Case Name: Louis Frank and Rudolph J. Zatzkin, Respondents, v. Solomon Frank, Appellant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1908-01-24
Citations: 123 A.D. 802
Docket Number: 
Parties: Louis Frank and Rudolph J. Zatzkin, Respondents, v. Solomon Frank, Appellant.
Judges: 
Reporter: Appellate Division Reports
Volume: 123
Pages: 802–804

Head Matter:
Louis Frank and Rudolph J. Zatzkin, Respondents, v. Solomon Frank, Appellant.
Second Department,
January 24, 1908.
Beal property — vendor and purchaser—provision that mortgage may be declared due if tax increased — when rejection of title not justified,
The plaintiff in May, 1906, entered into a contract to purchase lands subject to a. . mortgage, having at least one year to run, title to be taken July 81,1906. Chapter 532 of the Laws of 1906, providing that mortgages should be subject to no tax other than a recording or succession tax, took éSect July 1, 1906. Plaintiff refused to accept the title tendered by the- defendant owing to the fact that the mortgage, though having one year to run, contained a provision that should the law for the taxation of mortgages be changed so as to increase the tax thereon, and the owner fail to pay, the mortgagee might declare, the mortgage ■ due on thirty days’ notice. In an action to recover the earnest money paid and expense of searching title,
. Held, that the contingency that the Legislature- at the next session might violate the promise made in said act of 1906 was so improbable, if not impossible, that the plaintiff was not entitled to reject the title.
Appeal by the defendant, Solomon Frank, from a judgment of the Supreme Court in favor of the plaintiffs entered in the office of the clerk of the county of Kings on the 27th day of April, 1907, upon the decision of the court rendered after a trial at the Kings County Trial Term before the court without a jury.
The action was to recover $3,000 paid by the plaintiffs on a contract of purchase of real' property of the defendant, and also the amount expended in searching the title.
Alexander Rosenthal, for the appellant.
Edward Snyder, for the respondents.

Opinion:
Gaynor, J.:
The judgment should have been for the defendant. The agreement was that the plaintiffs should take thé title subject to a mortgage for $46,500 having'at least one year to run. The plaintiffs refused to take the title for the reason that although the said mortgage was by its terms to run for one year, it contained a clause that (in sum and substance) if the laws for the taxation of mortgages should be changed, so as to increase such taxes, and the fee owner should neglect to pay the same, the mortgagee should have the option to make the mortgage due by a notice of thirty days to such owner; and the question whether this did not make the mortgage one having less than a year to run is the only one presented to us. Chapter 729 of the Laws of 1905 levied an annual tax on all mortgage debts on real property. As such tax could be increased at any time by the Legislature, mortgagees had the said option clause put in mortgages very generally, and the printed blanks containing it remained in use after the said law was repealed. Chapter 532 of the Laws of 1906 repealed it and prescribed instead a recording tax of one-half of one per cent on mortgages, and- provided that no other tax should be levied on mortgages, thus taxed except the succession' tax (Tax Law, § 291). This new law took effect'on July 1st, 1906. The contract in this case was made on May 21st, 1906, and it made the deed day July 31st, 1906. The said mortgage of $46,500 was recorded and the recording tax paid on July 12th, 1906. If this promise of the state not to put any other tax on. such mortgages be not a contract between the parties to such mortgages and the state (which we do not need to decide) and therefore not to be impaired by future legislation, the improbable if not impossible contingency of the state violating its plighted faith at the very next session of the Legislature did not substantially detract from the terms of the mortgage. that it was to run for one year. The case is similar to that of Blanck v. Sadlier (153 N. Y. 551). The case of Oppenheim v. McGovern (115 App. Div. 135) is not controlling. It arose under the said law of 1905, which taxed mortgage debts annually, and might well be changed.at any time; whereas the law of 1906 repealed the law of 1905, and substituted a recording tax in lieu of all taxes .on mortgages (except as aforesaid), and declared that no other tax should be levied on a mortgage on which such recording tax should be paid. ' Moreover, the mortgage.in that case had three years to run.
The judgment should be reversed.
Woodward, Jenks, Hooker and Eich, JJ., concurred.
Judgment reversed and new trial granted, costs to abide the final award of costs.