Court Opinion

ID: 5193390
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:39:39.062121+00
Date Added: 2024-06-11T08:26:59.136929
License: Public Domain

Patterson, J. (dissenting):
I am unable to concur in the views of this case entertained by the majority of the members of the court.
The action was brought to foreclose a mortgage given as part of the purchase price of premises on the easterly side of Thompson street, near Broome street, in the city of Hew York. The defense is that the defendant Charles Edelson was induced to purchase the premises through fraudulent representations made by the plaintiff, *367the vendor. Authority for such a defense is found in Fairchild v. McMahon (139 N. Y. 290). The answer also sets up a counterclaim. On the trial of the cause at Special Term the complaint was dismissed, as was also the counterclaim. The plaintiff alone appeals. The judgment, in addition to dismissing the complaint on the merits, also directs that the bond to which the mortgage was collateral be delivered up and canceled, and the defendant and his wife be relieved from any liability thereon ; and it further directs that the mortgage be vacated and set aside, and that the register of the county of Kew York cancel and discharge it of record.
On the evidence in the case the court below was justified in finding that false and fraudulent representations were made by the vendor, and that the defendant Charles Edelson was induced thereby to make the purchase. It was shown that prior to the purchase by the defendant of the property in Thompson street and the giving of the purchase-money mortgage, he owned land on Long Island, which was subject to a mortgage. The plaintiff owned the property in Thompson street, and he represented to the defendant that it had cost and was worth $44,750. The plaintiff had only paid $35,500 for it. False representations were also made as to the rental of the Thompson street property. Relying on those representations, the defendant Charles Edelson exchanged the property on Long Island for the Thompson street property, and gave in addition certain personal property and a promissory note for $500, and executed the mortgage for $9,500 sought to be foreclosed in this action. After the defendant named had accepted the deed of the property in Thompson street, he ascertained that the statements made by the plaintiff were false, and thereupon an arrangement was made by which it was agreed that the property should be reconveyed to the plaintiff, and the defendant Edelson executed a deed of the premises to the plaintiff’s wife, at the plaintiff’s request; but it seems, according to the testimony of Charles Edelson, that the Thompson street property was reconveyed under promise by Jacobs that he would sell it for $44,750. Thereafter, creditors of Edelson brought an action to set aside the deed of the Thompson street property made by the Edelsons to the plaintiff, upon allegations that such conveyance was fraudulent and void as to creditors, and in that action the conveyance was set aside; but what became *368of the property, whether it was sold, or what the condition of the title was at the time the present suit was begun, does not appear.
There was sufficient evidence in the case to authorize the justice at Special Term to find that the original transaction was tainted with the fraud of the plaintiff. Under the peculiar facts of this case, it does not seem to have been necessary for the defendant Charles Edelson to do anything more by way of an attempt to rescind the transaction than he did. The Thompson street property was reconveyed at the request or with the acquiescence of the plaintiff, to his wife. While the conveyance was set aside by the court in favor of the creditors of Charles Edelson, the title to the property did not revert to Edelson. He was not obliged to tender a new deed to Jacobs, for the decree in the creditors’ action declared the conveyance therein condemned to be fraudulent and void as against the plaintiffs therein. While it was void as to creditors, it was good inter pontes. (Porter v. Williams, 9 N. Y. 150; Andrews v. Durant, 18 id. 496.) Edelson’s deed would not have put the title back in the plaintiff; a deed from Mrs. Jacobs would have been required also, and she held the property at the procurement of the plaintiff, and still holds it, unless indeed it has been sold under the judgment in the creditors’ action, or she has parted with it — and of that we know nothing.
It is urged further that Charles Edelson, after accepting the conveyance of the Thompson street property, dealt with it as his own and has thus debarred himself from claiming fraud in the original transaction of purchase of that property from the plaintiff. If his conduct with reference to the property is to be so construed, the objection to his maintaining this defense might prevail. He alleges in his answer that he made efforts to sell it, but it is apparent that in doing so he was testing the market, and through those efforts ascertained the value of the property to be less than that represented by the plaintiff, for those representations were not expressions of opinion, but were based upon the plaintiff’s own false declarations of what he paid for it. The giving of the power of attorney by Charles Edelson to the plaintiff’s wife to collect the rents is not to be regarded as an act of ownership binding him to the purchase, for that power of attorney was given contemporaneously with the conveyance of the property and the giving back off the mortgage *369sought to be foreclosed in this action. The nature of the transaction connected with the reconveyance of the property to the plaintiff’s wife as his nominee in connection with the written guaranty is also referred to as binding the defendants to the original purchase. It is true that in that written guaranty it is stated that the purpose of the conveyance to the plaintiff’s wife was to enable Sarah Jacobs to enter into a contract of sale of the premises to ether parties for the consideration of $33,375, such contract being made for the benefit of Charles Edelson. The judge at Special Term, however, must have considered that guaranty in connection with testimony, given and received without objection, that that instrument was executed under a promise made that the plaintiff would guarantee procuring a customer for $44,750, provided Charles Edelson would transfer the house to him. Thereupon, the defendant Charles Edelson agreed to make the reconveyance. The judge at Special Term evidently took the view of the case, which he was authorized to take, that all this was a transaction really with the plaintiff, while nominally with his wife. It is scarcely credible that the plaintiff, within two months after he ¡laid the full consideration of $44,750 for this piece of property, should have retransferred it to the seller or the seller’s appointee for $11,000 less, if some such arrangement were not made as Charles Edelson testified to.
I do not think these acts should be considered in a court of equity as binding the defendant Charles Edelson to the original purchase in such a way as to defeat his right to set up the fraud in the transaction as a defense to the mortgage. That he is interested in defeating the foreclosure results from the fact that he may be chargeable for a deficiency on a sale of the mortgaged premises. The case is a peculiar one, and, I think, its decision must depend altogether upon the special facts as they appeared on the trial, and on those facts the defendant was, I think, entitled to judgment.
Judgment reversed, new trial ordered, costs to appellant to abide event.