Case ID: misc_65/html/0592-01.html
Source: Caselaw Access Project
Author: {"author": "Goff, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Max Karpf, Respondent, v. Louis Borgenicht and Hyman Scharff, Appellants.
    (Supreme Ceurt, Appellate Term,
    January, 1910.)
    Damages — Liquidated damages — Liquidated damages or penalty.
    Saving question for review — Objections and exceptions in general — ^Necessity—^Evidence.
    Where the vendors of real property, who have agreed to procure the extension of certain mortgages, deposit $1,000 of the purchase money to protect the vendees against possible expense in procuring a new mortgage in default of procuring an extension of the old one, for which a writing is given stating it has been retained by the purchasers “ as a forfeiture and as stipulated damages should the said” vendors neglect to obtain an extension of said mortgages; and where the vendors failed to obtain a written extension but the mortgagees have not demanded judgment nor attempted to foreclose, and, in an action brought to recover the moneys deposited, there is no proof of the amount of expense incident to procuring a new mortgage, a judgment for the plaintiff will be affirmed.
    
      And where the plaintiffs proved on the trial, without objection, the conversations immediately preceding the execution of the writing, inconsistent with its language, and made no motion after its introduction to strike out the oral proof, they have waived their right to object to its consideration and it may be considered by the trial court and on appeal.
    Appeal by the defendants from a judgment of the Oity Court of the city of Mew York, entered in favor of the plaintiff upon the verdict of a jury, and also from an order denying a motion for a new trial.
    Fromme Brothers (Clarence E. Thornall, of counsel), for appellants.
    Jacob Gordon, for respondent.
   Goff, J.

The plaintiff’s assignors, Wolchok Brothers, owners of the premises 203-209 East One Hundredth street, Mew York city, contracted with defendants for the sale of those premises for $95,000, subject to the lien of four first mortgages’ for $15,000 each, maturing April 1, 1905, and stipulated to procure an extension of the first mortgage for one year from the time of its maturity at the time of dos ing title.” In the course of attempted performance of this stipulation, they were assured orally by the attorneys for the mortgagees that these liens would not be foredosed so long as taxes and water rents should be paid, but they Avere unable to obtain written extensions. The parties met to close title on Movember 18; 1904, when the following conversation took place, as one of the vendors testified: “ Mr. Erornme (attorney for the Aendees) said: ‘ How is it about the extension of the mortgage ? ’ and I said: ‘ I will get it for you; make out a paper and I will sign it,’ and he said: * What, I want $1,000 security cash, and, if not, we cannot close the title. I will put a Ids pendens this afternoon yet and I will put a receiver to-morrow morning.’ Then I said: ‘ Well, take all the money. I will give you an entire deed for nothing.’ He said: 'Mo, don’t be afraid of the $1,000. You will get it if we won’t have no expense.’ By expense I mean if they would not have to raise a new mortgage in the time that the mortgage expired.” Vendors thereupon delivered to defendants a deed of the premises and received from them the amount of the purchase price, less'$1,000, together with a paper which has been marked “ Defendants’ Exhibit 1,” and which reads as follows:

“New York, November 18, 1904.

“ In the matter of closing title of premises Nos. 203, 205, 207 and 209 East 100th Street, Borough of Manhattan, City of New York, the sum of One Thousand ($1,000) Dollars has been retained by the purchasers of said premises as a forfeiture and as stipulated damages should the said Wolchok Brothers neglect to obtain an extension covering a period of one year from the expiration of each mortgage of the four mortgages of Fifteen Thousand ($15,000) Dollars each, said extension to be obtained on or before February 1st, 1905; and should said extension be obtained on or before said date, the said One Thousand ($1,000) Dollars to be returned to Wolchok Brothers less such amounts as might have been paid by the purchasers for interest on a certain judgment of Two hundred and twenty-nine and 91/100 Dollars, or for any interest or rents not properly accounted for, provided notice is given of any error of rents on or before January 1st, 1905. In the event that any of the present mortgagees should refuse to extend the present first mortgage for a period of one year from the date of the expiration of said mortgages, the same may be obtained elsewhere without costs and expense to the purchasers herein, and upon the return of said receipt.

“ Fbomme Brothers,

' “Attorneys for purchasers.”

The vendors failed to obtain any written extension, but the mortgagees have not demanded payment nor attempted to foreclose. The judgment above mentioned has been paid. Eents and interest have been adjusted. Plaintiff, as assignee of the vendors, has had judgment in his favor in a suit brought by him to recover the sum of $1,000 mentioned in the above agreement. Defendants appeal, contending that the instrument above set forth is a contract to do certain things and to pay $1,000 as liquidated damages for failure to perform, that sum to be compensation for risk of loss in case the extensions should not be procured. Respondent contends that vendors made their deposit to secure damages in the penal sum of $1,000.

The instrument known as Defendants’ Exhibit 1 is more than a mere receipt. Vendors thereby agree to procure extensions of mortgage or a new mortgage by February 1, 1906, and to deposit $1,000 to secure their agreement. As consideration therefor, defendants agree to accept title, although they were under no obligations to do so, by reason of vendors’ failure to perform their contract. The court may look to the oral evidence to ascertain the real considertion. Wheeler v. Billings, 38 N. Y. 263. As against objection, it may so examine it to contradict the terms of the instrument, that is, to show that the parties intended a penalty or that they intended liquidated damages, by evidence that they agreed orally for one or the other (Eggleston v. Knickerbocker, 6 Barb, 458; Kellogg v. Richards, 14 Wend. 116) ; but, in the present case, defendants made no objection to the evidence of conversations immediately preceding execution of the contract and made no motion, after the written instrument was introduced in evidence, to strike out the oral testimony. The result is that they have waived their right to object to its consideration and to the presumption that the written instrument embodied the precise terms of the agreement. In such case parol evidence may be considered both by the trial court and on appeal. Brady v. Nally, 151 N. Y. 258. It is not necessary for us to decide whether or not the instrument, on its face, is a contract for a penalty or for liquidated damages, because the trial court has found, on the undisputed facts after consideration of the testimony as to the parol agreement, that vendors’ money was deposited for.the purpose of security only; and, on consideration of that testimony, we think the decision to have been clearly right. Ro damages were proven. Even if the risk of loss from expenses attendant on procuring a new mortgage or inability to obtain a new mortgage be considered' as an element of damage, there is no evidence of the amount of that loss. The judgment must be affirmed, with costs.

Giegerich, J., concurs; Lehman, J., concurs in result.

Judgment affirmed, with costs.