George Guynet and Joseph Sanchez de Agreda, v. John B. Mantel. John B. Mantel, v. George Guynet and others.
It is in equity a settled rule, that under a contract to sell and convey lands, either general in its terms, or containing stipulations as to the nature of the deed or title to be given, the purchaser may insist upon a good and unincumbered title.
But this general rule is subject to exceptions, one of -which is, that if the vendee can obtain substantially that for which he contracted, and the deficiency is of such a nature that it may justly be made a subject of compensation, the court will decree a specific performance.
So also, if the vendee so enter into the possession withsa knowledge of objections that may be compensated or removed, the act, if not qualified by some agreement between him and the vendor, will be construed as a waiver of the objections.
Judgments appealed from affirmed, with costs.
(Before Boswoeth, Hoffman, and Slosson, J. J.)
Nov. 8;
Dec. 2, 1854.
Appeal by the plaintiffs in the first action, and the defendants in the second, from judgments entered upon the report of a referge.
The complainant in the first action set forth a contract by which the defendant agreed to sell and convey to the plaintiffs certain property in the city of New York, for the sum of $50,000. It alleged that the plaintiffs had paid $5,000, and had offered to pay, or secure the payment of the residue, but that the defendant had refused to make the conveyance to which they were entitled, and insisted that the contract was rescinded by his default, and that they were entitled to a compensation in damages.
The cross action was by the vendor, to compel a specific execution of the contract.
In January, 1854, both causes were referred to William Kent, Esq., who, on the 10th of June following, made the following report:
In pursuance of the order of the court made in the above-entitled causes on the seventh day of January, 1854, whereby the said actions were referred to the undersigned to hear and decide all the matters at issue therein respectively, I, William Kent, the *87referee in said order named, Raying been attended upon the reference before me in the said actions, (the same having been heard as an original and cross action,) by the counsel for the respective parties thereto, and having heard the proofs and allega-gations of the respective parties, and having duly considered the same, do find therefrom the following facts, that is to say:
Eirst. — That on the 28th of February, 1853, a contract in writing, under seal, was duly executed by and between the above-named John B. Mantel and George Guynet and Joseph S. De Agreda, for the sale and purchase of a plot of ground and premises at the comer of Broadway and 46th street, in the city of New York, which is set forth in the pleadings.
Second. — That the said Guynet and De Agreda thereupon, on the day of the date of the said contract, and in part performance thereof on their part, paid to the said Mantel five thousand dollars, being ten per cent, of the purchase money in the said contract specified, and thereupon employed John B. Stevens, Esq., a counsellor-at-law, and one of the defendants in the said cross action, to examine the title to the said property, and to act for and advise them in the matter of the said purchase, which the said John B. Stevens undertook to do.
Third. — That on the second day of May, 1853, (being the day fixed in and by the said contract for the delivery of the deed, and the completion of the said purchase,) the said John B. Mantel tendered and offered to deliver to the said Guynet and De Agreda, a deed of the same premises, containing full covenants of warranty, and against incumbrances, duly executed and acknowledged by himself and wife, thereby granting and conveying the premises in the contract mentioned and referred to, to the said Guynet and De Agreda, in fee, which deed had been perused by the said John B. Stevens, and was, and has been admitted by the said Guynet and De Agreda to be correct in form and manner of execution; that the said John B. Mantel thereupon demanded from the said Guynet and De Agreda the payment of the purchase money and the execution and delivery of the bond and mortgage according to the said contract and in fulfilment thereof.
Fourth. — That the said Guynet and De Agreda then and there declined and refused to accept the said deed or further to perform the contract upon their part, alleging as a reason or excuse for *88such, refusal and non-performance on their part, that there was a mortgage for one thousand dollars made by the said Mantel to Richard L. Parish, dated 24th January, 1852, outstanding and unsatisfied of record upon a small portion of the premises agreed to be sold, and which they required to have first paid and can-celled of record, which was the only objection made, and the only excuse for the non-performance of the said contract.
Fifth. — That at the time the said contract of sale was executed, the existence of the said mortgage was known to the said parties respectively, and although the same was not by the terms thereof payable until the 24th of January, 1855, still it was reasonably expected by the parties that the owner and holder thereof would at any time, accept and receive payment of the same, and that he would execute a proper satisfaction piece therefor, upon being paid the same, so as to cancel the same of record.
Sixth. — That after the said John B. Stevéns was retained .to examine the title to the premises, and had proceeded with 'the work, and shortly before the said second day of May aforesaid, he did, without the knowledge of the said Mantel, apply to the defendant, 'William S. Toole, a partner in business with his brother, and requested him to become the assignee of the said mortgage, and he also proceeded to Oyster Bay, Long Island, where the said Parish resided, and obtained and procured from him an assignment of the said mortgage to the said William S. Toole; that the said John B. Stevens then and there executed a mortgage for one thousand dollars upon property of his own, which he delivered to the said Parish as a consideration or substitute for the mortgage of the said Mantel, which he assigned to the said Toole; that the said Toole never made any inquiry about the said mortgage, and never advanced any money on account thereof, nor was any charged to him in his account with his partner until in April, 1854, when the amount of the said mortgage was charged to bim in the said accounts; that he paid no compensation to Stevens for procuring the mortgage, and when applied to and requested to receive payment thereof, he referred the matter to his partner, the brother of the said John B. Stevens, as the person who would know about it.
Seventh. — That the said Mantel, finding that the said mortgage had been assigned to the said William S. Toole previous to the *89tender of tlie said deed, applied to him, and requested him to receive payment of the said mortgage, and tendered and offered to pay to him the principal and interest thereon up to the time of tender and offer to pay, but the said William S. Toole declined to accept the same, alleging as a reason that the mortgage veas not then due; that the said Mantel having been referred by Mr. Toole to Mr. Stevens in reference to the said mortgage, applied to him, and, in like manner, offered to pay the same, but he, in like manner, declined to receive payment or satisfy the said mortgage.
Eighth.- — That thereupon afterwards, and on the said second day of May, the said Mantel again tendered and offered to deliver the said deed to the said Guynet and Be Agreda, and, at the same time, offered and proposed to them to allow them to deduct and retain in their own hands so much of the purchase money, payable in cash on that day as would be sufficient to pay and satisfy the principal and interest upon the said mortgage up to that time; or otherwise, that he would deposit the whole amount of the said mortgage, with all the interest thereon up to the time when the same would become due and payable in the New York Life Insurance and Trust Company, to be applied to the satisfaction of the principal and interest upon the said mortgage as the same become due and payable, but the said Guynet and De Agreda, acting under the advice of the said John B. Stevens, declined and refused to accept of either of the said propositions, or to make any other arrangement for the completion of their said purchase, and while, at the same time, they tendered the balanee of the purchase money and a bond and mortgage, pursuant to the terms of the said constract, yet they refused to pay the same, or any part thereof, or to deliver the said bond or mortgage, until the said mortgage should be fully cancelled and discharged of record, which, by reason of the facts before stated, it was not in the power of said Mantel to perform.
Ninth. — That afterwards and on the fifth day of May in the same year, and before the commencement of either of these actions the said Mantel wrote and caused to be delivered to the defendants, Guynet and De Agreda, a letter renewing his aforesaid offer, and a copy of which is annexed to the complaint in the cross action, to which no answer was given or received. That the said John B. Stevens acted thoiighout the whole business as the counsel *90of tRe said Guynet and De Agreda, who were aware tRat Re Rad procured an assignment of tRe said mortgage, to Re made to tRe said William S. Toole, as before stated. TRat tRe acts of tRe said Stevens in relation to tRe said mortgage were not called for under Ris employment by tRe said Guynet and De Agreda, and sucR acts of Ris were for tRe purpose of embarrassing and preventing tRe said Mantel from fulfilling and performing tRe said contract on Ris part, and were known to tRe said Guynet and De Agreda. TRat said Guynet and De Agreda, after tRe contract was signed, and after tRey knew of tRe said mortgage, exercised acts of ownersRip over tRe property.
TentR. — TRat on tRe said , second day of May tRe principal of tRe said mortgage, witR interest tRereon to tRat date, amounted to tRe sum of $1,019.05, wRicR deducted from tRe $15,000, tRe residue of purcRase money due upon tRat day, left a balance of $18,980.95, wRicR, witR tRe interest tRereon to tRe date of tRis, my decision, viz.: tRe seventR day of June, amounts to $15,054.75.
I do tRerefore accordingly report and decide, tRat tRe aforesaid contract of sale was and is valid and binding upon tRe parties; tRat tRe deed tendered and offered to be delivered was a foil warranty deed witRin tRe meaning of tRe said contract, tRat tRe same was legally tendered on tRe day wRen tRe contract was to be performed, and by sucR tender tRe said Mantel fully performed tRe said contract on Ris part, and entitled Rimself to Rave tRe same specifically performed by tRe said Guynet and De Agreda.
TRat tRe mortgage Reid by tRe said William S. Toole did not justify tRe said Guynet and De Agreda in refusing to accept tRe deed and perform tRe contract on tReir part, inasmucR as by tRe true eontruction of tRe said contract, tRe said Mantel did not covenant or agree tRat tRe premises sRould be free and clear from incumbrances, by way of mortgage at tRe time of conveying, but, if otherwise, still tRe said mortgage did not affect tRe vaRdity of tRe title to tRe premises; but, being merely an incumbrance, it was a matter wRicR could Rave been and can now be compensated in money, and tRe said Mantel Raving on tRe second and fifth days of May, upon tendering the deed of the premises, offered to abate from the purcRase money then payable to Rim, so much as the said mortgage and the interest tRereon amounted to, and to *91leave' the same in their hands, the said Guynet and De Agreda should have accepted the offer as just and equitable, and have performed their said contract, and the said contract must therefore now he specifically performed by them. To this end the said Guynet and De Agreda must accept the deed tendered, and pay to the said Mantel the sum of fifteen thousand dollars, (abating therefrom one thousand and nineteen ⅝⅜ dollars, being the amount of the said mortgage held by Toole, 'with all interest thereon up to the said second day of May, and which sum they are to retain to pay and satisfy the said mortgage,) together with interest on the residue of the said fifteen thousand dollars to the date of this decision and report, amounting to the sum of (fifteen thousand and fifty-four dollars and seventy-five cents,) $15,054.75, and execute and deliver the bond and mortgage, as provided by the said contract, and must also pay the costs of these actions to the said Mantel, to be taxed. That unless the said contract be performed, and the balance of the aforesaid purchase money, with interest, amounting to the said sum of $15,054.75, together with interest, and the costs, be paid, and the bond and mortgage executed and delivered within fifteen days from the date of this decision, then that the premises mentioned and referred to in the said contract be sold at public auction, at the Merchants’ Exchange, upon such notice and in the same manner as in case of a foreclosure of mortgage, under and by virtue of the judgment or decree to be entered herein, subject to the said one thousand dollar mortgage. That upon such sale the said Mantel may become a purchaser, and that the proceeds to arise from the said sale be applied in the first place in and towards the payment of the costs and expenses of the advertisement and sale of the said premises, and the costs of the said Mantel in these actions, and in the next place to the payment of the whole purchase money of the said premises remaining unpaid, (less the sum of $5,000 paid on .account of the purchase money, with the amount that is to be abated for the said mortgage, that is to say, $1,019.05,) with interest thereon from the said second day of May, in the same way as if' the contract of sale had been for cash, and that the overplus, if any, be paid to the said Guynet or De Agreda, or their assigns; but in case the proceeds shall be insufficient to pay and satisfy the costs, charges, and expenses aforesaid, including the balanee due for said purchase *92money, -with interest aforesaid, then that the said Gruynet and De Agreda do pay the same to the said Mantel, and that he have execution therefor against the said Gruynet and De Agreda, according to law, to collect such balance.
That the complaint in the original .action must be dismissed, with costs to the said Mantel, to be taxed, and that the complaint in the said cross action must be also dismissed as against the defendant William S. Toole, with costs to him, to be paid by the said Mantel, but without any extra allowance, and that it must also be dismissed as against the said John B. Stevens, but without costs as to him. That the said Mantel is entitled to his costs against the said Gruynet and De Agreda, in the original and cross action.
That a decree must be entered in these actions by the clerk of the court in favor of the said Mantel against the said Gruynet and De Agreda, for, the specific performance of the said contract and otherwise in accordance with this decision.
It also appearing that the said Mantel has been by order of this court appointed receiver of the property and effects, he must render his accounts, and if required by the said Gruynet and De Agreda, must have them passed according to law, before a referee to be appointed by the court, under the decree to be entered hereon, and thereupon be discharged.
Either party may apply upon the footing of the decree to be entered hereon, for such further directions and order as they may be advised.
(Signed) W. Kent, Referee.
June 10, 1854.
The judgment appealed from was entered upon this report, and in conformity to its terms, and was appealed from by Gruynet and De Agreda, plaintiffs in the original and defendants in the cross action.
The case was argued upon a case settled by the referee.
O. P. JSdrTcland, for the appellants,
said that the respondent-Mantel, was bound by the legal construction of his contract to convey the premises free from all incumbrances whatever, and that, as on the day fixed for performance, he was unable, and was still unable to make such a conveyance, the contract was rescinded *93Ry Ms default, and the appellants Recame entitled to tRe damages wMcR tRey claimed. He cited Clute v. Robinson, 2 JoRn. R. 595; Judson v. Wass, 11 JoRn. 525
JS. S. Owen, for tRe respondent,
contended tRat Ry tRe true construction of tRe contract, Mantel was not Round to convey tRe premises free from incumRrances except taxes and assessments wMcR were specially mentioned, and tRat if Re were so Round; Re Rad so far complied witR Ms oRligation as folly to entitle Rim to a decree for a specific performance. He cited, on tRe first point, Yanderhar v. Yanderhar, 11 JoRn. 122; Yan Bps v. Schenectady, 12 JoRn. 436; Parker v. Parmele, 20 JoRn. 13; Fuller v. Subbard, 6 Cow. 13; and otRer cases, and upon tRe second; Ten Broeck v. Livingston, 1 JoRn. C. R. 862; Winnee v. Reynolds, 6 Paige, 412; Halsey v. Grant, 13 Vesey, 73; and otRer cases: also, Story Eq. Juris. §§ 775, 777
By the COURT.
Hoffman, J.
TRe case comes up on a judgment entered upon tRe report of a referee, and an appeal from sucR judgment. TRe complaint in tRe original action was dismissed witR costs to tRe defendant, and relief as sougRt Ry tRe cross action was adjudged, witR some variations, not important to Re noticed.
TRe complaint in tRe first suit was Ry tRe purcRasers under a written contract for tRe purcRase of .real estate, in order to oRtain tRe rescission of tRe contract, tRe repayment of tRe money deposited, tRe expenses for examining tRe title, and a certain sum for damages. TRis complaint proceeded on tRe ground tRat tRe defendants in tRat action could not fulfil tReir agreement.
TRe cross or second action was RrougRt Ry tRe vendors, in order to compel tRe specific execution of tRe contract.
TRe case, tRen, is one of a purely equitaRle cRaracter, and is to Re governed Ry tRe rules wMcR prevailed in a Court of CRan-cery up oil tRis suRject. We do not, tRerefore, enter upon tRe consideration of tRe point principally argued Ry tRe counsel of tRe appellants, as to tRe effect in a court of law of tRe covenant in tRo articles of agreement, tRat tRe “vendor would execute and deliver a full warranty deed for tRe premises.” We content ourselves witR noticing tRe leading case of Parker v. Parmele (20 *94Johnson’s Rep. 130.) In that the previous cases were reviewed, and it was held, that a covenant “ to execute a good warranty deed of conveyance of the premises,” would he fulfilled by tender of such a deed, and that want of title was not a good plea. But the learned Chief Justice twice alludes to, and admits the existence of, a different rule in a court of Chancery, and allows that the party would have a remedy there, when its power was invoked to enforce the specific execution of his contract.
I take it to be a settled, as well as most salutary rule of that court, that either under a contract general in its terms, to sell and convey land, or accompanied with any stipulations as to the covenants and nature of the deed to be given, or title to he made, the purchaser may insist upon a good, valid, unincumbered title. This i§ the fixed and general rule; but the same spirit of equity which has dictated it, has established certain exceptions and qualifications.
One of these is, that if the party can obtain substantially the thing for which he contracted — if the deficiency in quantity of the estate, or extent of incumbrance, can be made the subject of compensation — and if such compensation can be given consistently with the conclusion that the purchaser would not have declined the contract, had he known of the deficiency or burden, then the court will enforce it upon him.
The familiar case in the books, is the purchase of a farm by a known name, described as containing one hundred acres, and falling short by two or three acres. The object of the contract was the farm; the deficiency is compensated by a deduction from the purchase money.
This doctrine was carried to an unwarrantable extent in the noted Wharf case, where the real object of the purchase was the wharf, and the purchase of the adjoining parcel was only made as contributory to the full enjoyment of the wharf. But that case is now considered as overruled.
The leading authorities exhibiting the rule, and 'its application to particular cases, are Halsey v. Grant, (13 Vesey, 76;) Magennis v. Fallon, (2 Malloy, 588;) Hill v. Buckley, (17 Vesey, 394;) King v. Bardeau, (6 John. C. R. 38.) Numerous others are referred to by Mr. Sugden in his Treatise on Yendors.
The authorities which more pointedly bear upon the present *95case in their circumstances are Howland v. Norris, (1 Cox. Cas. 59;) Drew v. Hanson, (6 Vesey, 678;) and Collier v. Jenkins, (1 Young’s Rep. 295.)
In the former there were outgoings from the estate, which were not discovered until after the contract of sale, and performance was decreed with compensation. In the latter, the contract was for an estate in fee simple, free of incumbrances and in possession, and it was ascertained that there was an outstanding life lease at a low rent. Performance was refused.
To apply these authorities. The only objection to the judgment asked is, that there was a mortgage of $1,000 outstanding, not payable until about eighteen months from the date of the contract, without the consent of the holder. Here is a purchase for the sum of $50,000; sixty per cent, of which was to remain on bond and mortgage for the term of ten years. Can it be rationally imagined that if this mortgage and its terms had been fully known at the date of the contract, the purchaser would have refused to enter into it ? This is the strongest form in which the question can be placed in his favor.
In my opinion the case may be decided on this broad ground.
But again, the purchaser, before executing the contract, was apprised that there was a mortgage for $1,000 outstanding, though probably not apprised of its special terms. He had, however, notice sufficient to put him on inquiry, which could at once have been satisfied.
Again, the purchaser, after making the contract, entered into the possession of the premises, and the general rule certainly is, that when the purchaser is aware of objections^ not irremediable, but which may be removed or compensated, his taking the possession, without any agreement with the vendor qualifying the act, operates as a waiver, (1 Sugd. Yendors; p. 10;) and here the referee has found that Guynet and De Agreda exercised acts of ownership over the premises, after they knew of the existence of the mortgage. It is here proper to add, that the offers of Mr. Mantel, the vendor, have been in a high degree fair and liberal, and ought to have been accepted. The judgment appealed from must be affirmed with costs.