
    ASPINWALL v. BALCH.
    
      Court of Common Pleas; Special Term,
    May, 1877.
    Mortgage.—Foreclosure Sale.—Liability op Owner por Loss by Fire.—Purchaser’s Title.—Completing Contract op Sale.
    If intermediate a sale on a foreclosure and the time for the delivery of the deed to the purchaser, the premises are materially damaged by fire, or other cause, the loss must fall upon the owner of the equity of redemption and the mortgagee, and not upon the purchaser. Such a purchaser does not become the owner, so as to impose upon him any loss or burden, or an authority to exercise acts of ownership, until the delivery of the deed.
    Until then, the owner of the equity of redemption is entitled to the possession, and has a right to the rents and profits.
    If intermediate the sale and the time of performance, the property is so materially impaired by fire or other causes as to be greatly diminished in value, the purchaser is not obliged to accept it.
    But where the injury is comparatively slight, and a full and adequate compensation for it is offered to the purchaser, he will not be relieved from his contract.
    Motion to be relieved from a purchase at a foreclosure sale, and for a return of the money deposited at the time of the sale.
    The action was brought by Lloyd Aspinwall and others, executors of William H. Aspinwall, against Ebenezer H. Balch and others, to foreclose a mortgage.
    The sale was made by a referee under the usual printed terms of sale, on March 7, 1877, to A. A. Thurber, for the sum of $62,500, who signed the usual contracts of sale, and the sum of $6,275 was deposited by him or his assignee at the time with the referee. By the terms of sale the remainder of the purchase money was to be paid to the referee on March 28, 1877, when his deed was to be delivered to the purchaser. The mortgaged premises consisted of a brick store and dwelling known as No. 928 Broadway in the city of New York.
    The amount due upon the judgment with interest and taxes exceeded the amount of the purchase money, and after the sale the -property declined in value.
    The purchaser assigned his bid to Lewis Johnston.
    On March 11, 1877, a fire occurred by which the mortgaged premises were, to some extent, damaged or partially destroyed.
    The assignee of the purchaser then notified the referee of the damage caused by the fire, and objected to taking the deed on March 28, by reason thereof, and demanded a return of the deposit of $6,275, which was refused.
    Without any application to the courts, the referee proceeded, after March 28, 1877, to re-advertise the mortgaged premises for re-sale under the judgment, notifying the purchaser and his assignee that the loss and expense involved thereby would fall upon the purchaser, and the amount of money deposited would be applied to make up such loss, so far as there was sufficient, and the purchaser held liable for any deficiency. Thereupon, the assignee of the purchaser made this application.
    
      Albert Mathews, for the motion.
    I. Neither in judicial sales nor in contracts between individuals for the sale of lands in this State is the vendee considered in equity as the owner of the premises, until the time' has arrived when ‘ ‘ his right to a conveyance or to a specific performance is complete,” or when this equitable right of the vendee is perfected by “ the agreement and act of the parties,” or (in judicial sales) by the rules and practice of the courts in connection therewith (Fuller v. Van Geesen, 4 Hill, 173; S. C., 1 How. Ct. App. Dec. 240; McLaren v. Hartford Fire Ins. Co., 5 N. Y. 152; Cheney v. Woodruff, 45 Id. 98; Mitchell v. Bartlett, 52 Barb. 319; S. C., 51 N. Y. 447; Sherwin v. Shakspear, 5 De Gex, M. & G. 517; Wood v. North Western Ins. Co., 46 N. Y. 425; Cone v. Niagara Fire Ins. Co., 60 Id. 619, 622; Miller v. Collyer, 36 Barb. 255).
    II. Where, after a judicial sale, and before the day fixed by the terms of sale for the delivery of the referee’s deed, the premises are materially damaged by fire, the loss does not fall on the vendee. There being a partial failure of consideration, the vendee is not bound to accept the deed or complete his purchase until the premises are restored to their original condition as they existed at the time of sale, or there is at least an offer to indemnify him against injury (Thompson v. Gould, 20 Pick. 139; Tabor v. Robinson, 36 Barb. 486; Smith v. McCluskey, 45 Id. 612; Wells v. Calnan, 107 Mass. 514; Wicks v. Bowman, 5 Daly, 225; Murray v. Richards, 1 Wend. 58; Norton v. Woodruff, 2 N. Y. 153; Benedict v. Field, 16 Id. 595; Smith v. Brady, 17 Id. 173; Cunningham v. Jones, 20 Id. 487; Husted v. Craig, 36 Id. 221; Wood v. Hubbell, 5 Barb. 604; 10 N. Y. 488; Graves v. Bardan, 26 Id. 498; Morange v. Morris, 3 Abb. Ct. App. Dec. 314; Hartley v. James, 50 N. Y. 43; King v. Bardeau, 6 Johns. Ch. 44; Winne v. Reynolds, 6 Paige, 412).
    
      Varnum & Harrison, opposed,
    Claimed that in equity, the title vested in the purchaser upon the signing of the contract of sale, and the loss by fire fell upon him, and cited Sugden on Vendors, 5 Am. Ed. pp. 254, 468; Mott v. Coddington, 1 Abb. Pr. N. S. 300; McLaren v. Hartford Fire Ins. Co., 5 N. Y. 151; Dart on Vendors and Purchasers, 293, 564, 566; 2 Story's Eq. Juris. 790; Hoffman's Master in Chancery, 237; Kershaw v. Thompson, 4 Johns. Ch. 609, 615, 616; McKechnie v. Sterling, 48 Barb. 330.
    
      
       Compare Edwards v. West, 38 Law Times N. 8. 481.
    
   Daly, Ch. J.

J.This is an application to the court by the purchaser at a foreclosure sale of a house and lot, to be relieved of his bid, and to have the ten per cent, of the purchase money, $6,275, deposited at the time of the sale, restored to him, upon the ground that after the sale, and before the time for the delivery of the deed and the payment of the residue of the purchase money, the building was materially damaged by fire. He charges that by reason of the damage done to the building, there is a partial failure of the consideration; that the loss by reason of the fire falls upon the owner, and not upon him ; that it is to be borne by the owner and the mortgagee ; and that he is not bound to take, as the thing purchased, the land with the building diminished in value in consequence of the fire. He is, in my opinion, right in claiming that the loss occasioned by the fire falls upon the owner and the mortgagee, and not upon him. He does not become the owner until the delivery of the deed, nor is he equitably to be regarded as the owner, so as to impose upon him any loss or burden until the time fixed for the delivery of the deed, when by the payment or tender of the purchase money, he acquires the right to the immediate possession. Whatever may be the rule between vendor and vendee, upon an ordinary contract of sale, or where, by the terms of the sale, the purchaser takes possession, or has the right to do so, or an authority to exercise acts of ownership is conferred upon him before the time for the delivery of the deed and the payment of the purchase money, a purchaser at a foreclosure sale, who is not to go into possession until the delivery of the deed and the payment of the purchase money, acquires no title; but the owner of the equity of redemption is entitled to the possession and has the right to the rents and profits ; for as between him and the purchaser at the foreclosure sale, there is no such relation as exists between vendor and vendee ; the foreclosure being a proceeding in hostility to him. All that the purchaser acquires by the sale is a right to the deed at the time appointed; but until that time arrives, he is entitled to none of the benefit, nor charged with any of the burdens incident to ownership (Mitchell v. Bartlett, 51 N. Y. 452; Fuller v. Van Geesen, 4 Hill, 173; Cheney v. Woodruff, 45 N. Y. 100; Wicks v. Bowman, 5 Daly, 225; Tobor v. Robinson, 36 Barb. 483).

But it does not follow that because the loss occasioned by the fire is to be borne by the owner of the equity of redemption and the mortgagee, that the purchaser is to be relieved from his contract.

If intermediate the sale and the time of performance, the property is so materially injured by fire or other causes as to be greatly diminished in value, the purchaser is not obliged to accept it (Wickes v. Bowman, supra; Smith v. McCluskey, 45 Barb. 612).

In the first of these cases, the dwelling-house, which constituted seven-eighths of the value of the premises, was totally destroyed by fire between the time of the making of the agreement and the time of performance ; and we held that the purchaser was not bound to take the vacant lot in fulfillment of the contract. In the last case the building, which constituted the principal value of the premises, was destroyed by fire, and the court held that the purchaser was discharged, as the loss fell upon the owner; and the performance of the chief matter of the contract on his part had become impossible. In Wood v. Hubbell (5 Barb. 601; S. C., 10 N. Y. 488), the building demised was destroyed between the time of the execution of the lease and the commencement of the term, and before the lessee had taken possession. It was held that he was discharged, as the landlord was unable to give him the thing demised; that the loss fell upon the landlord, and not upon the tenant; that the tenant was prevented taking possession without any fault on his part, and that it would be inequitable to compel him to pay for the use of that of which he could have no enjoyment.

In Murray v. Richards (1 Wend. 58), where the property sold was a vessel, and before delivery she was destroyed by fire, it was held that the vendee could recover back the purchase "money, as the delivery of the thing contracted for was impossible (And see in recognition of this rule, Graves v. Berdan, 29 Barb. 100; S. C., 26 N. Y. 498).

But where the injury to the premises from the accident is comparatively slight, and a full and adequate compensation for it is offered to the purchaser, there is no reason why he should be relieved from the contract; that rule applying only where the delivery of the substance of the thing has become impossible, but not where some slight injury had arisen, which can be easily repaired, and the expense of which the owner is willing to bear (Winne v. Reynolds, 6 Paige, 412; King v. Bardeau, 6 Johns. Ch. 38; McGennis v. Fallon, 2 Moll. 588; Calcraft v. Roebuck, 1 Vesey Jr. 221; Drewe v. Hanson, 6 Ves. 678; Staypylton v. Scott, 13 Id. 425; Halsey v. Grant, Id. 78; Drewe v. Corp, 9 Id. 368).

The test appears to be whether the substantial inducement to the purchase has failed ; and this cannot be predicated where a slight damage has been done to ■the building by fire, which can be readily compensated for, out of the purchase money or otherwise. Such is the present case. The property purchased at the foreclosure sale consisted of a lot, No. 928 Broadway, in this city, with a building upon it, which was old and dilapidated, adding very little to the value of the premises, their value consisting chiefly in the value of the land. The purchase price was $62,500. The injury done to the building was slight. It appears, by the testimony of Mr. Smith, an insurance surveyor in this city, whose business it has been, for twenty years, to examine buildings and adjust losses by fire for insurance companies, that the whole of the damage occasioned by the fire can be repaired for the sum of $125; and there is submitted with the papers a written proposal of Edward Smith, a responsible and capable builder in this city, to repair the building for that sum. It appears further, that the loss is covered by insurance, and the offer is made upon the motion to transfer the insurance to the purchaser, upon the delivery of the deed. The injury from the fire occurred on March 11, but there was no refusal or intimation given by the purchaser that he would not take the premises for that reason, until April 7 following, which was more than a week after the time for performance. Having failed to perform, the property, according to the terms of sale, was again advertised for sale by auction, the terms of sale providing that if the purchaser fails to comply with the conditions, that the premises may, without any application to the court, be put up again at auction, and the purchaser held liable for any deficiency. It may be doubted if this could be done without first offering to compensate the purchaser for the injury occasioned by the fire, either by allowing the amount out of the purchase money, or by offering to repair the building, so as to put it in as good a condition as it was before. The present application to relieve the plaintiff from his contract will have to be denied, with the understanding, however, that the parties are ready and willing to make full compensation for the injury done by the fire. If, after they have done that, the purchaser still refuses to take the property, then, in my judgment, according to the conditions of sale, they will be entitled to put it up again at auction, and hold him responsible for any deficiency.

The difficulty on the part of those foreclosing the mortgage has arisen, I apprehend, from their impression that the loss occasioned by the fire fell upon the purchaser, and not upon them. It will now, however, be in their power either to repair the building or to offer an adequate compensation therefor ; for the purchaser is not bound to take a transfer of the insurance, with the risk of being indemnified or not by that means ; and if, within a reasonable length of time, they make no adequate offer of compensation, or do not themselves repair the building, then the purchaser will be at liberty to renew this motion to be discharged from his contract.  