Case ID: nys_75/html/0163-01.html
Source: Caselaw Access Project
Author: {"author": "FITZGERALD, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

(37 Misc. Rep. 207.)
    KELLEY v. ROOT.
    (Supreme Court, Special Term, New York County.
    February, 1902.)
    Contract—Reformation.
    Where a party to a proposed, contract wrote a letter to the other party, stating the terms thereof, and a month thereafter a formal written contract was executed, it will be presumed to express the intent of the parties, and a reformation thereof will not be made unless the evidence of a mutual mistake therein was of the most substantial character.
    Action by Daniel J. Kelley against Charles T. Root. Complaint dismissed.
    Einstein, Townsend, Guiterman & Shearn, for plaintiff.
    Ludlow & McKnight, for defendant.
   FITZGERALD, J.

Plaintiff and defendant were prior to October 18, 1899, the owners of or controlled the entire capital stock of the corporation known as the American Queen, upon which date plaintiff purchased the defendant’s stock, and became the sole stockholder of the corporation. It is now sought to reform the contract made between the parties on that date by inserting therein the words, "that the plaintiff should not be required or obligated to pay any of said notes, or any part thereof, if at the maturity of the said notes the corporation should not be upon a paying basis.” Negotiations for a sale had been pending some time, and discussions had on different occasions regarding the property; and on September 14, 1899, defendant orally agreed to sell to the plaintiff his stock in the American Queen for the sum of $5,000, and to accept in payment therefor five notes of the plaintiff, for $1,000 each, payable in 12, 18, 24, 36, and 42 months. This oral agreement resulted in the preparation of a letter by the defendant, addressed to 'himself, and given by him to plaintiff, who took it to his office, and had a typewritten copy thereof prepared by his wife, which copy was signed by plaintiff, and handed by him to defendant. This letter was as follows:

“Dear Mr. Root: I agree with you that, as I must now do all the work of the Queen, and take all the responsibility of its management, I ought to be its sole owner. As you are aware, I am not in shape to pay what your stock is worth, but this I will do: Make out five notes, of $1,000 each, bearing 6 per cent., and falling due in twelve, eighteen, twenty-four, thirty-six, and forty-two months, or sooner, at my option, and I will execute them, giving you as security the stock you now hold, and an insurance policy on my life for at least $5,000, the premiums on which I agree, as part of this contract, to keep up until all the notes are paid. I will also, by the end of this month, take your name of£ all our bills, letter heads, and other stationery, signs, etc., so as to' eliminate you entirely from the business. I will also hand you the insurance policy by that time.”

Plaintiff now claims that at one of the preceding interviews the defendant said, “Mr. Kelley, I won’t hold you for the notes if the Queen does not pay.” Plaintiff, subsequent to the letter of September 16th, told defendant that he would like to have a contract drawn by a lawyer; and defendant then, at plaintiff’s request, gave him a letter of introduction to Mr. Henry White, an attorney, upon whom plaintiff called, and who, at his request, and from such memorandum as plaintiff, to use his own words, “thought it necessary to furnish,” prepared the contract dated October 18, 1899. This instrument was signed by both parties,—first by defendant, who handed it to plaintiff; then by plaintiff, who returned it to defendant with his signature attached thereto. The letter was written nearly a month before the formal contract was executed, and there is nothing therein stated from which any inference can be drawn that defendant intended to dispose of his stock with the understanding that, in case the publication failed to pay, the plaintiff would be relieved from liability on his notes. The defendant denies absolutely that he ever made the statement, “Mr. Kelley, I won’t hold you for the notes if the Queen does not pay.” It is settled by abundant authority that a written instrument will be presumed to have been carefully prepared, and to express the deliberate intention of the parties, and the grade and degree of proof required to entitle a plaintiff to a reformation of such a contract must be of the most substantial and convincing character. Christopher & T. St. R. Co. v. Twenty-Third St. Ry. Co., 149 N. Y. 58, 43 N. E. 538; Lyman v. Insurance Co., 17 Johns. 373. It must also appear that the mistake was mutual, so that the intention of neither party was expressed. Paine v. Jones, 75 N. Y. 593. The evidence adduced by the plaintiff herein upon the trial failed to come within the requirements of the rule deducible from the entire volume of adjudications upon this subject, and the complaint must be dismissed, with costs, and judgment ordered for defendant on the counterclaim.

Complaint dismissed, with costs, -and judgment ordered for defendant on counterclaim.