109 N.Y.S. 1106 | N.Y. App. Div. | 1908
This action is brought to recover damages for a breach of contract to convey real estate. The defendant Johnston had contracted with one "V"an Dyke for the purchase of a thirty-three-acre farm in Kings county, at an agreed price of $2,000 per acre. This contract was dated on the 27th day of September, 1904, and by its terms the title was to -be closed on the 1st day of October, 1905, with an option to Johnston to have the time of delivery of the conveyance extended one year upon tire payment of $1,000 in addition to the $1,200 which was paid upon the delivery of the contract. This additional $1,000 was paid and an extension of this contract was duly executed by Yan Dyke, so that the actual time of delivery, as fixed by the contract, was October 1, 1906. On the 3d day of February, 1906, Johnston entered into a contract with Annie M. Marsh, the plaintiff, by the terms of which he undertook to sell the premises in question to her at an agreed price of $4,400 per acre, title to be closed on the 7th day of May, 1906. This agreement provided that the plaintiff might extend the time of taking title for one month on the payment of an additional $500, and this was subsequently done, so that the time when it was the duty of the defendant Johnston to deliver title was on the 7th day of June, 1906. When the time for Johnston to make his delivery came, Yan Dyke refused to transfer the property to Johnston or to his nominee, and this resulted in Johnston defaulting. The plaintiff brings this action to recover the amount of money paid upon this contract, the incidental expenses, and the value of her bargain, and the jury has awarded her $46,781, and it does not appear to be seriously questioned that the evidence is sufficient to support this finding, if the plaintiff is entitled to recover- the value of her bargain with the defendant Johnston, the defendant Yoorhees having been the owner of an interest in the Yan Dyke contract, and apparently a partner in the transaction.
In view of the conclusion we have reached, it may be important to point out just what the defendant Johnston contracted to do, for the principal contention upon this appeal is that the plaintiff is' entitled to recover only her deposit and her expenses, under that exception to the general rule that, in the sale of real estate, if the vendor acts in good faith but is unable to deliver a good title at the
It is the general rule that where a party sustains a loss by réason of a breach of contract he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed, and this rule is applied to sales of real estate where the vendor has the title and for any reason refuses to convey it as required by his contract, subject to this limitation or exception, that if the vendor contracts to sell and convey in good faith, believing he has a good title, and afterward discovers his title is defective, and for that reason, without any fraud on his part, refuses to fulfill his contract, he is only liable to nominal damages for a breach of his contract. But the rule is different, or rather, the general rule prevails where a party contracts to sell lands which he knows at the time he has no power to sell and convey. If he violates his contract in the latter case he should be held to make good to the vendee the loss of his bargain, and it does not excuse the vendor that he may have acted in good faith and believed when he entered into the contract that he should be able to procure a good title for his purchaser. (Pumpelly v. Phelps, 40 N. Y. 59, 66, 67, and authorities there cited.) That case it is suggested by counsel has been criticised and overruled, but a careful examination of the authorities leads to a contrary conclusion. The general rule prevails in this State, limited by the exception noted, and certainly the facts in the Pumpelly Case (supra) were such as to induce the court to extend the exception if such a thing were reasonably to be expected. There is a comment in the case of Margraf v. Muir (57 N. Y. 155, 160) that the Pumpelly case is the widest departure from the general rule of damages, but there is no suggestion of overruling the decision, and in the case of Burr v. Stenton (43 N. Y. 462, 468) the leading case is commented upon. The court say : “ The only point adjudged was that the rule did not apply to a case where the vendor knew at the time of executing the contract that he could not perform it by a conveyance of the title without the consent of a third person, which it subsequently turned out that he could not obtain, although he believed at the time in good faith he could obtain it. This was the only question in the case, and its decision involved only the application of the rule, well
In Mack v. Patchin (42 N. Y. 167, 175) the court in discussing a related question says that “ this court has recently held in Pumpelly v. Phelps (40 N. Y. 60) that this rule should be limited to eases of good faith, and that when a vendor contracts to sell lands in which he knows at the time that he has no title he is bound to make good to the vendee the loss also of the bargain sustained by his fault or fraud.”
If there is any case which has repudiated the Pumpelly Case (supra) upon the only question involved in that litigation, we have not been able to find it with the help of counsel, and we reach the conclusion that the authority of that case has not been disturbed by anything which has followed it. If we are right in this proposition, it follows that where a vendor, knowing he has no title, engages to deliver a title upon a particular day, without providing for the contingency which he knows is likely to happen, he is not taken out of the rule which requires the vendor to respond in damages for the value of the .bargain as well as for the deposit and expenses. He knew the situation; acting in good faith he could easily provide for limiting the damages in his contract in the event that he was unable to close the transaction at the appointed time, and, failing to do this, he must answer for the breach, the same as in any other contract not coming within the exception. (Chicago, Milwaukee, etc., Railway v. Hoyt, 149 U. S. 1; Labaree Co. v. Grossman, 100 App. Div. 499, 503, and authority there cited.)
We are persuaded that there is no reversible error in this case, and while the damages appear large, the evidence is sufficient to support the verdict, and it ought not to be disturbed.
The judgment and order appealed from should be affirmed.
Jenks, Hooker and Rich, JJ., concurred; Gaynor, J., taking no part.
Judgment and order affirmed, with costs.