#### Nathan H. Cohan et al., Plaintiffs-Appellants, *v.*Morris Rosenberg et. al., Defendants-Respondents.

(Supreme Court, Appellate Term,

November, 1910.)

Accord and satisfaction: Effect of accord and satisfaction — As to certain provisions only: Sufficiency of performance.

Where the owner of real property enters into a contract with builders for the reconstruction of the buildings standing upon it and the contract contains covenants to guarantee the roof, plumbing, elevator and heating plant and provides that such guaranties shall survive the completion of the building and *336all payments made under the contract; and, where disputes having arisen as to that part of the contract relating to the reconstruction of the buildings, such disputes were submitted to arbitration resulting in an award of $2,640 to the builders; and where the parties thereupon made a further agreement reciting these facts and providing for the assignment to the owners of certain guaranties the builders held relating to “the roof, elevator and other matters and further providing that, until the assignment and delivery of sueh guaranties to the owners, or in default thereof, the builders would continue to rely upon their original guaranty, in an action thereafter brought by the owner, held, that the latter agreement did not constitute an accord and satisfaction of the former agreement as to the guaranties contained therein and that the plaintiffs were entitled to recover thereon in the absence of proof by the builders that they had assigned and delivered to the owners the guaranties they held.

Appeal from a judgment of tlie Municipal Court of tlie city of New York, borough of Manhattan, seventh district, in favor of the defendants, entered upon a trial’by the court without a jury.

Spiro & Wasservogel (Abraham I. Spiro, of counsel), for appellant.

Rosenthal *&*Stecklor (David Steckler and Max Tachna, of counsel), for respondents.

Page, J.

On January 28, 1909, the plaintiffs and defendants entered into a written contract for the reconstruction of certain buildings known as Ros. 113 and 113% Bowery, theretofore destroyed by fire. This contract not alone provided for the erection of the buildings and the payments to he made, but contained the following guaranties;

> " *Eleventh.*The contractors agree to and do hereby guaranty the electric elevator and all its appurtenances and equipments and all electric light wiring and fixtures to he in perfect and easy working and running order and to remain in such perfect .and easy working and running order for the term of one year from May 1st, 1909; and should the same or any part of such equipment he found to ho defective after the completion of the buildings, they agree to replace the same with new and perfect material or parts and agree td *337make all repairs thereto at their expense, for the said term of one year. Contractors shall also procure and furnish all required certificates.

> " *Twelfth,.*It is further expressly agreed that all materials used for said construction, inside *or*outside of said building, shall he new and first class material.

> *“ Thirteenth.*The contractors guarantee to maintain tho plumbing in- the building in first class condition for the period of one year, and also guarantee to maintain and keep the roof in rópair at their own cost for the period of one year from May 1st, 1909 ; the contractors also guarantee the steam plant and all -its appurtenances to he in first class working order and condition, and to supply the heat mentioned in the specifications for the term of one year from May 1st, 1909.

> *“ Fourteenth.*All guarantees provided for in this contract shall survive the completion of the building and all payments to be made hereunder.”

On the 29th day of October, 1909, the parties hereto entered into another written contract which recited the agreement of January 28, 1909, .that certain disputes had arisen between the parties with respect to the reconstruction of said buildings; that the said disputes had been submitted, to arbitration; that the arbitrators had awarded the defendants $2,610'; and, in consideration of the settlement .of said disputes and the payment of said sum, “ the parties of the first part hereto ” (the defendants) “ hereby release and discharge the parties of the second part of and from said agreement of January 28th, 1909, and of and from any and all agreements, claims and demands whatsoever, arising or that may arise out of the- transactions had between the parties hereto on or relating to said rebuilding of the premises 113 & 113% Bowery, and of and from any and all claims and demands whatsoever in law or in equity to the date hereof,” and contains the following clauses:

> *“*The parties of the first part do hereby transfer and assign unto the parties of the second part the following guarantees, and all their light, title and interest in each and every one of said guarantees, tp wit:

> *338“ The guarantee of the Drum Elevator Company to keep the elevator and equipment in said building in repair against general wear and tear for one year from May 1st, 1909.

> *“*The guarantee of I. Block to keep the roof in repair for one year from May 1st, 1909.

> *“*The parties of the first part agree to deliver unto parties of the second part the above guarantees and all the other guarantees provided for in paragraphs 11, 12, 13 and 14 of said contract of January 28th, 1909 ; and until such delivery or in default of such delivery the parties of the first part will remain and hereby agree to remain liable on said guarantees mentioned in said agreement of January 28th, 1909.

> “ The parties of the first part further covenant and agree to indemnify, save and hold the parties of the second part harmless from any liens or claims which may be made against them and against the said building 113 & llBVa Bowery, by reason of the work and labor done or materials furnished thereon by the parties of the first part in connection with said job of the rebuilding of said premises. And except as herein mentioned and reserved each of the parties hereto releases the other from any further claims and demands whatsoever.”

The complaint in this action ¡alleges the making of the agreement of January 28, 1909, recites the guarantees therein above set forth; that plaintiffs performed said agreement and every part thereof on their part to be performed; that between the 1st day of August, 1909, and the 1st day of May, 1910, the said elevator and the equipment and appurtenances were found to be and became defective and out of working order and the roofs of the buildings were found to be defective and in a leaking condition; that plaintiffs, at divers times, notified the defendants of such defects and demanded of the defendants the repair of the same at their, the defendants’, expense, but that defendants failed and refused to make such repairs, and that plaintiffs made said repairs at an expense to them of $279.88, the reasonable cost and value thereof, and demanded payment of the same from the defendants, and their failure to pay. The answer sets up the agreement of October 29, 1909, as a *339release and discharge of the contract of January 28, 1909. On the trial the 'learned justice held with the defendants, finding, as a matter of law, that the .agreement of January twenty-eighth was released and discharged by the agreement of October twenty-ninth, -and that any right of action on the part of the plaintiffs against these defendants under the first agreement ceased; and that the cause of action between the parties over this transaction arises under the second agreement, -and that the second -agreement is substituted for the original contract which is abrogated and released thereby. As no evidence was given save the offering of these two agreements, the sole question to be considered on this appeal is this decision.

From an examination of the contract of January twenty-eighth, we.find therein two separate agreements; one for the reconstruction of the buildings that would he satisfied by the performance of its conditions, the construction of the buildings by the defendants according to the plans and specifications, and the payment of the sums agreed to he paid by the plaintiffs. The other, the guarantees set forth in the eleventh and thirteenth paragraphs thereof, which would be satisfied by the maintenance in good order and repair of the parts of the buildings and their equipment therein specified for the term of one year from May 1, 1909, which the contract expressly provided (paragraph fourteen) “ shall survive -the completion of the building and all payments to he made hereunder.”

Had the buildings been completed and payments made in accordance with the terms of the contract in that behalf, no one could have claimed that, the guarantees were satisfied and released, or an accord and satisfaction was had as to them, without doing violence to the expressed terms of the contract. The disputes of the parties, as appears from the contract of October twenty-ninth, related to the first agreement contained in the contract of January twenty-eighth, and the payment of amount awarded was an accord and satisfaction of that portion of the said contract. The release therein contained was a release of the plaintiffs from all claims and demands of the defendants, and not a release and *340discharge of the claims and demands of the plaintiffs against the defendants on account of the guarantees constituting the second agreement, unless such is found to be the intention of the parties from a consideration of the latter portion of the contract of October twenty-ninth. Upon turning to the last clause of the said contract, we read, *“*and *except as herein mentioned and reserved*each of the parties hereto releases the other from any further claims and demands whatsoever.” This exception and reservation referred to the agreement of the defendants to assign and deliver to the plaintiffs the guarantees of Tkum Elevator Company, I. Block, and the delivery of their personal guarantees provided for in sections 11, 12, 13 and 14 of the contract of January twenty-eighth, “ and *until such delivery,*or in default of such delivery, the parties of the first part ” (the defendants) *"will remain and hereby agree to remain liable*on said guarantees mentioned in said agreement of January 29th, 1909.”

It is a fundamental rule for the construction of a written contract that the intent of the parties as expressed in the words they have used must govern. It seems to us clear that it was the intent of the parties, as expressed in the words of this contract, that defendants were to remain liable on the guarantees contained in the original contract until they delivered to the plaintiffs the additional guarantees cálled for by this contract and re-executed and delivered their own guarantees set forth in the original contract.

If it was the intention of the parties that this contract was to operate as a release, *in prcesenti,*from the conditions of the original contract, so that no cause of action would arise under the original contract in favor of the plaintiffs, and reduce that contract to a mere evidentiary paper, from which the contract of October twenty-ninth might be made clear, as the learned justice held, why would the parties provide for a subsequent delivery of those very guarantees by defendants to plaintiffs? There remained something to be done under the contract. of October twenty-ninth — the assignments were to be executed and delivered, and the guarantees delivered. • The contract was, therefore, executory, *341and did not operate as a release and satisfaction until it was executed. Until that time the defendants were liable on the guarantees in the contract of January twenty-eighth.

The judgment should, therefore, he reversed and a new trial granted, with costs to appellants to abide the event.

Seabury and Bijur, JJ., concur.

Judgment reversed and new trial ordered.