Gadway v. Schachenmayr

• Decision Date: 03 July 1974
• Citation: 357 N.Y.S.2d 665,78 Misc.2d 572
• Parties: Charles GADWAY and Frances K. Gadway, Plaintiffs, v. Hans SCHACHENMAYR et al., Defendants.
• Court: New York Supreme Court

Page 665

357 N.Y.S.2d 665

78 Misc.2d 572

Charles GADWAY and Frances K. Gadway, Plaintiffs, v. Hans SCHACHENMAYR et al., Defendants.

Supreme Court, Essex County.

July 3, 1974.

Frederick S. Dennin, Lake Placid, for plaintiffs.

Dominick J. Viscardi, Ticonderoga, for defendant Schachenmayr.

McCormick, LaPan & Brooks, Saranac Lake (James M. Brooks, Saranac Lake, of counsel), for defendants Holderied.

WILLIAM J. CRANGLE, Justice.

Plaintiffs' complaint alleges breach of contract for the sale of a motel and restaurant business in Lake Placid, New York. As contract-sellers, plaintiffs complain that defendant buyers violated covenants as set forth in the following paragraphs:

IX . . . that this contract is not assignable by the Co-Purchasers without the written consent of the Sellers, except that when the total principal amount due under this contract has been reduced to $250,000.00, then the Co-Purchasers may sell the property herein subject to the indebtedness then against same.

XIII This contract is assignable, without the consent of the Sellers, to a corporation owned solely by the Co-Purchasers, which corporation is to continue to be owned solely by the Co-Purchasers.

V . . . that the Co-Purchasers will keep the premises insured for fire insurance for the protection of the Sellers' interest therein and will furnish the Sellers satisfactory evidence of such insurance. XI The Co-Purchasers further agree to operate the premises herein in a good and workmanlike manner and to maintain said premises in good condition.

The plaintiffs claim that defendants have violated these covenants in that two of the defendant-buyers have sold and assigned their interest in the contract to the remaining defendant-buyer and that the latter has allowed the premises to deteriorate and to fall into a dangerous and unproductive condition. They further claim that he has failed to maintain sufficient insurance on the property and that defendants' refusal to record the contract in the County Clerk's Office is a breach of an inherent right of a contract vendor which exists in law and equity though not set forth in the contract.

It appears from the moving papers that all payments required by the contract have been made to date, that the property is being operated as a motel and restaurant, that plaintiffs are not entitled to the personal services of the defendants under the contract (and have therefore not been deprived of them by the assignment), that the defendants all remain personally liable for the performance of their contract with plaintiffs and have not abandoned these obligations. Plaintiffs ask for judgment for the unpaid balance of the purchase price, appointment of a receiver, sale of the premises at public auction and a deficiency judgment. They have moved for summary judgment and defendants have cross moved for dismissal of the complaint for failure to state a cause of action.

Plaintiffs are, in effect, asking for accelerated payment of the purchase price in consequence of the alleged breaches of covenant although the only such acceleration clause is contained in Paragraph V for default in payment of principal or interest for thirty days or taxes and assessments for sixty days after notice and demand. There is no such acceleration clause with reference to these covenants and none can be implied. (Cerullo v. Cerullo, 40 A.D.2d 945, 339 N.Y.S.2d 252, app. dismd., 32 N.Y.2d 676, 343 N.Y.S.2d 358, 296 N.E.2d 255; Cranston v. Wheeler, 37 Hun. 63; Blomgren v. Tinton 763 Corp., 33 Misc.2d 1057, 1060, 225 N.Y.S.2d 347, 350, mod., 18 A.D.2d 979, 238 N.Y.S.2d 435; 100 Eighth Ave. Corp. v. Morgenstern, 3 Misc.2d 410, 150 N.Y.S.2d 471, mod., 4 A.D.2d 754, 164 N.Y.S.2d 812.) The latter case citing Wiltsie on Mortgage Foreclosure (5th ed., vol. 1, § 39, p. 74) quotes the general rule as follows: '. . . in the absence of an (acceleration) clause, the right to foreclosure does not arise before the maturity of the debt secured by the mortgage, even though the security is likely to be impaired in the interim.' (100 Eighth Ave. Corp. v. Morgenstern, supra at 415, at 476 of 150 N.Y.S.2d 471; see also 59 C.J.S. Mortgages § 495(3), p. 783).

The same rule is applied with respect to land contracts (Cerullo v. Cerullo, supra). Mortgages differ in some essential respects from land contracts and the rights of the parties vary accordingly. But precedent and reason support the position that equity will not enforce a forfeiture more readily in the case of one than the other. The court in ...