Patterson v. . Meyerhofer , 204 N.Y. 96 ( 1912 )

On January 5, 1909, John W. Shorrock was the owner of five houses and lots that adjoined each other in the borough of Brooklyn, New York city. It is admitted that they were of equal value. They were covered by three mortgages aggregating $23,000 and the five lots were described therein as one parcel of land. An action was then pending for the foreclosure of the second of said three mortgages and the sale of the property described therein. Defendant and her husband, had talked with Shorrock about purchasing such houses and lots prior to that time. On or about January 5, 1909, Shorrock called at the house of the defendant, and she and her husband went with him to the office of the plaintiff and negotiations were had in regard to the purchase of some or all of said houses and lots. On that day the plaintiff prepared a written agreement to be executed by and between him and the defendant and her husband, in regard to the purchase of four of said five houses and lots for the sum of $23,000, and such proposed agreement stated in some detail the facts relating to the property and that one of the mortgages thereon was then being foreclosed and that the property would be offered for sale thereunder. Such proposed agreement was referred to the counsel of a trust company acting for the defendant and her husband, and he advised the defendant not to sign it because of its complexity and it was not executed.

An ordinary contract for the purchase and sale of real property was entered into by and between the plaintiff and the defendant without including therein the defendant's husband, which agreement is dated January 13, 1909, and in and by such agreement the plaintiff agreed to sell and the defendant to purchase four of said houses and lots specified for the sum of $23,000, to be paid as therein specified, and it was therein provided that the deed should be delivered March 16, 1909. The contract did not refer to nor did it include special agreements relating to the action to foreclose the mortgage then pending, nor as to the fact that the defendant was not at the time of making the contract the owner of the property. On February 19, 1909, judgment of foreclosure and sale was entered in the action and the property was advertised for sale under such judgment to take place on March 29, 1909. On March 11 the attorney for the trust company wrote to the defendant suggesting a postponement of the time for closing the title under the contract to March 30, and on March 13 a further letter saying that he had been obliged to further postpone closing the title to April 5. On March 15 the defendant wrote to such attorney protesting against such adjournments unless she was given security that the agreement would be carried out, and on March 26 she further wrote such attorney saying, "You needn't trouble yourself about the property any longer, as I considered the agreement void in my letter from the 15th of March." On March 29 the plaintiff and the defendant were both present at the sale. The defendant notified the plaintiff that she intended to bid on the property (the five houses and lots) to the amount of $28,000. The defendant bid thereon, and one or two bids were made by the plaintiff when bids were continued by the defendant and others until the property was struck off to the defendant for substantially $27,975. Plaintiff was acting solely for Shorrock, and in this opinion I am treating the plaintiff and Shorrock as one person. After making the contract upon which this action is brought, the plaintiff purchased the third outstanding mortgage upon said property. Shorrock, therefore, was entitled to the return to him through a surplus proceeding of every dollar that the plaintiff might bid on said property over and above the amount necessary to pay the mortgage then being foreclosed, and it was immaterial to him, therefore, how much over and above the amount of the mortgage being foreclosed the property was bid off for, providing it was bid off by or for Shorrock, except as it was necessary to pay the amount thereof upon the bid and to obtain a return thereof through a proceeding as provided by the Code of Civil Procedure. To make the defendant bid for the five houses and lots at at a price equal to $23,000 for the four houses and lots, it would have been necessary for the plaintiff to have required the defendant to bid thereon the sum of $28,750. A surplus proceeding was inevitable, because others than the defendant bid on said property more than $23,000, and it was quite foolish and without reason for the plaintiff to have failed to make the defendant bid thereon the amount of $28,000 or an amount in excess thereof, at least up to $28,750. He allowed the defendant to bid off the whole property, as I have stated, for substantially $27,975, when a further bid of $25 would have resulted in the purchase of the whole property and enabled him to fulfill his contract with the defendant, and the additional $25 would have been returned to Shorrock in the inevitable surplus proceeding. The plaintiff testified: "I could not say how much I would have to pay for the property, but I was prepared to bid it in up to any sum necessary." And he also testified: "I intended to bid when she got up to $28,000." He did not do so, however. Why he did not carry out his intention does not appear. He now brings this action, assuming and insisting that the defendant is bound by all of the special agreements included in the proposed contract prepared by the plaintiff to be executed by him and by the defendant and her husband. That contract was not executed either by the defendant or her husband; it was merged in the agreement of January 13, and the court in this action found "That no agreement exists that refers to the transaction other than the contract aforementioned. (Contract of January 13.)" The facts stated in this opinion are found by the trial court or may be properly considered in the record in determining the appellant's contention as to whether proposed findings by him were properly ruled upon by the court. It is alleged in the complaint in substance that before the execution of the agreement of January 13 it was orally agreed between the parties hereto that the plaintiff should, on the sale under said foreclosure action, purchase said five lots with the houses thereon and have the same conveyed to the defendant, and that he would thereupon convey to the defendant the four lots with the houses thereon specifically described in the complaint, and retain the other of said five houses and lots for the benefit of Shorrock.

This action is brought to compel the defendant to "convey by deed to this plaintiff all of the premises purchased by her at said foreclosure sale, excepting the four parcels mentioned and described in the said contract, and that she also pay to the plaintiff the sum of $620.00 with interest from March 29th, 1909, damages sustained by plaintiff as aforesaid, and that plaintiff has a lien therefor upon the premises purchased by the defendant at foreclosure sale aforesaid and declaring that defendant holds the same and her bid and purchase thereof in trust for this plaintiff and for the purpose of and subject to the said contract."

The action is based upon the claim that the defendant in purchasing the property at the foreclosure sale was acting for the plaintiff and that she holds it as trustee for him. No privity of contract relating to the fifth house and lot is shown. I am of the opinion that no relation of trust of any kind was established. The defendant not only bid upon the property in opposition to the plaintiff but openly declared her purpose to bid thereon for herself to a specified amount, while the plaintiff with full knowledge of her purpose stood in unnecessary acquiescence in the defendant's thus becoming a successful bidder for the property for an amount less than the maximum amount for which she would bid.

The contract of January 13 is the basis of the rights of the parties. Any action between the parties must be upon that contract. It may be assumed that the defendant is precluded by her acts from sustaining any action against the plaintiff for his non-performance of the contract. Whether the plaintiff can sustain an action at law upon the contract under the circumstances disclosed it is unnecessary to determine. The action brought is not one for damages under the contract nor for damages by reason of the defendant's fraud and wrongdoing.

The complaint is essentially one in equity. There is nothing in it relating to damages except as an incident to the equitable relief. The plaintiff is a member of the bar and he and his counsel have consistently treated the action as one in equity. It was placed upon the Special Term calendar and tried at the Special Term. If the plaintiff at the Special Term when he found that the complaint was to be dismissed because of his failure to establish a trust relation had asserted his claim to recover as in an action at law or asked that the case be sent to the Trial Term he would now stand in a very different position, but no such suggestion was made at Special Term, and there has been no suggestion either at the Appellate Division or in this court that the action is one other than an action in equity triable at Special Term. The appellant continues to insist in this court that he has proved a cause of action in equity and that he is entitled to a judgment following his pleading and demand at Special Term. It is not urged nor asserted in this court that the judgment should be reversed because the plaintiff is entitled to relief as in an action at law. The necessity of requiring that a person shall be reasonably bound to the terms and demands of his pleading makes it necessary to recognize the distinction between an action at law and an action in equity although both forms of actions are within the jurisdiction of the same court. This court has recently held that if a party brings an equitable action even now when the same court administers both systems of law and equity the party must maintain his equitable action upon equitable grounds or fail, even though he may prove a good cause of action at law. (Loeb v. Supreme Lodge, Royal Arcanum,198 N.Y. 180.) There was a dissent by three of the judges in that case, but the conclusion of the dissenting judges was expressed by Judge HAIGHT as follows: "When the trial court became satisfied that the plaintiffs had abandoned the equitable issue raised by the pleadings and rested upon the issue that the assessment had been duly tendered and that Loeb was not in default the trial should have been suspended and the issue sent to the trial term of the court to be disposed of by a jury and that the plaintiffs should not have been turned out of court by having their complaint dismissed." (p. 193.)

In this case the plaintiff has never urged nor even asserted by pleading or otherwise that he could recover as in an action at law, and no such demand or claim is made in this court.

I think that the complaint was properly dismissed and the judgment should be affirmed, with costs.

CULLEN, Ch. J., VANN and WERNER, JJ., concur with WILLARD BARTLETT, J.; HISCOCK and COLLIN, JJ., concur with CHASE, J.

Judgments reversed, etc.