Bandman v. . Finn

The defendant had purchased through H. Schmidt, the plaintiff's assignor, certain premises on Broadway and Lafayette place, in the city of New York, which he was endeavoring to sell. Growing out of such purchase the parties had entered into a written agreement, which, so far as is material herein, provided that the defendant agreed to pay Schmidt $8,600 upon the consummation of the resale of the premises. Thereafter, and in October, 1903, Schmidt retained one Levy, a lawyer, to negotiate with the defendant for a satisfaction and surrender of this agreement. The negotiations continued until the 23rd day of November, when the defendant told Levy that he would pay $2,500 to Schmidt and $250 to Levy for his counsel fees, in settlement and for a release of the contract in question. This offer was reported to Schmidt and his attorney was authorized to accept it, who thereupon arranged to have the matter settled at his office on the 25th day of November, at three o'clock in the afternoon. At that time the defendant appeared at Levy's office with two checks, one for $2,500 and the other for $250, ready to carry out the settlement of the claim, but Schmidt did not appear or furnish a release of the defendant from his aforesaid agreement. Prior to this the defendant had entered into negotiations for a sale of the premises to Wanamaker, and such negotiations had proceeded to such an extent that the terms had been agreed upon and *Page 518 duplicate contracts drawn, which were signed by the defendant on the 24th day of November and then transmitted to Wanamaker, who signed them on the 25th and returned to the defendant his copy about a quarter-past three in the afternoon, within a few minutes after the failure of Schmidt to appear and close the transaction on his part.

The question presented upon this review is as to whether the negotiations for a settlement that had taken place between plaintiff and the defendant had ripened into a completed contract, so that a novation had taken place and the new contract substituted for the old, or whether the negotiations had proceeded to the extent only that their minds had met upon the terms with the understanding that the settlement by the payment of the money and the delivery of the release was to take place on a future day; in other words, that there was an accord executory without satisfaction. I think the undisputed evidence in this case, even adopting the most favorable view that can be taken thereof for the defendant, brings it within the latter rule of an accord executory — a meeting of the minds of the parties upon the terms, with the satisfaction or payment postponed until a future time. The defendant had offered Schmidt $2,500 for his claim under the contract. Schmidt had said that he would accept it, and the defendant was to pay over the $2,500, and Schmidt was to execute and deliver a release of his claim on the Wednesday following, at the hour designated; the payment of the money and the delivery of the release were to be concurrent acts. The satisfaction, therefore, was executory. It was postponed until the future. There had been simply an accord of their minds upon the terms of the settlement. It was, therefore, an uncompleted contract, one which could not be enforced by action or substituted for the existing contract. The rights of the parties herein cannot be stated more forcibly by me than to quote from Justice BARRETT in the case of Panzerbeiter v. Waydell (21 Hun, 161). In that case one of the parties had made a claim against the other and action had been brought thereon. Negotiations were then undertaken *Page 519 for a settlement and the terms had been agreed upon, but the payment of the claim and the execution of the release and the discontinuance of the action were to be made on a future day. The learned justice says with reference thereto: "There was no acceptance of the discontinuance and release, nor were they even left with the defendants or their attorneys. There was, in fact, no intention to surrender these documents without concurrent payment. * * * This is a plain case of an accord executory; such an agreement would have been no bar to the original suit unless executed by the acceptance of the $150. * * * The promise to discontinue and release was not binding upon the plaintiff. Consequently the defendants were without a consideration for their promise. In the case of mutual and concurrent promises there must be reciprocity of obligation." (Mitchell v.Hawley, 4 Denio, 414; Russell v. Lytle, 6 Wend. 391;Daniels v. Hallenbeck, 19 Wend. 408; Tilton v. Alcott, 16 Barb. 598; Day v. Roth, 18 N.Y. 448; Kromer v. Heim,75 N.Y. 574; Brennan v. Ostrander, 18 Jones Spencer, 426;Noe v. Christie, 51 N.Y. 270; Osborn v. Robbins, 37 Barb. 481.)

I do not understand the learned chief judge to question the rule I here invoke. He, however, contends, if I understand his opinion correctly, that the claim existing between Schmidt and the defendant was an unmatured claim, and for that reason the parties had the right to agree upon the compromise of it, and that it was not subject to the rule that where a payment of a portion of an undisputed claim had been made and receipt given therefor in full, it did not conclude the party from recovering the balance due, as stated in the case of Ryan v. Ward (48 N.Y. 204). I quite agree to this. I concede that the parties may agree to surrender and compromise an unmatured claim. They may also agree to compromise and settle a disputed claim. What I do not agree to is that a different rule obtains with reference to the settlement of a disputed claim from that of an unmatured claim. Where the minds meet upon the terms of a settlement of a disputed claim and the delivery of the release and the payment is postponed *Page 520 to a future date, it is but an accord executory and not a complete settlement or agreement, for the reason that no consideration passes between the parties at the time; it is but a mutual understanding as to terms, but a failure to complete by satisfaction. The same is true with reference to the settlement of an unmatured claim. (Hearn v. Kiehl, 38 Penn. St. 147.)

Under the provision of the contract the whole of the $8,600 became due and payable from the defendant to Schmidt upon the consummation of the resale of the premises. This took place within a few minutes after three o'clock of the day that was fixed for the settlement between the defendant and Schmidt. It is quite possible that the defendant had reason to believe that this sale would be effected when he made his offer to compromise with Schmidt. Schmidt was not advised of the fact that negotiations for a sale were pending between the defendant and Wanamaker. But in view of the findings in this case, I incline to the view that no question of law arises with reference to this branch of the case which we can consider upon this review.

I favor an affirmance of the order of the Appellate Division.

EDWARD T. BARTLETT, WERNER and HISCOCK, JJ., concur with CULLEN, Ch. J.; GRAY, J., concurs with HAIGHT, J.; O'BRIEN, J., absent.

Ordered accordingly.