Opinion
July 25, 1912.
Abram I. Elkus [ Carlisle J. Gleason and Richard Kelly with him on the brief], for the appellant.
William N. Dykman [ Francis L. Archer with him on the brief], for the plaintiff, respondent.
Louis Marshall [ Louis Malthaner with him on the brief], for the respondent Caroline M. Bovee (formerly Wemple).
This action was brought for the partition and sale of three pieces of property, two of them situated in the borough Manhattan and one in the borough of Brooklyn. On November 11, 1911, a judgment was entered by which, among other things, a referee was appointed to make the sale. One of the pieces of property, described as parcel No. 1, was situated on the northwest corner of Broadway and Spring street in the borough of Manhattan. At the sale, held February 29, 1912, said parcel was struck down to the Esseff Realty Company for $132,000. The judgment, in accordance with the terms of which the sale was had, provided that the referee should sell each of said parcels free and clear from any and all general or specific liens or incumbrances whatsoever, excepting the lien of the mortgage of the East River Savings Institution. This mortgage affected parcel No. 1. Upon that mortgage, at the date of the sale, the sum of $75,000 of principal was due, with interest from February 1, 1912. The notice of sale contained a statement as follows: "The premises above described as parcel No. 1 will be sold subject to * * * a mortgage held by the East River Savings Institution, on which there is now due the sum of $75,000, with interest thereon at the rate of five per centum per annum from February 1, 1912." The terms of sale, so far as they related to parcel No. 1, contained a similar statement. Upon the date for closing the contract of sale, the purchaser sought to deduct from the bid price the amount of the mortgage, with the interest thereon, the sum tendered being only the excess of the bid above such amount. The referee refused to deliver the deed upon such conditions. Thereupon the purchaser moved to be released from its bid, unless the referee should be directed by the court to allow and deduct therefrom the amount of the principal and interest on said mortgage. From an order denying such motion this appeal is taken.
A bid at a foreclosure sale "when accepted so far constitutes a contract that a bidder may not withdraw his bid except under circumstances that will justify the rescission or reformation of an ordinary contract for the sale of land." ( Continental Insurance Co. v. Reeve, 135 App. Div. 737; appeal dismissed, 198 N.Y. 595.) The purchaser does not now claim a right to reform the contract. It does seek a rescission thereof. There is no suggestion of fraud in the case, but appellant urges rescission upon the ground of mistake, which, however, was not mutual. A mistake on one side only may be ground for rescinding, but not for reforming a contract. ( City of New York v. Dowd Lumber Co., 140 App. Div. 358; Hearne v. Marine Ins. Co., 20 Wall. 488; Moffett, Hodgkins, etc., Co. v. Rochester, 178 U.S. 373.)
The respondents contend that if the purchaser had any right of rescission it has been lost by reason of the form of the application for relief. A party to a contract may not at the same time affirm it in part and rescind it in part. If he elects to affirm, he must affirm it in all of its terms. (Wald's Pollock Cont. [3d ed.] 707.) An election once made with knowledge of all the facts is final and conclusive. ( Moller v. Tuska, 87 N.Y. 166; Follett v. Brown, 188 Ill. 244; Wylie v. Gamble, 95 Mich. 564. ) Taking steps to enforce a contract is a conclusive election not to rescind on account of anything known at the time. (Wald's Pollock Cont. [3d ed.] 708; Conrow v. Little, 115 N.Y. 387; Bach v. Tuch, 126 id. 53.) If the appellant had sought in the first instance to compel a delivery of the deed upon payment of the sum bid, less the amount of the principal and interest of the mortgage, and had failed to establish that such was the contract between the parties, it may be that because of such election it could not afterward be heard upon an application to rescind the contract upon the ground of a mistake upon its part. But in this instance the primary relief asked for was a cancellation of the bid. It is true that coupled with this there was a suggestion of alternative relief. But we think that this alternative should not be construed as anything more than an offer upon the part of the purchaser to make a new contract upon the basis thereof if the other party to the contract so desired. But to rescind a contract upon the ground of mistake by one of the parties thereto it must be an honest and excusable mistake. One cannot be heard to state that the terms of a proposed written contract, plain and unambiguous in character, were known to him before he entered upon the same, but that, notwithstanding this, he erred in his construction thereof. This would be opening the door to a method of avoiding a perfectly valid contract if subsequently to the making thereof one of the parties thereto concluded it was to his disadvantage.
Considering, then, the application upon its merits, we think that the learned court at Special Term correctly found as a fact that there was no honest mistake as to the terms and conditions of appellant's bid. In the affidavit verified by its president at the time that the motion was originally made he asserted that before bids were invited by the auctioneer he stated that "the amount of the mortgage on the property held by the East River Savings Bank would be allowed from and out of the bid or purchase price." As to this he is corroborated by no one, for the evidence of his brother, the secretary and treasurer of the realty company, is weak and evasive upon this point; it is that "to the best of his knowledge and belief, and as deponent understood it, the reader stated that the Seventy-five thousand Dollar ($75,000) mortgage to the East River Savings Bank would be allowed from and out of the purchase price." He is contradicted by the referee who made the sale, by one of the attorneys for the plaintiff and by two of the attorneys for the parties defendant. Each of these persons was present at the sale. He was also contradicted by the husband of the plaintiff who attended for the purpose of bidding and who did bid upon the property, and also by the auctioneer and his assistant. When it clearly appeared that the secretary and treasurer of the realty corporation which purchased at the sale and who was present at the time had seen and examined the notice of sale before the date of the auction and that the terms of sale were distinctly read before bids were invited, the purchaser then shifted its ground and contended that it was the custom when sales of real property were made at auction at the Real Estate Exchange in the borough of Manhattan, even where the property is declared to be sold subject to a mortgage, unless such mortgage is not to be deducted from the purchase price, for the auctioneer to announce that all bids will be over and above such mortgage, and that in this case no such announcement was made. As to this fact, the recollection of the learned referee who made the sale does not accord with that of the president and secretary of the purchasing corporation, and there is a conflict of evidence as to the existence of such a custom. But parol evidence of a custom may not be received to add new terms to a contract inconsistent with the terms actually expressed therein in writing. (Wald's Pollock Cont. [3d ed.] 315; 1 Greenl. Ev. [15th ed.] § 292; Bigelow v. Legg, 102 N.Y. 652, 654; Hedden v. Roberts, 134 Mass. 38; Matter of Schooner Reeside, 2 Sumn. 567; De Witt v. Berry, 134 U.S. 306, 312.) In the Reeside case Justice STORY said: "I apprehend that it can never be proper to resort to any usage or custom to control or vary the positive stipulations in a written contract, and, a fortiori, not in order to contradict them. An express contract of the parties is always admissible to supersede, or vary, or control, a usage or custom; for the latter may always be waived at the will of the parties. But a written and express contract cannot be controlled, or varied, or contradicted by a usage or custom; for that would not only be to admit parol evidence to control, vary or contradict written contracts, but it would be to allow mere presumptions and implications, properly arising in the absence of any positive expressions of intention, to control, vary or contradict the most formal and deliberate written declarations of the parties." This language was quoted with approval by Justice LAMAR, speaking for the United States Supreme Court, in the case of De Witt v. Berry ( supra). The practical construction put upon the contract by the acts of the parties immediately after the property was struck down militates against appellant's present contention. By the terms of sale ten per cent of the purchase money was to be paid to the referee at the time and place of sale and the residue on the delivery of the deed. If appellant's contention were correct, the purchase money to be paid was not $132,000, but $132,000 less $75,000, with interest thereon for a period of about two months. Yet we do not find the purchaser paying ten per cent of this reduced sum, amounting to a little more than $5,000, but, on the contrary, $13,200. If this is ten per cent of the purchase price to be paid, a sum nine times as great will be the residue thereof.
The order appealed from should be affirmed, with ten dollars costs and disbursements.
HIRSCHBERG, THOMAS, WOODWARD and RICH, JJ., concurred.
Order affirmed, with ten dollars costs and disbursements.