecessary for the complainant to establish irreparable injury, “ or on a continuing covenant ” even substantial injury. Then too equity should net reciprocally. It protects the mortgagee’s rights, for it will not permit the mortgagor to :sell and place beyond the reach of the mortgagee chattels covered by the mortgage. It will equally protect the mortgagor’s rights. It will not permit the mortgagee to
The only other point, made by the appellants is that the plaintiff failed to secure title at the sheriff’s sale for the reason that the silverware was not then actually present and exposed to the bidder’s view. The property was sold in the rotunda, or lobby, of the hotel. A large part of the silverware was in an adjoining room opening out of the rotunda. It was exposed upon a large table, and the door of the room was not closed. The property was about twenty feet away. Some of it was in the storeroom downstairs, a room, which was kept locked only at night. There was, imder the circumstances, a sufficient compliance with the law which requires property sold under execution to be open to the inspection of bidders. It would have been impracticable to displace all the furniture and property in the hotel and pile it up in the rotunda. The rooms were open to the public, and any one could have examined the property. The sale was valid upon tlie principle enunciated in Tifft v. Barton (4 Den. 171) and National Bank of the Metropolis v. Sprague (20 N. J. Eq. 159). It may be added that the defendant in the execution was présent at the sale, and made no objection. Since then he has fully recognized the plaintiff’s title, and has acted for her in her relations to the property.
The remaining question is upon the plaintiff’s appeal. The learned trial judge refused to grant the plaintiff any compensation for the deprivation of her possessory right. In this we think he erred. It is true that theré was no evidence of the value of the use of the silverware. In the nature of things there could be no such evidence. Indeed, the difficulty of proving the value of possession is, as we have seen, one of the reasons why equity affords relief. We think, however, that there was still a measure of compensation which should have been awarded to the plaintiff.
This was in the nature of a possessory action. The damages which might have been awarded on replevin are, therefore, appropriate here. It is true that the judgment below was not (like a replevin judgment) in the alternative for the return of the property, or its value if not returned. The judgment here is limited to the return of the property. Such is the effect of the mandatory injunction. If, however, the value of the property sufficiently appears in
- This rule is especially applicable to a case like the present, where the party wronged is- actually paying interest to the wrongdoer upon the notes which represent the value of the property. He is actually paying this interest (at three and four per cent) during the entire period of the wrongful deprivation of the use. Thus the wrongdoer keeps both possession and interest, while the party wronged is -deprived of both.
The question, then, is one of fact — does the case show the. value of the projDerty, and if so, what value? We agree with the defendants that the true value of the property, when' taken by them, was not its original purchase price. But that original purchase price is an element for consideration in connection with the natural depreciation from use. The purchase price of the property covered by the mortgage was $35,082.95. But, as we have seen, some' $3,500 worth of additional, silverware was subsequently added thereto. The new notes covered this additional $3,500, together with interest upon -the original $35,082.95. The grand total was $39,483.13, and for this latter sum the new notes were given. The defendants thus took property, the purchase price of which aggregated some $38,500. In their answer the defendants admit that they took possession of all the .goods “ covered by and included in ” the chattel mortgage, “ save and excepting certain of said goods and chattels of the value of $1,083.58 or thereabouts,” which they claim were missing. There was no claim in the answer that any other goods were missing. The answer was verified by the defendant Bobinson. This sworn
The judgment appealed from by the defendants should be affirmed, with costs. The judgment, so far as appealed from by the plaintiff, should be modified by granting her the additional relief indicated in this opinion.
Van Brunt, P. J., and Rumsey, J.:
We concur in the affirmance of the judgment on the defendant’s'appeal. We dissent from the modification on the plaintiff’s appeal-
judgment appealed from by the defendants affirmed, with tiosts.. Judgment, so far as appealed from by plaintiff, modified by granting her the additional relief indicated in opinion.