Opinion
April 4, 1913.
George E. Blackwell, for the appellant Alexander S. Burns.
Barnett Jablow [ Ralph Barnett and Morris Jablow of counsel], for the appellant Semenza.
Louis O. Van Doren, for the respondent.
To thoroughly comprehend the merits of this appeal it is necessary to recite the essential facts which, although somewhat complicated, are not in dispute.
In the year 1909 the real property known as No. 128 West Houston street in the city of New York was owned by Christina and Carmine Minetti. At that time Domenico Castelli, the plaintiff, held a mortgage upon the property for $4,000, which was subordinate to four prior mortgages as follows: One held by the Standard Trust Company for $57,000; one held by Arnstein Levy for $11,000; one held by Anna Neill for $4,000, and one held by Luigi Minetti for $2,000.
The mortgages held by Neill and Luigi Minetti cut no figure in this controversy. The present owners of them were made parties to the action and appeared by attorneys, but made no claim for relief, and are not represented on this appeal.
In 1909 Arnstein Levy, the holders of the second mortgage for $11,000, began an action of foreclosure. Plaintiff on being served with the papers in that action took them to his attorney, Antonio C. Astarito, who, in turn, called upon one Timonier, an attorney who had represented the owners of the property when plaintiff's mortgage was made. Astarito, acting for plaintiff, had a meeting with Timonier and the appellant Burns, at which it was agreed that plaintiff should contribute $2,500 towards a fund for the purchase of the property at the foreclosure sale, and that Burns should make the purchase for the benefit of the mortgagees holding mortgages subsequent to the one being foreclosed. This agreement was carried out. The foreclosure sale was held on May 3, 1910, and Burns purchased the property for $15,000, of which $2,500 was contributed by plaintiff, and on May 25, 1910, the referee executed a deed of the property to Burns. On the same day Burns and plaintiff entered into a written agreement of which a copy is attached to the complaint. This agreement was carelessly worded but its meaning is sufficiently plain. It is made between plaintiff, designated as party of the first part, and Burns, designated as party of the second part. The confusion arises from the fact that in two places the words "party of the second part" are used, when, as is perfectly apparent from the surrounding circumstances and the acts of the parties, the "party of the first part" was meant. In one instance it recites that the "party of the second part" has agreed to contribute and has contributed $2,500 towards purchasing the property, whereas it was plaintiff, party of the first part, who made the contribution. In another instance it is provided that the party of the second part shall receive from the party of the first part a mortgage for the sum advanced. Again it is perfectly apparent that the parties should be transposed. It was the party of the first part (plaintiff) who contributed the $2,500, and it was the party of the second part (Burns) who bought the property in, so that it is entirely apparent that the intention was that the party of the second part (Burns), who bought the property, should give a mortgage to the party of the first part (plaintiff), who had advanced the money. As was said by the vice chancellor in Huyler's Executors v. Atwood ( 26 N.J. Eq. 504) of a deed in which the same transposition of parties occurred: "The mistake is evident. The party of the second part was to pay the purchase money. The deed is to be read according to the manifest intention of the parties. There can be no doubt what that is." So read the meaning of the agreement under consideration is quite clear. After reciting the contribution by plaintiff of $2,500 towards the purchase of the property, and Burns' purchase thereof "at the instance of and for the sole benefit of all the said subsequent mortgagees," it was agreed that plaintiff should receive from Burns, "or his immediate grantee," a mortgage to secure the amount of $2,500 advanced by plaintiff, with interest at six per centum, "which mortgage shall be subsequent and subordinate only to the second mortgage, to be given by the owner to secure the difference in the money required in acquiring said premises on said sale and expenses in connection therewith, and that the expense of placing the said second mortgage shall be borne out of the property." It was further provided that Burns should execute a bond and mortgage for the sum of $4,000 and interest to cover the original advance by plaintiff upon the property, which mortgage was to be a fourth mortgage upon the property, subject to the Minetti and Neill mortgages, and also subject to the first and second mortgages, "the latter to cover the money advanced by the party of the second part [Burns] on taking title and expenses in connection therewith and all expenses for recording and taxes on said mortgages and drawing same."
Upon the execution of this agreement Burns executed a deed of the property to one Agnes T. Madden, concededly a dummy, and she at once executed and delivered to Burns a bond and mortgage for $11,000, which he, on December 27, 1910, sold to the defendant Semenza for the sum of $10,000 in cash, which Burns received and kept, or gave to Timonier, under whose direction he appears to have been acting, and who is now dead. In August, 1911, Madden, at Burns' direction and for a nominal consideration, executed a deed of the property to one Victoria Michelien, who executed a lease to one Paterno.
Up to a certain point in these proceedings Burns acted in strict conformity to his agreement with plaintiff. That agreement contemplated that he should convey the property to a third person, and through that third person execute a mortgage which was to be a second mortgage replacing the mortgage formerly held by Arnstein Levy. Having done that, however, it was his duty to have executed and delivered to plaintiff a mortgage for $2,500 and a bond and mortgage for $4,000. The conveyance to Mrs. Michelien was in violation of that duty, but fortunately no irreparable harm was done thereby, because at the trial Mrs. Michelien tendered to said Burns a deed of the premises and an assignment of the lease to Paterno, which, as appears by a document appended to the case on appeal, said defendant has accepted. Upon these facts it is not difficult to formulate a judgment which will do equity between the parties, and which will not be so elaborate and drastic as the one under review.
Burns is now in a position to specifically perform his contract with plaintiff and should be required to execute and deliver to plaintiff: (1) A mortgage for $2,500 bearing interest at six per cent. (2) A bond and mortgage for $4,000, also bearing interest at six per cent. No time is specified in the agreement as to how long these mortgages are to run, and they should, therefore, be presently payable. (3) He should pay interest on $6,500 from May 25, 1910, the date on which he received the referee's deed to the date of the mortgages to be given by him. He held the property from the receipt of the referee's deed, as trustee for the plaintiff so far as plaintiff's advances went, and should account for and pay either interest or mesne profits from that time. Although the property is apparently of a rentable character, there is no evidence as to the mesne profits, and interest should, therefore, be allowed. These two mortgages should be subordinate only to the $11,000 mortgage held by Semenza, the mortgages to Neill and Minetti being for some reason out of the case.
If said Burns shall still be unable to make specific performance as above provided, or shall refuse to do so within twenty days, he should pay to plaintiff the sum of $6,500, with interest at six per cent from May 25, 1910.
So far as concerns the appellant Semenza we see no reason why the mortgage held by him should be annulled, and a new one executed, as required by the order appealed from, or why he should be further restrained from proceeding with its foreclosure. The making of such a mortgage was expressly provided for in the agreement between plaintiff and Burns, and Semenza appears to have purchased it in entire good faith. In so far as Semenza is concerned the judgment should be reversed and the complaint dismissed. So far as concerns costs the necessity for this action arose from the failure of Burns to live up to his contract, and the plaintiff is entitled to costs against him at the Special Term and on appeal. Semenza, on the other hand, having apparently been blameless, is entitled to costs against plaintiff at Special Term and on appeal.
INGRAHAM, P.J., McLAUGHLIN, LAUGHLIN and CLARKE, JJ., concurred.
As to defendant Burns judgment ordered as directed in opinion, with costs to plaintiff in this court and at Special Term. As to defendant Semenza judgment reversed and complaint dismissed, with costs to him against plaintiff in this court and at Special Term. Order to be settled on notice.