New York Court of Appeals - 97 N.E. 472, 204 N.Y. 96
The plaintiff and defendant entered into a contract for the sale of four parcels of land with houses. The defendant knew that the plaintiff did not own the property at the time of the contract but intended to acquire it through a foreclosure sale. The defendant stated that she would not perform the contract and intended to buy the property for herself without recognizing the contract. The plaintiff claims that there was a prior oral agreement that he would buy all five houses at the foreclosure sale and convey only four to the defendant, retaining the fifth for himself. The defendant purchased a fifth house at the foreclosure sale, which was not mentioned in the written contract between the parties. The trial court ruled in favor of the defendant, stating that there was no fiduciary relationship between the buyer and seller under the contract of sale. The appellate court agreed with the trial court that there was no fiduciary relationship between the parties. The plaintiff was entitled to recover $620 in damages, which he had demanded in his complaint. The court stated that every contract implies that each party will not intentionally prevent the other party from carrying out their part of the agreement. Therefore, a party who causes or sanctions the breach of an agreement is precluded from recovering damages for its non-performance or from using it as a defense to an action upon the contract. However, the court erred in not recognizing the prior oral agreement between the parties, which could have affected the outcome of the case.
In 1909, John W. Shorrock owned five houses and lots in Brooklyn, New York, covered by three mortgages totaling $23,000. Plaintiff prepared a written agreement for the purchase of four of the properties for $23,000, which was not executed due to the advice of the defendant's counsel. Later, plaintiff and defendant entered into a contract for the purchase and sale of four houses and lots for $23,000, with a delivery date of March 16, 1909. The contract did not include special agreements relating to the pending foreclosure or the fact that the defendant was not yet the owner of the property. Defendant bid on the property at a sale and won it for $27,975. Plaintiff failed to require the defendant to bid the necessary amount to fulfill their contract, which would have resulted in a surplus proceeding. Plaintiff brings an action to compel the defendant to convey the property purchased at a foreclosure sale, except for four parcels, and pay damages. However, there is no evidence of a trust relationship, and the defendant openly bid on the property for herself. The court found that no special agreement exists between the parties.
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