Court Opinion

ID: 5196022
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:43:22.434884+00
Date Added: 2024-06-11T08:27:05.236968
License: Public Domain

McLaughlin, J.:
. The New York Building-Loan. Banking Company, a domestic corporation, on the 7th of November, 1900, was' the owner of certain real estate in the city of New York, and the appellant Fallon and one Maria T. Hallinan, desiring to purchase the same, entered into an agreement with -the association for the accomplishment of that purpose, and by which they subscribed for forty-five and eight-tenths shares of the capital stock of the association , and paid to it, on -account of the premium and contract price, $43Q. This stock was assigned to the association- as collateral security for their agreement to pay, “ for a' term coextensive with the term required to mature-or fully pay the aforesaid shares of stock, which term it is estimated will be about twelve years, at-the monthly rental of Thirty-four and 35/100 dollars, to be paid on the first of each and every month in advance during said term.” The agreement further provided that if Fallon and Hallinan performed all the covenants contained in .the agreement and made the payments as therein provided they were to have, in the meantime, the quiet and peaceable possession of the premises, and at the expiration of the term the association was to" give to them, a good and sufficient deed. It also provided that “ if any rent shall be due and unpaid for the period of sixty days or if default shall be made by the parties of the second part as to any of the covenants herein contained,” then the association might re-enter said premises ■ and repossess the same.- The'premises, at the time the agreement .was' made, were subject to. a mortgage of $3,000. On the 9th of August, 1902, in consideration of the payment of $50, the monthly payments were reduced to- $33.94. On the 17th- of September, 1902, .Hallinan transferred her interest to Fallon and he thereafter ma.de the monthly payments prescribed down to the 6th of July, 1903. On the 12th of September, 1-903, the respondent Preston was. appointed temporary receiver of the association and his appointment made permanent on the 24th of February, 1904. Thereafter the premises were sold in an' action brought to foreclose the mortgage above referred ' to and on the sale a surplus was realized over and above the amount due on the mortgage, with interest and costs, of $8941^7. This-surplus was .claimed by tlie receiver and. also by’Fallon, and a reference was ordered to determine the rights of the respective parties thereto. *565The referee reported that Fallon having made default in his payments thereby relinquished his right to damages against the association for breach of contract on its part to convey; that the receiver upon his appointment became the owner of the equity of redemption in the property foreclosed and by reason thereof was entitled to the whole of the surplus money, and that the capital stock of the company deposited by Fallon as security should remain “for final adjustment by the receiver.” An order was subsequently made confirming in all respects the report of the referee and Fallon has appealed.
I am of the opinion that the order appealed from should be affirmed, but only so .far as it directs the payment of the whole surplus to the receiver. At the time the receiver was appointed Fallon was not in default. He had paid the monthly payments agreed to be paid to the sixth of July. He had not paid what was due on the first of August or on the first of September, but the agreement expressly provides that the association could not re-enter until the monthly payments had remained unpaid “ for the period of sixty days.” He at most, therefore, was in default only forty-two days. His rights under the contract had not then been terminated, nor had his failure to pay for that period deprived him, upon complying with its terms, of the right to damages for a breach of it. Hor was there any obligation upon his part to make further payment after the receiver was appointed. (Rochester Savings Bank v. Whitmore, 25 App Div. 491, and cases cited.) The association was insolvent and by reason thereof, and the appointment of the receiver, had become incapable of proceeding further-under the contract, and the foreclosure of the mortgage resulting in a sale, had put it beyond the power of the receiver, even if he would have had a right to do so, to give the deed which the association had contracted to give. This relieved Fallon from further performance (Hall v. Stowell, 75 App Div. 21), and the interest of both parties in the subject-matter of the contract was thereafter to be determined according to their respective equities. These equities, however, cannot be determined until all of the assets of the association have been marshaled apd its liabilities ascertained. It is clear, upon the facts presented, that the receiver is not entitled except for the purpose of administration to' the whole surplus and it is equally .clear *566that the interest which Fallon - has therein carinot, at this time, be ascertained. At the hearing before the referee Fallon attempted to prove what improvements he had put. upon the premises." His efforts, however, were ineffectual, the referee excluding all evidence bearing on that subject. The evidence was properly excluded inasmuch as the referee could riot determine what allowance, if' any, should be made by reason of them. This, however, will be a proper subject for consideration on á final adjustment of the affairs tif the association when .the rights of the respective parties are determined and settled according to their equities:
The order' appealed from, therefore, should be modified as indicated in this opinion, and as thus modified affirmed, without costs to either party. -
Yak Brunt, P. J., O’Brien, Hatch and ' Lauglhin, JJ., concurred. . ' . .
Order modified as directed in opinion, and as modified affirmed, without -costs. - . ■ ■