Case Name: Harmon Pumpelly and another, Executors of Elizabeth Brinkerhoff, deceased, Respondents, v. Philip Phelps, Appellant
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1869-03-18
Citations: 40 N.Y. 59
Docket Number: 
Parties: Harmon Pumpelly and another, Executors of Elizabeth Brinkerhoff, deceased, Respondents, v. Philip Phelps, Appellant.
Judges: 
Reporter: New York Reports
Volume: 40
Pages: 59–75

Head Matter:
Harmon Pumpelly and another, Executors of Elizabeth Brinkerhoff, deceased, Respondents, v. Philip Phelps, Appellant.
The rule, that a vendor, who contracts to sell and convey real property in good faith, believing hehas a good title, and on discovering it to be defective, for that reason, refuses or is unable to fulfill his contract, is, in an action against him, by the vendee, for the breach, liable for only nominal damages, should not be in any degree extended, but strictly limited to those cases coming wholly and exactly within it. Mason, J.
And where a vendor contracts to sell lands, in which he knows, at the time, he has not title or the power of conveyance, he is bound to make good to the vendee the loss of the bargain through his default. ¡Nor, in such case, does it excuse the vendor, that he acted in good faith, and believed, when he entered into the contract, that he should be able to procure a good title for his purchaser.
Accordingly, where a trustee, only authorized to convey lands upon obtaining the written consent of his cestui que trust, contracts, in his own name, to sell them, without having obtained such written consent, although he, at the time, in good faith, expected, that he should be able to procure it, and afterwards, on account of the refusal of such cestui que trust to give the written consent, he is unable to make title. Held (Hunt, Oh. J., Lott and Daniels, JJ., dissenting) that, in an action by the purchaser for specific performance, or, in case of inability to perform, for damages, he was entitled to recover of the vendor the difference between the contract price and the value of the land, at the time of the breach. Hopldns v. Grazebrook (6 Barn & Cress., 31), followed.
To exempt a party contracting from personal liability, he must so contract as to bind those he claims to represent; and the fact that he describes himself as “ trustee ” in signing the instrument, does not relieve him or change the effect of Ms agreement. Mason, J.
Held (all concurring), no trust appearing in the body of the contract, noi that defendant was making it for any other, or in any representative character, he was personally liable upon it, notwithstanding he added to Ms signature the words “ trustee, &c.”
(This cause was argued January 7th, 1869,
and decided March 18th, 1869.)
The action was brought to compel the specific performance of a contract to convey land, or to recover damages alleged to have been sustained by the original plaintiff, by reason of the defendant’s refusal to perform.
The answer alleges, that the defendant never was the individual owner of the land in question, and never had any interest in it, except as trustee of Catharine W. Van Rensselaer, under a deed of trust, which gave the defendant no authority to sell the land in question, without the written consent of Mrs. Van Rensselaer; that, at the time of the contract, the plaintiff, and her agent who negotiated it, knew the nature of the defendant’s interest and his power under the deed of trust; that the defendant has been always willing to convey, "but Mrs. Yan Rensselaer has absolutely refused her consent to such conveyance.
The facts disclosed, on the trial are as follows:
On the 13th of June, 1849, the defendant, acting as the trustee of Catharine W. Yan Rensselaer, the wife of Cornelius Gr. Yan Rensselaer, agreed to sell and convey to Elizabeth Brinlcerhoff, on the 15th day of July, following, lot Mo. 82, in Bleecker and Lansing’s patent, in the town of Stratford, in the county of Fulton, at seven shillings per acre. The lot was to be surveyed, at the expense of the estate, for whom the defendant was acting, and paid for accordingly. On the execution of the agreement (June 13, 1849), $318.25 was paid by the plaintiff, on account of the purchase money.
The lot proved to contain eight hundred and thirty-five acres. After the survey was completed, the plaintiff tendered the balance of the purchase money and demanded a warranty deed of the lot. The defendant declined to comply with this demand, for the reason, that Mrs. Yan Rensselaer had positively refused her consent to any conveyance of the land to the plaintiff.
And it appeared, that by the provisions of the deed of trust, under which the defendant was acting, it only gave him power to convey lands, belonging to the trust estate, upon the written assent of Mrs. Yan Rensselaer, the eestm, que trust.
At the time fixed for the delivery of the deed in the contract, the land was worth $2,000.
The lands, mentioned in the contract, were part of the estate held in trust by the defendant, under an appointment in 1841, by the late Court of Chancery, as the successor of Julius Rhoades.
Yery soon after the appointment of the defendant as trustee, Mrs. Yan Rensselaer told him that he need not consult her about the sale of any of the lands belonging to the trust estate, but to confer with her husband on the subject, and to what they should agree upon, she would give the required assent.
The defendant, relying upon this assurance, acted upon it, and prior to making the agreement with the plaintiff, had sold and conveyed many parcels of land, to the deeds for which Mrs. "Van Eensselaer assented, not having in any case objected to what her husband and the defendant thought proper to be done.
The defendant,' in this case, made the agreement with the plaintiff, with the concurrence of Cornelius G. "Van Eensselaer, not suspecting any unwillingness on Mrs. Y.’s part to assent to it, but believing she would do so. The defendant repeatedly requested her to assent to the conveyance to the plaintiff, which was refused, for the reason that she would assent to no deed to the plaintiff, upon any terms' whatever. The reasons for this refusal were personal to Mrs. Yan Eensselaer, and were in no respect instigated or caused by the defendant. Finding it impossible to persuade Mrs. Yan Eensselaer to consent to the deed, agreed to be given to the plaintiff, the defendant afterwards sold and conveyed the. land to another person, with the assent of Mrs Yan Eensse--" laer, for $1,000. The land came to the sum of $730.62, in the sale to the plaintiff, at the price fixed by the contract. At the commencement of the action, the defendant offered to pay back so much of the purchase money, as had been paid, and costs.
The justice, by whom the cause was tried, ruled that the plaintiff was entitled to recover, as damages, the difference between the value of the land and the price to be paid for it, with some directions as to interest, not now material, and directed a verdict for the plaintiff for $3,378.42, subject to the opinion of the court at General Term, upon a motion for judgment, to be made by the plaintiff. The General Term affirmed the ruling at Circuit, and the defendant appeals.
Mrs. Brinekerhoff having died, pending the appeal, her executors have been duly substituted as appellants.
This case has been twice tried. On the first trial, the defendant succeeded, and a new trial was granted. (24 Bar-hour, 100). On the second trial, the plaintiff prevailed, and the judgment in her favor was affirmed at the General Term (43 Barbour, 469).
In the contract of sale, the defendant is no where described in the body of the contract as the trustee of any one, but it says: “ I acknowledge the receipt of money, and I agree to sell and convey, &c.” The contract is signed “ Philip Phelps, Trustee, &c.; ” and there is nothing in it to intimate, of whom he is trustee. Mor is there any evidence in the case to show, that plaintiff knew anything of this defect in the defendant’s title.
John U. Reynolds, for the appellant,
cited, on the question of personal liability of the defendant upon the contract, Bank of Genesee v. Patchin Bank (19 N. Y., 312); Oleott v. Tioga R.R. Co. (27 N. Y., 546). As to the measure of damages, he cited (Sedgwick on Damages, 189,190); Baldwin v. Munn (2 Wend., 399, 405); Peters v. McKeon (4 Denio, 546); Conger v. Weaver (20 N. Y. R., 140,146); (Mayne on Damages, 93, 94); Staats v. Ten Eyck (3 Caines, 111); Wild v. Fort (4 Taunton, 334).
Samuel Hand, for the respondents, on the question of personal responsibility,
cited Moss v. Livingston (4 Comstock, 208); De Witt v. Walton (5 Seld., 571); Bay v. Gunn (1 Denio, 108); Bush v. Cole (28 N. Y., 261); Taft v. Brewster (9 Johnson, 334); White v. Skinner (13 Johnson, 307); Burwell v. Jackson (5 Selden, 535); White v. Madison (26 New York R., 124). As to the measure of damages, he cited Hopkins v. Grazebrook (6 Barn. & Cr., 31); Bush v. Cole (28 N. Y., 261); Lock v. Furze (Exch. Chamber, Law Rep. Common Pleas, vol. 1, 441); Hopkins v. Lee (6 Wheaton, 109, 118); Robinson v. Harman (1 Exchequer R., 849); Hill v. Hobart (16 Maine, 164,169); Fletcher v. Button (6 Barbour, 650, 1); Trull v. Granger (4 Selden, 115); Lewis v. Lee (15 Indiana, 499); Dean v. Raseler (1 Hilton C. P., 420); Bitner v. Brough (11 Penn. St., 127); McNair v. Crompton (35 Penn. St., 23); Graham v. Hackwith (1 A. K. Marsh., 429); Gerault v. Anderson (2 Bibb, 543); Wilson v. Spencer (11 Leigh, 261); Driggs v. Dwight (17 Wend., 74); Nurse v. Burns (Thos. Raym., 77.)

Opinion:
Marón, J.
There has never seemed to me to have been any very good foundation for the rule, which excused a party from the performance of his contract, to sell and convey lands, because he had not the title, which he had agreed to convey. There seems to have been considerable diversity of opinion in the courts, as to the grounds, upon which the rule itself is based.
In England, the rule seems to have been sustained upon the ground of an implied understanding of the parties, that the parties must have contemplated the difficulties attendant upon the conveyance. In the leading case on this subject of Flureau v. Thornhill (2 W. Black., 1078), Blackstone, J., said: " These contracts cure merely upon condition, frequently expressed, tut ahoa/ys implied, that the vendor has a good title."
While, in this country, the rule is based upon the analogy between this class of cases and actions for breach of covenant of warranty of title, Baldwin v. Munn (2 W. R., 399); Peters v. McKeon (4 Den. R., 546). The rule of damages, in an action for a breach of covenant of warranty of title is settled to be the consideration paid, and the interest; and yet this is an arbitrary rule, and works great injustice many times; and the courts met with the greatest embarrassment in settling it. These difficulties were considered, and well expressed, in the leading case in this State of Staats v. The Ex'rs of Ten Eyck (3 Caines' R., 115), in which the court said: " To find a rule of damages, in a case like this, is a work of' difficulty • none will be entirely free from objection, or will not, at times, work injustice.
To refund the consideration, even with the interest, may be a very inadequate compensation, when the property is greatly enhanced in value, and when the money might have been laid out to equal advantage elsewhere. Tet to make this increased value, the criterion, where there has been no fraud, may also be attended with injustice, if not ruin.
A piece of land is bought, solely for the purpose of agriculture, and, by some unforeseen turn of fortune, it becomes the site of a populous city; after which an eviction takes place. Every one must perceive the injustice of calling on a bona fide vendor to refund its value, and that few fortunes could bear the demand. "Who, for the sake of one hundred pounds, would assume the hazard of repaying as many thousands, to which value the property might rise, by causes unforeseen by either party, and which increase in worth would confer no right on the grantor to demand a further sum of the grantee ?" There is still another class of cases, where the rule of simply refunding the purchase money and the interest operates with great hardship and injustice upon the purchaser. A purchases of B a city lot, for the purpose of building himself a dwelling or buildings upon it, and takes from B a full covenant deed of the premises, covenanting to assure, warrant and defend the title. The buildings are constructed at the cost of thousands of dollars, and then B is evicted by a paramount title, ascertained to he in some one else. The recovery of the money and six years interest is not a very just or reasonable'return in damages, for the law to give to one, who holds a covenant, to make good and defend the title.
The reasons assigned for this rule, in actions for a breach of covenant of warranty of title, can scarcely apply to these preliminary contracts to sell and convey title at a future time. In the latter case, the vendee knows he has not got the title, and that perhaps he may never get it; and if he will go on and make expenditures under such circumstances, it is his own fault; and, besides, these preliminary contracts to convey generally have but a short time to run, and there is seldom any such opportunity for the growth of towns, or a "large increase in the value of the property, as there is in these covenants in deeds, which run with the land, through all time.
The Supreme Court of the United States have refused to yield its sanction to this rule, when applied to contracts for the sale of lands, and affirm the doctrine that the reason of the rule, as to contracts for the sale of goods and chattels, applies with equal force to these executory contracts for the sale of lands. (Hopkins v. Lee, 6 Wheat. R., 109.) That rule is, where a party sustains a loss, by reason of a breach of contract, he is, so far as money can do it, to. be placed in the same situation, with respect to damages, as if the contract had been performed. (Robinson v. Harman, 1 Exch. R., 850.) This case of Hopkins v. Lee (6 Wheat. R.), is cited with approbation in some of the American cases, and the rule, there laid down, affirmed.
These views are not presented to induce the court to overrule or repudiate the adjudged cases in our own courts, upon this subject. They reach back over a period of more than forty years, and have been too long sanctioned to be now. repudiated.
I have referred to this matter, simply as furnishing an argument against, in any degree, extending the rule, and as a reason for limiting it strictly, where the already adjudged cases, in our own courts, have placed it. It becomes important, in this connection, to inquire what that limit is. The general rule certainly is, that where the vendor has the title, and for any reason refuses to convey it, as required by his contract, he shall respond in law for the damages, in which he shall make good to the plaintiff, what he has lost by his bargain not being lived up to. This gives the vendee the difference between the contract price and the value at the time of the breach, as profits or advantages, which are the direct and immediate fruits of the contract. (Griffin v. Colver, 16 N. Y. R., 489; Durkee v. Mott, 8 Barb. R., 423; Underhill v. Gas Light Co., 31 How. Pr. R., 37; Masterton v. Mayor, &c., of Brooklyn, 7 Hill R., 61, 69.) Where, however, the vendor contracts to sell and convey, in good faith, believing he has a good title, and afterwards discovers his title is defective, and for that reason, without any fraud on his part, refuses to fulfill his contract, he is only liable to nominal damages for a breach of his contract. (Baldwin v. Munn, 2 Wend. R., 399; Peters v. McKeon, 4 Denio R., 546; Conger v. Weaver, 20 N. Y. R., 140.) The rule is otherwise, however, where a party contracts to sell lands, which he. knows, at the time, he has not the power to sell and convey; and, if he violates his contract in the latter case, he should be held to make good to the vendee the loss of his bargain, and it does not excuse the vendor, that he may have acted in good faith and believed, when he entered into the contract that he should be able to procure a good title for his pur chaser. (2 Parsons on Contracts, 503, 504, 505; Hopkins v. Grazebrook, 6 Barn. & C., 31; Driggs v. Dwight, 17 W. R., 74; Bush v. Cole, 28 N. Y. R., 261; Lock v. Furze, Exch. Ch. Law Rep. Com. Pleas, 1 vol, 441; Robinson v. Harman, 1 Exch. Rep., [Wels., Hurlst. & Gordon] 849; Hill v. Hobart, 16 Maine R., 164; Fletcher v Button, 6 Barb. R., 650; Trull v. Granger, 4 Seld. R., 115; Hopkins v. Lee, 6 Wheat. R., 109; Burwell v. Jackson, 5 Seld. R., 535; White v. Madison, 26 N. Y. R., 124; Lewis v. Lee, 15 Ind. R., 499; Dean v. Raseler, 1 Hilt. R., 420; Bitner v. Brough, 11 Penn. St. R., 127; McNair v. Crompton, 35 Penn. St. R., 23; Wilson v. Spencer, 11 Leigh. R., 261; Graham v. Hackwith, 1 A. K. Marsh R., 429; Dart on Vendors, 447.) This rule, applied to the case at law, sustains the judgment of the Supreme Court.
The defendant must be held personally liable on this contract. It is essentially his contract. In order to exempt the contracting party from personal liability, he must so contract as to bind those he claims to represent. (Moss v. Livingston, 4 Comst. R., 208; Dewitt v. Walton, 5 Seld. R., 570; Bay v. Gunn, 1 Den. R., 108; Bush v. Cole, 28 N. Y. R., 261.)
The fact that the party describes himself as trustee, without stating for whom, does not relieve him from personal liability, or change the effect of his engagement. (Taft v. Brewster, 9 J. R., 334; White v. Skinner, 13 J. R., 307; Dewitt v. Walton, 5 Seld. R., 570; Bush v. Cole, 28 N. Y. R., 261.) These views lead to the affirmance of the judgment.
Geovee, Woodbuee, James, and Muebay, JJ., concurred with Mason, J., and were for affirmance.