"Metropolitan Lumber Company was unable to convey to the Formans because tax, mortgage, and judgment liens on the property exceeded the purchase price, which it was unable to discharge. Later a receiver in insolvency was appointed for Metropolitan Lumber Company. Under mortgage foreclosure the property was sold February 13, 1930, at a price in excess of the Formans' purchase price.
"When the subordination deed of Grant Lunch Corporation to the Fidelity Union Title & Mortgage Guaranty Company was delivered to the Formans, the Formans gave Grant Lunch Corporation an agreement which recited the existence of the Grant Lunch Corporation lease, that the Formans were about to acquire the property and to give the $375,000 Fidelity Union Company mortgage and witnesseth:
"'1. The parties of the first part (Formans), in order to induce the said party of the second part (Grant Lunch Corporation) to execute the 'subordination of lease' hereinafter mentioned, hereby, jointly and severally, agree to and with Grant Lunch Corporation, a corporation, that upon the execution by the party of the second part of the 'subordination of lease', referred to in paragraph 2 hereof, they, the said David S. Forman and Harry Forman shall henceforth be, become and remain, jointly and severally, liable, obligated and bound to Grant Lunch Corporation, a corporation, for the payment or repayment of such sum or sums as Metropolitan Lumber Company, a corporation, is, or may become, obliged to pay or repay to Grant Lunch Corporation, a corporation, under the provisions of the aforesaid lease recorded in the office of the Register of Essex County, in Book H 77 of Deeds for said County, at pages 541-549, and particularly for the payment and/or repayment of Eight Thousand Dollars (8,000.00), said sum of Eight Thousand Dollars (8,000.00) being the security which is now held by Metropolitan
Lumber Company, a corporation, heretofore received by it from Grant Lunch Corporation, a corporation, pursuant to the provisions of the aforesaid lease. It is expressly understood and agreed between the parties heretofore that the obligation for the payment and/or repayment of the sums above referred to shall be, and hereby is, constituted an encumbrance and charge against the premises described in deed recorded in the office of the Register of Essex County, in book O 66 of Deeds for said County, at page 165, etc., and that such encumbrance and charge shall be, and remain, inferior only to the first mortgage above to be placed on the premises above described in the sum of Three Hundred and Seventy Five Thousand Dollars ($375,000.00) and to be held by Fidelity Union Title and Mortgage Guaranty Company. Said encumbrance and charge hereby created is to be discharged and to be null and void only when the sums above referred to are paid or repaid to Grant Lunch Corporation, a corporation, in accordance with the lease herein referred to and in accordance with the provisions of this agreement.'
"Metropolitan Lumber Company, having defaulted, Grant Lunch Corporation in December, 1929, brought suit in the Supreme Court against the Formans to recover the $8,000 advanced to Metropolitan Lumber Company, whereupon the Formans filed this bill alleging, in substance, that their agreement with Grant Lunch Corporation was that it would postpone its lease to the $375,000 mortgage, and that they (the Formans) would, upon getting in the title, repay the $8,000; that the agreement as first reduced to writing so provided; that there was no agreement that they should become responsible upon the mere execution of the deed of subordination, and that the attorney of Grant Lunch Corporation, in redrafting the agreement, fraudulently substituted the absolute promise, and deceitfully procured the Formans to execute it in ignorance of its effect and in the belief that they would not be bound unless they obtained title and the subordination deed became effective; that the subordination deed of Grant Lunch Corporation and their (the Formans') corresponding agreement to repay the $8,000 were executed and delivered in anticipation of the closing of the title and were contingent upon their acquiring the property, and, the sale having failed, there was no liability.
"The defendant, Grant Lunch Corporation, answers that it refused to sign any instrument of subordination unless the Formans would enter into a binding agreement to pay the $8,000 which would be due it from Metropolitan Lumber Company if possession were not given to it March 1, 1929, and that the Formans agreed to become bound for Grant Lunch Corporation 'physically executing the subordination agreement' whether they be came the owners of the property or not, and that the agreement to pay expresses the real and only agreement made between the parties. Fraud is denied.
"David S. Forman, lawyer, negotiated the entire deal. He says he applied to the officials of Grant Lunch Corporation, Halprin and Jackowitz, for the subordination of their lease, and that they agreed, Jackowitz expressing eagerness to have the Formans as their landlord instead of Jacobson of the Metropolitan Lumber Company, as they felt more certain that they would get the $8,000 from him if he were the landlord instead of Jacobson, and they referred him to Charles Kanter, their attorney, to prepare the papers. Halprin and Jackowitz deny having any communication with Formans. However that may be, Forman called upon Kanter. Kanter says he was asked by Forman to get the postponement; that he replied he saw no objection and that he would see his clients. He says he saw them and later informed Forman '* * * that the Grant Lunch Corporation would not sign a postponement to the Fidelity mortgage unless he would guarantee, he—Forman and his brother— would guarantee to the Grant Lunch Corporation the $8,000 which they then had theretofore put up with the Metropolitan Lumber Company under the lease. I said, furthermore—told Mr. Forman, "My people are very much disgusted with the whole situation," that the building was not being erected in accordance with the plans nor was it being erected with such speed as it would be completed by March 1st, that it was essential for my people to have the building on March 1st—the lease so called—provided for. I told him they were very much worried, they didn't want to sign any more papers unless they, Mr. Forman and his brother, would take the responsibility and sign some papers to that effect. He said, "Well, that is all right," he says, "we will do that." I said. ...
