Rabinovitz v. Marcus , 100 Conn. 86 ( 1923 )

Three of the errors claimed by the defendants relate to the admission of the seven second mortgages upon the various properties, and more particularly the defeasance conditions of the mortgages to prove the total amount of incumbrance existing upon these properties. The ruling of the court upon this evidence is not set out in defendants' request for a finding, in accordance with General Statutes, § 5826, and Practice Book, p. 307, § 6. It is true that there is in this case a transcript of the entire evidence given on the trial, placed in the record as bearing upon the correction of certain paragraphs of the finding of the trial court, but this does not satisfy the requirement of the statute and rule. Leahy v. Cheney, 90 Conn. 611,617, 98 A. 132; Friedler v. Hekeler, 96 Conn. 29, 34,112 A. 651; Wladyka v. Waterbury, 98 Conn. 305,308, 119 A. 149, and numerous other cases. As, however, this evidence, consisting of copies of the second mortgages, exhibits in the case, came in at the trial without objection, as showing how the record as to the various transactions appeared, and the objection of the defendants was urged only against the validity of the evidence as proving the amount of the existing incumbrances, and as the defendants claim that the facts appearing from these mortgages do not justify the ultimate facts found by the court as to the total amount of the incumbrance and the variance of the provisions in the defeasances of the mortgages from the attempted recital of the same, and for this reason claim a correction of several paragraphs of the finding, we shall, with some hesitation, consider the points raised by the contention of the defendants in this regard.

In respect to the question presented, when the same is presented evidentially, we are to inquire whether the facts recited in the defeasance of a mortgage are admissible to prove the amount of incumbrance upon the mortgaged property. Looked at from the point of view of evidence already in the case for one purpose, the question is presented whether this evidence, that is, the facts it tends to prove, can be legitimately applied to establish the amount of existing incumbrances. The questions of admissibility and application are logically and practically the same.

It would seem that upon principle the contents of the mortgage deeds were clearly admissible as prima facie evidence of the amounts due thereon. The defendants had in the agreement of sale referred to each of these mortgages and described their several terms, and by the terms of the agreement the same were to be assumed by the plaintiffs at an aggregate amount stated in the contract, and in accordance with their terms as to amounts and times of payment therein stated. If and when assumed, had the contract been carried out, the plaintiffs would have been obliged to pay the amounts called for by the several instruments and at the time therein provided. When they had once assumed such payment, they could in no way be questioned by them. "One who has assumed the payment of a mortgage can not contest the validity of it, or show that the amount assumed by him is not due upon it." 2 Jones on Mortgages (7th Ed.) § 744, p. 156. This is familiar law. An examination of these mortgages as appearing of record is made by these plaintiffs, and they find that the aggregate amount of the same is larger than the amount named in the contract, and also that the terms and times of payment differ from those set forth in the contract. If such a state of facts existed, the plaintiffs were clearly entitled to refuse to perform this contract of purchase. If they took the property they were bound by the record of these mortgages, and clearly they have the right to show exactly what appeared of record by production of certified copies, as by statute provided. If defendants had desired to show that the real indebtedness was that named in the contract rather than what appeared from the record, the burden was on them to do so. Archibald v. Banks, 203 Ill. 380, 67 N.E. 791. The defendants were the makers of the notes secured by the mortgages, and how much had been paid thereon was peculiarly within their knowledge.

If the plaintiffs had owned one of these mortgages and were foreclosing it they would be obliged to prove the amount due; but except in a controversy between the holder of the mortgage and the owner of the mortgaged property, the recitals of the mortgage are prima facie evidence of the facts therein stated, and nonpayment is presumed. Givens v. Davenport, 8 Tex. 451; Graham v. Anderson, 42 Ill. 514; Chapin v. Billings, 91 Ill. 539,543; 19 R. C. L. pp. 538, 539, par. 343; 27 Cyc. p. 1615, par. (c), 1617, 1618. It therefore would appear that the evidence admitted was adapted to the issues, and that the subordinate facts established thereby were sufficient to establish the conclusions as to amount due on the mortgages, and the times and manner of payment as found by the court. This being the case, the corrections of the finding asked for, in the way of striking out certain paragraphs thereof, cannot be made, as these paragraphs were not found without evidence.

Defendants claim that even upon the facts found the contract was substantially performed, since the variation between the facts stated in the contract and those appearing from the record are slight and inconsequential. We cannot so hold, since it is clear that in addition to the sum of $500 extra incumbrance, there has been an acceleration of several months in the due days of some of the mortgages, and a liability for a considerable payment of taxes in certain contingencies depending on the amount at which the mortgaged properties are assessed for taxation. Under Public Acts of 1919, Chapter 90 (General Statutes, § 1167), all excess in the amount of a mortgage above the assessed value of the mortgaged real estate is assessed to the lender, and the several mortgage notes secured by the second mortgages each have a provision whereby the maker agrees to pay the amount of the notes "together with all lawful taxes levied on said amount against the holder thereof." That the possibility of such a burden in addition to the amount of the notes and interest thereon is not speculative or imaginary, is shown by the finding of the court that each of the seven mortgaged tracts was at the date of the contract assessed for taxation for less that the total of the first and second mortgages thereon. This finding is made in paragraph nine of the finding which the defendants ask to have stricken out. It is sustained by uncontradicted evidence coming in without objection, whereby it appears that the total assessment on the seven properties in October, 1920, was $46,800, while the mortgages to be assumed amounted to a total of $57,175, a difference of $10,375, on which the owners of the equity in the mortgaged realty would have to pay taxes on account of the provision above quoted.

Defendants further claim that the court erred in finding any actual misrepresentation in the facts as set forth in the contract of sale, in that the representations were true as far as they went, and that as to any facts which might appear concerning the purport of the mortgage notes not included in the representations, the burden was upon the plaintiffs to make inquiry and the doctrine of caveat emptor applies, "unless these clauses tend to vary the terms as described in the agreement." The case principally relied on by defendants is that of Feltenstein v. Ernst, 97 N.Y.S. 376, followed and approved in Feist v. Block,115 N.Y. App. Div. 211, 100 N.Y.S. 843, and in Baucher v.Stewart, 136 N.Y. App. Div. 844, 122 N.Y.S. 202, also cited by defendants. In the case first cited, the court held that "all the seller is required to do is to correctly describe the incumbrance so far as he attempts to describe it at all. If he does this and tenders a deed subject to a mortgage answering the description in the contract, he has fulfilled his obligation. . . . Undoubtedly the purchaser was entitled to rely upon the description of the mortgage in so far as the seller undertook to incorporate it in the contract, and if the amount has been found to be larger or the interest higher, or the due day earlier, a very different question would have been presented." To bring the defendants within the scope of these decisions, it must appear that the description of the mortgages as appears from the contract must be correct so far as it goes. This defendants do not accomplish, for the trial court has expressly found that the aggregate of the debts disclosed by the mortgages exceeds that stated in the contract by the sum of $500, and also that the notes were not payable as described in the contract as regards the period of time for which they were to run and the installments and amounts which were payable. Consequently the incumbrances were not correctly described so far as the attempt was made, and do not come within the ruling of the case cited, but rather fall within the terms later expressed by the court in that case, in that the amount of the debt is found to be larger, and some of the due dates earlier. So without passing upon the correctness of the rule laid down in the New York cases, we fail to see that defendants have brought their case within the rule.

The trial court further finds that plaintiffs had ground for nonperformance of the contract in that no mention was made in the contract of the tax clause appearing in the mortgage notes, and that this failure so to do constituted a material misrepresentation. Now if, as a matter of fact, it is the custom throughout the State, or in the vicinity of Hartford, to incorporate what is known as the tax clause in all mortgage notes, then such a clause might well have been in the minds of the plaintiffs when bargaining, and perhaps if they took no means, by inquiry of defendants or otherwise, to ascertain this fact as regards the mortgages in question, it is a fair assumption that they took for granted, or should have taken for granted, that the mortgage notes contained such a clause, and that they now cannot fairly claim that the omission to refer to it in the contract constituted a misrepresentation. The plaintiffs could have shown by proper evidence that such a clause was unusual in the locality of the contract, or the defendants might have introduced testimony to prove that it was usual in the State and in the vicinity. This was not done, and without a finding of fact in this regard, the record fails to give a basis, on which we may found a consideration of this feature of the case.

Another error assigned by the defendants relates to the rule of damages applied by the court. As we have seen, the court awarded damages covering the deposit of earnest money and the expenses incurred by plaintiffs in the examination of title and preparation of papers. This signifies that the plaintiffs claimed a breach of contract on the part of the defendants and that the former had chosen, therefore, to rescind the contract on account of the breach. The complaint is sufficient and adequate for such action by the trial court, as well as the facts by it found. The proper rule of damages was applied. 3 Sedgwick on Damages (9th Ed.) §§ 1012a, 1017; 17 Corpus Juris, 800, § 126(b). The reason of appeal by which defendants raise this question is that the proper rule of damages was the difference between the market value of the property to be sold and the contract price on day of sale, and this reason is supported in the brief by a claim that plaintiffs had elected to sue for damages for breach of contract. There is nothing in the finding of facts on which to base such a claim and it cannot be considered. What really occurred in this respect is shown in the transcript of the testimony, but that cannot be considered for want of a proper presentation of the case in the finding.

In addition to certain claimed corrections of the finding heretofore considered, there are several others which are the subject of error claimed by defendants. There is nothing in the evidence to warrant any change in the particulars mentioned.

There is no error.

In this opinion the other judges concurred.