Court Opinion

ID: 5307864
Source: CourtListenerOpinion
Date Created: 2022-01-08 03:36:51.978474+00
Date Added: 2024-06-11T08:29:09.843750
License: Public Domain

Proskauer, J.
(dissenting). An agreement was entered into between the defendant and John A. Moran, Jr., by which the defendant was to sell and Moran to buy certain premises located in New York city. The contract provided: “ And the said purchaser hereby agrees to purchase said premises at the consideration of the sum of $11,000 and pay the same as follows: * * * Upon taking title to the premises as hereinafter provided by the execution and delivery of a purchase money bond and mortgage in the sum of $9,000 made to the seller.” The contract also contained this provision: “ The stipulations aforesaid are to apply to and bind the heirs, executors, administrators, successors and assigns of the respective parties.” Moran assigned the contract to the plaintiff, which brought this action for specific performance. The defendant in its answer set up that the contract was not assignable and that it had not consented to an assignment. It further set up as a defense a contention upon which it now also challenges the sufficiency of the complaint. It urges that under the terms of the contract it was entitled to receive a purchase-money bond and mortgage executed by the assignor Moran, that the plaintiff made no tender of such a bond and mortgage, but insisted on its right to execute its own purchase-money bond and mortgage, and that the plaintiff is for these reasons not entitled to a decree of specific performance. At the Special Term these defenses were stricken out.
The contract was clearly assignable and the plaintiff is entitled to maintain an action for specific performance and to succeed therein if it complied with the terms of the contract on its part to be performed. (Epstein v. Gluckin, 233 N. Y. 490.)
The crucial question is whether under the terms of this contract *295the parties intended that the defendant should receive the personal bond of Moran. In my view they did not. As a matter of common knowledge contracts for the sale of real estate are generally and frequently assigned. The parties must be deemed to have had this in mind when they contracted, particularly in view of the recital in the contract that its stipulations were to be binding upon the assigns of the parties. Under these circumstances, if the defendant was relying on the personal bond of Moran, it should have inserted in the contract a clause to that effect. The language of the contract is merely that the purchaser is to pay “ by the execution and delivery of a purchase money bond and mortgage.” There is nothing to suggest that this bond and mortgage was to be executed by the purchaser rather than by his assignee.
We are referred to no authority on this question in the courts of New York. It is significant that the contention urged by the defendant has apparently never before been asserted despite the large number of assigned contracts for the sale of real estate which have been considered by the courts. The Supreme Court of California has, however, decided the precise question (Montgomery v. De Picot, 96 Pac. 305). There Lorigan, J., writes: “ It seems quite plain from an examination of the contract that the personal financial responsibility of Bradshaw was not a material inducement for its execution. What was really relied upon was a mortgage upon the property for the unpaid portion of the purchase price, and ‘ a promissory note ’ evidencing this indebtedness was to be given. It is a matter of general knowledge that, upon sales of real estate, a mortgage back for a portion of the purchase price is one of the most common methods of dealing in such transactions. The mortgage is the main thing relied on, and when a substantial prior payment, as in this case, is made on the purchase price, the financial responsibility of the vendee, on the note itself evidencing the debt for the balance, is a matter of very little importance to the vendor. And in contracts for the sale of real property, which in terms run in favor of assignees, and which provide for a promissory note and mortgage to secure the balance of the purchase price, the general construction will be that the promissory note is a mere incident to the transaction, and that the principal thing relied on is the mortgage. It is a very easy matter, when reliance is intended to be placed on the financial responsibility of the original vendee, to specify in the contract that, in addition to the mortgage, his personal obligation shall be given. When this is not done, and a mortgage to secure ( a promissory note ’ is alone called for, as in the contract here, such provision will be construed as^ making the giving of a mortgage, not the giving of a note, the material *296inducement to the contract; that under such circumstances the obligation is not personal, and may be assigned, and specific performance on proper tender had at the suit of the assignee.”
I think this opinion of the California Supreme Court states a correct rule of law which is in accord with the understanding and practice of traders in real estate.
The point here under consideration was not decided in Epstein v. Gluckin (233 N. Y. 490), as the original vendee was there ready to execute the bond and mortgage. Nor can it be maintained that to permit the assignee to execute the purchase-money bond and mortgage is to vary the terms of the original contract. The question is really one of the interpretation of the original contract. If it is to be fairly construed to impose upon the vendee the duty of executing the bond and mortgage, specific performance could not be decreed unless the original vendee personally performed. On the other hand, if the contract is interpreted, as I think it should be, to the effect that the purchase-money bond and mortgage may be executed either by the vendee or his assignee, the plaintiff would not lose its right to specific performance because the original vendee did not execute the bond and mortgage.
For these reasons the order appealed from should be affirmed.
Dowling, P. J., concurs.
Order reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs.