Lloyd Canaday, Respondent, v. John S. Stiger, Appellant

Lloyd Canaday, Respondent, v. John S. Stiger, Appellant. (Argued December 17, 1873; decided January 20, 1874.) A recovery in an equitable action cannot be defeated by an independent counter-equity in favor of defendant, which is insufficient to found an action and consequently to predicate a counter-claim upon. Each claim must stand upon its own merits,- although arising out of the same general transaction. The rale that a party cannot recover back money paid upon a claim which he was morally bound to pay, although there was a legal bar preventing a recovery thereof from him, is not applicable, as there the equity which defeats the recovery relates to the very claim upon which the money is paid. Plaintiff brought his action to recover back money paid by a mistake upon a contract between the parties for the exchange of lands. By the contract plaintiff agreed to convey to defendant certain houses and lots described tlierein; one of the houses was unfinished. With knowledge of this fact defendant accepted a deed thereof. It was supposed at the time that the house would be completed by contractors who were then at work thereon under a contract with a former owner, but no stipulation in relation thereto was inserted in the contract. The contractors failed and defendant was obliged to complete the work. The referee allowed defendant, in reduction of plaintiff’s claim, the amount so expended. Held, error; 1st. That there was no equity in favor of defendant, as plaintiff was in no wise legally, equitably or morally bound for the performance of the contractor’s agreement; 2d. That the equity, if any, related to a separate and distinct claim; and to allow it would, in effect, permit a recovery where no legal or equitable right of action existed. Appeal from judgment of the General Term of the Superior Court of the city of ¡New York, amending a judgment in favor of plaintiff entered upon the report of a referee, and affirming the judgment as amended. This action was brought to recover back moneys alleged to have been paid by mistake. A contract was entered into between the parties on the 14th October, 1871, by which defendant was to convey to the plaintiff certain real estate in New Jersey, and the plaintiff, in exchange therefor, to convey seven houses and lots, in the city of New York, subject to mortgages of a specified amount. One of the houses was at the time unfinished. The builders were at work thereon under a contract with plaintiff’s grantors. Deeds were exchanged between the parties in accordance with the contract. The contractors for the work failed soon after and ceased work. Defendant was obliged to complete the work at his own expense. It appeared that, in reckoning the amount of the mortgages upon the premises conveyed to plaintiff, they were figured at $1,930 too much, which sum plaintiff sought to recover. The referee allowed this sum, deducting therefrom, however, $1,400 the amount expended by defendant in completing the house. The General Term amended the judgment by adding thereto said sum of $1,400, with interest. Samuel Hand for the appellant. Plaintiff’s action being strictly equitable in its nature he can only recover that amount which under all the circumstances ex aequo et bono is his due. (Denby v. Moore, 1 B. & A., 123; Farmer v. Arundel, 2 Blk., 824; Price v. Neal, 2 Burr., 1354; Eddy v. Smith, 13 Wend., 488; Franklin Bk. v. Raymond, 3 id., 69; Buel v. Boughton, 2 Den., 91; Moses v. McFarlan, 2 Burr., 1012; Bise v. Dickerson, 1 T. R., 286.) Defendant is not prohibited, because he accepted the money and the deed, from claiming that the house should be finished by plaintiff. (McCrea v. Purmort, 16 Wend., 460 ; Seaman v. Hasbrouck, 35 Barb., 151; Murray v. Smith, 1 Duer, 412 ; Thomas v. Dickinson, 2 Kern., 364; Bernnett v. Abrams, 41 Barb., 619; Lower v. Winters, 7 Cow., 263 ; Ely v. McKnight, 30 How., 97.) The agreement as to finishing the house was valid and its breach a ground of set-off. (Erskine v. Adeane, L. R. [8 Ct. App.], 756; Morgan v. Griffith, L. R. [6 Ex. Ch.], 70, and cases cited.) De Witt G. Brown for the respondent. The legal presumption is that contracts like the one in suit are made upon and in view of the premises. French v. Carhart, 1 Comst., 107; Hansha v. Reid, 45 N. Y., 418.) The contract is superseded by the deed and its covenants. (4 Hill, 346 ; 2 Kent’s Com., 473 ; 5 Paige, 299 ; 5 J. Ch., 79 ; 9 Paige, 443 ; 3 Sanf., 437; 3 Bosw., 29; 26 Wend., 169.) Defendant’s retention of the property was an admission that the contract has been performed. (Reed v. Randall, 29 N. Y., 358; Beck v. Sheldon, 48 id., 373.) As the contract and deed contained no express covenant to finish the house, plaintiff was not obliged to finish it. (Kinney v. Watts, 14 Wend., 38; Sanford v. Truax, 40 N. Y., 140; Thomas v. Bartow, 48 id., 197.) Evidence to show that the contract was intended to have a different meaning, was not competent. (Curtis v. Howell, 39 N. Y., 211; Norton v. Woodruff, 2 Coms., 153 ; Westcott v. Thompson, 18 N. Y., 367; Groat v. Giles, 51 id., 431; Auburn City Bk. v. Leonard, 40 Barb., 119.) There was no legal liability resting upon the plaintiff to finish the house. (Taylor’s L. and T., § 381.) The General Term had power to modify the judgment. (Moffet v. Sackett, 18 N. Y., 522 ; Taussig v. Hart, 49 id., 301.) [MAJORITY — Church, Ch. J.] Church, Ch. J. The claim of the plaintiff to recover the amount overpaid by mistake for the lands conveyed by the defendant is undisputed. The defendant seeks to prevent a recovery to the extent of $1,400, on the ground that one of the houses conveyed to him by the plaintiff was unfinished, and that it cost that sum to finish it. The referee decided in favor of the defendant’s right to reduce the recovery upon the ground that the contract called for seven finished houses, which was clearly erroneous and is scarcely insisted upon here. The houses were specified, but not as finished houses. They answer the description in the contract, and the deed was afterward accepted containing a particular description of the house and lot in question. The parties are presumed to have been on the ground and known the condition of the house and the state of its completion. The defendant, if he did not, had the opportunity to make a personal examination, and the evidence shows that when the deed was executed, at all events, he knew that the house was not entirely finished. The fact that it was unfinished was observable from the outside, and of course was patent from an inside view. The defendant received what he bargained for and he had accepted a delivery of the deed and the property, and if it was not in the precise condition he expected, he is forclosed, in the absence of fraud or mistake, by the maxim crneat emj>tor. (45 N. Y., 418.) There is no finding or pretence of fraud nor of a mistake which would justify a reformation of the contract. The additional finding of the referee, that the plaintiff “ bargained with the defendant upon the supposition and with the intent that the said unfinished house was to be finished without expense to the defendant,” does not aid the defendant. The finding was correct according to the evidence, but was cautiously expressed so as not tti convey a meaning not warranted. The evidence is that the plaintiff hoped, and perhaps supposed, that the house would be finished by the contractors under a contract made by his grantor, but he did not incur nor intend to incur any obligation in respect to it, and, when they failed, he did all that good faith required and more than he was legally required to do by procuring the builders’ contract and offering it to the defendants. The ground upon which the learned counsel in this court seeks to sustain the allowance to the defendant for the expense of finishing the house, if I apprehend it, is that there is a counter-equity in favor of the defendant, which, although not sufficient to found an action upon against the plaintiff, and consequently not sufficient upon which to predicate a counter-claim, yet is sufficient to prevent a recovery in the equitable action for money had and received. There are two answers to this ground, each of which is fatal. First, there is no equity of any character in favor of the defendant. It is proved that both parties knew the facts. If so, the most that can be said is that both were disappointed, because a third person did not perform his contract for which the plaintiff was in no wise liable legally, equitably or morally. If the defendant was really ignorant of any of the facts, he has so conducted as to preclude himself from asserting it. Second, the rule that a party cannot recover money back in this action which has been paid upon a debt barred by the statute of limitations, or contracted during infancy and the like, cannot be applied to this case. (2 Smith’s Leading Cases, 402.) In those cases there is a moral obligation to pay, notwithstanding the legal bar, and when that obligation is thus discharged equity and good conscience forbid a recovery back, but the equity relates to the very claim upon which the money was paid and not to an independent claim, although in the same general transaction. To allow the defendant’s claim would in effect permit a recovery where no legal or equitable right of action existed. The two claims are distinct and separate, and each must stand on its own merits. If the plaintiff had paid the defendant’s claim and was seeking to recover it back, the reasoning of the defendant’s counsel would have some force, but it is inappropriate to weaken or destroy the plaintiff’s right of recovery. We have been referred tó no authority to justify the judgment of the referee. The General Term was therefore right in adding $1,400 to that judgment. The judgment of the General Term must be affirmed, with costs. All concur. Judgment affirmed.