Court Opinion

ID: 5260262
Source: CourtListenerOpinion
Date Created: 2022-01-06 18:40:42.187569+00
Date Added: 2024-06-11T08:28:04.189029
License: Public Domain

Merrell, J. (dissenting):
This appeal is by the plaintiff, Mary F. Roberts, from a judgment in favor of the defendant, New York Life Insurance Company, entered upon the verdict in favor of said defendant *103directed by the court at Trial Term. The plaintiff also appeals from the order denying her motion to set aside the verdict and for a new trial.
The action is brought to recover the sum of $100,000 and interest, which sum was paid by the plaintiff’s assignor upon the contract of sale upon its execution on January 2, 1917. The contract was between the defendant and one William C. Roberts, and by the terms of the contract in consideration of the sum of $2,400,000 to be .fully paid as in the contract provided, the said defendant agreed to sell and convey to the said William C. Roberts, plaintiff’s predecessor, the Madison Square Garden property. Under the terms of the contract the said sum of $100,000 was to be paid upon the execution thereof, the sum of $300,000 was to be paid thereafter and on the 1st day of March, 1917, which was the time the defendant was to execute, acknowledge and -deliver to the grantee a proper deed with covenants against the grantor’s acts for the conveying to said Roberts or his assigns the fee simple of said premises free of incumbrances, except taxes, assessments and water rates payable after the date of the contract, and subject also to certain bookings and leases then outstanding against the property. The final payment of $300,000 was to be made and the deed delivered at the office of George W. Hubbell at 346 Broadway, New York city, and it was further agreed that upon the payment of said $300,000 on March 1, 1917, the grantee should execute and deliver t.o the defendant a purchase-money bond and mortgage upon the property to secure the balance of the purchase price of $2,000,000. The contract also contained the following provision: “ In case any valid defect to the title is found, and the same is rejected therefor by the purchaser, then .this contract shall become void, and the said sum of One hundred thousand ($100,000) dollars shall be returned with interest.”
Subsequent to the execution of the said contract it was first assigned with all rights of the grantee thereunder by said Williani C. Roberts to the Garden Tower Corporation, and thereafter the said contract, together with all rights accruing to the grantee and his assignee thereunder was duly assigned and transferred by the Garden Tower Corporation to the plaintiff, Mary F. Roberts.
*104It is the claim of the plaintiff that upon the 1st day of March, 1917, the date upon which the contract was to be performed by the payment of the $300,000 by the grantee, the execution and delivery of the deed of the property by the defendant to the said grantee and his execution and delivery of the purchase-money bond and mortgage to the grantor to secure the balance of the purchase money of $2,000,000, the grantor was unable to furnish the grantee with a valid title to said property and that by reason thereof the grantee rejected the title and deed then and there tendered by the grantor. It is the claim of the grantee and the plaintiff herein that there were outstanding upon said property upon the law day when the parties met to fulfill said contract, two mechanics’ liens, both of which were filed subsequently to the execution of said contract. These hens aggregated in amount a little more than $2,500, and had been filed by contractors who had furnished lumber and materials to one Grundy holding a lease of a part of said premises and which was used in the erection of a skating rink therein for said tenant. 'It was claimed by the representatives of the assignee of the grantee under said contract at the time and place where said contract was to be performed,, that said liens constituted a valid defect in the title of the New York Life Insurance Company, and that by reason thereof the title offered by. the said company was rejected by the representatives of the grantee.
The court at the close of the plaintiff’s case upon the trial directed the jury to return a verdict in favor of the defendant. A motion was made to set aside the verdict of the jury and for a new trial, which was denied by the court. No tender of performance was made by the grantee upon the rejection of title, nor did the grantee demand that the insurance company perform the contract on its part by delivering a deed of the property conveying title thereto free of incumbrances.
It appears from the opinion of the trial court that the jury was directed to find for the defendant upon the ground that the plaintiff had failed to show a tender of performance on the part of the grantee, and a demand of the grantor that it perform said contract on its part, which the court held was a condition precedent to bringing suit to recover back the *105assignee’s money paid at the time of the execution of the contract.
I think the reasons stated by the trial court for directing a verdict in defendant’s favor are sound, and that under the authorities it was necessary for the plaintiff, before bringing suit, to prove a tender of performance on the part of the grantee and a demand that the grantor deliver the deed provided for by the contract.
Under the precise terms of this contract I do not think that the existence of the two mechanics’ hens upon the property covered by the contract upon the law day thereof was a “ valid defect to the title.” The provision of the contract with reference to the recovery of the assignee’s money is that “ In case any valid defect to the title is found, and the same is rejected therefor by the purchaser, then this contract shall become void, and the said sum of One hundred thousand ($100,000) dollars shall b'e returned with interest.”
The law seems reasonably well settled that the existence of a mechanic’s lien upon property does not create a defect in the title thereto. (Raben v. Risnikoff, 95 App. Div. 68; March v. Marasco, 165 id. 348.)
Raben v. Risnikoff (supra) arose in the Second Department and was to recover, as in the case at bar, moneys paid to the vendor upon the execution of the contract. Mr. Justice Willard Bartlett, in delivering the unanimous opinion of the court in that' case, among other things, said: “ It appeared that there was a mortgage of $600 upon the land, payable on demand, which was not mentioned in the contract. If the vendor had then paid this mortgage, or tendered to the vendee an amount sufficient for its payment, he .might have obviated the objection. He did neither, however. The mere existence on the day when the title is to be closed of an incumbrance on the property to be conveyed, which it is within the power of the vendor to remove, does not constitute a breach of the contract (Higgins v. Eagleton, 155 N. Y. 466), but if the vendee then make a tender and demand of performance, and the vendor. fails to remove the incumbrance or provide for its removal to the satisfaction of the vendee, the latter may maintain an action to recover the money paid on the agreement.” (Italics are the writer’s.)
*106The evidence in the case at bar shows that no tender of performance was made on the part of the grantee, nor did the grantee demand performance on the part of the insurance company. Indeed, it appears that upon the law day, March 1, 1917, after the attorney for the assignee of the grantee under the contract had made repeated requests for an adjournment in order to secure the necessary moneys to make up the $300,000 then payable, all of which efforts were attended by failure, as a last resort the attorney spoke of the two mechanics’ liens resting against the property. It appears that the insurance company and its attorney were surprised at the information of the existence of such liens, and the attorney then stated that under the provisions of law the liens would be eliminated without delay, and the attorney for the insurance company gave his word that he would see that the property was relieved of said liens at once if the grantee would accept title to the property and perform on his part. This the grantee refused to do, insisting on a further adjournment.
The Lien Law provides for discharging mechanics’ liens in several ways. (See § 19, as amd. by Laws of 1916, chap. 507 ;* Id. § 20.) They may be discharged by payment to the lienor of the amount of his lien and discharge of the same, or may be discharged by executing a bond with proper sureties and in an amount approved by the court. Before action is brought upon the liens they may be discharged by payment into court of the amount of the lien with interest. Thus it would seem that it was within the power of the insurance company on the law day itself to have gotten rid of these liens and relieved the property of incumbrances by reason thereof. But even assuming that the existence of the liens constituted a “ valid defect ” to the title of the property, it is entirely clear from the evidence that the title was not rejected by reason of such defect. The claim that the property was incumbered by hens made by counsel for the grantee after repeated failures to secure a continuance in order that the grantee might raise the money to make payment of the $300,000 was, I think, a mere subterfuge to enable the grantee to avoid performance of the contract. I do not think there was any *107rejection of the title of the property in good faith. As pointed out by the trial justice, there were too many ways in which these two small hens, aggregating a little more than $2,500, in this stupendous deal involving $2,400,000, could have been discharged, and whereby the purchaser might have been amply protected. Not only could the hens have been discharged as suggested and promised by the sohcitor for the insurance company, but the amount thereof could easily have been withheld by the grantee from the purchase price or pro tanto the purchase-money mortgage might have been reduced in amount. But even assuming that the hens constituted an invalidity of title, and that the grantee rejected the same by reason thereof, under the authorities I do not think the grantee could recover the $100,000 paid upon the execution of the contract, except upon tender of performance on the part of the grantee and a demand of the grantor of performance of the contract on its part. (McCammon v. Kaiser, 218 N. Y. 46; Ziehen v. Smith, 148 id. 558; Higgins v. Eagleton, 155 id. 466.)
Judge O’Brien said, in Ziehen v. Smith (supra): “ The contract is not broken by the mere fact of the existence on the day of performance of some hen or incumbrance which it is in the power of the vendor to remove.” And, further: “It is not alleged or claimed that the plaintiff on that day, or at any other time, offered to perform on his part or demanded performance on the part of the defendant, * * *. It is, no doubt, the general rule that in order to entitle a party to recover damages for the breach of an executory contract of this character he must show performance or tender of performance on his part.”
Had the assignee of the grantee in the case at bar tendered to the insurance company upon the law day performance on the part of said grantee of said contract, tendering the $300,000 then due upon said purchase price, and had said assignee then demanded the deed from the insurance company in accordance with the terms of the contract, then the insurance company would have been required to act, and on failure to furnish such deed of the property free from incumbrances an action would lie on the part of said assignee to recover the earnest money paid upon the execution of the contract.
I think there can be no question but that the incumbrance, *108such as it was, upon the property, was one which the insurance company had it within its power to remove at once. Several different courses to effect such removal were open to it, the adoption of either of which would have enabled it to have performed the contract. The payment of the $300,000 and the transfer of title and the execution and delivery of the purchase-money mortgage were all concurrent acts, each dependent upon the other. In the absence of tender of performance on the part of the assignee of the grantee and a demand of performance on the part of the grantor, I think no foundation lies either for recovery of damages for failure to perform or to recover back the part of the purchase price paid upon the execution of the contract, and which by the terms of the contract it was agreed should be regarded as liquidated damages, if the grantee failed to perform.
I think the trial court properly directed a verdict herein in favor of the defendant, and that the judgment entered thereon should be affirmed, with costsi -
Judgment and order reversed, with costs, and judgment ordered for plaintiff for $100,000, with interest from January 2, 1917, with costs. Settle order on notice.::

 Since amd. by Laws of 1920, chap. 373.— [Rep.