Lockwood v. Title Insurance

Pound, J. This is an action on the promise of defendant, to pay to plaintiffs the amount of a land award based on a mortgage alleged to have been erroneously set out by defendant on an abstract of title of plaintiffs’, premises furnished by it to the grade crossing commissioners of the city of Buffalo in condemnation proceedings instituted by such commission. The award was made and paid to the mort [297] gagees when it should have been made to plaintiffs as owners "of the fee, the mortgage not being a lien on the condemned premises. The defendant was not legally liable to plaintiffs for this injurious error for the reason that it did not furnish the search to them. Glawatz v. People’s Guaranty Search Co., 49 App. Div. 465. The complaint does not attempt to allege a cause of action for the erroneous statement. It alleges the facts leading up to and including the payment of the award and then as follows: “ 10. That, upon the return of said Thomas B. Lockwood to this Country, the plaintiffs discovered the error above set forth and demanded of the defendant the payment to them of the money thus erroneously paid and threatened to bring suit against the defendant unless payment was at once made. “ 11. Thai after said demand and threat of suit .as aforesaid the defendant promised and agreed with these plaintiffs that if the plaintiffs would refrain from instituting said suit against the defendant, and would also allow the .defendant, through the Grade Grossing Commission of the City of Buffalo, to carry on a proceeding loohing to the repayment of the award ~by the mortgagees-, to whom it was paid, the defendant would pay to these plaintiffs upon, demand sadd sum of one thousand three hundred and forty-six Dollars and sixty-one cents ($1,346.61) and interest thereon from the day of the payment of said award. “ 12. That relying upon and in consideration of said promise of the defendant, made to these plaintiffs as aforesaid, plaintiffs promised and agreed to and did refrain from instituting said suit against the defendant, and also promised and agreed to and did allow the defendant to carry on said proceedings looking to the repayment of the award by said mortgagees. “ 13. That the defendant through the Grade Crossing Commission of the City of Buffalo carried on said proceedings, but were unsuccessful in compelling the repayment of [298] said, award by said mortgagees, and said proceedings have been finally determined adversely to the interests of said defendant. “ 14. That thereafter plaintiffs demanded of the defendant the payment of said sum of One thousand three hundred and forty-six Dollars and sixty-one cents ,($1,346.61) and interest thereon since the date of the payment of said award, but that the defendant has refused and neglected to,pay plaintiffs said sum, all of which sum is now due and owing from the defendant to these plaintiffs.” Defendant demurs on the ground that the facts stated do not constitute a cause of action. The question is whether a consideration is pleaded for the defendant’s promise to pay. I think that a consideration is sufficiently alleged. Defendant had no standing “ through the Grade Crossing Commission * * * to carry on a proceeding looking to the repayment of the award by the mortgagees,” except as plaintiffs surrendered their right to conduct such proceeding to it, i. e'., allowed it to conduct such proceedings for them. The facts stated in paragraph 11, supra, sufficiently allege 'an act of plaintiffs called for and- induced by defendant’s promise to pay, to-w-it, a surrender of the right to conduct their own proceedings--for the repayment of the. award. “ So long as' a legal right, is surrendered, there is a sufficient consideration, although the surrender of that right may be of no value to the other party, and may actually benefit the party surrendering such right. In fact, any'act which constitutes a change of the legal position,of the promisee may be a valid consideration.” Harriman Contracts (2d ed.), § 91. Forbearance to sue -as. a consideration for the defendant’s promise to pay is also sufficiently pleaded. Modern decisions have modified the rule that forbearance to sue upon an unfounded claim can never support a promise given therefor,- for the reason that forbearance to sue a claim not legally enforcible can be no detriment. 9 Cye. 340. A forbearance to sue upon a claim of a definite amount is a consideration for a promise to pay the entire claim, unless [299] the claim is made in bad faith, or is based upon an illegal transaction, such as money lost in gambling. Moore v. Blanck, 71 Misc. Rep. 257. It is not necessary that the claimant should have a well-founded claim in law. It is-enough if he acts honestly. The rule has been well stated as follows: “ If he (-a man) bona fide believes he has a fair chance of success, he has a reasonable ground for suing, and his forbearance to sue will constitute a good consideration. When such a person forbears to sue he gives up what he believes to be a right of action and the other party gets an advantage, and, instead of being annoyed with an action, he escapes from the vexations incident to it. * * * It would be another matter if a person made a claim which he knew to be unfounded, and, by a compromise, obtained an advantage under it: in that case his conduct would be fraudulent.” Callisher v. Bischoffsheim, L. R., 5 Q. B. 449, 452. A very recent opinion in' the Appellate Division, third department, contains the following: “Such claim being a bona fide one, so far as consideration for the compromise is concerned, it does not matter whether the claim was much or little, or for that matter good or bad. It is not necessary, in order to uphold a compromise agreement based upon a surrender or composition or compromise of a claim, that the claim should be a valid one, or one that can be enforced at law, provided it be made in good faith. A promise made .upon a settlement.of disputes and to prevent litigation is made upon a good consideration, and the settlement of a doubtful claim will uphold a promise to pay a stipulated sum or do any other lawful act. Courts from the earliest times have favored compromises of bona fide disputes and have held agreements therefor to be founded upon good consideration irrespective of the validity of the claim which was compromised.” Minehan v. Hill, 144 App. Div. 854, and cases cited. A knowledge of the law will not be presumed in a case of this kind, in order to charge plaintiffs with bad faith. “ There is nó presumption that everybody knows the law; it would be contrary to common sense 'and reason if it were so.” [300] Maule, J., in Martindale v. Falkner, 2 C. B. 719. It will he presumed, on the demurrer, that plaintiffs acted honestly in the belief that they had a good cause of action against defendant when they made the demand. Demurrer overruled, with costs, with leave to withdraw demurrer and answer on payment of costs. Demurrer overruled.