Malex Realty Corp. v. Hageman

Plaintiff sued to recover for breach of a contract by the defendant to make a loan under the following circumstances: Plaintiff had agreed to sell two pieces of property which it in turn held under a contract to purchase. In the agreements of sale it was provided: “ It is stipulated and understood, that the Seller will make all reasonable efforts to procure a first mortgage for the largest possible amount not, however, exceeding $15,000, but it is expressly understood and agreed, that the premises are to be taken subject to such first mortgage as the Seller may be able to procure. Whatever the amount of the first mortgage so to be procured by the Seller may be, it shall bear interest at the rate of 5|% per annum, payable as required by the lender, and shall become due on or about November 1st, 1927. Should the amount of the first mortgage procured by the Seller be less than $15,000, then, in that event, the amount of the difference shall be paid by the execution and delivery of the personal bond of the Purchaser for such amount, to be secured by a purchase money second mortgage covering the above described premises.” The provision as to the other parcel was identical except the amount of the mortgage was to be $14,000.

Defendant, after having been permitted to examine this contract, agreed to loan the $15,000 as a first mortgage loan on the premises, but before title passed withdrew from his bargain. Plaintiff, by its witnesses, proved that at that time it had become impossible to obtain a first mortgage from any other source, and that it paid the vendor $1,100 to be relieved of its bargain.

*678The judge below has found judgment for this last amount less the brokerage agreed to have been paid to the defendant for making the loan. Had the agreement of plaintiff with the vendee been so definite as to place upon the former an obligation to loan to the latter a fixed sum as first mortgage without any alternative, and had it become impossible to obtain in the market a loan on those terms after defendant defaulted, it may be that in view of the impossibility of applying the usual market price rule, plaintiff could recover its loss measured by a bona fide settlement made with the vendee. Delafield v. Armsby Co., 131 App. Div. 572; affd., on the opinion of Ingraham, J., 199 N. Y. 518. I cannot, however, so construe the contract. The amount to be loaned by plaintiff on first mortgage was wholly unfixed, and in addition thereto the alternative of lending the money itself by way of a “ purchase money second mortgage ” was open to plaintiff without any penalty so that no damages were suffered by it by reason of defendant’s default. The arrangement which it made with the vendee, apparently to be relieved of the inconvenience of making the loan itself, is surely not chargeable against the defendant.

Judgment reversed, with thirty dollars costs, and complaint dismissed on the merits, with costs.

Guy and Mullan, JJ., concur.

Judgment accordingly.