
    Alfred Urbansky, Appellant, v. George P. Shirmer and Michael J. Hand, Respondents.
    First Department,
    February 9, 1906.
    Specific performance -- when prior false representations of' plaintiff - waived by defendant— when promise to assign mortgage shown by promise to deliver same—adequate remedy at law not pleaded — tender— when plaintiff not bound ,to accept offer to return consideration.
    When, in an .action for the specific performance óf a contract to assign a mortgage, it is Shown that though the defendant had made A former agreement to execute releases of said mortgage on the false representation óf the plaintiff * that he was the owner of 'the mortgaged premises, the defendant, subsequent to the discovery of the fraud, has agreed .to assign the mortgage And has accepted the consideration, there is a waiver of the prior fraud of the plaintiff and he is entitled to specific performance or damages for a breach of contract.
    A .promise by the holder of .a mortgage on delivering a release thereof that he will -also deliver the .bond and mortgage when he finds it, is an agreement .to assign the same, for title to a bond and mortgage can pass by delivery: "■ ’
    In. an action, for specific performance, the defense .that the. plaintiff has an - adequate remedy at law must be pleaded to be available.
    In such action the plaintiff is not pound to accept a tender by the defendant of the consideration paid, but may . insist upon specific performance or damages for the breach of the contract..
    Appeal by the plaintiff, Alfred Urbansky*. from ,a judgment óf the Supreme Court in favor of the defendants, entered in the office of the- clerk of the county of Hew York on- the 28th day of January, 1905, .upon the decision of the court, rendered after a trial at the Hew York Special Term, dismissing the complaint upon the.merits. . ’ -
    
      Isaac L. Miller, for the appellant.
    
      
      Oscar C. Kunze, for the respondent Shirmer.
    
      Roswell H. Carpenter, for the respondent Hand.
   Ingraham, J.:

The facts in this case are peculiar. The plaintiff for some reason was desirous of obtaining the assignment of a bond and mortgage held by the defendant Shirmer on certain property in. the city of Hew York owned by the defendant Hand. The plaintiff testified that he met' Shirmer in the month of June, 1904, and told him that as the first mortgages on the lots at Baychester and Pelham Park on which he (Shirmer) held second mortgages were being foreclosed, his second mortgages would be wiped out, and, “ providing he would take little for any of his mortgages, I would probably consider buying them.” Shirmer asked the plaintiff if he knew the particular lots he referred tó; plaintiff replied no, but that he would let him know by letter. Subsequently plaintiff sent Shirmer a letter, dated June 3, 1904, as follows:

‘ “ Dear Sib.— The lots I referred to when I spoke to you to-day are as follows : ” (Then a number of lots are named, and the letter continues): “How kindly state the lowest possible figure on each bunch separate, and if your figures are low enough it will not take me long to let you know what can be done.”

In reply to this letter the defendant Shirmer wrote to the plaintiff on June eighth, as follows :

“ Deab Sib.— I submit the following: ” (and there .follow a number of lots; the lots in question being lots 5 to 10, inclusive,) “ release price $640; will take cash now $500.”

In reply the plaintiff wrote to the defendant that he would buy ‘¡the third parcel or bunch, which included lots 5 to 10 inclusive, for $225 and that he would be ready to pay in cash before the fifteenth instant. Subsequently to this letter the defendant called upon the plaintiff and said he wanted $500, to which plaintiff replied that it was no use talking, that he had given the figures he would pay, and in case defendant wanted that, very well and good, and if not, to drop the matter. Subsequently an agreement resulted, the plaintiff paid the defendant $25, and the defendant made out and delivered to plaintiff a memorándum, as follows:'

“ $25.00 ■ • ' B. Y., June 10, 1904.
“Beceived of Alfred Urbansky, Twenty-five dollars on account of Three hundred' and twenty-five dollars to be paid in full for release of,lots 5, 6, 7, 8, 9, 10, 35, 36 and 37, Block 32, Baychester, from lien of second, mortgage to be closed on or before June 15, 1904, at 104 East 32nd St., at 10 a. m.
“ GEO. P. SHIBMEB.”

This agreement was carried out' on June fifteenth by the plaintiff paying to the defendant the balance of the $225, when he received from Shirmer a satisfaction piece of the mortgage covering these six lots. The plaintiff testified that whén this satisfaction piece was tendered to him he stated that he was not looking for a satisfaction . piece, that he wanted an assignment, and that Shirmer said that he did not bargain to give an assignment; that the agreement called for a release and that he did not know that those lots were separate, that it was a separate mortgage.. Plaintiff • testified that at this con- ■ versation Shirmer promised togive the plaintiff an assignment if he wanted it and agreed to deliver the bond and mortgage to plaintiff. The plaintiff accepted the satisfaction piece and paid the balance, $200. At the same time Shirmer gave the plaintiff a receipt, dated June 15, 1904, as follows:

“ Beceived of Alfred Urbansky the sum of" Two hundred and twenty-five dollars for satisfaction piece of Mtg. upon "lots 5 to 10 inclusive, Block 32, Baychester.
“ GEO. P. SHIBMEB.”

It was also proved that on the i4th day of June, 1904, the day before the payment of the $200 and the delivery of the satisfaction piece,' Sliirmer executed an assignment of this mortgage and bond to Hand, the owner of the property, which was recorded on the twentieth day of June. There was also introduced in evidence an. agreement between Shirmer and Hand dated June twentieth, which recited the delivery of the satisfaction piece of the mortgage to the plaintiff and the payment by the plaintiflkof $225, and ‘it was'agreed that $225 of the $450 that Hand paid for the assignment of the mortgage should be deposited to pay any and all expenses of any litigation that might arise by reason of the giving of the said satisfaction piece.

Plaintiff having rested, Shirmer testified on .his own behalf that the plaintiff called upon him and claimed to be the owner of the lots and wanted to obtain a release of these six lots, and that in- consequence of the statement of the plaintiff that he was .the owner of the lots, the arrangement about this satisfaction piece was made; that between the tenth and fifteenth of June the plaintiff wrote to Shirmer asking for an assignment of the mortgage on these six lots which Shirmer refused to give; that he saw the plaintiff on the thirteenth and at'that time plaintiff stated that he wanted an assignment and not a release, to which Shirmer replied that he would not give it, as he had not agreed to give it, and would only give what he agreed to give. Plaintiff said he was not satisfied with that and wanted an assignment. Shirmer then said, very well, we had better call the transaction off; I will return the money to yon and enough in addition to'pay you for your’trouble, and we will carvel the agreement.” After this interview, on June fourteenth Shiran r had an interview with the defendant Hand, the owner of the lots covered by the mortgage, and then gave Hand an assignment of the-mortgage covering these six lots. After giving the assignment of the mortgage to Hand on the fourteenth, Shirmer gave a satisfaction of the mortgage to the plaintiff on the fifteenth. Subseqnenfiy Shirmer testified that it was on the twentieth that he delivered the assignment to the defendant Hand,, having before that received $225 from the plaintiff for which he had given him a satisfaction of the mortgage, and that he promised to give to the plaintiff the bond and mortgage in case he found them.

After the testimony was in the court announced that It would give judgment in favor of the plaintiff, and ad journed the trial until the following Monday, when the defendant Shirmer appeared in court and tendered 'to the plaintiff the sum of $225 that he had received from him and which plaintiff refused to accept, whereupon the court found that the making of this agreement whereby the defendant agreed to release .to the plaintiff these six lots from the lien of the mortgage for the sum of $225 wras based upon representations made by the plaintiff that he was the owner of the lots, and that the plaintiff also falsely and fraudulently stated and represented that he was making or had made arrangements with the owner of a prior mortgage covering said lots to secure a release of said lots from the lien of said mortgage; that the defendant Shirmer believed the said repiresentationS' of the plaintiff to be true; and relied thereon, and was thereby induced to execute and deliver said agreement to release said lots from the lien of said mortgage ; that between the tenth and fifteenth days of June it was discovered that the lots had been released from the prior mortgage and that the-mortgage covering the said six lots was a separate mortgage; that thereupon, and before the defendant Shirmer learned that the aforesaid representations made by the plaintiff were not true, the defendant Shirmér, believing the said representations to he true, 'was induced to modify said agreement and to' substitute a satisfaction piece of said last-mentioned mortgage in the place, and stead of a release as to the said lots so numbered o to, 10, inclusive; that on June ^fifteenth Shirmer informed the plaintiff that thé representations made by the plaintiff to Shirmer were false and. thereupon Shirmer offered to cancel said'agreement and.tendered to said plaintiff in cash the amount of money paid by the plaintiff on account thereof, but that plaintiff refused to cancel said agreement or to accept the money tendered and demanded an.assignment of the said mortgage, which the defendant Shirmer refused to give that thereupon the plaintiff threatened the defendant'Shirmer with , a suit if he failed to carry out said agreement, and the defendant Shirmer, because,of.such threat, thereupon delivered to the plaintiff the satisfaction piece of said mortgage'of defendant Hand and wife, and said plaintiff accepted said satisfaction piece in full settlement and satisfaction of said agreement between plaintiff and defendant Shirmer,;and paid the defendant Shirmer the amount required, to be paid under said agreement, viz., $200 ; that thereafter and on the 20th' day of June, 1904, defendant Shirmer, at the request of the defendant Hand, who was then and still is the owner of the said lots, by an assignment in writing bearing date on that day, assigned and transferred to the said defendant Hand all his interest in the said mortgage given by said Hand arid his wife to said defendant Shirmer, and received from said defendant Hand for the'same'the sum of $440, and that at the time of the delivery of the said assigninent.the defendant Hand had full knowledge of the delivery of the said satisfaction piece from the defendant Shirmer to the plaintiff. And as a conclusion of law the court found that by reason of the fraud the plaintiff was not entitled to any judgment in his favor; whereupon judgment was directed in favor of the defendants, with separate costs against the plaintiff.

It is evident that this' judgment cannot be sustained on the ground that the contract was avoided by reason of the fraudulent representations made to the defendant when, after the defendant Shirmer knew that the representations were false, instead of repudiating the contract, he carried it out and received the balance of the consideration which the plaintiff had agreed to pay. Assuming that the original agreement for the release of this mortgage was induced by fraudulent representations, upon' the discovery of the fraud the defendant had the right to repudiate the contract and refuse to be bound by it, but also had the right to carry it ouh His attempted repudiation having been refused by the plaintiff, he then accepted the consideration paid by the plaintiff for the completion of the contract, and he was then bound by it. The plaintiff swears that the defendant agreed to assign these mortgages, but the correspondence somewhat negatives this testimony, as by the writings all that the defendant agreed, to do was to release the mortgage upon these lots. The defendant Shirmer according to his own testimony, after he had knowledge that the representations were false, delivered the satisfaction piece to plaintiff, received the $200, and agreed to deliver the bond and mortgage when he found it. A delivery would be a transfer of the bond and mortgage, and if .this agreement for'which Shirmer received $225 had been carried out, it would vest in the plaintiff a valid title to the bond and mortgage. Hand was informed of this agreement with the plaintiff, and received from the defendant Shirmer an assignment of the' bbnd and. mortgage, although the original bond and mortgage itself do not seem to have been delivered. The defendant Hand’s right to the mortgage was, therefore, snbject'to the plaintiff’s right, whatever1 it was, under his agreement with Shirmer. It seems to me, on the undisputed evidence, that t,he plaintiff was entitled to a transfer of this bond and mortgage. The conceded agreement of Shirmer to execute a release or satisfaction piece of the mortgage and to deliver the bond and mortgage when he found them would vest in the plaintiff a good title to the bond and mortgage, and as the plaintiff stood upon his rights under'that agreement there isx no reason why he is not ."entitled to a«specific enforcement of it.

The only real defense that the defendant would have was' one hot pleadéd or taken on the trial, and this was that the plaintiff -had a , complete remedy at law by an action' for the damages, sustained by a- breach of the Contract in failing to deliver the bond and mortgage, In such a casé he would have been entitled to recover the value of the bond arid the mortgage which would presumably be its face value ; but that defense was not pleaded and tlie case was not tried on that theory. If that point had been taken on the trial the plaintiff then- would have been entitled to have-the action continued as one at. law to recover his damages, and if the defendant demanded . a jury trial, sent to the Trial Term for that purpose to tie tried. Tlie effect of' this judgment' is that the plaintiff was not entitled to' recover under the contract, as it*was obtained by fraudulent representations, but as Shirmer had,, after full knowledge of the fraudulent representations, affirmed the Contract when it was sought to -be enforced, he was not entitled to have the complaint dismissed upon that ground. The plaintiff was not bound to accept'in discharge of his right to'enforce the contract the amount that he had paid to Shirmer, but was entitled to'insist that-.the contract1 should be either specifically enforced or that he recover the damages sustained by him by reason of Shir.mer’s- refusing to-perforin it.

- It follows that the judgment appealed from should be. reversed and a new trial ordered, with' costs to the appellant to abide the event. ,. , ■

O’Bkieu, P. J., -MoLaughlih, Latjghlih' and Clabke, J3\, concurred.

Judgment: reversed, new trial ordered, costs to appellant to abide event! ' >  