Case Name: George H. Church, Plaintiff, v. The Standard Railroad Signal Co., Defendant
Court: New York Supreme Court
Jurisdiction: New York
Decision Date: 1900-01
Citations: 30 Misc. 261
Docket Number: 
Parties: George H. Church, Plaintiff, v. The Standard Railroad Signal Co., Defendant.
Judges: 
Reporter: New York Miscellaneous Reports
Volume: 30
Pages: 261–264

Head Matter:
George H. Church, Plaintiff, v. The Standard Railroad Signal Co., Defendant.
(Supreme Court, New York Special Term,
January, 1900.)
Lease — Lessee’s option to purchase premises construed.
A lease provided, in substance, that, at any time before its expiration on December 31, 1898, the lessee, “having first satisfied itself” that the lessor could convey a good and clear title to the demised! premises, might purchase them at a price named, the same to be paid on March 31, 1899, when the deed was to be delivered. It was further provided that, if the lessee did not exercise said right to purchase, it should, on said December 31, 1898, pay the lessor additional rental in the sum of $5,000. the rent of $5,000 reserved in the lease having been reduced to the latter sum in order to induce the lessee to exercise the option; and, further, that, if the lessor should be unable to convey a good and clear title, preventing an exercise of the option, then the lessee should not be obliged to pay the additional $5,000. On December 31, 1899, the title was defective and the option was never exercised. On demurrer to the complaint in an action for the additional $5,000, brought by an assignee of the lessor,
Held, that he was not entitled to recover the additional $5,0001 That the true construction of me various clauses of the instrument made the state of the title, on December 31, 1898, the material and decisive time, and that, as the title was defective on that day, the lessee was wholly excused from exercising the option.
Issues of law upon demurrer to the separate defense set up in the answer, on the ground that it is insufficient in law upon the face thereof.
The nature of the action and the material facts are stated in the opinion.
Shearman & Sterling (Cortland Betts, of counsel), for demurrant.
Hasten & Nichols (Arthur H. Hasten and James D. Layng, Jr., of counsel), opposed.

Opinion:
Giegerich, J.
The action is brought upon an assigned claim for $5,000, based upon certain provisions of a lease, made by the plaintiff's assignor to the defendant and framed as below.
"At any time before the expiration of this lease, the party of the second part, having first satisfied itself that the party of the first part can convey to it a good and valid title in fee to the said premises, free and clear of all encumbrances, may pur-' chase the said premises for the sum of Seventy thousand dollars ($70,000.) to be paid as follows (the method of payment then detailed).
" On March 31, 1899, at 12 o'clock noon, at the office of the party of the first part, in New York City, the said purchase price shall be paid as aforesaid and a deed, which shall vest the title to the said premises in fee simple in party of the second part, shall be executed and delivered to it, conveying the said premises to the party of the second part free of all encumbrances, exr cept taxes which may become a lien thereon subsequently to January 1, 1899.
"In case the party of the second part should not exercise the right to purchase the said premises as aforesaid, it shall, upon the expiration of this lease, on December 31, 1898, pay to the party of the first part, as additional rental, the sum of Five thousand dollars ($5,000.); the rental of $5,000 per annum hereinbefore reserved being reduced to that sum solely as an inducement to the party of the second ,part to exercise the said option. If, however, the party of the first part should be unable to convey to the party of the second part a good and sufficient title in fee simple to the said premises, free of all incumbrances, and the party of the second part should not be able to exercise the said option on that account, then the party of the second part shall not be obliged toi pay the said additional sum of Five thousand Dollars ($5,000.)."
The defendant did not exercise the option to purchase and the question now presented, by demurrer to affirmative matter in the answer, is whether the fact that the plaintiff's assignor, the lessor, had a defective title up to December 31, 1898, sufficed to release the defendant from the.payment of $5,000, as provided in the lease.
It is contended by the plaintiff that the state of the title did not become material until March 31, 1899, the date when delivery of the deed was to be made, while the defendant argues that the rights. of the parties depended upon the lessor's title as it stood on December 31, 1898, the day when the $5,000 became payable by the defendant in the event of its unexcused failure to exercise the option to purchase.
The intention of the. parties to the instrument must be looked for in the words employed by them, and effect should be given to all the provisions expressed. Examining this agreement, with a reasonable regard t'o its apparent purpose, I must conclude that the defendant's construction is correct, and that it had the right to base its refusal of the option upon the condition of the title, as existing at the termination of the lease.
To adopt the plaintiff's view would be to hold that there was an absolute contract of purchase, succeeding the lease, binding the purchaser in stipulated damages, subject only to the vendor's ability to offer a good title upon the day fixed for closing.
This, however, not only involves a disregard of the parties' characterization of the right as an " option," but must nullify the provision that the defendant should make the purchase, having first satisfied itself (before December 31, 1898,) that the lessor " can convey to it a good and valid title," since, if the ability to convey was to be considered as of a date three months later, the defendant would have been unable to determine, from an examination of the title at the earlier date, whether the existing defects would be remedied or not, and hence there could be no basis for the purchaser's " satisfaction," nor any test of the reasonableness of its dissatisfaction. Moreover, the agreement was that if the defendant should not be able to exercise the option, because of the lessor's inability to give an unencumbered title, then it should not be obliged to pay the $5,000, but, this being the case, the only reasonable meaning is that the excuse from the payment was to arise, if at all, from the facts as they existed at the time when the payment, unless excused, was due. That time was the 31st of December, 1898, and it would do violence to the clear wording of the instrument to say that a payment due at this specified date was to be then made unless excused by facts appearing three months afterwards.
I think that the" allegations as to the defective condition of the title are sufficient as statements of the ultimate facts, in view of the nature of the issues, and that, while greater particu larity might be required, upon proper motion, the averments are not to be viewed as mere conclusions of law.
Nor would it appear that the demurrer should prevail upon the technical defect disclosed by the defendant's reference to " the plaintiff " in some instances, where the obvious intention was to refer to his assignor of the claim in suit, since here the error or defect seems to be of' the unsubstantial character contemplated by section 723 of the Code of Civil Procedure, and thus to be disregarded.
The demurrer must, therefore, be overruled, with costs.
Demurrer overruled, with costs.