Kutschinski v. Thompson

• Citation: 138 A. 569
• Parties: KUTSCHINSKI et al. v. THOMPSON et al.
• Decision Date: 24 August 1927
• Court: New Jersey Court of Chancery

138 A. 569

KUTSCHINSKI et al.

v. THOMPSON et al.

Court of Chancery of New Jersey.

Aug. 24, 1927.

Bill for specific performance, brought by May L. Kutschinski and husband against Hallie C. Thompson and husband. Decree of dismissal.

Eichmann & Seiden, of Jersey City, for complainants.

Lum, Tamblyn & Colyer, of Newark, for defendants.

FALLON, Vice Chancellor. This is a bill for specific performance of a contract for the sale of lands, with abatement of the purchase price because of an easement, referred to as a millrace, constituting an incumbrance of the title.

The contract bears date April 30, 1926, and was entered into between the defendant Hallie C. Thompson and Clarence A. Thompson, her husband, as vendors, and Samuel E. Houston, as vendee. Defendants agreed therein to convey to said vendee, a tract of land in the city of Summit, N. J., upon which there is a one-family dwelling and a garage. The consideration named is $13,500, payable as follows: $500 on the execution and delivery of the contract; $2,000 on the delivery of the deed; $5,800 by the vendee assuming a mortgage for said sum, which is now a lien on the property; $5,200 by vendee executing and delivering to vendors a bond therefor, with a purchase-money mortgage as security for the payment thereof, the bond and mortgage to mature in five years, and bear interest at the rate of 6 per cent. per annum, payable semiannually, the mortgage to contain a clause providing for installment payments of $500 every six months from the date thereof, with the privilege of paying the entire amount of the mortgage at any time. The contract provides that the vendors shall convey to the vendee the property therein described, "subject to restrictions of record" by deed of warranty, free from incumbrances, except as therein stated, on or before the 1st day of June next ensuing fie date thereof, and that the vendee, his heirs and assigns, may enter into and upon the lands and premises on the date aforesaid, and from thence take the rents, issues, and profits to his and their use, and that the vendee, his heirs, executors, and administrators, shall pay and satisfy, or cause to be paid and satisfied, to the vendors, the purchase moneys aforesaid, and that, in the event of the sale of the property, the vendee guarantees the payment of the purchase-money mortgage. The latter provision indicates that the vendors looked to the personal liability of the vendee to secure payment of the purchase moneys, and such is further manifested by the fact that the contract provides for the assumption by the vendee of a mortgage lien of $5,800 to which the property is now subject. It will be observed also, that the contract provides:

"And for the performance of all and singular the covenants and agreements aforesaid, the said parties do bind themselves, and their respective heirs, executors, and administrators."

The vendee, on May 3, 1926, assigned the contract to Gustav M. Kutschinski, and he, on May 26, 1926, assigned same to the complainant May L, Kutschinski.

The date of passing title was postponed, at complainants' request, from June 1st to June 5th, when defendants refused tender of a bond and mortgage executed by the complainants, and refused also to allow to the complainants an abatement of the purchase price as sought by them.

The personal liability of the vendee, Samuel E. Houston, to the vendors, is not affected by the assignment of the contract to the complainant, May L. Kutschinski. 27 R. C. L. 563, § 302; Weideubaum v. Raphael, 83 N. J. Eq. 17, 90 A. 683. In the latter case Vice Chancellor Emery says:

"The vendee's right to specific performance is dependent on the fulfillment of the conditions to be performed on his part, and the assignee of a vendee * * * is not permitted to substitute his personal liability on the unperformed conditions against the consent of the vendor."

The proofs disclose that the vendee, Samuel E. Houston, was a dummy purchaser for the complainant May L. Kutschinski, and such is conceded in the brief submitted in her behalf, which says:

"Houston was, in fact, a dummy purchaser; the real party in interest being complainant May L. Kutschinski."

The proofs disclose also that the complainants had previously negotiated with the defendants for the purchase of the property in question, and such is conceded in complainants' brief which says:

"Several months previous, complainant May L. Kutschinski. through her husband, Fred Kutschinski, had negotiated with the defendants for the purchase of the property."

Complainants were aware that the defendants would not have any business dealings with them, nor sell to them said property, and it was doubtless because thereof that the complainants arranged with the vendee, Samuel E. Houston, to act as a dummy purchaser for the complainant May L. Kutschinski, contracting for the purchase of the property in his own name, and assigning the contract to her through her father-in-law, Gustav M. Kutschinski, as intermediary. Complainants claim that they ascertained for the first time, prior to June 1, 1926, the date designated in the contract as the time for passing title, that the property was incumbered by an easement consisting of the right of a mill owner on lands below the property of the vendors to the uninterrupted flowage of water of a brook coursing through vendor's property, for water power purposes. Said brook was observable by a mere casual inspection of the property, and any one inspecting the property with a view of purchase could not possibly avoid observing that the water thereof was utilized by the mill owner aforesaid.

The proofs show that complainants had several times inspected the property, with a view of purchase, prior to the making of the contract between vendors and vendee, and also at or about the time of their negotiations with the defendants several months prior to the aforesaid contract of April 30, 1926, and it is clearly established by the evidence in the case that they could not, on such inspection, avoid observing the brook aforesaid, and the use to which the water thereof was utilized by the mill owner on lands below that of the defendants; and that about one week prior to June 1, 1926, notwithstanding complainants were then absolutely aware of the easement aforesaid, evidenced by the search of the title, the complainant Fred Kutschinski, conceded, to be acting as agent for his wife, the complainant May L. Kutschinski, obtained from defendants' real estate agent, the keys of the building forming part of the premises in question, by falsely representing that he was a laborer who desired to gain entrance to the premises for the purpose of making repairs thereto, and by means thereof the complainants obtained possession of, said premises, and have since persistently continued in possession thereof, against the remonstrance of the defendants, and have refused to surrender same to defendants. Complainants' brief says about a week prior to June 1, 1926, "her husband, Fred Kutschinski, obtained the keys for the premises from an agent, stating he wanted to inspect the damp condition of the cellar." In view of the aforesaid facts, the complainants must be regarded as bound with constructive notice of such facts as a proper inquiry made by them would disclose. N. J. Title Guarantee & Trust Co. v. Jersey City Co-Operative Realty Co., 90 N. J. Eq. 615, 110 A. 109; Jones v. Smith, 1 Hare, 43; Hoy v. Bramhall, 19 N. J. Eq. 563, 572, 97 Am. Dec. 687; Schwoebel v. Storrie, 76 N. J. Eq. 466, 74 A. 969; Raritan Water Power Co. v. Veghte, 21 N. J. Eq. 463, 478. See, also, as to doctrine of caveat emptor as applicable to real estate purchasers, Industrial Savings & Loan Co. v. Flummer, 84 N. J. Eq. 184, 92 A. 583, L. R. A. 1915C, 613. In Schwoebel v. Storrie, supra (at page 470 ), Vice Chancellor Learning says:

"Where a person purchases property where a visible state of things exists which could not legally exist without the property being subject to some burden, he is taken to have notice of the extent and nature of the burden"—citing Allen v. Seckham, 11 Ch. Div. 790, 795.

And also:

"When facts are brought to the knowledge of the person contemplating the purchase of the record title which are sufficient to apprise him of the existence of an outstanding claim of title, and a reasonable investigation of such facts would necessarily discover the existence of such outstanding title, the purchaser is put upon inquiry and charged with notice of the facts which a reasonably diligent inquiry would have ascertained."

In Jones v. Smith, 1 Hare, 43, it is said that constructive notice is established when the court is satisfied from the evidence before it that the party charged had designedly abstained from inquiry for the purpose of avoiding notice. In Raritan Water-Power Co. v. Veghte, supra, it is said whatever is sufficient to direct the attention of a purchaser to the prior rights and equities of third persons, and to enable him to ascertain their nature by inquiry, will operate as a notice.

Complainants, having obtained possession of the defendants' land and premises under the circumstances aforesaid, and after they had examined the title to the premises and were fully aware that the brook on the lands of the defendants served as an easement for the furnishing of water power to another property owner for the operation of a mill, and persisting in retaining possession of said lands and premises against the remonstrance of the defendants, must be re garded, in equity, as not only having waived the incumbrance occasioned by the easement which the mill owner aforesaid was obviously making use of—that is, the free flow of water over the lands of the defendants—but also, as having waived the right of compensation for such diminution in value, if any, as such easement may be said to have occasioned to defendants' lands. Melick v. Cross, 62 N. J. Eq. 545, 51 A. 16. In the latter case, the court says ...