Viele v. Troy & Boston Rail Road

21 Barb. 381, 1855 N.Y. App. Div. LEXIS 159

• Court: New York Supreme Court
• Decided: September 3, 1855
• Status: Published

Opinion

By the Court, Weight, J.

Being unable to agree for the purchase of real estate from the plaintiffs, required for the purposes of.the defendants’ incorporation, and instead of instituting the proceedings prescribed by the rail road act to acquire title, the parties mutually agreed to submit the question to three persons to determine the amount of compensation to be made to the plaintiffs. As no title could be acquired by the award of the arbitrators, it was further agreed, that they should notify the respective parties of their determination within a specified time, and that within ten days after the receipt of such notice, the plaintiffs should execute and deliver to the defendants a good and valid deed of conveyance of the lands taken for the purposes of the road, thereby conveying them by a title free from incumbrances. At the delivery of such conveyance the rail road company was to pay the amount of compensation ascertained and determined by the arbitrators, or any two of them.

Less than three acres of the plaintiffs’ lands were taken from a farm of some 150 acres, at its maximum value worth $60 'per acre. Two of the arbitrators (or appraisers as they are called in the agreement) signed an award fixing the compensation to be paid for the three acres, at $2850. The parties were notified of the award on the 24th of January, 1851. On the 3d of February following, the plaintiffs tendered a deed of the lands taken. There was no objection made to the form of the conveyance. It contained a cbvenant that the premises were free from incumbrances. The secretary and treasurer of the company declined to accept the deed and pay the money, assigning as a reason that he had no authority to pay without an order from the president, and he was absent ■ At this time there was a mortgage upon the premises, given in July, 1839, to the loan commissioners of the county of Rensselaer, on which there was due the'Sum of $350. This mortgage was discharged on the 11th of February, 1851, eighteen days after notice of the award. There was also upon - the record, unsatisfied, another mortgage for $1500 against one of the plaintiffs, but whether it covered the lands taken the case does not show. On the return of the president the deed was tendered to him. It .was left at the office' of the company, and subsequently referred to their attorney, who reported that the property was incumbered. One of the directors of the company retained the deed, but neither the reason that it was tendered more" than ten days after notice of the award, or that the property embraced in it was incumbered appear to have been given. Ho tender of deed and demand of money was proved to have been made after the satisfaction of the loan commissioners’ mortgage and before the action was brought. The company, at the time of the trial, were using the land for their road. They had taken possession prior to the award. Just previous to the award one of the plaintiffs forbade the workmen going on to the land until he got his pay. They ceased their operations until after the'award, and then resumed them. In the summer of 1851, the plaintiffs brought this action, asking for a specific performance of the agreement, and that the defendants accept the' deed tendered, and pay to them the sum awarded, with interest thereon from the date and notice of the award.

The only issues tendered by the defendants’ answer were that the award was procured by fraud; that there was partiality and corruption in two of the arbitrators ; that they based their determination on impertinent and incompetent evidence; and that at no time within ten days after notice of the award, were the premises free from incumbrances. The action is therefore in form for a specific performance of the contract of January, 1851. Instead of treating that instrument as a submission, and bringing their action to recover the sum awarded, the plaintiffs have chosen to treat it as a contract for the sale of lands, the purchase price to be determined by individuals chosen and named by the parties. This they may do. They may insist upon a specific performance of the contract, provided a case is made for equitable interference. When an agreement in relation to real estate is in its nature and circumstances unobjectionable, and the contract is in writing, is certain, and fair in all its parts, is for an adequate consideration, and capable of being performed, it is as much a matter of course for a court of equity to decree a specific performance, as for a court of law to give damages for a breach of it. Indeed, the cases are numerous where equity has enforced contracts for the breach of which no action for damages could be maintained at law. The case of Seymour v. Delancy, (3 Cowen, 445,) which the learned judge who tried the cause seems to have had in his mind, is in point. In that case the vendor’s remedy at law was gone, by reason of there being a mortgage on the estate, so that he could not convey a good title at the day fixed upon by the contract, yet a bill for specific performance was sustained. In equity, the leading inquiry is, whether in conscience the contract should be enforced; and mere technical objections that would defeat on action at law for damages are not allowed to produce inequitable and oppressive results. Time is not in general the essence of the contract. If it be conscientious that the agreement should be performed, though the action be lost at law, by the default of the very party-seeking a specific performance, it will notwithstanding be decreed. Yet the parties may make time the essence of the contract, and in such case a court of equity will not relieve the party in default.

The contract in this case provided that within ten days after notice of the award, the plaintiffs were to convey the premises, free from incumbrances, and the defendants to pay the sum awarded. The counsel for the defendants misapprehends the agreement in supposing that the delivery of the deed was made a condition precedent to the payment of the purchase money, or sum awarded. They were to be simultaneous acts. It was as much the duty of the defendants to pay at the time stipulated, as of the plaintiffs to convey. Neither party could sue at law, without the tender of a deed by the one party, or of the purchase money by the other.. The provision for a conveyance of the premises free from incumbrances was not an express condition precedent to be performed within the period of ten days after notice of the award, else the contract should be at an end, and the defendants relieved from payment. It was not the understanding of the parties that after the amount of the purchase money had been ascertained, and notice thereof given, within ten days thereafter the plaintiffs should convey a perfect title, or making default, the agreement to be void. The defendants had taken possession of the premises prior to the award, and at the expiration of the ten days were using, and still continue to use them. There is nothing, therefore, in the contract, or the circumstances surrounding the case, showing that the parties had made time any part of the essence .of the contract. The defendants could lose nothing by extending the time for the plaintiffs to convey a perfect title beyond the period of ten days, as they were in the possession and use of the premises, and could not be called on to pay the award unless such perfect title were made. Within the ten days the defendants might have tendered the purchase money and demanded a deed, and in default of the plaintiffs, have- sued at law. So, also, the plaintiffs having tendered a deed conveying a perfect title,' in default of payment might have maintained their action at law. As neither party has put the other in default, and the time has elapsed, it is probable that the remedy of both, at law, for a breach of the contract, is gone. Either party may, however, go into equity, for a specific performance, and make the offer incumbent on him, in the complaint ; and the failure to make a tender before the commencement of the suit would only affect the question of costs. (12 Vesey, 25.) In general, and where lapse of time is not essential to the substance of the contract, it is not necessary for the plaintiff to show that he was able to give a good title at the time of making the agreement to sell, or even at the commencement of the suit. It will be sufficient if he can give a perfect title at the time of the decree, or at the time when the master makes his report. (5 Paige, 241.) In Seymour v. Delancy, (3 Cowen, 445,) the plaintiff had covenanted that he would convey to the defendant certain premises on or before the 1st June, 1820, with a stipulation that the defendant might enter into immediate possession of the premises, which he accordingly did. On the -1st June there was a mortgage on the premises which remained unpaid until a short time previous to filing the bill, in March, 1821. The plaintiff executed no conveyance of the title on the 1st June, neither could he make perfect title, as the property was incumbered by the mortgage. Suydam, senator, who delivered the prevailing opinion, said: “ In the case of a specific performance it is the usual course of the court to refer the inquiry as to title to a master. In my judgment this inquiry extends not only to the actual title, but to incumbrances upon the property. In fact the master is to inquire 'whether the party can make a deed according to his contract. If he can, it is sufficient, although he was not in a situation to do so when he entered into the contract, or at the time for performance; though it might- be otherwise where one party, had been quickened by the other, or when time is of the essence of the contract, as where it relates to stocks or other personal chattels. The appellant’s remedy is lost at law, because the property was covered by' a mortgage.. But that is no objection in a court of equity. It is the peculiar privilege of courts of equity to interfere where the remedy is defective at law, if it be not against conscience: and if a contract be fair it should be enforced.” Savage, C. J., who was for affirming the decree of the chancellor dismissing the bill, said: “ Although lapse of time, when not of the essence of the contract, or an incapacity to make title on the day stipulated, are not insuperable- obstacles in the way of obtaining the specific execution of a contract, provided title can be made before the decree; yet when connected with inadequacy of price, they will justify the court in withholding the exercise of its ex: traordinary powers in compelling a specific performance.” The court of errors reversed the decision of the chancellor, and ordered that a master inquire whether the appellant had, and could give, a good title to the premises which he had agreed to convey, and if the chancellor, upon the coming in of his report, should be of the opinion that such title could be given, that a proper decree be made for the specific performance of the contract. In the present case the parties had contracted for the sale of certain lands to be used for the purposes of the rail road company, and instead of fixing the price themselves that question was agreed to be left to three persons chosen by the parties. The plaintiffs were to convey a perfect-title to the premises, and the defendants to pay the award or purchase money within ten days after notice of the award. Within the ten days the plaintiffs tendered a deed, properly executed. Ho objection was made on the ground of a defective title. Shortly afterwards the deed was again tendered to the president of the company. He raised no objection that .the tender came too late, or that the title was defective, upon the ground that there were incumbrances upon the property. The deed was subsequently returned to the plaintiffs, without any specific reason being assigned; but the defendants continued in the possession and use of the property. The defendants did nothing which looked like an abandonment of the contract; or evinced by word or act an intention to question the plaintiffs’ right to a performance, or to hold them to furnishing a perfect title within ten days after notice of the award. Indeed these acts amounted to a waiver of the condition to convey a perfect title within ten days after notice of the sum of the purchase money awarded to be paid. It seems, however, that though the deed tendered within the ten days contained a covenant against incumbrances, there was a small mortgage existing and unpaid at the time of the tender, on the whole farm of 150 acres. This was paid some eighteen days after the award, and prior to the commencement of the suit. For any thing that appears in the case, when the suit was commenced the plaintiffs were able to give a perfect title. The only ground of the de- ■ fendants, as respects this branch of the case, was that the plaintiffs had shown, themselves, that it was not in their power to convey the premises free from incumbrances, within ten days after notice of the award, and as it was of the' essence of the contract, and a condition precedent to the payment of the purchase money, that a perfect title should be furnished within ten days after notice of the award, equity could not enforce a specific execution of the contract. The learned judge holding the circuit thought otherwise; and in this we are of the opinion there was no error. The parties had not made time the essence of the contract, nor was lapse of time in furnishing a perfect title essential to its substance. The defendants had waived or acquiesced in the default, if default it may be called, in not conveying a title to the premises, free of incumbrances, on or before the 1st of February, 1851. Indeed, (regarding this as the only point in the case,) the proof would have justified a judgment for a specific performance, without a reference, as was had in Seymour v. Delancy, to ascertain whether the plaintiff could give a perfect title. But for greater caution the judge chose to follow the practice in that case, (if the defendants required it,) and ordered the question to be referred to a person to be named in the judgment, to ascertain and report upon the title, and if it should prove defective, and should not be made perfect, then the complaint was to be dismissed. There was nothing, therefore, in the omission to make perfect title on or before the 1st February, 1851, to prevent a court of equity from decreeing a specific performance of the contract, provided it could be made, at the time of the decree.

Whether a court of equity shall decree the specific performance of an agreement, or not, is a matter resting m its discretion ; but this is a sound legal discretion. It will not lend its aid to enforce an unconscientious contract. The case presented must be fair, just and reasonable; the contract free from fraud, misrepresentation or surprise; and not hard, unconscionable or unequal. It must also be entered into upon adequate consideration ; and where the inadequacy of price in a contract to sell, is so great as to be conclusive evidence of fraud, as where it would shock the moral sense of an .indifferent man, a court of equity should not carry it into effect. But inadequacy of price merely, without being such as to prove fraud conclusively, the contract being entered into deliberately, and fair in all its parts, is not an objection to its being executed. In this case it cannot be pretended that the contract entered into was hard, unconscionable or unequal; nor does the proof show misrepresentation or surprise on the part of either of the parties entering into it. If there was any fraud in the case it is to be inferred from the inadequacy of price. The contract was entered into deliberately, and was fair' in all its parts. The consideration to be paid for the land was not definitely fixed in the contract,, but the sum submitted to men indifferently chosen by the parties. A majority of those men fixed the price to be paid for the land, and that sum is to be regarded and treated as the consideration, as though it were named in the agreement. It seems a disproportionate compensation for less than three acres of land, taken from a farm of 150 acres, the maximum value of the whole of which was about $9000. • But is there enough in the case to show that the price was so inadequate as to shock the moral sense, and be conclusive evidence of fraud ? All that we have is that the price for 2ArV acres of land from the plaintiffs’ farm was fixed at $2850,' and that one of the appraisers expressed an eagerness to make the defendants pay all that the land was worth, and more if he could do it conscientiously. We have no evidence as to what part of the farm was taken, whether it included in it or was contiguous to any buildings, or how it affected the value of the remainder of the farm. It might be that the road as located ran through valuable buildings of the plaintiffs, or cut up and divided the farm in such a way as to reduce its aggregate value one third. We cannot say that, under these circumstances, the price is so inadequate as to establish fraud conclusively, and preclude the plaintiffs from a specific performance. We may surmise from the disproportion between the value of the whole farm, and the price fixed as the consideration for the small part in acres taken for the purposes of the road, that the defendants were made to pay pretty dearly, but the price does not shock the moral sense, as it may be that that part of the farm taken was worth the sum of the appraisal. On this subject there was a palpable defect of proof, and the. court would not have been legally justified in denying relief on the ground of inadequacy of price. ' »

The defendants offered to prove that the appraisers, in determining the sum to be paid as a compensation for the land taken, received proof or representations from one of the plaintiffs of expenses incurred by him in attending the legislature as a lobby agent, and that they actually allowed some $80 on that account in the award, and allowed the further sum of $500 to indemnify the plaintiffs against the chance that at some future day they might lose the life of a son or child by the engine. This proof was excluded by the judge. It is difficult to perceive the pertinency of this proof in an action to enforce the specific performance of a contract. It would not have risen to the dignity of pertinent evidence had it been offered on direct proceedings to set aside an appraisal, on the ground of partiality, corruption or misconduct of the arbitrators. Arbitrators are judges of the parties choosing, and their determination is generally final and conclusive. Their award may be vitiated in a court of equity, for partiality or corruption in either of them; but it is no ground for setting it aside that they erred in receiving impertinent and incompetent evidence. If they refuse to hear pertinent and material evidence, and thus avail themselves of the only means— the testimony of witnesses—to arrive at an honest and conscientious result, equity will set aside their award. But, says Chief Justice Spencer, in Van Cortlandt v. Underhill, (17 John. ,) “if arbitrators hear the evidence offered to them, and make up their award with such lights as the parties afford them,' their award in estimating damages or in the value of property will not be set aside, unless their estimates are so enormously disproportioned to the case proved as to strike every one that there must have been corruption or partiality;” The tendency of the proof offered was to show that the arbitrators received incompetent evidence, for aught that appears without objection, and acted upon it in estimating the plaintiffs’ damages. It did not however legitimately tend to show that partiality or corruption on the part of either of the arbitrators, which should have led a court of equity, on direct proceedings, to set aside their award. They may have received improper evidence, or erred in judgment in estimating the plaintiffs’ damages—it may be, that their estimation to some extent was based on erroneous principles—but this does not tend to show such partiality or corruption as should vitiate an award deliberately made by them. But this was not an action or cross action to set aside the award of arbitrators on the ground of partiality or corruption. It was for the specific performance of a contract, in which in no possible view could the fact that arbitrators chosen by the parties had received and acted upon incompetent evidence, have been pertinent proof. The judge did not err in keeping this irrelevant issue out of the case.

The court decided that the plaintiffs were entitled to interest on the award or purchase money from the 3d February, 1851, the day'on which the deed of the premises was tendered. The defendants were in the possession and use of the- premises, and the parties by their contract had fixed upon that time for the payment of the purchase money. The purchase money was neither paid nor tendered. The defendants had not demanded a deed, and thereby put the plaintiffs in default. We think that interest was rightly allowed, from the time fixed in the contract for the payment of the purchase money, provided there was to be a judgment at all for a specific performance.

We have chosen to look into the merits of this case, though ° no exception appears to have been taken to the decision of the judge, and the judgment appealed from was consented to and entered by stipulation of the attorneys of the respective parties. The code provides that when a trial is had by the court, for the purposes of an appeal either party may except to a decision on a matter of law arising upon such trial, within ten days after notice in writing of .the judgment, and with the same effect as upon a trial by jury. (Code, § 268.) The defendants did not except to the decision of the judge, and the parties agreed upon the judgment to be entered, and the referee to report upon the question of title. The judgment entered was not final in its character. It contained a provision for reference as to title, and in the notice of appeal the right was reserved by the defendants, in case of the affirmance of the judgment or any part thereof, to avail themselves of the order of reference contained in the judgment. It is questionable whether, under these circumstances, the defendants could properly appeal; and whether after consenting to the judgment, they have any remedy left but an appeal from the order confirming the report of the referee to whom they have referred the question of title. But we have not chosen to rest the cause upon this technical ground.

[Albany General Term, September 3, 1855.

Judgment of the circuit court affirmed.

Harris, Wright and Watson, Justices.]