Manufacturers & Traders Trust Co. v. Cottrell

Hancock, Jr., J. (dissenting).

I agree with the analysis of the issues and the conclusions in the memoranda at Special Term, McCarthy, J. In the letter written by defendant Cottrell on March 2, 1978 he states:

"1. Under my agreement with the Trust Company dated March 3, 1976, I became obligated to pay, by December 31, 1977, the interest on my indebtedness to the Trust Company for the calendar year 1976.
"2. In view of my inability to consummate a sale of all or a substantial portion of the Lancaster properties prior to December 31, 1977, I was at that time, and continue now to be, unable to make the payment required by our agreement. I, of course, acknowledge my responsibility in this respect.”

and further:

"4. I understand and confirm that the Trust Company’s current election to withhold the forwarding to me of a written notification of intention to foreclose does not constitute in any sense a waiver by the Trust Company of any of its rights or privileges under the March 3, 1976 agreement, and that position is taken and maintained by the Trust Company at its sole option without prejudice to any of its rights under that Agreement. In other words, the Trust Company continues, under the March 3, 1976 agreement, to have the right at any time while I am in default under the agreement, at its sole option and discretion, to forward to me written notification of intention to foreclose to which reference is made in paragraph 4(C) of the agreement.
"5. I am now and shall continue to pursue every reasonable means of effecting an orderly liquidation of the Lancaster properties in order to satisfy my obligations to the Trust Company.
"This letter is written with the expressed understanding that the agreement of March 3, 1976 continues in full force and effect and is in no way modified by this letter.”

This letter is an unequivocal acknowledgment of Cottrell’s continuing default and the plaintiff bank’s continuing "right at any time while [Cottrell is] in default under the agreement, at its sole option and discretion” to commence foreclosure proceedings under the March 3, 1976 agreement. The majority hold that the last sentence of Mr. Cottrell’s letter, to the effect *546that the agreement of March 3, 1976 continues in full force and effect, creates a question of fact as to whether plaintiff bank, despite its unqualified right to foreclose at any time at its discretion, nevertheless intended to afford Cottrell a further grace period in which to liquidate the Lancaster properties. I cannot agree. The last sentence of the March 2, 1978 letter is, in my opinion, solely for the benefit of the bank and a re-emphasis of the express reservations of the bank’s rights under the March 3, 1976 agreement as spelled out in paragraph 4 of the March 2, 1978 letter, including particularly and most importantly, its absolute right to commence foreclosure in its sole discretion at any time while Cottrell remains in default. The letter of March 2, 1978 is not signed or accepted by the bank and does not on its face purport to be binding on the bank. There is nothing in the letter or in the circumstances surrounding its preparation and delivery suggesting that it was intended to impose any obligation on the bank. The letter clearly had one purpose: to preserve the bank’s unlimited right to foreclose because of the defendants’ admitted default under the March 3, 1976 agreement and to assure that the bank’s delay in foreclosing under that agreement would not be construed as a waiver of that right. To interpret the last sentence of the March 2, 1978 letter as making the bank’s right to immediate foreclosure subject to the condition that Cottrell should have further time to liquidate the properties is not only contrary to the plain meaning of the letter but destroys its very purpose. Such interpretation would impute to the bank the intention of preserving its unqualified right to foreclose in the specific language of paragraphs 1 and 4 of the letter and by the last sentence giving that right away by making it subject to Cottrell’s continued right to liquidate the properties under paragraph 2 of the March 3, 1976 agreement as though the default had not yet occurred—something that the bank had no obligation and no reason to do and an absurdity that the bank could never have intended. Therefore, in my opinion, plaintiff bank was under no contractual duty to consider the Marrano deal.

Any claim of waiver of the bank’s rights to foreclose and to hold Cottrell to his promise in the March 3, 1976 contract not to interpose any defenses or counterclaims is negated by the express terms of the March 2, 1978 letter. Likewise I believe that letter precludes any claim of estoppel. Even if this were not so, there is no showing of any change of position by Cottrell which would give rise to a claim of estoppel. He was *547in default on December 31, 1977 and by terms of the March 2, 1978 letter remained in default and subject to foreclosure at all times thereafter. For this reason, cases such as Thomson v Poor (147 NY 402) and Marine Midland Bank-Western v Center of Williamsville (48 AD2d 764, supra) (where the due date was extended and there was forbearance from declaring a default) are not in point.

Inasmuch as there are, in my opinion, no questions of fact requiring a trial, I respectfully dissent and vote to affirm.

Simons, J. P., Doerr and Witmer, JJ., concur with Schnepp, J.; Hancock, Jr., J., dissents and votes to affirm in an opinion.

Order and judgment reversed, with costs to defendants and motion denied in accordance with opinion by Schnepp, J.