Case Name: FELTENSTEIN v. ERNST et al.
Court: New York Supreme Court, Appellate Term
Jurisdiction: New York
Decision Date: 1906-01-17
Citations: 97 N.Y.S. 376
Docket Number: 
Parties: FELTENSTEIN v. ERNST et al.
Judges: 
Reporter: West's New York Supplement
Volume: 97
Pages: 376–380

Head Matter:
FELTENSTEIN v. ERNST et al.
(Supreme Court, Appellate Term.
January 17, 1906.)
1. Vendor and Purchaser—Contracts—-Incumbrances—Conditions—Implied Knowledge.
A purchaser of land subject to an incumbrance, having notice of the existence of the incumbrance and its general nature, is chargeable with knowledge of the contents, terms, and conditions thereof, and cannot avoid his purchase, no deceit having been exercised, because he did not acquaint himself with the particular terms of the incumbrance.
2. Same—Mortgages.
A contract for the sale of land provided that it should be conveyed subject to a first mortgage, bearing interest.at the rate of 5 per cent, and due at a certain date. The mortgage which was recorded contained, in addition to the usual clauses, a stipulation that, if any law should be enacted reducing the taxable value of land or changing the laws in relation to taxes on mortgage debts, the mortgagors should pay to the mortgagee a sum equal to the tax so imposed in addition to the interest, unless the amount of such tax added to the interest should exceed legal interest, in which event, or if payment of such tax by the mortgagor should be prohibited by law, the mortgage was to become due 30 days after the enactment of the law. Held, that the vendee.was chargeable with notice of the conditions of the mortgage, and, though there was a possibility that- without any acts or default on the part of the vendee the interest on the mortgage might be increased beyond 5 per cent, or the due date advanced, the vendee was not released from his contract.
Blanchard, J., dissenting.
Appeal from City Court of New York, Trial Term.
Action by Sidonia Feltenstein against Moritz L. Ernst and another. From a judgment for plaintiff, defendants appeal.
Reversed.
Argued before SCOTT, P. J., and BLANCHARD .and DOW-LING, JJ.
Arnstein & Levy (Emil Goldmark, Emanuel Arnstein, and Samuel Levy, of counsel), for appellants.
Feltenstein & Rosenstein (Moses Feltenstein, of counsel), for respondent.

Opinion:
SCOTT, P. J.
This is an action to recover the deposit paid by plaintiff's assignor upon a contract for the purchase from defendants of certain real property in the city of New York. The contract was dated May 15, 1905, and provided that the property should be conveyed "subject to a first mortgage in the sum of twenty-six thousand five hundred dollars ($26,500), bearing interest at the rate of five (5%) per cent, per annum. Due Dec. 1st, 1907." The mortgage, as appears from the evidence, was an existing mortgage at the time the contract was made, having been executed on August 19, 1904, and recorded in the register's office on the same day. By its terms it was to become due on December 1, 1907, and bore interest at the rate of 5 per cent, per annum. It contained the usual interest, tax, assessment, insurance, and receivership clauses, and in addition thereto a - clause,- commonly known as the "Brundage clause," providing for the contingency of the imposition by the Legislature of a specific tax on mortgages. This clause provided in substance that if, before the debt was paid, any law should be enacted reducing the taxable value of land by deducting therefrom any lien thereon, or changing the laws in relation to taxes on debts secured by mortgages or the manner of collecting such taxes, the mortgagors should pay to the mortgagee a sum equal to the tax or burden imposed by such law upon the holder of such bond and mortgage in addition to the interest provided to be paid by said bond and mortgage, unless the amount of such tax added to the said interest should exceed legal interest, or unless payment of such tax by the mortgagor or owner of the land should be prohibited by law. If the tax added to the interest should exceed legal interest, or if payment of the tax by the mortgagor or owner of the land is prohibited by law, the bond and mortgage is to become due and payable 30 days after the enactment of the law. The additional amounts to be paid are to be regarded as interest.
If any law be enacted under which by the terms of this covenant the mortgagors may become liable to pay an additional sum, they may at their option pay off the bond and mortgage upon giving three months' notice.
It is not to be denied that there is a possibility under this clause that, without any act or default on the part of the mortgagor or the owner of the land, the interest on the mortgage may be increased beyond 5 per cent, or the due date may be advanced. The plaintiff contends, and the court below held, that this possibility avoided the contract and entitled the plaintiff to recover back the deposit paid by her assignor. The significant facts are that the mortgage was an existing instrument at the time the contract was made, and that in so far as the contract undertook ,to describe it the description was accurate, for the mortgage did bear 5 per cent, interest and was to fall due on December 1, 1907. The general rule respecting the purchase of land subject to incumbrances is that, if the purchaser has notice of the existence of the incumbrance and its general nature, he is chargeable with knowledge of the contents, terms, and conditions thereof, and cannot avoid his purchase, no deceit or fraud having been exercised, because he did not acquaint himself with the particular terms of the incumbrance, and finds them to be different from what he supposed. Riggs v. Pursell, 66 N. Y. 193; Kingsland v. Fuller, 157 N. Y. 510, 52 N. E. 562; Blanck v. Sadlier, 153 N. Y. 551, 47 N. E. 920, 40 L. R. A. 666. The latter case is in some respects similar to the present. The action was also by a purchaser to recover back a deposit paid upon a contract for the sale of real property. The sale was agreed to be made "subject to a mortgage of $16,000 to be at five per cent., having three years to run," and no other or further státement or representation was made as to the time or conditions of the mortgage. It developed upon examination that the mortgage contained a clause requiring it to be paid in gold coin. In deciding against the plaintiff the Court of Appeals used language that is peculiarly applicable to the present case, saying:
"In this case the land was the subject of sale, and not the mortgage. The purchaser was notified of the existence of the mortgage and its amount. He made no inquiry as to whether it contained any special terms. He purchased subject to the incumbrance, entering into no personal obligation for Its payment. Special clauses in mortgages are not infrequent. It would not, we conceive, be a valid ground of objection on the part of a purchaser of land subject to a specific mortgage, wherein the contract did not set out such special clauses, that they were not disclosed at the time the contract was made, if there was no deceit or misrepresentation."
So it was said in Riggs v. Pursell, supra:
"This was a sale of premises held under a lease, and the lease was referred' to in the notice of sale, and hence the purchasers are chargeable with knowledge of the contents thereof. They are supposed to have examined the lease and made their bid in view of its provisions."
The point in these cases, as in the present, is that the purchaser agreed to take subject to a specific incumbrance of which he had notice. Presumptively he had also knowledge of its terms. If he had not, he should have ascertained the terms either by examination of the record, or by inquiry of the seller. All that the seller is required to do is to-correctly describe the incumbrance so far as he attempts to describe it at all. If he does this and tenders a deed subject to a mortgage answering the description in the contract, he has fulfilled his obligation. The contract of sale made no reference to any covenants in the mortgage, not even specifying that it contained, as it did, "the usual covenants,"' so that no basis is provided for the application in plaintiff's behalf of the maxim: "Expressio unius est exclusio alterius." Undoubtedly the purchaser was entitled to rely upon the description of the mortgage in so far as the seller undertook to incorporate it in the contract, and if the amount has been found to be larger, or the interest higher, or the due day earlier, a very different question would have been presented. But the description was not inaccurate. The reference to the mortgage in the contract was manifestly to that instrument as it then existed, and the amount, rate of interest, and due date were correctly set forth. Schiff v. Tamor, 104 App. Div. 42, 93 N. Y. Supp. 853, much relied upon by the plaintiff, is not in point. There too the purchaser had agreed to take title subject to an existing mortgage, and the seller had stipulated on his part that the principal sum thereof was "to-be extended, prior to the closing of title hereunder, for not less than three years, at the same rate of interest, by an extension in writing executed by the holder and duly acknowledged." The seller tendered, in fulfillment of this agreement, an extension which included the so-called Brundage clause heretofore cited, which was not incorporated' into the existing mortgage. The court held, very naturally, that the purchaser had agreed to buy subject to the mortgage-as it existed when the contract was made, that the seller's agreement was for an unconditional extension of that mortgage just as it then existed, and that that obligation was not satisfied by tendering an extension tacking onto the mortgage any other or different conditions than those which it contained at the time of making the contract. In my opinion- the plaintiff's obligations to the fulfillment of- the contract are untenable, and the judgment should be reversed, with costs to appellants to abide the event.
Judgment reversed, and new trial granted, with costs to appellants to abide the event.
DOWLING, J., concurs.