Citations
- 212 A.D. 95
Full opinion text
Van Kirk, J.:
There is no evidence of bad faith or wrongdoing on the part of the defendants; in fact the contrary appears throughout the record. The plaintiff was using and needed the Hollister warehouse. When the defendants were informed that others were seeking to acquire it and the assignees were about to sell, they purchased it to protect the company and its interests and without selfish purpose. They did this without any assurance from the company that it would approve the purchase or rent the property from them. Before the transaction was consummated Geary informed the two other directors of the reason for the hurried purchase and of defendants’ intent in purchasing. There is no suggestion of an intent to conceal or unjustly gain advantage from any relation of trust and confidence. Mrs. Porter is said to have remarked, when told that defendants had purchased the property, that the company would take the property; but it took no action to that end. This failure to act may perhaps be understood in the light of the financial condition of the plaintiff at the time. Though the plaintiff knew of the contract to purchase before it was performed, it left the defendants without aid from it to furnish the purchase money, which they did; one defendant mortgaging his property to procure his share. Having paid for the building they properly, with the knowledge of the directors, took title in their names. In whose else could they take it? This done the plaintiff and defendants stood in this position: the defendants were the owners; their money was tied up in the building; theirs was the entire risk of loss from depreciation, from cancellation of the ground lease, from failing business, from competition, from fire. The plaintiff on the other hand was under no obligation to take the building off their hands, but it had an option or privilege to take over the property at the price paid, which privilege it could elect to exercise at any time. The plaintiff, however, made no motion looking to the exercise of this privilege for thirteen months after the purchase. On April 7, 1923, at a directors’ meeting, a resolution was passed to take over the property and give the company’s note for the purchase price; but when, in pursuance of the resolution, an offer for the property was made to the defendants, it was not a request for or tender of performance of the option. Conditions were imposed with which defendants were in no wise called upon to comply. The first condition was that the rentals received by the defendants, then the owners, for the use of their building, be deducted from the purchase price, without at the time offering any allowance to them for upkeep, taxes, insurance and the ground rent paid by them. Certainly defendants were entitled to a reasonable rental; there is no evidence that the rental charged was unreasonable; we think it was reasonable. The company knew all the facts all the time; it knew the building was being used solely for the company’s business; that, though it had been given the privilege of purchasing, it had never purchased. Geary testified that he talked with Mrs. Porter about the rental; but, if this testimony is rejected, still the company must have known that, while it was using the property of another, it was incurring an obligation to pay rent therefor. The second condition was that the alleged overpayment of salary to Geary be deducted. Whether or not there had been such overpayment is not material; a tender or demand of performance of the option could not be incumbered by such an alleged offset. In fact another action is pending, brought by the company against Geary, to recover this overpayment.
The judgment should be reversed and the complaint dismissed, with costs.
We disapprove of findings as follows:
Findings 15, 16, 25; that part of finding 18 as follows: “ Which payments [for rentals] were made without the consent of said plaintiff or its officers or directors. That the checks dated April 28, 1923, payable to the order of James Geary and Patrick F. Harrington and signed by Maggie A. Porter, as president, and James Geary", as treasurer, were secured from the plaintiff corporation under the pretense of being issued for salaries; ” that part of finding 21, as follows: “ That the plaintiff was willing and ready to pay said sum of $4,500, plus interest thereon, taxes and ground rent, to the defendants upon being allowed the deduction claimed on behalf of the plaintiff.”
We find that, in purchasing the Hollister building, the defendants acted in entire good faith; that they became and are the rightful owners of the building in question and of reasonable rentals therefor; that the plaintiff has the privilege to take it over on payment of $4,500, with interest; that the plaintiff has never elected to have its rights under its option or privilege; that no demand has been made by plaintiff upon the defendants for a conveyance to it of said building; that defendants could not be placed in default, or in the wrong, until the plaintiff had made its election to take over this property and had made demand in accord with its privilege therefor; that the judgment be reversed and the complaint dismissed, with costs.
All concur.
Judgment reversed on the law and facts and complaint dismissed, with costs. The court disapproves of findings as stated in opinion.