(195 N.Y.S.)

in evidence by the defendant. It is contended that those exhibits, in connection with the oral testimony, show that the net amount of the deficiency exceeds the total amount of the indemnitor's liability. We have examined these exhibits with some care, and reached the conclusion that they do not establish conclusively that if all of the defendant's claims for diverted and wasted assets, and other claims of defendant in dispute are allowed to the defendant, that the deficiency will equal the amount of the indemnitors' liability.

As regards the question of reasonable notice, I think the proof shows that it was timely given. Nor was the legality of the sale affected by the excessive amount claimed in the notice. There is nothing to indicate that the property was sold for less than its value, or that the defendant was misled or harmed, and furthermore I am of the opinion that no notice of the sale was necessary. The pledge was not an ordinary pledge. It was not contemplated that they should be held and sold as a pledge requiring notice of sale. Under the terms of the agreement the German Bank was required to convert the assets. As was said by Judge Cardozo on the appeal to the Court of Appeals in this case (226 N. Y. 377, 123 N. E. 743):

"All that the defendant may insist upon is a conversion of the assets into money by the liquidator, if alive, and, if dead, by its successors. There has been no departure from that course in anything that has been done. The loss has been ascertained, and the defendant's duty is to pay it."

But for the reasons stated we think the trial court erred in directing a verdict for the plaintiff. The judgment and orders should therefore be reversed, and a new trial granted, with costs to the appellant to abide the event. All concur.

(202 App. Div. 528)

NISSEN et al. v. MCCAFFERTY et al.

(Supreme Court, Appellate Division, Second Department. July 21, 1922.) 1. Witnesses 140(5)-"Party interested" in result of action held to be incompetent as a witness.

In a suit by property owners along a street to restrain the successors in interest of a deceased person from making a deed without incorporating therein certain set-back restrictions made by defendants' predecessor in his lifetime, a property owner who was not a party to the suit was a "party interested," within Civil Practice Act, § 347, so as to preclude testimony as to statements of deceased in his lifetime.

[Ed. Note.-For other definitions, see Words and Phrases, First and Second Series, Interest (In Suit or Action).]

2. Covenants 20-Conduct of owner of land held to establish a restriction as to building on his land.

Where a landowner, with others, purchased a lot lying on an avenue where the landowner and others owned residence property, and by certain trust agreements placed a restriction on the land so purchased, with an idea that the whole residence property along the avenue should be similarly restricted with respect to the distance of buildings from the street, his action in so doing placed a restriction on his land in respect to building within the agreed distance from the street.

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

3. Estoppel 52-"Estoppel in pais" defined.

An "estoppel in pais" does not create a technical title in land. Its effect is to conclude a party from denying the effect of his statements or admissions designed to influence, and which have influenced, the conduct of another, and, when so applied, it is as effectual as a deed would be from the party estopped.

[Ed. Note.-For other definitions, see Words and Phrases, First and Second Series, Estoppel in Pais.]

4. Covenants 122-Evidence held sufficient to support a finding that purchasers had notice of a building restriction on property.

In a suit by property owners to restrain the successors in title of a deceased person from conveying residence property without a restriction in the deed, evidence held sufficient to show that the defendants took possession with knowledge of a building restriction placed thereon by their predecessor in title.

Appeal from Special Term, Kings County.

Action by Ludwig Nissen and another against James McCafferty and others. From a judgment for plaintiffs, defendants appeal. Affirmed. Argued before BLACKMAR, P. J., and RICH, KELLY, MANNING, and KELBY, JJ.

Luke D. Stapleton, of New York City (James S. Regan, of New York City, on the brief), for appellant McCafferty.

Meier Steinbrink, of Brooklyn (Frank E. Johnson and Joseph J. Schwartz, both of Brooklyn, on the brief), for appellants Aaron and others.

William G. Cooke, of New York City (Howard O. Wood, of New York City, on the brief), for respondents.

KELBY, J. Action for an injunction to restrain the defendant McCafferty and his assigns from making a deed of certain real property acquired by McCafferty from the executors of James N. Wallace, deceased, unless there be incorporated in the deed certain set-back restrictions alleged to have been theretofore made by Wallace in his lifetime.

In 1917, James N. Wallace owned a house and lot on the south side of St. Marks avenue, having 100 feet frontage on St. Marks avenue and running through the block to the next street to the south, Prospect Place. Wallace's property was situate between New York avenue and Brooklyn avenue. On the same side of St. Marks avenue, in the same block and 250 feet to the east of the Wallace property, was a vacant lot, with a frontage of 75 feet on St. Marks avenue and running through to the south to Prospect Place. In May, 1917, there appeared on this vacant lot a notice that said lot would be sold at an unrestricted auction sale. The remainder of the block was built up at this time with private residences, all of which stood back a considerable distance from the street line. On the north side of the same block were similar buildings, except that at the end of the block nearest Brooklyn avenue stood four contiguous houses, not quite so far back from the street line.

Mr. Howard O. Wood, one of the residents of the block, saw the notice of the sale on the vacant lot and consulted Mr. Nissen and Mr. Morse, both owners of property in the block. Wood asked these gentlemen if they thought the neighborhood would stand behind a purchase

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

(195 N.Y.S.)

of the vacant property for the protection of the neighborhood. The next day, at the instance of Mr. Wood, the vacant property was bid in at the price of about $28,000. The day after the bidding in of the property, Wood saw Wallace, told him of the purchase, and asked him what he thought of entering into an agreement for the protection of the block. Wallace said "that, if a set-back agreement could be made. binding the owners of property on the south side of St. Marks avenue, he would be glad to head a syndicate for that purpose," and outlined. then the basis of such syndicate; it being proposed by him that each participant therein should go in on the basis of his front foot ownership on St. Marks avenue, that the property should be paid for and should be carried until such a time as it could be sold subject to the direction of those who signed the so-called syndicate agreement. Wallace then suggested the People's Trust Company of Brooklyn as trustee. Wood then notified the resident owners on the south side of St. Marks avenue, and two or three on the north, and he saw and talked with Messrs. Hentz, Murray, Morse, and Nissen. They all agreed that the trust agreement should be made with the People's Trust Company; and each agreed to contribute their share toward the syndicate to pay the cost of the property, to pay taxes and interest until the property should be sold pursuant to an agreement to be made by them designating to whom it should be sold, and upon a covenant of "set-back."

In the written agreement subsequently duly executed, the People's Trust Company was named as party of the first part, and James N. Wallace, Ludwig Nissen, Horace J. Morse, Elizabeth Schultz, Mary E. McDermott, H. O. Wood, Emily S. Wood, Charles E. Warren, Thomas E. Murray, and Henry Hentz parties of the second part. The agreement has this opening recital:

nue,

*

"Whereas, the parties of the second part, the owners and holders of certain property on St. Marks avenue, between Brooklyn avenue and New York ave for their mutual protection have bought for the sum of $28,100 and taxes due May 1, 1917, certain property on the south side of St. Marks avenue, and are about to cause the same to be conveyed to the party of the first part."

*

*

*

The trust company agreed to hold the property in trust for the benefit of the parties of the second part, to hold it until such time as a majority of the parties of the second part should require in writing the same to be sold to a grantee of their selection at a named price. The trust company held the property under this agreement until the spring of 1919. Then appeared two bidders for the property, a Mr. Fraser for the plaintiff Schultz, and Mr. Aaron, a defendant, through a broker named Hyland. The bid of the plaintiff Schultz was approximately $33,000, and Wood was given to understand that Aaron would pay more, but Aaron insisted on building on the property apartment houses. The bid submitted on behalf of the plaintiff Schultz contemplated the tearing down of the adjoining property belonging to Mr. Schultz and then building on the combined frontage of 75 feet and 50 feet. private semidetached houses.

Wood then saw Wallace and asked him what he thought of accepting the Fraser bid for private houses, and further asked him whether

an effort should be made to get more for the property allowing apartments to be built, but subject to a set-back line. Wallace said he thought apartment houses might be built on St. Marks avenue in the future, but that the front set-back line formed by the houses must be maintained; that under the circumstances he would rather sell to the builder of private houses than sell to the builder of apartment houses, even though it necessitated a loss. Wood then consulted Messrs. Nissen and Morse, who expressed themselves "much more strongly than Mr. Wallace," and Wood then agreed to sell to Schultz, provided the signers of the trust agreement consented. Under date. of May 22, 1919, all signers of the agreement consented in writing that the People's Trust Company enter into a contract of sale of the property, and authorized the trust company to give a deed in accordance with the terms of the trust agreement. The written consent named the sales price, $33,000, but did not name the purchaser. All written consents so signed were identical, except that signed by McDermott, which described the property as "on the south side of St. Marks avenue, bought by us for our mutual protection." This consent also contained these additional words:

"Subject to a provision that no building shall be erected on the property within thirty-five (35) feet of the fence line, except open porticos or stoops, and that no buildings shall be erected on the St. Marks avenue front except private residences."

All of the consents had this recital:

"We, the undersigned, who on the 8th day of May, 1917, made a certain agreement with the People's Trust Company, and with each other, in regard to premises on the south side of St. Marks avenue, bought by us for our mutual protection."

On June 13, 1919, the People's Trust Company executed a contract for the sale of the vacant lot to Elizabeth Schultz, one of the plaintiffs. The contract contained the following:

"Subject to covenants and restrictions contained in prior deeds, and subject to a covenant that no building shall be erected upon the premises conveyed in front of the present house line formed by the residences of Schultz, Morse, and Nissen; said covenant to be made by an agreement between Elizabeth Schultz, Horace J. Morse, and Ludwig Nissen, to be signed and recorded at the time of closing this title, and upon the further condition that the grantee build or cause to be built upon the St. Marks avenue front thereof private residences."

Subsequently, and on July 25, 1919, a deed to the property was duly delivered by the trust company to Elizabeth Schultz, and contained the covenants recited in the foregoing contract. In October, 1919, Wallace died, and his executors in December, 1920, conveyed the Wallace property (not the former vacant lot) to the defendant McCafferty; but this deed contains no reference to any building line agreement.

Both before and after the deed from the trust company to Schultz, Wood wrote Wallace letters. In a letter dated May 22, 1919, Wood said that the property had been sold to Fraser, who agreed to have"the main line of his building 35 feet back from the present fence line. The stoops, open in character, will be in front of this line. I went over the matter with him thoroughly, and it seemed impossible to go further back; but

(195 N.Y.S.)

this will give the general appearance of a line in uniform with your house and those of your adjoining neighbors."

In a letter dated July 29, 1919, he stated:

"As you know, we have sold the Emery lot for $33,000, with the covenant that only private houses be erected and a collateral agreement, signed by Messrs. Schultz, Morse, and Nissen, that there be no building beyond the present house line. This preserves the integrity of the southerly side of St. Marks avenue, between Brooklyn and New York."

The complaint alleged that, at the time of the conveyance of the property to the plaintiff Schultz, Mr. Nissen and Mr. Wallace made an agreement between themselves that they would not sell their property or cause it to be sold, excepting upon a similar covenant, which they would cause to run with the land, agreeing each with the other to maintain the present residential line formed by the residences of Schultz, Morse, and Nissen. It is further alleged that defendant McCafferty entered into a contract of sale of the premises, and that his transferee intended to erect thereon an apartment house, in front of the residential line established and agreed to by Wallace. It is conceded that the record title of the defendant McCafferty and his assigns is unrestricted. No written covenant is relied upon by the plaintiff; but the suit is based on parol agreements. No written agreement was ever made between Wallace and Nissen relating to their respective properties.

[1] The first question presented for review is whether Wood, who is not a party to this action, is disqualified as a witness under section 347 of the Civil Practice Act, formerly section 829 of the Code of Civil Procedure. Is he a person interested in the event, and was he examined on his own behalf or interest? The judgment entered herein could not be offered in evidence for or against him, in another action commenced by him. Under the decisions, therefore, Wood was not precluded from testifying. Eisenlord v. Clum, 126 N. Y. 552, 27 N. E. 1024, 12 L. R. A. 836; Hobart v. Hobart, 62 N. Y. 80; Franklin v. Kidd, 219 N. Y. 409, 412, 114 N. E. 839.

[2] The vacant lot was purchased for the "mutual protection" of the owners. The only common object sought to be protected was the existing front building line on St. Marks avenue. All of the owners were interested in this subject, for it made the neighborhood more attractive, and it made certain greater air and light to the various properties than would be the case without the set-back restriction. Wallace expressly stated that

"If a set-back agreement could be made, binding the owners of property on the south side of St. Marks avenue, he would head a syndicate for that purpose."

He subsequently did, and the other property owners subscribed their share to the syndicate. It fairly appears from Wood's evidence that the intent of the various parties to the trust agreement was to secure a permanent set-back restriction. They did not rely on the rather questionable permanence of line that might be secured by the mere limitation of the structure about to be built on the vacant lot acquired by them.