Case ID: ad_159/html/0351-01.html
Source: Caselaw Access Project
Author: {"author": "\n      McLaughlin, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Julia Tanzer, Respondent, v. Bankers' Land and Mortgage Corporation and Others, Appellants.
    First Department,
    December 5, 1913.
    Vendor and purchaser — action for breach of contract to convey — sale by vendor after execution of contract to convey to another party — duty of vendor under executory contract to convey.
    In an action for breach of a contract made by a corporation to convey property, it appeared that the defendant had but two stockholders, each owning one-half of the stock; that they determined to dissolve the corporation and continue business as a partnership, and, prior to the dissolution, conveyed by full covenant warranty deed the land covered by the contract in question to one of the stockholders and the sister of the other, for the purpose of facilitating the conveyance under the contract; that the contract provided for the payment of certain installments and the balance upon the delivery of a full covenant warranty deed, and that at the time when the deed was to be delivered to the plaintiff, the grantees of the corporation prepared the same in compliance with the provisions of the contract and requested that the plaintiff pay the balance of installments due, and upon her refusal notice was given that the vendor elected to terminate the contract.
    Held, that the conveyance by the corporation did not constitute a breach of the contract, and that the complaint should be dismissed.
    One who enters into an executory contract for the sale and conveyance of land fulfills his obligations thereunder if, at the date fixed for the delivery of the deed, he is able and willing to convey a marketable title, and this irrespective of the question whether he had title at the time the contract was executed.
    Appeal by the defendants, Bankers’ Land and Mortgage Corporation and others, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 11th day of February, 1913, upon the verdict of a jury rendered by direction of the court, and also from an order entered in said clerk’s office on the 14th day of February, 1913, denying the defendants’ motion for a new trial made upon the minutes.
    
      Charles F. Brown, for the appellants.
    
      Raphael Link, for the respondent.
   McLaughlin, J.:

Action to recover damages for an alleged breach of contract dated April 16, 1906, by which the Bankers’ Land and Mortgage Corporation agreed to convey certain real estate to the plaintiff and her husband, Jacob Tanzer.

The complaint alleged a breach of the contract in that the corporation fraudulently and in bad faith conveyed- the property to J. Parker Sloane and Louise M. Higham. The defense was that this conveyance was not made in repudiation of the contract with plaintiff and her husband, but with full recognition of their rights thereunder, and that Mr. Sloane and Mrs. Higham held the property for their benefit and were able, ready and willing to perform. By the terms of the contract, which was annexed to and made a part of the complaint, the mortgage corporation agreed to sell and convey to the plaintiff and her husband, and they agreed to purchase the land described therein for the sum $4,485. The purchase money was to be paid in installments, $500 upon the execution of the contract, $500 within six months thereafter and from that time $30 monthly for five years, at the end of which the balance was to be paid and a full covenant warranty deed given.

At the trial it appeared that the vendees did not make the payments as provided in the contract, andón the 16th of April, 1911, the day when, by the terms of the contract, the balance of the purchase price was to be paid and the deed delivered, there were due from the vendees installments amounting to $1,685. It also appeared that the mortgage corporation had but two stockholders, the defendants Sloane and Sicard, each of whom owned fifty per cent of its capital stock; that in November, 1909, they determined to, and on the eighteenth of that month did, dissolve the corporation and thereafter continued the same business as a partnership. On the day of, but prior to, the dissolution of the corporation, it conveyed, by full covenant warranty deed, the land covered by the contract with the plaintiff and her husband to Mr. Sloane and Mrs. Higham, Mr. Sicard’s sister. The conveyance was made to them for the purpose of facilitating the conveyance under the contract in question. On the 16th of April, 1911, the day fixed for the closing of the contract, Sloane and Sicard had a deed executed by Sloane and Mrs. Higham, which complied in all respects with the provisions of the contract, ready to be delivered to the plaintiff. Her son, who transacted the business for her, was notified of that fact and a request made that the balance of the purchase money, or at least a substantial part thereof, should be paid. No further payments were made, and on the 2d of May, 1911, notice was given to the plaintiff to the effect that the vendor elected to terminate the contract. Neither party did anything thereafter until February, 1912, when this action was commenced.

The trial court held, upon the foregoing facts, that the conveyance by the corporation to Mr. Sloane and Mrs. Higham of the land covered by the contract gave the plaintiff the right to rescind the contract and recover back the moneys paid thereon, together with interest from the date of each payment, and he directed a verdict in favor of plaintiff for this amount. The defendants appeal from the judgment entered thereon and an order denying a motion for a new trial.

I am of the opinion that the court erred in directing a verdict in favor of the plaintiff. Upon the undisputed facts she was not entitled to recover and her complaint should have been dismissed. There had been no breach of the contract upon the part of the vendor. By the terms of the contract all the covenants on the part of the plaintiff for the payment of the installments of the purchase money, except the last, were independent, and had an action been brought against her to recover them, the fact that the vendor did not have title to the land would not have constituted a defense. (Harrington v. Higgins, 17 Wend. 376; Camp v. Morse, 5 Den. 161; Robb v. Montgomery, 20 Johns. 15; Wamsley v. Horton & Co., 77 Hun, 317; Dresel v. Jordan, 104 Mass. 407.) It was not until the 16th of April, 1911, when the last payment became due, that it and the delivery of the deed became dependent acts. (Beecher v. Conradt, 13 N. Y. 108; Eddy v. Davis, 116 id. 247.) The vendor, therefore, owed the vendee no duty under the contract except to convey, at the time fixed for closing, a marketable title to the land described. He was obligated to do this only upon full payment of the purchase money and he could not he put in default unless such money were paid or tendered and a deed demanded. The rule is well settled that one who enters into an executory contract for the sale and conveyance of land fulfills his obligations thereunder if, at the date fixed for the delivery of the deed, he is able and willing to convey a marketable title, and this irrespective of the question whether he had title at the time the contract was executed, or at any time thereafter. (Harrington v. Higgins, supra; Robb v. Montgomery, supra.) The conveyance by the mortgage corporation did not constitute a ground for rescission because such conveyance was made in recognition, and not in repudiation of the contract with the plaintiff. (Robb v. Montgomery, supra; Greenby v. Cheevers, 9 Johns. 126; Eddy v. Davis, supra; Hawley v. Keeler, 53 N. Y. 121; Joyce v. Shafer, 97 Cal. 335; Shively v. Semi-Tropic Land & Water Co., 99 id. 259; Garberino v. Roberts, 109 id. 125.)

In Robb v. Montgomery (supra) the action was to recover installments similar to those specified in the contract under consideration. The defense was that before the time fixed for the payment of the first installment the plaintiff conveyed the land in fee simple to one Bemis, and assigned the contract to him, which the defendant alleged disabled the plaintiff from performing his agreement. To this the plaintiff replied, to the effect that when the first payment became due Bemis was able, ready and willing to convey in accordance with the terms of the contract. A demurrer was interposed to the reply and in disposing of the same the court said: “In the view of a court of equity Bemis' was a mere trustee for the performance of the contract. Under the facts in the case he might be compelled to execute a deed to the defendant when the latter entitled himself to one, by the payment of the purchase money. And if the plaintiff’s personal warranty was a valuable part of the contract, he had not disabled himself from uniting with Bemis in a warranty deed.”

In the present case, when the mortgage corporation conveyed to Sloane and Higham, and they accepted the conveyance subject to the contract with the plaintiff and her husband, and in recognition of their rights thereunder, they thereupon became trustees for the performance of the contract. Had they refused to perform, the balance of the purchase price being paid or tendered, there can be no doubt that a court of equity could compel them to do so.

It is urged that under the contract plaintiff is entitled to a full covenant warranty deed from the corporation, which cannot now be given by reason of its dissolution. The dissolution of the corporation was of no importance. It represented, at most, only Sloane and Sicard. They were, in fact, the corporation, since they owned all the capital stock. While the legal title, prior to the conveyance, was in the corporation, Sloane and Sicard were the beneficial owners and when they dissolved it they thereupon became trustees for the creditors and stockholders and had power under the statute to wind up its business and affairs, and carry out its contracts. The statute expressly provides that when a corporation is dissolved, it, nevertheless, shall continue in existence for the purpose of discharging any existing debts or obligations, and doing all other acts required in order to adjust and wind up its business and affairs. (Gen. Corp. Law [Consol. Laws, chap. 23; Laws of 1909, chap. 28], § 221, subds. 2, 3.)

Besides, as we have seen, the corporation conveyed by a full covenant warranty deed and had plaintiff performed on her part and accepted the deed tendered, the covenant of the corporation would have inured to her benefit. A covenant of warranty of title runs with the land and the maker maybe sued by a subsequent grantee, however remote, who has been injured by the breach thereof. (Geiszler v. De Graaf, 166 N. Y. 339; Beddoe’s Executor v. Wadsworth, 21 Wend. 120; Hunt v. Hay, 156 App. Div. 138.)

My conclusion, therefore, is that since the plaintiff, at the time the action was commenced was in default, she could not rescind the contract without tendering the payment of the purchase money then due. This she did not do and, therefore, as already said, defendants’ motion for the direction of a verdict in their favor should have been granted and the complaint dismissed. This, I think, we can now do under section 1317 of the Code of Civil Procedure, as amended by chapter 380 of the Laws of 1912.

The judgment and order appealed from are, therefore, reversed, with costs, and judgment dismissing complaint directed, with costs.

Ingraham, P. J., Laughlin, Clarke and Scott, JJ., concurred.

Judgment and order reversed, with costs, and complaint dismissed, with costs.