Hayden v. Pinchot , 158 N.Y.S. 215 ( 1916 )

McLaughlin, J.:

On January 31, 1913, the appellant entered into a contract with respondents to purchase from them for $125,000 certain real estate in the city of Hew York — the respondents agreeing to convey “free from all encumbrance.” Two thousand five hundred dollars of the purchase price was paid at the time the contract was executed and the balance agreed to be paid on the third of March following — the date set for closing the transaction — when the deed was to be delivered. On that day the respondents tendered to the appellant a deed, which he refused to accept on the ground that there was an incumbrance upon the property. The alleged incumbrance consisted of a party wall agreement between the mother and predecessor in title of the respondents, and third parties by the name of Dinsmore, who owned adjoining property. This agreement provided, in substance, that as the Dinsmores were about to erect a building on their property they might extend, at their own expense, the party wall then existing between the two lots, and if in the future the respondents’ mother should use the extension so to be erected she should pay to them, for such use, a sum to be fixed as provided in the agreement. It was further provided that the agreement should £ ‘ bind and run to the benefit of the heirs, executors, administrators and assigns of all the parties ” thereto. It is not claimed that the appellant knew of the existence of this agreement until the time fixed for the closing of the title, when that fact was disclosed by a search made by a title company. This fact having been disclosed, the appellant refused to complete the 'contract by paying the balance of the purchase price, on the ground that the agreement was an incumbrance and that the respondents could not give good title. Thereupon this action was brought to recover the damages alleged to have been sustained by such refusal to perform. The answer alleged that the respondents could not give good title, by reason of the agreement referred to, and set up as a counterclaim the $2,500 paid, for which a recovery was asked. At the conclusion of the trial — both parties having moved for the direction of a verdict—it was stipulated that a verdict might be directed in the absence of the jury with the same force and effect as if present, and that the damages to which the respective parties might be entitled be assessed by the court. The court directed a verdict in favor of the respondents for $3,515.17, upon which judgment was entered, and from which this appeal is taken.

The principal question presented on the appeal is whether the agreement relating to the party wall constituted an incumbrance and prevented the respondents from conveying good title. I am of the opinion that it did not. A party wall agreement, such as the one here involved, does not create a privity of estate or constitute an incumbrance upon the land, but at most is a personal covenant. (Crawford v. Krollpfeiffer, 195 N. Y. 185; Sebald v. Mulholland, 155 id. 455; Scott v. McMillan, 76 id. 141; Cole v. Hughes, 54 id. 444; Schwenker v. Picken, 91 App. Div. 367.) The rule seems to be different where the agreement does not contemplate the present construction of a party wall, but authorizes its construction by either party in the future. In that case the covenant is said to create a privity of estate and to run with and be binding upon the land. (Sebald v. Mulholland, supra; Mott v. Oppenheimer, 135 N. Y. 312; Crawford v. Krollpfeiffer, 122 App. Div. 848.) The agreement here -under consideration does not come within the exception, because it appears that it contemplated an extension at once of a party wall then in existence.

The authorities cited by the appellant have not been overlooked. They are distinguishable from the present case, and besides, Bedell v. Kennedy (38 Hun, 510) and Guentzer v. Juch (51 id. 397) seem to be contrary to the rule laid down by the Court of Appeals in Crawford v. Krollpfeiffer (supra) and Sebald v. Mulholland (supra).

My conclusion, therefore, is that the party-wall agreement could not be enforced against the appellant or his grantee and hence did not constitute an incumbrance, nor render the title unmarketable. If this be correct, then the appellant was not justified in refusing to take title.

But it is said the court adopted an improper measure of

damage. The amount of such damage was made up of the following items:

(a) The difference between the contract price and the

market value of the land at the time the contract was broken.......................... $2,500 00

(b) Taxes paid by the respondents intermediate the

breach of the contract and a resale of the land. 1,086 00

(c) The amount paid for broker’s commission on

the resale.................................. 1,000 00

(d) Interest on $122,500, the balance of the purchase

price, from the date the contract was broken

to the date of a resale...................... 1,429 17

$6,015 17

Less the amount paid by the appellant at the time the contract was executed................... 2,500 00

- Leaving due the plaintiffs...................... $3,515 17

The proof as to the market value of the land at the time the contract was broken was conflicting. The court found the market value to be $122,500. Such finding cannot be said to be against the weight of evidence and, therefore, the difference between that sum and the contract price was the proper measure of damage. The rule seems to be well settled that the measure of damages for the breach of a contract by the vendee is the difference between the contract price and the market' value of the property at the time of the breach. (Schmaltz v. Weed, 27 App. Div. 309; Bensinger v. Erhardt, 74 id. 169; Kuntz v. Schnugg, 99 id. 191.)

The other items—taxes, broker’s commission and interest — were not a part of the plaintiffs’ damage and were erroneously allowed as such. When the contract was broken, the respondents could have brought an action (1) for specific performance; or (2) to recover damages for the breach of the contract. (Smyth v. Sturges, 108 N. Y. 495; Schmaltz v. Weed, 27 App. Div. 309; Prichard v. Mulhall, 127 Iowa, 515, and authorities cited.) They, however, elected to retain the title to the land and bring this action to recover damages. The taxes, commission and interest were paid or accrued after the contract was broken and cannot, under any authority of which I am aware, be held to be damages occasioned by such breach for which appellant is liable.

But it is urged by the respondents that the appellant should not have been credited with the $2,500 paid by him when the contract was executed; and in the event of a modification of the judgment this alleged error should be corrected. It is true there are authorities to the effect that a vendee who has broken a contract to purchase real estate cannot recover from the vendor payments made on account of the purchase price. (Higgins v. Eagleton, 155 N. Y. 466; Ziehen v. Smith, 148 id. 558; Lawrence v. Miller, 86 id. 131; Levy v. Hill, 70 App. Div. 95; affd., 174 N. Y. 536.) These authorities are not in point. They are simply to the effect that a party who has broken his contract is not in a position to recover what he has paid, and it is for this reason the appellant was not entitled to recover on his counterclaim. But that is not this case. Here, the vendor asks that he be paid the damage which he sustained by reason of the vendee’s breach. The vendee is not recovering anything; on the contrary, the vendor is recovering what the court found the damage to be. Such damage, as already indicated, is the difference between the contract price and the market value of the land at the time the contract was broken. If the vendor has already received part of the purchase price, the sum thus paid must be deducted from the amount of damages awarded. While I have been unable to find any authority in this State bearing directly upon the point, this must be so in principle, and there are several authorities to that effect in other jurisdictions. (Ockenden v. Henly, El., Bl. & El. 485; 120 Eng. Rep. Reprint, 49 K. B. 590; Curtis v. Aspinwall, 114 Mass. 187; Allen v. Mohn, 86 Mich. 328; Prichard v. Mulhall, 127 Iowa, 545.) The rule is tersely, and I think correctly, stated in the head note to Prichard v. Mulhall (supra) as follows: “A vendor’s measure of damages for breach of a contract, where he retains the title to the land, is the difference between the contract price of the land and its market value at the time of the breach less any portion of the purchase price already paid.”

If the foregoing views be correct, then it follows that the judgment appealed from should be modified by reducing the verdict to one for nominal damages, and as thus modified affirmed, with costs to the appellant.

Clarke, P. J., Dowling, Smith and Davis, JJ., concurred.

Judgment modified as directed in opinion, and as modified affirmed, with costs to appellant. Order to be settled on notice.