Case ID: abbn-cas_15/html/0091-01.html
Source: Caselaw Access Project
Author: {"author": "\n      John I. Macklin (Roe & Macklin, attorneys), for the referee, opposed. Lawrence, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

CHASE v. CHASE
    
      N. Y. Supreme Court, First Department; Chambers,
    
      December, 1884.
    Action for Partition.—Judicial Sale ; deficiency on resale ; EXTENT OF FIRST PURCHASER’S LIABILITY.
    Under the terms of a sale in partition requiring payment of ten per cent, of the purchase money at the sale and providing that the referee need not send notice to any purchaser, but that in case of neglect to complete at the time specified, he should be charged with interest thereafter on the whole amount of his purchase, unless the referee extended his time to complete, and that, upon failure to comply with the conditions of sale, the premises might be resold without application to the court, and the purchaser held, liable for any deficiency,—Held, upon motion by a purchaser in default to compel repayment of his deposit, that a purchaser who wholly failed to complete his purchase, so that a resale became necessary, was liable for the entire deficiency on the resale, to the payment of which the referee might apply his deposit; and he was not merely for interest on the amount of his bid, as that was the penalty provided in case he eventually completed his purchase at a later date than that specified in the terms of sale.
    Motion for repayment of a deposit on a purchase at a referee’s sale in an action for partition.
    This was an action by William I. Chase and wife against Nelson Chase and others, for partition of lands. A sale thereof by a referee appointed in the action was made upon the following terms :
    (1.) “ Ten per cent, of the purchase money of said premises will be required to be paid to the said referee at the time and place of sale, and for which the referee’s receipt will be given.”
    (2.) (Required payment of the residue of the purchase money at a specified place on a day named.)
    (8.) “ The referee is not required to send any notice to the purchaser; and if he neglects to call at the time and place above specified to receive his deed, he will be charged with interest thereafter on the whole amount of his purchase, unless the referee shall deem it proper to extend the time for the completion of said purchase.”
    (4.) (The usual provision as to taxes and assessments.)
    (5.) (Required the purchaser at the time of sale to sign a memorandum of his purchase, and pay, in addition to the purchase money, the auctioneer’s fee and the exchange fee.)
    (6.) “ The biddings will be kept open after the property is struck down ; and in case any purchaser shall fail to comply with any of the above conditions of sale the premises so struck down to him will be again put up for sale under direction of said referee, under these same terms of sale, without application to the court, unless the plaintiff’s attorneys shall elect to make such application; and such purchaser will be held liable for any deficiency there may be between the sums for which said premises shall be struck down upon the sale, and that for which they may be purchased on the resale, and also for any costs or expenses occurring on such resale.”
    (7.) (Provided as to what portion of the purchase money might remain on mortgage, &c.)
    Two purchasers of different parcels failed to complete, and upon a resale without application to the court, a deficiency resulted larger than their respective deposits.
    This motion was made to compel the referee to pay over to the purchasers the amount of their respective payments at the time of sale, claiming that under the third specification of the terms of sale, their only liability was for interest upon the amount of their bids.
    
      Malcolm Campbell (Scudder & Carter, attorneys), for the purchasers, and the motion.
   John I. Macklin (Roe & Macklin, attorneys), for the referee, opposed.

I. If a notice by the referee to the purchaser to complete was necessary in order to put the purchaser in default, it was expressly waived by the purchaser agreeing that the referee was not required to send any notice to him. It was made optional with the referee whether the time of completion should be extended and whether terms in the shape of interest on the whole purchase should be imposed, as a condition for granting the application. Affirmative action on the part of the purchaser seeking an extension was necessary before this provision would become operative.

II. It is not claimed that any request for delay was made or any subsequent tender of performance ; consequently the penalty agreed upon by the terms of sale 'because operative—viz: a resale and liability for deficiency if any. A deficiency arising on the resale, the amount thereof became liquidated damages which the purchaser thereupon became bound to pay (Ruhe v. Law, 8 Hun, 251).

III. If the case is controlled by equitable principles, the only answer the case admits of, is this : the parties in interest having been damnified by the failure of the purchaser to carry out his contract to a sum exceeding the ten percent, paid, it is but just and equitable that the money be applied as far as it will go in liquidation of the loss sustained.

TV. In another view, under all the circumstances, time was material and was the essence of the contract (Lawrence v. Miller, 86 N. Y. 131). The purchaser, even if the premises had not been re-sold, could not compel specific performance (Hoan v. Parr, 13 Hun, 95).

Even if he could show that he was ever ready and willing to complete (which he does not pretend), after this lapse of time,—two and a half years from first sale to one purchaser, and two years from sale to the other,—specific performance would be denied, nor could he recover back the money he has paid (Lawrence v. Miller, 86 N. Y. 131), even where it does not appear that the seller was injured by non-compliance, to the amount of the payment.

V. The position of the purchaser is substantially as if he had brought an action to recover back the money. If he must necessarily fail if he had brought such an action, he must fail in this proceeding. If the vendor brings an action to recover damages for nonperformance, the court will apply in reduction of damages the amount paid on the contract (See Hennig v. Jennett, 4 Daly, 543). It, now having all the facts before it, and the parties in interest, should, to do exact justice, apply same rule.

Lawrence, J.

By the terms of sale the purchaser waived an application to the court for a resale, and he became liable for any deficiency which there might be between the sum for which the premises should be struck down upon the sale and that for which they might be purchased at the resale, and also for any costs or expenses occurring on such resale. By the third condition of the terms of sale, the purchaser also waived any notice from the referee. The third and the sixth conditions in the terms of sale are to be construed together, and I do not think that the only penalty which a purchaser who refuses to complete is to incur is the charging of interest upon the amount of his bid. He is charged with such interest if he eventually completes at a day later than that specified in the terms of sale. He is liable for the entire deficiency, in case he wholly fails to complete his purchase and a resale becomes necessary. Even if a notice of the resale should have been given to the purchaser, I think that the affidavits read upon the part of the referee establish that such notice was given. The case of the Home Ins. Co. v. Jones (45 How. Pr. 498), was a special term decision, and seems to me to be opposed to the case of Ruhe v. Law (8 Hun, 251), decided by the general term of this department. In the latter case, a purchaser who had paid the ten per cent, required by the terms of sale, objected to the title, and the terms of sale providing, as in this case, for a resale and for the purchaser’s liability in case of a deficiency, a resale was had at which a deficiency occurred, and the purchaser was charged with the deficiency and the taxes which had ad interim, been imposed upon the property. The objections to the title were overruled, and the purchaser brought an action to recover the ten per cent, paid at the time of purchase. The defendants interposed a counter-claim, charging the plaintiff with such taxes. Judgment was rendered at special term in favor of the defendant for the counter-claim. On appeal, the general term said, speaking of the plaintiff: “ He complains that the sum . . . . paid for taxes, imposed subsequent to his refusal to complete, and before the second sale, is not within the letter or spirit of the contract, which threw upon him the ‘ difference and costs and expenses on the resale,’ but in this he is mistaken. The resale was not delayed, and the additional taxes were legitimately a part of the difference in the sum realized. The necessity of their payment was occasioned by his refusal to complete the sale. If he had taken the property, the defendant would not have been obliged to pay them under any circumstances.....We discover no reason why the judgment should be disturbed, and it must be affirmed, with costs.”

Applying the principles laid down in the case just cited, I reach the conclusion that the sum now in the referee’s hands should be appropriated to the payment of the deficiency which occurred upon the resale.