Case ID: ny-super-ct_37/html/0057-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court.—Speir, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

MARY E. LOUNSBURY, Plaintiff and Appellant, v. ORLANDO B. POTTER, Defendant and Respondent.
    The plaintiff and defendant entered into an agreement in writing, dated June 3,1871, for the purchase and sale of certain lots of land on Eleventh-avenue and One-Hundred-and-Twenty-Seventh and One„-Huñdred-and-Twenty-Eighth-streets, in New York city, by the terms of which plaintiff was to deliver to defendant a deed in sixty ■ days from date of agreement. The deed was to be delivered on August 3, 1871, and the property was to be sold “free from all incumbrances." When the parties met to pass the title the defendant claimed that there was an assessment on the property for opening Riverside Park, amounting to one thousand six hundred and seventy dollars. Plaintiff denied her obligation under the contract to pay the same, and an adjournment was had. At the adjourned meeting plaintiff delivered deed, and defendant retained from the purchase money one thousand six hundred and seventy dollars.
    It appears from the papers that previous to the delivery of the deed there was no question raised as to the actual existence of the as- • sessment or lien, or as to its validity.
    Between the date of the contract and the passing of title the supreme court had made two orders, dated July 11, and July 21, 1871, respectively, purporting to confirm the report of Riverside Park commissioners, and consequently the assessment of one thousand six hundred and seventy dollars appeared upon the face of the title bri August 7, when the deed was to be delivered. Under these circumstances plaintiff delivered the deed, and defendant retained one thousand six hundred and seventy dollars, for the purpose^qf liquidating the supposed lien.
    Subsequently the orders above referred to were vacated, reversed and set aside by the general term of the supreme court, and new commissioners of assessment and-award in the Riverside Park matter appointed. Defendant, when he went to pay the supposed assessment of one thousand six hundred and seventy dollars, learned that it had been set aside, and did not pay the same.
    About a year after the appointment of the new commissioners they made their report, which was confirmed August 22, 1872. They assessed the property in question for two thousand one hundred and ninety dollars, and the defendant, owning the property at that time, paid the assessment.
    Plaintiff brings this action for money had and received by defendant, and seeks to recover the sum of one thousand six hundred and seventy dollars, the amount-retained from the purchase money to pay, what was supposed by the parties to have been an existing lien and incumbrance.
    
      Held l>y the court. The defendant received the money in question as security for; himself against loss, which might occur to him, by reason 1 of a debt of the plaintiff, being enforced as a lien against the property, about to be transferred to him by the plaintiff pursuant to the contract.
    The case is the ordinary one of a purchaser of real estate receiving money to pay a Ren for taxes or a judgment, which appears in the record, as a Ren against the property of the seller and received on the understanding between the parties, and the implied promise in law, on the part of the purchaser, to return the money to the seller, in case it appeared that there was no such lien, and the money paid to, or received by, the purchaser, for the payment of the lien, should not be paid by him.
    The extinguishment or cancellation of this lien, and the admitted fact that the purchaser never paid the assessment, and could not pay it, because of such extinguishment, gives to the purchaser the right to recover the amount paid to, or reserved by, the purchaser on account thereof.
    Upon another view of the case considered by the court, there was never a lien on these premises for the said one thousand sic hundred and seventy dollars. If the parties supposed there was, it was a mistake of fact. The defendant has obtained the plaintiff’s money without consideration, and not as a gift, but under a mistake.
    For a full review of the law and proceedings in the matter of assessments in New York for public improvements, and the cases relating thereto, see the opinion of the court.
    Before Freedman, Curtis and Speir, JJ.
    
      Decided January 31, 1874.
    The plaintiff brings this action for money had and received by the defendant. The referee gave judgment for defendant. The plaintiff appeals from the judgment.
    The parties on June 2, 1871, entered into a contract for the purchase and sale of the premises in question. The purchase money was twenty-five thousand dollars, and the deed was to be delivered in sixty days after the date of the contract. The parties met to pass the title, and the plaintiff was informed that there was an assesment on the property for opening Riverside Park, amounting to one thousand six hundred and seventy dollars. She denied her obligation under the contract to pay the amount, and an adjournment was had. At an adjourned meeting the deed was delivered, and the defendant retained from the purchase money the amount of the assessment.
    Between the date of the contract and the passing the title, the supreme court had made two orders dated July 11 and July 21, 1871, respectively, purporting to confirm the report of the Riverside commissioners, and consequently the assessment of one thousand six hundred and seventy dollars appeared on the face of the title August 7, when the deed was to be de-. livered.
    Subsequently the orders above referred to were vacated by the general term of' the supreme court, and new commissioners of assessment and award were appointed. When the defendant went to pay the supposed a ssessment, he ascertained that it had been set aside, and he did not pay it. The new commissioners made their report, which was confirmed August 22, 1872. The property was assessed at two thousand one hundred and ninety dollars, and the defendant, then being owner, paid the amount.
    When the parties met to pass the title they made the following memorandum:
    11 Amount of purchase money, $25,000.00
    “ Paid in cash at signing agreement, $500.00 “Amount of mortgage. .$15,150.00 ‘1 Interest from March 14,
    1871, to Aug. 3, 1871... 409.34
    --$15,559.34
    “ Assessment opening
    Riverside Park...... 1,670.00
    “Assessment opening
    127th street.......... 1,150.00
    “Allowed for land..... 180.00
    - $3,000.00 19,059.34
    “Cash to balance....... 5,941.34
    $25,000.00 $5,940.66 “ Settled according to this statement.
    O. B. Potter.
    Mary C. Louxsbuey.”
    The chief question in the case mainly depends upon the legal effect of the above . memorandum. The learned referee views it as an agreement whereby the gum of one thousand six hundred and seventy dollars —the Riverside assessment—was to be deducted from the purchase money and retained by the defendant, to discharge the assessment, and that he was entitled to hold that sum even though the lien had been otherwise discharged.
    This item of one thousand six hundred and seventy dollars—Riverside assessment—is the only matter in dispute between the parties. At the time of closing the contract of sale and purchase, they believed that this assessment was a lien on the premises, and that it belonged to the plaintiff to remove by paying the amount. She testifies that she left the money in defendant’s hands and he agreed to pay it. He admits that he went to pay it, and learned that the lien was vacated and there was to be a new assesment—that the plaintiff conveyed to him by deed all that she contracted for by the contract except the piece of land which was allowed for by the one hunred and eighty dollars—bound by the contract he agreed to take the conveyance according to the contract—that the assessment of one thousand six hundred and seventy dollars was on the property when the deed passed, and he supposed it was a valid assessment at that time.
    
      E. T. & G. G. Hull, for appellant, argued as follows :—I.
    The defendant received the one thousand six hundred and seventy dollars as agent of plaintiff, to apply the same to the extinguishment of the plaintiff’s supposed debt. This was plaintiff’s debt. It was her business to remove liens from the property. She constituted the defendant her agent for that purpose. The one thousand six hundred and seventy dollars was plaintiff’s money received by defendant. The defendant received the money in question as security against any loss which might come to him by reason of a debt of the plaintiff’s being enforced as a lien against the property about to be transferred to'him by the plaintiff. He received it just as he would have received the amount of any judgment or mechanic’s lien which appeared of record against the seller and as a lien against the property, and on the same understanding or implied promise in law to return it to the seller upon the production of a satisfaction-piece.
    II. ' The supposed debt or lien which the money in suit was to be applied upon was canceled and satisfied otherwise than by payment of the moneys set apart for the purpose. The general term “reversed, set aside and vacated” the orders purporting to confirm the assessment. It is the order confirming the report of the commissioners which makes an assessment a lien (Act of April 20, 1839; Laws of 1858, ch. 338, p. 574; 1 Wend. 262). If the lien was extinguished by the action of the general term, it is immaterial to inquire for what reason it was extinguished, whether for mistake of law or mistake of fact in the proceedings. It is the extinguishment of the lien which gives the plaintiff right to recover in this action.
    III. The defendant did not pay the one thousand sand six hundred and seventy dollars lien ; and if that lien was extinguished by the court, then it follows that the defendant can never pay it, and the money must revert to the plaintiff.
    IY. But if, as defendant claims, the one thousand six hundred and seventy dollars was allowed to him from the purchase money, if it was a reduction from the purchase money, if he received it in settlement of the alleged lien, then we claim on behalf of the plaintiff that the money was paid by mistake of fact, that there never was a lien or assessment upon the premises for one thousand six hundred and seventy dollars, or for any other sum, for opening Riverside Park, prior to August 22, 1872. The report -of the commissioners never was confirmed; the orders of July 11 and July 21 do not confirm it. There can be but otie order of confirmation. The court must confirm reports, or send them back for correction. This may be repeated until a report shall be made or returned in the premises which the said court shall confirm ; and such report, when so confirmed by the court, shall be final and conclusive. The court cannot confirm a report by piecemeal (Laws of 1813, § 178). The order of July 11 is not final, as it referred back part of the report. The order of July 21 supports this view, and shows that the court considered that the order of confirmation. Proceedings subsequent to the order of July 11 are all unconstitutional, irregular and void. The order of July 21 founded upon them is of no effect. The court cannot correct alleged errors, but must refer the report back to the commissioners for revisal (Laws of 1813, § 178; Laws of 1839, § 210; Laws of 1862, p. 966; Riverside Park Case, 4 Lans. 467). The court can lay down principles for the guidance of the commissioners, but cannot make corrections directly (see opinion of Brady, J., in Morning Side Park Case, 10 Abb. Pr. N. S. 338;. The supplemental report being signed by only two commissioners, is void (Art. 1, § 7, Constitution of 1846). Compensation “ shall be as ascertained by a jury, or not less than three commissioners'.”. The commissioners are a jury, and are governed by the same rules as a jury. They must all agree and unite in the report. Decisions declaring valid acts of only two commissioners are all prior to the constitution of 1846. It follows that there never was a lien on the premises for the one thousand six hundred and seventy dollars. If the parties supposed there was a lien on the premises, it was a mistake of fact (Gardner v. Mayor, &c. of Troy, 26 Barb. 428; Fleetwood v. City of New York, 2 Sandf. 475).
    Y. The defendants cannot retain the one thousand six hundred and seventy dollars to pay the assessment confirmed August 22, 1872. He received the title free and clear of incumbrances. He could not recover the amount of the assessment of August, 1872, in an action against plaintiff for a breach of covenant against incumbrances.
    VI. A conclusion that moneys agreed to be applied to a particular assessment may, if the particular assessment is vacated and one for a larger sum imposed, be applied to payment of the latter, is bad on its face.
    
      Frederick E. Betts-, for respondent, argued I.
    This action is one for money, alleged to have -been had and received by the defendant to the use of the plaintiff. The question is, does the law in the absence of any express promise to pay the money to plaintiff [because no. contingency was contemplated by which it could be payable] imply from the circumstances of the case a promise where none in fact exists. The only possible ground for a recovery which has been suggested by the plaintiff’s counsel is, that the money was paid by plaintiff to defendant by mistake. That both parties acted on the supposition that the assessment, the amount of which was deducted, was a valid assessment, and it having been subsequently set aside, the amount of it should be refunded. The theory is, that the original assessment of one thousand six hundred and seventy dollars was an entire nullity, and that fact appearing by the reversal of the order confirming it, an obligation to pay. the amount of it was created. This theory cannot be sustained. That the original assessment was not a nullity, is conclusively shown by the fact that the costs and expenses of laying it were treated as legitimately incurred, and were collected in the subsequent part of the proceedings. 1STo new petition for the appointment of commissioners was filed, but the new commissioners were appointed in the same proceedings (See Act of 1813, § 178, cited in Report, 12 
      Rev. Stat. 408). The office of the new commissioners was simply to correct the mistakes of law of their predecessors and to re-compute the amount due from each landowner. If the plaintiff depends as a basis for recovery upon the fact that the old amount assessed, i. e., one thousand six hundred and seventy dollars, was a nullity, she must prove it as part of her case. She has not done so; on the contrary, the proof all tends to show that the original assessment was not a nullity, but that the proceedings were valid, and the method of computation and apportionment only was erroneous. Again, if the plaintiff relies upon the fact that the one thousand six hundred and seventy dollars was deducted by defendant and retained by him by mistake, if so, it is. part of his case to prove that that mistake was a mistake of fact and not a mistake of law. The former only would form any ground for recovery. Mistake of law cannot be made a basis of claim. If the assessment was not void ah initio but only erroneous by reason of an error in law as to certain property liable-to assessment, then any mistake of the parties as to the validity of the assessment was a mistake of law. only (Lyon v. Richmond, 2 Johns. Ch. 51, 60 : see especially Jacobs v. Morange, 47 N. Y. 57, 59). The burden is upon the plaintiff to show mistake of' fact.
    II. At the time the title passed the parties made a written agreement deducting one thousand six hundred, and seventy dollars from the purchase price by reason of the existence of the assessment. The words of this agreement were '•'■settled according to this statement.” The plaintiff seeks to add to this written agreement an implied clause, to read to this effect, “ Settled, &c., &c.;” “but if said assessment shall be vacated, then this matter shall not be settled, but the said O. B. Potter shall repay one thousand six hundred and seventy dollars.” The word “settled” signified that between the parties, that matter had an end. This action seeks to break up a “settlement.” The plaintiff ought not to interpolate into the agreement of settlement a clause which contradicts it.
    III. There was no “ mistake” made by the parties which justifies setting aside their deliberate settlement. To justify the setting aside of a transaction on the ground of mistake, it must appear that the party asking the interposition of the court would have acted otherwise had the facts been known. In this present case it appears by the testimony of the plaintiff herself that, though she wholly denied her liability for the assessment, valid or invalid, yet that she consented that the amount of it should be deducted, because she was obliged, owing to other arrangements, to carry the sale through. Though she wholly denied her liability, yet she consented to the reduction, without regard to the question of the validity of the assessment, because she wanted the balance of the money. Suppose it had then been known that the facts would be what they now are, viz: that, that particular computation of the assessment would be set aside and a larger one made, she at least would not have acted differently. The defendant doubtless might have demurred, but he asks no relief. There was entire mutuality between the parties at the time the deduction was made. The plaintiff by the deduction secured the carrying out of an agreement which would have otherwise failed, and she received the balance due her, which was all she expected. .The defendant retained an amount to meet an existing lien. He, the defendant, is the only person who is prejudiced by the subsequent proceedings, but he does not complain. Why then, can the plaintiff be heard, who has received all the money and obtained all the benefit she expected by her agreement of settlement ? Where mutuality exists at the time of inception of the contract, no subsequent changes can destroy the contract (Walton v. Carlson, 1 McLean, 120; citing Bugden on Vend. 194 ; Attorney- General v. Growen, 1 Ves. 218; 10 Ves. Jr. 315.
    IY. The assessment of one thousand six hundred and seventy dollars was, on August 3, 1871, an “incumbrance,” unless the proceedings by which it was" imposed was an entire nullity. As we have already seen, they were not a nullity, but were continued, and culminated in a larger assessment. The assessment of one thousand six hundred and seventy dollars was then, on August 3, 1871, “an incumbrance;” and the plaintiff having covenanted to deed her property “free from all incumbrance,” how can the very act by which her agreement was discharged preate a supplementary obligation on the part of the defendant to repay the sum because the incumbrance was subsequently removed.
    Y. Again: this action being for money had and received, is one which only prevails when, ex cequo et bono, it ought to prevail. Anything which renders it equitable for the defendant to retain the "money will prevent a recovery (2 Den. 91; Cow. Tr. § 305; Roth v. Schloss, 6 Barb. 312). o This rule has been applied in such cases as the following: An execution was issued in one county on a judgment docketed in another ; the defendant paid the money to the sheriff under the void execution. Held, he could not recover it back, because, though execution was void, the amount-was. due (6 Barb. 308). In the present case the particular amount computed as the assessment was erroneously assessed, not because some amount was not due, but because, owing to non-assessable property having been assessed, the amount of one thousand six hundred and seventy dollars, assessed on premises in question, was too small. The reversal of the order confirming the assessment was for" no defect that exempted the premises in question, or diminished their liability; on the contrary, the amount was increased. The plaintiff having received all the benefit she expected from the settlement, and the defendant having been not a gainer but a loser by the reversal of the order of confirmation, it is inequitable to still further mulct him for the same cause. Having settled, she cannot recover (Fleetwood v. City of New York, 2 Sandf. 475).
    VI. The liability of the premises in question has never been for a moment suspended. The foundation of the liability, viz: the proceedings for opening Riverside Park, which were a benefit to the property, were continuous proceedings from 1868 to 1872. The amount was the only thing not ascertained (see Rundell v. Lakey, 40 N. Y. 513).
   By the Court.—Speir, J.

From the oral evidence in the case, it appears that the parties substantially agree in the construction they put on the memorandum. It is admitted that .the defendant did not pay this assessment, but he claims that he paid an assessment of two thousand one hundred and ninety dollars confirmed August, 1872, after he had taken the title.

The referee admits that “strictly it was money due the plaintiff by the defendant, but retained by consent to discharge "this liability,” and he adds “that the agreement for the application of the sum of one thousand six. hundred and seventy dollars, made between the parties for a good and valuable consideration, was not discharged by the reversal of the order confirming the assessment, when followed by the imposition of a larger sum which has been paid.”

The case is simply this. The defendant received the plaintiff’s money to pay off and dischárge a lien on the premises she was about to convey to him. He does not pay it, as there is no such lien. I know of no principle, either in law or equity, which justifies the defendant in retaining this money, because he had paid it out in removing a lien of a larger amount on the same premises belonging to him, and which lien had been imposed a year or more after he took a conveyance of it. There is no consideration for detaining this money.

The defendant received the money in question as security for himself against loss which might occur to him, by reason of a debt of the plaintiff being enforced as a lien against the property about being transferred to him by the plaintiff. The case is the ordinary one of taking money to pay a lien for taxes or judgment which should appear in the record against the property of the seller, on the understanding or implied promise in law to return it. to the seller in case there was no such lien, and the money had not been paid.

The general term set aside and vacated the order purporting to confirm the assessment. The lien is only created by the order confirming the report of the commissioners (Act of April 20, 1839, Laws of 1858, ch. 338, p. 574; Matter of opening Seventeenth-street, 1 Wend. 262). This lien was extinguished by the action of the general term of the court, whether for mistake of law or mistake of fact in the proceedings, is not material. It is simply the extinguishment of the lien which gives the plaintiff the right to recover. The defendant never paid the assessment and he cannot pay'it.

If it be admitted that this sum was allowed to defendant from the purchase money—if it was' a deduction from the purchase money—if he received it in settlement of the alleged lien, I am of opinion that the money was paid in mistalce of fact; that there never was a lien for this sum of one thousand six hundred and seventy dollars, or any other sum, for opening Riverside Park prior to August 22, 1872. The orders of July 11 and 21,1871, did not confirm the assessment.

There can be but one order of confirmation. In these proceedings a conrt acts only in the sphere of a limited jurisdiction (Rev. Laws of 1813, § 178). On

coming in of said report signed by the commissioners or any two of them, the said court shall, by rule or order, after hearing any matter which may be alleged against the same, either confirm the said report or refer the same to the same commissioners for revisal and correction, or to new commissioners to be appointed by the said court to consider the subject matter thereof, and the said commissioners to whom the said report shall be so referred shall return the same corrected and revised as a new report, to be made by them in the premises to the said court, without unnecessary delay, and the same, upon being so returned, shall be confirmed or again referred by the said court in the manner aforesaid, as right and justice shall require, and so from time to time until a report shall be made or returned in the premises which the said court shall confirm, and such report, when so confirmed by the said court, shall be final and conclusive.”

The language is in the alternative,—the court shall either confirm, or refer back to the commissioners, for revisal—one or the other- -it cannot do both, and cannot confirm a report by piecemeal. The order of July 11 was referred back to the commissioners for revisal and correction, by increasing the amounts of awards to the parties who were entitled, by naming such persons and giving the several amounts which the commissioners should allow to each. The order of July 21 takes this view, treating the former order as an order to refer back, and not an order of confirmation.

The statute above recited clearly limits the jurisdiction of the court, and if it actually send the report back it has no authority to confirm. The order, therefore, is irregular, and absolutely void, and the order of July 21, founded uppn the proceedings, is of no effect. The supplemental report is not the commissioners’ report, but Judge Barnard’s, and the commissioners intimate as much in their report. The court cannot correct errors, but must refer back to the commissioners, who alone have authority to revise (Rev. Laws of 1813, § 178; Laws of 1839, § 210; Id. 1862, p. 966 ; Riverside Park Case, 4 Lans. 467). The court can laydown principles for the guidance of the commissioners, but cannot make corrections directly (Morning Side Park Case, 10 Abb. Pr. N. S. 338, Brady, J.). The report is signed by only two of the commissioners in violation of article 1, section 7, of the constitution.

“When private property shall be taken for any public use, the compensation to be made therefor, when such compensation is not made by the State, shall be ascertained by a jury”, or by not less than three commissioners appointed by a court, of record, as shall be prescribed by Jaw.” •

It follows that’there never was a lien on the premises for one thousand six hundred and seventy dollars. If the parties supposed there was, it was a mistake of fact. The defendant has obtained the plaintiff’s money without consideration, not as a gift, but under a mistake (Gardner v. Mayor, &c. of Troy. 26 Barb. 423 ; Martin v. McCormick, 4 Seld. 331; Hitchcock v. Giddings, 4 Price, 135 ; Fleetwood v. City of New York, 2 Sandf. 475).

In either view of this case I am unable to sustain the decision of the learned referee. The judgment appealed from should be reversed, the order of reference vacated, and a new trial granted, with costs to abide the event.

Freedman and Curtis, JJ., concurred.