Court Opinion

ID: 5201745
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:53:46.757545+00
Date Added: 2024-06-11T08:27:12.665602
License: Public Domain

Patterson, P. J. (dissenting):
The question arising upon the appeal from the judgment in this action is presented to this court in this department directly for definite decision-for the first time, and that question is whether, simply on the default'of a vendor in performing an executory contract for the sale of land, the vendee, seeking to recover a deposit made on account of the purchase money and the expenses of examining the title to the premises embraced in the contract, may have not only an equitable lien imposed upon such premises, but also a decree of foreclosure and sale, with the same effect as if he were a mortgagee pro tanto' of such premises.
The facts of the case are simple. The defendant agreed to sell and convey to the plaintiff certain premises in the city of blew York, for the stipulated sum of $8,500, of which $500 were to be paid at the time of the execution of the contract and $8,000 on the delivery of the deed and the closing of title. Five hundred dollars were paid. On an examination of the title by the purchaser there were various defects disclosed, such as incumbrances, encroachments and slight deficiencies in quantity, or, at least, such vagueness and uncertainty in description as made it difficult to determine what property would pass under a deed. The plaintiff declined to complete the purchase, and I will assume, for the purposes of this decision, that some, at least, of its objections were well founded and that it was justified in refusing to take the conveyance and pay the residue of the purchase money. Thereafter the plaintiff began this action, and in its complaint sets forth the transaction with the defendant and makes appropriate allegations concerning the payment of the deposit money and the outlay for examining the title, and then specifically asks that a lien be declared to exist in its favor upon the premises for the amount of both the deposit and the outlay for examining the title, and prays that a foreclosure of such lien and a sale of the property be directed. The learned judge at Special Term has granted to the plaintiff all the relief it sought, has directed a sale of the right, title and interest of the defendant in the premises and what shall be done with surplus money arising after a sale. The learned judge held that the plaintiff was entitled to a vendee’s .lien, based upon the theory that the vendor became a trustee of the land which he had sold and held in trust for the *512vendee the moment lie received part payment tinder the contract, and that the vendee’s part payment operated immediately to effect an equitable conveyance of the land to the extent of the money which he had invested in it, and gave, as his only authority for this proposition the case of Whitebread & Co., Ltd., v. Watt (L. R. 1902, 1 Ch. Biv. 835). The authority, cited undoubtedly declares the law in England to be as stated by the learned trial justice, and there •can be no doubt that in this jurisdiction a vendee’s lien may also_ exist arising out of a similar relationship between the vendor of real property and a purchaser; but. it has not been held by the courts of final authority in the State of, Rew York that a vendee’s lien may be enforced by foreclosure and sale in every case of default 'by a vendor in the performance of his executory contract. . Singular as it may appear, the doctrine of a vendee’s lien was never judicially established in England by controlling authority until the year 1855. Before that time there had been discussion and speculation upon • the subject and dicta of judges are to found in the books tending to the recognition of such a lien, but it was not until the case Wythes v. Lee (3 Drew. 396) that it was directly recognized. In that case Vice-Chancellor Eindersléy states in his judgment “no case is produced in which the particular point has been determined Or even directly raised. Counsel on both sides agree that no such case can be found ; and it is extraordinary, considering the number of instances in which the question might have arisen, that there is no single case in which any such claim has ever been even attempted by apurchasér. There have been a few cases in which the purchaser has applied for the return of his deposit ; but in those cases there has not been even a suggestion that he was entitled to a lien.” In that case the vendee’s lien was sustained, and it was "supposed to rest upon natural justice and that it might be spelled out from .general principles of' equity. The case arose upon demurrer toa bill. It is only atitlio'rity for the ■ proposition that such a lien may exist. "• The grounds upon which it may be maintained do not seem to have been definitely stated until the case of Rose v. Watson (10 H. L. Cas. 672), which was decided in 1864. The judgments in that case were delivered by the •Lord Chancellor (Lord Westbuey) and Lord Cranworth, bút the -grounds upon which they place their conclusions do not- seem to have received the full concurrence of all the judges who sat in *513Whitebread & Co., Ltd., v. Watt (supra). Nevertheless, it may be assumed that in England a véndeejs lien, pure and simple, may be established and enforced in equity; but no such determination, upon What seems to be conceded was a novel doctrine in England, has ever been made by any court of final authority in the State of New York unless there were some equities apart from the mere fact of a deposit having been made and expenses incurred, which called for the exercise of the jurisdiction of a court of equity. As an illustration, such supervening equities as the insolvency of a vendor, the entry of the vendee into possession and his making improvements or incurring other expense in connection with the premises, the subject of the contract, have been regarded as entitling the vendee to enforce a lien in equity ; and even in the two leading authorities in England (Rose v. Watson and Whitebread & Co., Ltd., v. Watt) the fact appeared that the vendor in each case was insolvent. It may not be said with absolute certainty that that fact was controlling in the decision in either case. But in all the adjudications in the State of New York, with the exception, perhaps, of some Special Term decisions, the intervention of special equities has been made to appear whenever a vendee’s lien had been enforced. In Tompkins v. Seeley (29 Barb. 212) the purchaser had -entered upon the premises and made improvements thereon, and there were other equk table considerations also presented in the refiord. In Parks v. Jackson (11 Wend. 442) the purchaser made valuable improvements upon the property. In Gibert v. Peteler (38 N. Y. 165) the vendees were in possession, and made improvements in accordance with the contract, which required certain expenditures as a necessary condition to entitle them to a deed. Chase v. Peck (21 N. Y. 581) went upon special equities, and does not apply here.
It is suggested by the respondent in the present case that a special equity does appear, namely, that the vendor represented that he was the owner of the premises the subject of the contract, and that the deposit of $500 was paid upon that representation; but there is nothing to show that Palmer made a willful, false representation. In every contract for the sale of real estate the purchaser- must make it upon the belief that the person with whom he is contracting has the ability to. perform the contract. There is no special *514equity arising, u.pon the statement of a-person- contracting to sell real estate that he is the owner of the land if, upon examining the title, it is disclosed that- such title is affected by trammels and impairments which prevent his making an absolute conveyance thereof free from all legal objection. There is no evidence of bad faith on the part of the vendor in this action.
As I look at this record- it merely presents the case of a person who is entitled to recover at law the amount of a deposit which he has made upon a contract for the purchase of land, which contract has failed by reason of the inability of the vendor to make title, the purchaser being also entitled to recover at law the amount he had expended in searching the title. The right to enforce a vendee’s lien in equity, in such circumstances, has been passed upon and determined adversely to the right in the case of Klim v. Sachs (102 App. Div. 44). That was. an action for specific performance brought by the purchaser against the vendor. There the plaintiff refused to aceept a deed on. the ground that the title was unmarketable because of certain encroachments of adjoining buildings upon the premises and also because the buildings on the property to be conveyed encroached upon the street, and he asked that if the defendant could not specifically perform he should have judgment for the amount deposited and for expenses of -examining the title, and that judgment be impressed as a lien upon the land described in the contract. The justice at Special Term granted the full relief, bu-t it. was held by the Appellate Division that the judgment was. erroneous in so far as it impressed the sum, together with interest and costs, as a lien upon the premises which were the subject of the contract, and the court struck from the judgment such poz-tions thez-eof as related to the alleged lien and the foreclosure thez-eof and affirzned the' znoney judgznent for the deposit and the expenses;
In. wliati may be 'eonsidez-ed the pioneer ease of Wythes v. Lee (supra) the learned vice-chancellor, referring to the embarrassment which existed by reason of the want of authority upon the subject, said: “I should feel mu eh pressed by the absence of any such cases if I could see that maintaining such a lien could he attended with danger or incozivenience. But I do not see any inconvenience in establishing the rule. 1 do not see any hardship izi it.” The inconvenience and the hardship are made manifest in this case, *515There is blit one 'breach of an executory contract. By the decision about to be made the vendee is allowed to enforce a lien upon the land for the amount, of its deposit and to sell the land under foreclosure of the lien, but there still remains a claim for'.the expenses incurred in examining the title to the property the subject of the' contract, for which it is declared no lien exists, and for satisfactory reasons. The. vendee is certainly entitled to recover for such expenses. Is the vendor to be subjected to another suit, one at law, to recover them ? Are two actions to be allowed for the breach of the same contract? Why should the vendor be vexed twice? If in the same action the lien may be enforced and a recovery had for .the expenses of searching the title, the vendor is entitled to a trial by jury of the common-law claim. A judgment would provide for the lien and its foreclosure and also for a Teco very of a sum of money for the collection of which an execution would issue and thus for a breach of the same contract, the vendor is to have his real property sold under foreclosure and an execution against his personal property to recover the damages on the common-law cause of action. The inconvenience and, the hardship are apparent at once. There is no doubt that such a thing as a vendee’s lien exists, but the question is whether, in the absence of any special equity, such a lien tvill be enforced by .foreclosure, where from all that appears an adequate remedy exists at law. In that aspect of the case, I think the judgment now appealed from should be reversed.
Judgment modified as directed in opinion, and as modified affirmed, with costs. Settle order o;n notice.