Ruttenberg v. Davidge Data Systems Corp.

Murphy, P. J., and Asch, J., dissent in a memorandum by Murphy, P. J., as follows:

On the well reasoned opinion of Schackman, J., I would affirm. The purpose of the agreement clearly was to enable the stockholders of defendant closed corporation to retain control, a fact reflected in the "whereas” clause, declaring that "the Stockholders and the Corporation believe that it is in their best interests to provide for certain restrictions on the transfer of the stock of the Corporation now held by them or to be issued to them in the future”. Not only is the transfer of shares, by any means, prohibited without the "advanced written consent of all other Stockholders,” but "termination of employment by the Corporation of any Stockholder for any reason whatever” authorizes the corporation to purchase, at a price set forth in the agreement, all of the shares of the departing stockholder.

Contrary to the position of defendants, it is clear that defendants’ obligation to purchase arises upon the termination of plaintiffs employment with the corporation, not upon his being discharged by the company. Significantly, the phrase "termination of employment by the Corporation of any Stockholder for any reason whatever,” specifically states that such termination includes, but is not limited to, the death or disability of the shareholder, neither of which is within the control of the corporation. As the Court of Appeals explained in Sutton v East Riv. Sav. Bank (55 NY2d 550, 555), "in searching for the probable intent of the parties, lest form swallow substance, our goal must be to accord the words of the contract their 'fair and reasonable meaning’ ”.

Under defendants’ anomalous construction, an unsatisfactory employee of Davidge Corp., upon being fired, would be required to sell back his stock and receive what defendants call a "parachute”, while a perfectly satisfactory employee upon his voluntary departure would be forced to keep his stock and the corporation would have no obligation to repurchase it. Are we to suppose that defendant in drafting the agreement intended to reward dishonest employees while *199penalizing those who prior to their resignation had rendered good and loyal service?

Defendants, having given an expansive definition to the word "termination” in the contract may not now complain that, because plaintiff disappointed them by suddenly leaving their employ, it could not have been contemplated that he simply be permitted to walk away with a windfall. "It is established that an ambiguity in a contract must be construed against the party who drafted it” (BT Commercial Corp. v Blum, 175 AD2d 43, 44), and the instrument herein was drawn up by defendants.