Case ID: ad_126/html/0282-01.html
Source: Caselaw Access Project
Author: {"author": "Miller, J.: Gaynor, J. (dissenting):", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Thomas J. Clarke, Respondent, v. Long Island Realty Company, Appellant.
    Second Department,
    May 12, 1908.
    Real property—equitable relation of vendor and purchaser after execution. of contract — effect of condemnation proceedings — earnest money.
    The vendee under an executory contract for the purchase and sale of lands has the equitable title, which the vendor holds merely as security for the payment of the purchase money.
    When after the execution of such contract the premises are taken oy eminent domain, the damages awarded belong to the vendee, subject to the lien of the vendor who holds the award as trustee for the vendee.
    Hence, although after the execution of such contract and before the payment of earnest money the premises are taken by eminent domain, the vendee is not entitled to recover a subsequent deposit on the theory that the contract of sa^ was made by him under a mistake of fact.
    Gaynou, J., dissented, with opinion.
    Appeal by the defendant, the Long Island Realty Company, from a judgment of the Municipal Court of the city of Rew York, borough of Brooklyn, in favor of the plaintiff, rendered on the 23d day of May, 1907, overruling defendant’s demurrer to the .complaint.
    
      Walter Underhill, for the appellant.
    
      Paul Jones, for the respondent.
   Miller, J.:

The plaintiff sues to recover payments on an. executory contract of purchase and sale of real property alleged to have been made by him, the vendee, under a mistake of fact. The plaintiff alleges that intermediate the execution of said contract and the making of said payments the city of Rew York acquired title to the property under the right of eminent domain, of which fact he was ignorant when said payments were made.

It is not necessary to cite authority for the familiar proposition that the vendee under an executory contract of purchase and sale has the equitable title, the vendor holding the legal title merely as security for the payment of the purchase money. The plaintiff’s theory is that the contract was abrogated by the condemnation proceedings ; but no authority is cited in support of that proposition, and no reason is urged or suggests itself to us for so holding! The contract is not abrogated. (Randolph’s Law of Eminent Domain, § 170.) The damages awarded in the condemnation proceeding belong to the vendee, subject of course to the lien of the vendor, and if the latter receives them, he does so as trustee for the former. (McIntyre v. Easton & Amboy R. R. Co., 26 N. J. Eq. 425; Pinkerton v. Boston & Albany R. R. Co., 109 Mass. 527; Stevenson v. Loehr, 57 Ill. 509.)

This is not a case of thrusting the equities of a party on him, but of holding him to his contract. The vendor is able to give him all he contracted to. The State has intervened and under its right of eminent domain substituted for the land its value. In legal effect as between vendor and vendee the award becomes the subject of the conveyance. The plaintiff took the equitable title subject to the exercise of the right of eminent domain, precisely as though the legal title had been transferred, and the possibility of the land being taken for public use should be deemed to have been within the contemplation of the parties. The taking of land by proceedings in invitum is in a legal sense a purchase and sale (Vandermulen v. Vandermulen, 108 N. Y. 195), and of course the equitable owner must be deemed the vendor. In the case of Parks v. Boston (15 Pick. 198), cited by Andrews, J., in the Vandermulen Case (supra), it was held that a lease was not extinguished or the lessee discharged of the obligation to pay the reserved rent during the residue of the term. In the course of his opinion in that case, Shaw, Ch. J., said : “ But upon what principle can it be maintained, that a lessee under such circumstances would be exempted from the payment of the stipulated rent? The lessee takes his term, just as every other owner of real estate takes title, subject to the right and power of the public to take it or a part of it, for public use, whenever the public necessity and convenience may require it. Such a right is no incumbrance; such a taking is no breach of the covenant of the lessor for quiet enjoyment. The lessee then holds and enjoys exactly what was granted him, as a consideration for the reserved rent; which is, the whole use and beneficial enjoyment of the estate leased, subject to the sovereign right of eminent domain on the part of the public. If he has suffered any loss or diminution in the actual enjoyment of this use, it is not by the act or sufferance of the landlord ; but it is by the act of the public, against whom the law has provided him an ample remedy.” ^

The demurrer should have been sustained.

Jenks, Hooker and Eran, JJ., concurred; Gaynor, J., read for affirmance.

Gaynor, J. (dissenting):

The plaintiff had a contract with the defendant for the conveyance of a piece of land to him by the latter; payments to be made by installments, and the conveyance to be made and delivered when the purchase money should be paid in full. The land was taken by eminent domain proceedings after the contract was made. In ignorance of that fact, the plaintiff paid installments. ' He may recover back all he has paid, for the defendant cannot convey the land to him. That the plaintiff- could assert his equitable rights to the award made for the land does not enter into the case. He is not obliged to do so. The rule of the equitable ownership of the land pro tanto by a purchaser who has paid in part but not received the deed is made for his protection. It seems strange that it should be used to prevent him from maintaining a common law action to recover back what he has paid on the vendor being unable to perform. The defendant contracted to convey the plaintiff the land and cannot do so. The plaintiff is not compelled by law to substitute the award for the land, and pay the contract price. Suppose the award were less than the contract price? The defendant cannot thrust the plaintiff’s equities upon him or compel him to fall back on them. They are for the plaintiff’s protection, and he is free to resort to them or not as he sees fit. He may prefer to pursue his common law remedy. Hone of the cases cited has any application. Here the defendant cannot carry out his contract to convey the land. In the case of the lease cited, the lease had been made and the term thus conveyed to the tenant before the land was taken for public use. It was not the case of a contract for the making of a lease in the future.

The plaintiff seems to be suing for only some of the installments he has paid. If he prevail, he may be embarrassed by the rule against splitting a cause of action if lie tries to recover the amount of the others.

Judgment of the Municipal Court reversed, with costs, and demurrer sustained, with costs, with leave to plead over on payment of costs.