Gross v. Gorsch

Laughlin, J.:

Plaintiff alleges that on the 4th day of March,x1907, a decree of foreclosure was duly entered in an action for the foreclosure of - a mortgage for $37,500, bearing date the 27th day of June, 1905, on premises on One Hundred and Twenty-eighth street owned by him; that thereafter and in or about the month of April, 1907, the defendant became the owner of the bond given to secure said mortgage and of the mortgage ; that the defendant was the owner of certain premises described in the complaint, situate in the village of Ryack, in the county of Rockland, R. Y.; that on or about the 1st day of June, 1907, the plaintiff and defendant entered into an agreement by which plaintiff promised to convey to the defendant the said mortgaged premises and the defendant agreed to convey to the plaintiff, in exchange therefor, his said premises in the village of Ryack “ and to take back a bond and mortgage upon the same in the sum of” $8,000; that on or about the 3d or 4th day of June, 1907, the plaintiff duly tendered performance of this agreement on his part, but that the defendant refused to perform, and thereupon another agreement was made between the parties by which it was understood that no conveyance of the mortgaged premises should be given by the plaintiff to the defendant, but that defendant should be permitted to bid in the premises on the foreclosure sale without competition in bidding “at as small a sum as possible,” and that “if the plaintiff or his assigns would further execute a bond and mortgage in the sum of $8,000 to the defendant upon said premises at Ryack, he, the said defendant, would convey the said premises at Ryack to the plaintiff as agreed between them .originally; ” that the plaintiff duly consented and agreed to this' modification of the contract and promised to and did refrain from bidding at the sale and promised that he would execute or procure the execution of a bond and mortgage for the sum of $8,000 to the defendant on the premises in Ryack “as agreed originally;” that defendant was the only bidder at the foreclosure sale and purchased the premises for the sum of $48,737.14, just sufficient to cover the mortgage indebtedness and expenses of sale, leaving no surplus, but that the premises were at the time worth the sum of $55,000, or the sum of $7,000 over and above all liens and incumbrances; that the referee executed and delivered to defendant a deed of the premises.; that thereafter plaintiff “ duly offered and tendered to execute and deliver” a bond and. mortgage for $8,000 as agreed and demanded that defendant convey to him the premises at Ryack, “ but that defendant wrongfully and fraudulently refused and still refuses to execute such a conveyance, or to accept the bond and mortgage.” Judgment is demanded in the alternative, first, that it be adjudged and decreed that plaintiff has an interest in the premises so purchased by the defendant at the foreclosure sale to the extent of $7,000 and that it be decreed that defendant .holds the same in trust for the benefit of the plaintiff to the extent of said sum and that the premises be sold for the payment' thereof, or that defendant be decreed to specifically perform his agreement to convey, to plaintiff the premises at Nyack. The-demurrer is taken upon the ground that the part of the amended answer designated “ a second separate and distinct defense” is insufficient in law upon the face thereof as a defense to the amended complaint. That part of the •answer to which the demurrer is interposed alleges that the contract which the plaintiff seeks tp enforce rested in parol, and pleads the Statute of Frauds* as a defense thereto.

Ordinarily, courts of equity are only called upon to decree a specific performance of a contract for. the conveyance of real estate, void under the Statute of Frauds, where the purchaser is in possession. ' In the case at bar it is not only not shown that the plaintiff was not permitted to take possession of the premises at FTyaclc, pursuant to the parol contract, but it appears that the defendant wholly refused performance upon the first request made that he perforin.■ The contract, in so far as it contemplated that the defendant should be permitted to purchase the plaintiff’s premises on the foreclosure sale, appears to have bemi fully executed. • It may well be that if that part of the contract by which the defendant agreed to convey tlie premises at Nyack was sufficiently definite, a court ■ of equity would now enforce specific performance notwithstanding the fact that plaintiff was never in possession thereof. It is, therefore, extremely doubtful whether the Statute of Frauds would be a defense, provided the contract set up in the complaint were suffi- ■ ciently definite to enable á court to enforce specific performance, but it is not necessary to -place the decision on that ground. A demurrer searches the pleadings, and if the complaint be insufficient to justify specific performance the demurrer should have been overruled, even though the Statute of Frauds would not constitute a defense. The contract by which the plaintiff was to obtain title to the premises at Nyack, as pleaded, is too indefinite to he enforced. The terms and conditions of the bond and mortgage to be executed by the plaintiff as part of the' consideration for the transfer are not stated. It is manifest that it was not to bo a cash payment, and it is improbable that a bond and. mortgage were to be executed payable forthwith. According to the contract, as pleaded, the parties did not agree lipón the terms and conditions of the bond and mortgage. It needs no argument, therefore, to show that the court cannot decree a specific performance of the agreement of the defendant to convey his premises at Ffyaek to the plaintiff.

The remaining question is with respect to the prayer that it be " adjudged that plaintiff lias an interest in and lien upon the premises formerly owned by him and purchased at the foreclosure sale by the defendant,-for the difference between the amount bid by the defendant and the actual value of the property at the time. If the plaintiff had not asked for a specific performance of the defendant’s agreement to convey the premises at ISlyack, and had confined the prayer for relief to the question of having a lien declared and enforced upon the premises purchased by the defendant, it is probable that the Statute of Frauds would not have been pleaded as a defense, for it is manifest that it would not deprive a court of equity of authority to prevent the defendant obtaining an unconscionable advantage over the. plaintiff. . If, however, the Statute of Frauds would constitute a defense to the prayer for a conveyance by the defendant, but not to the prayer for the other relief, the plea should not be held bad on demurrer, for the complaint should be regarded as setting up two causes of action, to one of which the Statute of Frauds would be a defense and was properly pleaded, although not specifically limited thereto, owing, however, to the plaintiff’s failure to plead the facts in sejiarate counts. . Moreover, I am of opinion that the complaint is not good with respect to the demand that a lien be declared in favor of the plaintiff on the premises purchased by the defendant. The plaintiff merely shows that the defendant, after the contract was performed iii part, refused further performance. There is no • sufficient allegation of.fraud, and the only attempt to allege it is with respect to the defendant’s refusal to carry out the contract.. There is not a suggestion that he practiced any fraud or deception on the plaintiff in inducing the making of the contract, The defendant did not agree to .purchase the premises on foreclosure for the benefit of the plaintiff. There is no basis in the facts alleged for declaring that the plaintiff has an interest in and lien upon the premises to the extent of $7,000 or .any other sum. Aside from the contract, the defendant had a right to purchase the premises for his own benefit. If. they are to be deemed to have been purchased under the contract by reason of the fact that the plaintiff refrained from- bidding or procuring others to bid, then the contract contemplated that the defendant should purchase the premises, not for the plaintiff, but for himself. It would seem that the remedy of the plaintiff would be a motion to vacate the order •confirming the referee’s report of sale, or an action to cancel the sale upon payment of the amount paid by the defendant and interest thereon, or an action for damages for fraud, if fraud can be established-; but I see no theory upon which, on the facts pleaded, the plaintiff can be decreed to have a lien upon the premises and defendant be charged as a purchaser for plaintiff. Inasmuch, therefore, as the complaint fails to state a cause of action for any of the relief-_ demanded, the demurrer to the separate defense was improperly sustained.

It follows that the interlocutory judgment should be reversed, with costs, with leave to plaintiff to withdraw the demurrer upon payment of costs of the appeal and costs of the demurrer.

Patterson, P. J., concurred.

* See Real Prop. Law (Laws of 1896, chap. 547), §§ 207, 224.— [Rep.