Maher v. Garry

O’Brien, J.:

The object of this suit is to obtain a judgment enjoining and restraining the defendants, as executors of Thomas Garry, from attempting to rescind, annul, terminate or modify the contract between the plaintiffs and the said Garry, and from liquidating, selling, disposing of, or interfering with the business, or with its assets and effects, or with the control and management thereof .by the plaintiffs, and from excluding them froni the premises occupied by the business, or from its books and property, upon the grounds that, by the terms of the agreement, the decedent became bound not only to execute a written contract which was actually signed, but also to make a will of such a_nature that the executors should have no power as against these plaintiffs, under the circumstances now existing, to wind up the business, and to do the things which they are now attempting to do; and that either through innocent mistake, or through fraud, the will which the decedent promised to execute was not, as a matter of fact, made by him.

The two questions which naturally present themselves at the outset, are as to whether the understanding or agreement relied upon as to Garry’s making a will could be proved by párol, and, if it could, whether such shows a binding agreement.

In reading the contract between plaintiffs and Garry, it will be noticed that it contains covenants executed by both [Darties, and embodies provisions which assume to provide not only for the contingency of death, but for nearly every other conceivable contingency as well. Notwithstanding that thus the contract appears on its face to be complete, plaintiffs claim the right to establish by parol an agreement contemporaneous with the execution' of the written instrument, which the respondents insist is inconsistent with the latter, but which the- appellants claim is á collateral agreement, and, therefore; as coming within the class of exceptions, is not a violation of the rale which excludes the admission of parol evidence to vary, contradict or control a Written contract.

In Thomas v. Scott (127 N. Y. 133), which is the latest expression of the Court of Appeals on the subject, it is said: “ It is a general rule that evidence of what was said between the parties to a valid instrument in writing, either prior to or at the time of its execution, cannot be received to contradict or vary its terms. This rule is not universal in its application, because the courts, in their efforts to prevent fraud and injustice, have laid down certain exceptions, which although correct in principle are sometimes so loosely applied in practice as to threaten the integrity of the rule itself. * * * The real exceptions may be grouped into two classes; the first of which includes those cases in which parol evidence has, been received to show that that which purports to be a written contract is in fact no contract at all. * * * The second class embraces those cases which recognize the written instrument as existing and valid, but regard it as incomplete, either obviously or at least pos^ siblv, and admit parol evidence, not to contradict or vary, but to-complete the entire agreement of which the writing was only a part. * * * Two things, however, are essential to bring a case within this class. 1. The writing must not appear upon inspection to be a complete contract- embracing all the particulars necessary to make a perfect agreement, and designed to express the whole arrangement between the parties, for in such a case it is conclusively presumed to embrace the entire contract. 2. The parol evidence must be consistent with and not contradictory of the written instrument.”

Are the two things essential to bring a case within the exception allowed to the general rule present in the case at bar ? Is there anything to indicate upon inspection of the written agreement that it was not designed to express the entire understanding of the. parties ? . And is the agreement thus supported by parol “ consistent with and not contradictory of the written instrument ? ”

We think it would be difficult to conclude, after reading the written contract, consisting of twenty-seven clauses, which apparently was designed to cover every possible contingency that could arise, that such an agreement was not on its face complete and did not contain the entire agreement of the parties. But assuming that we are justified in regarding the written- contract as incomplete, and the parol agreement as collateral and supplemental, can it be said that it is consistent with the written agreement? The latter expressly deals with the rights, powers -and obligations of the testator’s executors with respect to the contractual relations then created by it; and the parol agreement must be regarded as relating to the same subject-matter, because its effect is to destroy the very provisions of the written agreement which refer to the rights, powers and obligations of the executors. It will thus be seen that both cover the saíne area. In each the subject was the powers of the executors of the testator to deal with the business with reference to which the contract was made after his death. The written agreement gave to the executors the identical power to terminate the interest of the plaintiffs which was reserved by the testator to himself during his life. By the parol- arrangement, as interpreted by the plaintiffs, the executors were to be precluded from exercising the right to terminate the contract so long as the plaintiffs conformed to its requirements. An agreement to make testamentary provisions qrrohibiting the defendants from interfering with the business is the equivalent of an agreement on the' part of the testator that his executors should not exercise such right. Rot only this, but the provisions evidence an intention upon Garry’s part that neither he nor his estate would be in any way legally obliged to perform any one act, and in this respect the plaintiffs. were willing to take their chances.. . If then we give the force to the parol agreement claimed for it by the plaintiffs, is it not clearly inconsistent with, and does it not annul, the express provisions of the written contract ?

"Without, however, deciding, that the parol agreement is inconsistent with and would tend to vary and contradict the written instrument, and assuming that equity would enforce a distinct and definite agreement, and give relief regardless of the operations of rules of law'or statute, when the result of recognizing such rules would be, not the prevention, but the commission of a fraud, we are brought to the second-consideration as to whether the parol agreement was such a binding and definite contract that if in writing, it would be enforced.

If we assume then that Garry agreed to make a codicil directing his executors. that if. the plaintiffs conformed to the agreement they were to continue the business until the amount was paid and, the contract fulfilled, it will be noticed that there is an absence, not only of anything to indicate what is meant by “ conforming ” to the agreement, but there is no time fixed when the amount to which the testator was entitled is to be paid. While living, he had full power to determine at what time and in what manner his capital should be withdrawn, and so under the written agreement the executors have the same power. But the parol agreement is silent as to the time and manner in which the money was to be paid; and thus the executors, if the plaintiffs are right, are under obligation to permit the business to continue for an indefinite and uncertain period of time. There is abundant authority for the proposition that equity will not undertake to enforce specifically a contract which is indefinite and uncertain in its character. (Stanton v. Miller, 58 N. Y. 192 ; Shakespeare v. Markham, 72 id. 400 ; Crosdale v. Lanigan, 129 id. 604.)

The plaintiffs, seeing the force of this, have offered to stipulate against any injury flowing to the estate from the absence of any definite provision on this subject. But this does not aid us in determining the question as to the plaintiffs’ right to relief, which must be predicated upon the agreement itself, though if upon that we could reach a conclusion favorable to the plaintiffs, it might be that equity would require that the relief should be accorded upon certain conditions which the court would undoubtedly have the right to impose. Our conclusion upon this branch of the case is that the parol contract is too indefinite to be enforced. But if definite, is it binding %

The written contract imposed no obligation on Garry or his estate prior to the withdrawal of his capital. It is conceded that Garry had the right at any time during his life, before his capital was withdrawn, arbitrarily to cancel the agreement and to return to each of the plaintiffs his $4,000. He was the. sole owner of the business until such withdrawal of capital; he could sell the business, and the purchaser could cancel the agreement. n fact the written agreement permitted him to do as he chose with the property so long as any part of his capital remained in the business. And even after it had been withdrawn, he was to fix the terms of any partnership and the interests of the partners. If, into such an agreement, we read the parol understanding relied upon by the plaintiffs, can it be said that there was any binding obligation created ? It is net claimed that, if so written in, the clauses relating to the right of Garry in his lifetime to annül and cancel the agreement at any time before his capital was withdrawn, would be in any way destroyed or impaired. Therefore, in respect to the agreement to make the codicil to his will, restricting the right of his executors, this was subject, as was every other provision of the agreement, to the arbi-trary will and disposition of Garry. If, during his lifetime, he had canceled the agreement, or had' .sold the business to another, then all the rights which the plaintiffs had under the agreement, including the provision for a codicil, would have fallen. If we are right in our reasoning, then it follows that he was at liberty, at any time during life, arbitrarily to change his mind in regard to making a codicil to his will, or making any provision for the security of the plaintiffs after his death, and this power was not dependent upon his canceling the entire agreement,, because, while any portion of his capital remained, he could annul any of its provisions. And that this was his understanding clearly appears, because he executed a codicil some time after, which,, to a certain extent, complied with what plaintiffs claimed was the parol agreement, and later made a new will which had no such clause as it is now insisted he should have included therein. And thus the evidence is afforded that he changed his mind on this subject. He was not required by the agreement to indicate in any Avay his change of mind, and he was, therefore, at liberty to notify them or not of such change.

It will thus be seen that, we agree with the views of the learned trial justice, that “ The plaintiffs concededly gave to the testator the absolute power to cancel during its lifetime; the trust which they reposed in his willingness to deal justly with them was fully as great as that which they would be expected to place in him if they placed a moral reliance upon his executing a favorable provision in his -will. They were willing to trust him, at the same time not to exercise unjustly the power to cancel and also to incorporate a provision in his will continuing the business. Both acts had to he performed in his lifetime; both acts were left not only te his sense of justice, but to his possible perception of the danger of continuing a business decreasing in value or increasing in risk in times of financial distress, so that he might provide for himself or for his estate when he could no longer supervise it against the perils of the future.

“ So considered, the whole transaction at the time of the signing of the instrument was consistent with the purposes' and intentions of the parties, and it is the most reasonable supposition that the plaintiffs relied upon his willingness to allow the business to continue after his death, if, in his judgment, it should likely be safe to do so, rather than upon a legal obligation to prevent, after his death, the doing of a thing which he might do in his life, and which legal obligation was nowhere incorporated into the lengthy and expressive instrument which contained the agreement of the parties.”

Apart, therefore, from the question as to whether the oral agreement varied and was inconsistent with the written contract, and upon the grounds that such agreement is too indefinite to be enforced and is not binding, we think the judgment should be affirmed, with costs.

Van Brunt, P. J., Williams and Ingraham, JJ., concurred; Patterson, J., dissented.

Ingraham, J.:

The extremely unfortunate position in which plaintiffs now find themselves, and the manifest injustice of the position taken by the defendants in exercising the power given to them by the contract to terminate, rescind and annul it at any time before the withdrawal of the full sum of $151,327.45, naturally inclines us to find, if possible, some method by which we can prevent such injustice being done. We are, however, confronted with the contract that the plaintiffs have themselves executed. They have seen fit to agree that the defendants’ testator, his executors, administrators, successors or assigns, shall have this right to terminate, rescind and annul the agreement at any time before the full amount agreed to have been paid to the defendants’ testator from the business shall have been actually paid to them. And it is that agreement that we are required to enforce. We cannot make a new agreement for the parties, nor can we deliberately overlook or disregard the express terms of the contract that the parties have made.

This provision of the eleventh clause of the contract is explicit and gives to the testator and his executors the full and uncontrolled power in their discretion to terminate the agreement at any time prior to the final withdrawal of the sum specified. The evidence shows that that provision and its effect were clearly understood by the plaintiffs before they signed the instrument. Thus with their eyes open, understanding what they were doing, they made the agreement. Having made it, the testimony is that at the same time another and independent agreement was made between the plaintiffs and the defendants’ testator, and we are asked to enforce that agreement. I think it clear that the latter was not one that was in conflict with this written agreement that the jiarties then executed, but one that was entirely independent of it and not at all inconsistent with it. The testimony is that the plaintiffs objected to executing the proposed written agreement on the ground that while they would trust Mr. Garry, the contingency of his death was presented to them; and then the question came up as to what the executors would do in case of Mr. Garry’s death, the contract giving to the executors the same power that Mr. Garry had to terminate the contract. To meet that objection it was. not proposed to take away from the executors this power to rescind the contract. It was not' proposed to restrict them as to what they could or could not do as between the plaintiffs and the executors in case of Garry’s death. Mr. Garry said to the plaintiffs that he would make a ■ codicil to his will directing his executors to have the business continued, provided the plaintiffs would comply with the contract; and with that agree-" ment the plaintiffs were content and signed the contract. This understanding with Mr. Garry as to the codicil that be would execute would not be at all inconsistent with the discretion that the executors had to terminate the contract. Gariy made no agreement with the plaintiffs that his executors would not exercise the power. He simply said by a codicil he would direct his executors not to exercise it upon certain conditions; and as between the plaintiffs and the executors, it left them in the position by which the executors had the power to rescind the contract, that power being expressly given to them by the contract that was signed after Garry had agreed that he would make a codicil. by which' he would leave direction to his executors as to how they should exercise the power given them by the contract. The only effect that the execution of such ■ a codicil would have as between the plaintiffs and the executors would be, that under it the executors would have the power to continue the business if they considered it for the benefit of the estate. It might be that one of the executors, or one of the legatees or beneficiaries under Garry’s will, would have the right to ask the court to compel the executors to carry out Garry’s directions; but these plaintiffs would not be in a position, under the contract they had signed, to ask the court for a judgment restraining the executors from enforcing this express provision by which power was given to them to rescind the contract.

A different question would have been presented had the plaintiffs, before the executors had formally rescinded the contract, tendered to the executors the amount that was unpaid of the sum that Garry or his estate was entitled to withdraw from .the business, and then insisted upon the contract for the continuation of the partnership being performed. That, however, was not done. That amount had not, at the time of the trial, been withdrawn from the business, and, under the express provisions of the contract in force as between these plaintiffs and the executors, the executors had the power to terminate the contract, and. the existence of such a codicil would not justify the court in taking away from the executors the power expressly given to them by the agreement.

I can see no escape from the conclusion that this judgment was right, unless we are prepared to make an entirely new contract for the parties, instead of enforcing the one that they have made.

I concur, therefore, in an affirmance of the judgment.

Patterson, J. (dissenting):

I am not able to agree with the views expressed in the opinion of the court in this cause, nor in the conclusion at which Mr. Justice Ingraham has arrived in his concurring opinion. It is conceded that the equities are overwhelmingly with the plaintiffs, but it is considered that the court is powerless to grant relief by reason of supposed insurmountable obstacles in fixed rules of law applying to the contract relations existing between the parties. In my judgment not only do these alleged obstacles not exist, but the intrinsic merits of the plaintiffs’ cause being so clear and indisputable, an efficient remedy may be afforded within and pursuant to well-established elementary principles of equity, without violating or ignoring any rule-of law or of evidence, and without the arbitrary exercise of judicial authority. We have before us a plain case of a grievous, contemplated and threatened wrong, imposing upon the court a plain duty, one which it should be eager to discharge and not astute to evade, namely, to grant that measure of relief which the plaintiffs’ rights demand, and to withhold which, it seems to me, is purely and simply a denial of justice. ■

Many, but not all the material facts, are mentioned in the prevailing opinion, but no reference is made to the exact situation of the parties, nor to the leonine character of the contract made by the defendants’ testator with the plaintiffs. Mr. Garry, desiring to retire from any active connection with the business owned by him, proposed to put it absolutely in the charge of his two clerks, the plaintiffs, for them to conduct without any participation by him; they to devote their whole time and to mortgage their future for his benefit-; he to retain absolute ownership of the business; they to withdraw from it only such weekly sums as were equal to the wages theretofore paid them; they to advance every dollar of necessary cash capital; that is to say, each to advance $4,000 (and the evidence-shows that the indebtedness -of the business never, during any period of its currency, was greater than between $5,000 and $8,000); he, Garry, to receive from the profits of the business -made for him by the labor -and the capital of these plaintiffs the sum of $151,000, with interest at six per cent, and when that sum was paid him the plaintiffs were to acquire as their reward each a one-fifth interest in the business, Garry still retaining three-fifths ■of the whole. Those are facts in the case which should be made prominent. Garry was to secure- to himself every dollar he had in the business, real or imaginary; was to be the absolute owner; was to take no part in conducting it, to do no work, but to leave everything to the fidelity, the diligence and the business skill of his two clerksj and all that -they had to look forward to after Garry was satisfied in full was the acquisition of a small fractional proprietorship in the business which would give them a standing, and open to them- possibly a business career. They were willing to enter into this contract in the hope and expectation referred to, and they were .also willing to stipulate that Mr. Garry might, at any time before the full sum of $151,000 and interest .at six per cent was paid to him from profits tó he earned by them, terminate the agreement and resume possession of the business by returning to them their capital. This they were willing to do obviously, because they not only trusted to the integrity, the sense of justice and the gratitude of Garry, but because it is patent that it could not be to his interest to put an end to a contract so immensely beneficial to himself so long as they faithfully carried out their part of it by paying to him from profits the whole value of his business, and leaving him when that was done the lion’s share of what remained.

When the preliminaries of this contract had been settled and the parties met to execute a written agreement at the office of the attorney who prepared it, the plaintiffs found that there had been inserted therein a provision (that referred to in the opinion of the court), namely, that not only should the contract be determinable at the pleasure of Mr. Garry, but also at the mere instance of his executors, administrators or assigns, upon a return of the capital contributed by the plaintiffs.

It is stated in the opinion of the court that this provision was objected to by the plaintiffs. It was not only objected to, but, according to the testimony of Mr. Bannin, one of the executors of Mr. Garry, it was protested against by the plaintiffs. I do not read the testimony as the majority of the court have done. Mr. Bannin distinctly swears there was a protest against signing with such a provision. “Mr. Molohan (he says) made it before the reading was completed ; that is my recollection. .Mr. Molohan made a protest.” Molohan said to Garry, “ You are liable to die; * * * what would your executors do; what position would it place us in if we would sign this % ” Manifestly they would not be guilty of the folly of committing themselves to this contract and expending years perhaps of faithful labor, with the use of their money, only to find themselves thrown back upon the world at the volition or caprice of strangers, and just at a time, perhaps, when their contract would be upon the eve of fulfillment. ' "

There is no doubt that Mr. Garry recognized the reasonableness and the justice of this protest, and thereupon stated that he would make a codicil to his will directing his executors to conform to the agreement, that is if they, tlie plaintiffs, conformed to the agreement to continue the business until the amount was paid and that the contract would, be fulfilled. Thereupon the plaintiffs, as Mr. Bannin says,, stated that “with that under standing they would sign itand they did sign it, and thus they executed and delivered the contract.' upon the distinct understanding and agreement that Garry would do as he promised. Their act in so signing and delivering was a consideration for the promise Garry made., There is nothing ambiguous or vague in this part of the transaction. It was a. distinct stipulation between the parties that in one. certain event or contingency, and only , in that one event or contingency, should any limitation be put upon the right to rescind the contract. And this brings us to the consideration of the question as to the legal effect of this particular feature of the transaction.

It would appear that the learned judge at Special Term admitted all the testimony respecting the protest of the plaintiffs and the statement and promise made'by Mr. Garry to overcome it. . That testimony was all objected to, and if the objections were valid and the testimony was inadmissible, it would be folly to báse any judgment upon it. But, in my opinion, that testimony was entirely competent. It was not introduced for the purpose of varying or modifying a written contract between the parties, which was to contain or might have contained all the terms and conditions of all that was in negotiation prior to the execution of the written paper. It was merely a collateral agreement respecting, it is true, a matter in one sense germane to the whole transaction, but actually something that was distinct and separate, and intended to be kept separate from that which was to be comprehended in the main agreement. ■ . The case does not fall within the ruling in Eighmie v. Taylor (98 N. Y. 288) and Thomas v. Scott (127 id. 133) and cognate cases, for the evidence does not affect a paper designed to signify and to execute the terms of the whole contract agreed upon between the parties and which was adequate for the purpose of embracing all that was agreed upon. This proof was not intended to import into a written contract a term which should have, been inserted therein, and the case differs tota celo from those relied upon to exclude the testimony.

There are three elements, each one of radical difference: First. By specific agreement between the .parties,, the stipulation was hot to be inserted in the main agreement, but. was to be .absolutely independent and collateral. Second. In the very nature of things, it could not have been inserted in the agreement, because it was some;thing that was to he done by Mr. Garry by last will and testament or codicil thereto. It was to be done by an instrument to be executed by Mr. Garry alone, and which no one but himself could execute, and it was not contemplated in any way that any reference should be made, in the written agreement then signed, to such a codicil. Third. It appears without dispute that Mr. Garry, in conformity with this collateral agreement, did actually execute a testar mentary paper of the character he promised to execute as a condition of the plaintiffs’ signing and delivering the contract to.him,' so that the evidence of the collateral contract was complete, its terms were definite and what was intended by Mr. Garry as performance thereof was actually made.

I think, therefore, it is clear, from the circumstances which surrounded the execution of the agreement and all the attending .facts and the positive testimony of Mr. Bannin, that, the matter with reference to. the direction to be given .to the 'executors in case Mr. Garry should die- before full performance of the contract by the plaintiffs, was. a thing it was neither contemplated nor intended, should go into the main agreement, hut should-, be kept as a matter-extrinsic and entirely independent of the terms of' that agreement..

If the foregoing views on this, sub ject are correct, then it will not be disputed that it'was incompetent for Mr. Garry to revoke or destroy the codicil. While the provisions of that codicil are not as, broad nor as beneficial tó the plaintiffs as their agreement justified, them in expecting, yet, doubtless, it evinced Mr. Garry’s apprehension; of what had been agreed to and would, be. the measure'of the plaintiffs’ rights. The .parol evidence is that,Garry stated that his will would contain a direction to his executors to 'conform to the agreement -so long as.the plaintiffs conformed to it. This is referred to in the opinion of the majority of the court, and it is suggested that there is no meaning of any definite character to be ascribed to these words. But Mr’ Garry ascribed ¿’meaning to them, and that is to be found at folio 169 of the case, and .it is that if the plaintiffs, conform to the agreement, the business was to be continued uphil the amount was paid (referring to; the $151:000), and that, the contract .would be fulfilled. There is no misunderstanding possible of this testimony. It comes from an executor of Mr. Garry’s will, a man who was present at the time the papers were executed, and the collateral agreement was made, and Garry perfectly understood that in the event of his death, so long as the plaintiffs performed their part of the contract, the business was to be continued.

Of course, equity will not undertake to enforce a contract indefinite and uncertain in its character, but what could be more definite and certain than this testimony of the executor of Mr. Garry’s own will, who was a -witness to all that took place between the plaintiffs and Mr. Garry Mr. Garry’s own understanding of the matter appeal’s from the codicil to his will dated May 24, 1892, and here it is important to observe that this codicil was .executed just ten days after the main agreement was signed and delivered and .must have been for the purpose of carrying out the collateral contract and of making that independent instrument which he -pn’omised to make as a condition of the plaintiffs signing the agreement of May 14, 1892. This codicil states that the testator wishes :and desires the business established, etc., to be continued “ while the i same can be conducted successfully and with profit to my estate, :and I desire that my said executors shall permit my friends, Fran•cis J. Maher and Patrick J. Mololian, or any p>artner or partners I may have at mv decease, to have the management and control of my said business as long as in the discretion of my said executors ■they manage the same profitably.” How this, of course; is not as broad as the agreement testified to by Mr. Bannin, and yet at the same time it shows, that Mr. Garry’s understanding of the plaintiffs conforming to the agreement as testified to by Mr. Bannin was so long as the same was managed -profitably. This codicil clearly expresses the purpose and desire of the testator that the business shall be continued so long as it could be profitably done, and the •discretion which is given to the executors is not the discretion to terminate at any time or under- any circumstances, but the business, is to be continued so long as it is successful and produces profit for the ■estate ; that is to say, profit directly from the business. It is - not a general discretion, as Mr. Justice Ingraham, in his opinion,, construes it to be. These executors do not set up in their answer that the business has been managed unprofitably; they • do not allege any want of fidelity on the part of the plaintiffs or any dissatisfaction with their conduct of the business which they assuredly could not have done in view of the enormous returns' of clear profit made to Mr. Garry in his lifetime and to them since his death. They have, therefore, no reason or ground to complain of the management nor to exercise.,a discretion adversely to the continuance of the business.

It seems to me, therefore, that the case should stand precisely as if the promised codicil were now in operation, and that the plaintiffs have the right to invoke it as a shield against the termination of the agreement by the executors, and that they have a right to come into a court of equity and .say that they have performed their contract honestly and faithfully and to the great profit and advantage of Mr. Garry and. of his estate and to seek the protection of the court from the cruel wrong which these .executors are seeking to inflict upon them under the color of technical rights which' Mr. Garry expressly contracted against and which justice and. equity demand should not be enforced.

I think that the judgment should be reversed and on the whole •case a judgment should be directed for the plaintiffs granting an injunction restraining the defendants from interfering or molesting them in the conduct of the business so long as the same is conducted profitably.

Judgment affirmed, with costs.

Williams, J.:

We have heard the appeal from the judgment in this case at. the present term and have felt constrained to affirm such judgment. We have thus become familiar with all the facts, and in view of. the great-hardship to the plaintiffs resulting from the judgment, .we think there should be- no additional allowance, granted.

The order should, therefore, be reversed,-but without costs, of the appeal, and the motion should be. denied,, without costs.

Van Brunt, P. J., Patterson, . Q’Bbien and Ingraham, JJ., ■concurred.

Order reversed, without costs of appeal,, and motion denied, without costs.