Court Opinion

ID: 3629605
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:09:29.130568+00
Date Added: 2024-06-11T13:44:54.960070
License: Public Domain

The judgment in this case was entered upon the report of a referee and awarded to the plaintiff damages for a breach by the defendant of an executory contract in writing whereby the defendant agreed to sell and convey to the plaintiff certain real estate at a specified price. The complaint alleges the due execution and delivery of the contract, the breach thereof by the defendant in refusing to convey upon tender of the purchase price, the sale by her to another party before the action was commenced, and the damages. The only fact alleged upon which the defendant in her answer took issue was the amount of the damages, and that was the only question which the referee was required to determine. He found that the property which the defendant had agreed to sell to the plaintiff for $35,000, subject to a mortgage of $15,000, was worth at the date of the breach of the contract at least $65,500, and that the damages amounted to $15,500, with interest thereon from the date of the tender by the plaintiff of the purchase price. The Appellate Division, in affirming the judgment as to the damages, held that the item of interest, amounting to $2,853.54, was improperly allowed, and modified the judgment by striking it out of the recovery. Both parties have appealed to this court, the defendant from the whole judgment, and the plaintiff from that part of it which decides that interest was not allowable.
The defendant's appeal, therefore, rests upon the exceptions taken at the trial and the plaintiff's appeal upon the question of interest upon the damages from the date of the breach. The defendant having deprived the court of the power to decree specific performance of the contract, was bound to respond to the plaintiff in such damages as were found to have been sustained by him in consequence of the breach resulting from the tender of performance and the refusal of the defendant to convey. (Cooley
v. Lobdell, 153 N.Y. 596.) The circumstance that the real property constituting the subject-matter of the contract was situated in another state presented no obstacle to the jurisdiction. (Newton v. Bronson, 13 N.Y. 587; Gardner v.Ogden, 22 N.Y. 327; Sutphen v. Fowler, *Page 332
9 Paige, 280; Ward v. Arredondo, 1 Hopk. Ch. 213.) Tender of the purchase price is generally regarded as equivalent to payment, and until conveyance made the vendor holds the title as trustee for the vendee. (Pelton v. W.F. Ins. Co., 77 N.Y. 605;Hathaway v. Payne, 34 id. 92; Cogswell v. Cogswell,
2 Edw. Ch. 231.) Upon tender of performance by the plaintiff and refusal of the defendant to convey, the damages for the breach of the contract is the difference between the contract price and the market value of the property at the time of the beach, and the vendee becomes then entitled to the rents and profits. (Worrall
v. Munn, 38 N.Y. 137; Bostwick v. Beach, 103 id. 414;S.C., 105 id. 661; Margraf v. Muir, 57 id. 155; Pumpelly
v. Phelps, 40 id. 66.)
The decision of the referee upon the facts is conclusive upon this court, and but two exceptions are relied upon by the learned counsel for the defendant to sustain her appeal. They were taken to a ruling of the referee permitting two witnesses to express an opinion as to the value of the property, first, from their knowledge and observation of the property, and, again, upon a hypothetical question in the form usually propounded to experts on other subjects. The real estate which was the subject of the controversy was a rubber factory at Trenton, New Jersey. Neither of the witnesses resided there, but it appeared that they had seen the property, had heard the other testimony as to the cost of the land, the building and the tools and machinery, and were conversant in a very large way with the general business for which the plaintiff intended the property to be used and the cost of such plants. Both witnesses had large experience in the rubber business, and were familiar with the character and capacity of the various plants for producing the article throughout the country, but it did not appear that they had any knowledge of the local market for real estate at Trenton, where the plant in question was situated. Courts cannot ignore modern conditions of business which affect the value of property. We know, for instance, that the value of a factory for the refinement *Page 333 
or manufacture of sugar, oil or even rubber, cannot be determined with reference to the market for such property in the locality where situated. If values in such cases could be made to depend upon the wants of the local markets, much valuable property would be sacrificed, or, at least, underestimated. In many cases it would be found that there is practically no local market for real estate of this character. The particular location of this factory had very little to do with its value. That was dependent upon conditions entirely outside of the locality and growing out of the character of the business and the methods by which it is conducted. To an individual or even a local corporation the property might be worth very little, while one of the great corporations or combinations, by means of which business of this character is now conducted, would readily pay a fair price for it. It would, therefore, be unjust to limit the plaintiff's measure of damages to the nominal value in the market of Trenton, when it appears that it had a greater value in a much wider market. Since it appears that the business for which it was to be used is conducted by corporations outside of that city, operating throughout the country generally, or at least large sections of the country, the market in which the value was to be ascertained must be deemed to be coextensive with the field of their operations. Therefore, whether these witnesses had qualified themselves to express an opinion with reference to the value of the property in controversy was a question of fact to be determined by the referee in the first instance, and it is clear that the evidence justified his decision. (Slocovich v. OrientMut. Ins. Co., 108 N.Y. 56; Nelson v. Sun Mut. Ins. Co.,
71 id. 453; Perkins v. Stickney, 132 Mass. 218; Spring Co. v.Edgar, 99 U.S. 658; Stillwell  B. Mfg. Co. v. Phelps,
130 id. 520; Montana Railway Co. v. Warren, 137 id. 353; I.  S.Coasting Co. v. Tolson, 139 id. 559.) There was evidence with respect to the competency of the witnesses, and the decision of the referee upon the question is not reviewable in this court, not because the decision of the court below was unanimous, but upon general and well-settled principles of *Page 334 
law. The effect of a unanimous decision is limited to the facts in the case put in issue by the pleadings, and to the evidence to sustain such facts, and has no application to collateral questions arising at the trial, such as the qualifications of a witness to express an opinion or a juror to sit in the case. It follows that the defendants appeal cannot be sustained.
It seems to me that the argument of the learned counsel for the plaintiff in support of his appeal from the decision below, on the question of interest, cannot be successfully answered. It would not be profitable, however, to discuss the question now upon principle or authority, since it has very recently occupied the attention of the court. (Gray v. Central R.R. Co. ofN.J., 157 N.Y. 483.) In that case it was admitted that a party was entitled to recover interest as part of the damages for breach of an executory contract for the sale of property when the property sold had a market value at the time of the breach, but as the subject of the sale was an old ferryboat that had no market value, it was held that the action of the court below in striking out the item of interest was proper. In the present case the referee held that the property had a market value at the time of the breach, and assessed the damages accordingly. I am unable to see how the court can hold that the referee committed an error of law in allowing interest on the damages from the date of the breach, since the facts found by him have not been disturbed by the court below. The question of damages was the only issue in the case, and the only ground upon which this court can deny interest to the plaintiff is that the defendant, when sued, could not ascertain how much she was bound to pay for her breach of the contract. The same answer is available to a defendant in every case; but whatever force it once had, it is clear that it has none now, since, by statute, a defendant, when sued upon such a claim, may serve with the answer an offer to liquidate the damages at a specified sum, and, unless the recovery is for a larger sum, he may not only defeat all claim for interest, but recover from the plaintiff the expenses incurred in defending on the question of damages *Page 335 
against a claim for a larger measure of damages. (Code, §§ 736, 737.)
But quite apart from the fact that in every action against the vendor of real property for damages arising from the breach of an executory contract of sale, it must be shown that the property has a market value exceeding the contract price in order to justify a finding of any damages whatever, the plaintiff's right to interest in this case rests upon other grounds still more difficult to answer.
When the plaintiff tendered the purchase price, he had fully performed the contract, and, as we have seen, became in equity the owner of the property and entitled to the rents and profits, the defendant holding the legal title as his trustee. The conveyance by the defendant to a third party in violation of her agreement and of the trust, deprived the plaintiff of the rents and profits to which he was entitled, and the law will give him indemnity for this loss by awarding interest as a substitute. (Worrall v. Munn, supra; Bostwick v. Beach, supra.) The only inquiry involved in this feature of the case is whether the referee committed any legal error in awarding interest to the plaintiff. I think it is difficult, if not impossible, to show that he did. If these views are correct, the judgment should be affirmed on the defendant's appeal, reversed on the plaintiff's appeal, and the judgment entered on the report of the referee affirmed.
GRAY, LANDON, CULLEN and WERNER, JJ., concur with HAIGHT, J.; PARKER, Ch. J., votes for affirmance because he is unable to distinguish this case from that of Gray v. C.R.R. Co. of N.J. (157 N.Y. 483); O'BRIEN, J., reads opinion in affirmance of the referee including interest.
Judgment affirmed. *Page 336