Case Name: MAHER et al. v. GARRY et al.
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1896-04-10
Citations: 38 N.Y.S. 436
Docket Number: No. 245
Parties: MAHER et al. v. GARRY et al.
Judges: 
Reporter: West's New York Supplement
Volume: 38
Pages: 436–448

Head Matter:
(3 App. Div. 480.)
MAHER et al. v. GARRY et al.
(No. 245.)
(Supreme Court, Appellate Division, First Department.
April 10, 1896.)
1. Contracts—Power to Rescind—Collateral Agreement.
Defendants’ testator .associated plaintiffs with him in business under a written contract, providing that plaintiffs should invest a specified sum, and should manage the business, drawing weekly salaries; that, from the profits, testator should withdraw the amount of his capital from time to time, with interest. The agreement expressly provided that, until this amount was entirely paid, testator or his executors should have the power to alter any portion of the agreement, or to cancel the same absolutely, on repaying to plaintiffs the sums invested by them. By a parol agreement, made before the main contract was signed, testator agreed to add a codicil to his will, providing that, as long as plaintiffs fulfilled their part of the contract, his executors should not cancel it. Such codicil was actually annexed to the will, but afterwards revoked. HeM, that the parol agreement was a part of the general contract, and, under the power given to testator to alter or cancel any part thereof, he had the right to rescind the parol agreement to limit by codicil the power of his executors. Patterson, J., dissenting.
2. Specific Performance—Indefinite Agreement.
A parol agreement providing merely that, if plaintiffs conform to the contract, the business should be continued until the amount due testator was paid, the contract containing nothing to indicate what was meant by conforming to the contract, and not limiting the time within which the amount due testator should be paid, is too indefinite to be enforced in equity.
In May, 1892, and for years prior thereto, the defendants’ testator, Thomas Garry, was engaged in the retail dry-goods business in Grand street, in this city. The plaintiffs were clerks in his employ; Maher receiving $33 per weeic, and Molohan receiving $18 per week. The testator had an investment of upward of $151,000 in the business. He wanted to withdraw this capital, and gradually retire from active participation in the business; but he was not willing to relinquish any part of his sole ownership until he had withdrawn this amount and interest. To effectuate this object, he requested the plaintiffs to enter into a certain contract, the essential points of which, so rar as they relate to the matters involved, are that the business should continue until such time as Thomas Garry could withdraw from it his capital, with interest; that the plaintiffs should each contribute $4,000 to the business; that, during the period while withdrawals were being made by Garry, the plaintiffs should be allowed to withdraw the same amount each week that they had formerly been receiving as salary, and that during such time they should have no further interest in the business or profits; that, upon the withdrawal of his capital and interest, it should become the duty of Garry to execute to each of the plaintiff's good and sufficient transfer of a one-fifth interest in and to the business, and all the capital, assets, and effects, good will, etc., connected therewith, except the lease. Further provisions of the contract are as follows: “Eleventh. It is further mutually and expressly agreed by the parties hereto that the party of the first part, his executors, administrators, successors, or assigns, shall at any time subsequent to the date of this agreement, and before the withdrawal of said full sum of $151,327.45 and interest, have full power to in all respects terminate, rescind, and annul said agreement, as to either or both of said parties of the second part, if he or they shall see fit so to do, free from any claim for damages or otherwise on the part of the said parties of the second part, or either of them; provided, however, that the said party of the first part, or his executors, administrators, successors, or assigns, shall, in case of such rescission, repay to the parties of the second part such sums of money as they may have theretofore contributed to the capital of the said business, as provided in section second hereof, together with interest on such sum from the time of contribution thereof. If said contract shall not be so rescinded until the full withdrawal of said sum of $151,327.45, it shall thereafter be binding on said party of the first part, except as herein provided. It is also understood and agreed that the party of the first part may at any time assign, transfer, or set over his entire interest in the said business, and the assets, effects, and profits thereof, or any portion of such interest, to any person or persons whatsoever, and that any such transferee shall be admitted as a partner in the said firm, if desired by the party of the first part; it being the understanding and intention of the parties hereto that during the whole time of the continuance of the said business, as set forth in section first hereof, the said party of the first part shall remain the sole owner of the said business, and the assets and effects thereof, with the same full power of disposition or transfer thereof, in case he sees fit so to do, as though this agreement had not been made. During said time the party of the first part may also, at will, alter the provisions of the foregoing sections.” By the fifteenth clause it was provided that, after the capital had been withdrawn, the testator, or his representatives, successors, or assigns, should have the deciding voice as to any matter that might arise in the conduct of the business, and might at any time change any of the provisions in relation to such conduct. The sixteenth clause provides that, after the testator has been repaid his capital and interest, he or his representatives “shall have the power, at any time during the continuation of the said business, to transfer his interest therein, or in the profits thereof,” to such parties as he or they may see fit. The seventeenth clause provides that, if the testator or his representatives choose to form a special partnership after his capital is withdrawn, ho may designate the general partners, “and he and his representatives shall have full power in all respects to fix the particular terms and conditions of such special partnership which shall bind said parties of the second part.” The twenty-third clause is as follows: “Twenty-Third. It is further expressly provided that the death of the party of the first part during any of the periods herein specified shall not affect his rights, or those of his executors, administrators, successors, or assigns, but that each and every provision herein contained shall apply to such executors, administrators, successors, and assigns with the same force and effect as they would have had as regards said party of the first part had such death not occurred; and, if such death shall occur after the withdrawal of said sum of $151,327.45 and interest, it shall not cause any alteration in the general partnership, if organized, or dissolve said special partnership, if formed; but such representatives and assigns, or any persons appointed by them, shall in all respects occupy the position of the said party of the first part, arid said business shall continue as herein provided.”
Appeal from special term, Hew York county.
Action by John F. Maher and Patrick J. Molohan against Della Garry and others, executors of Thomas Garry, deceased, to restrain defendants from canceling a certain contract. From a judgment dismissing the complaint, plaintiffs appeal.
Affirmed.
For former report, see 37 H. Y. Supp. 605.
What took place when this paper was offered for signature is thus detailed by one of plaintiffs’ witnesses: “At the time of reading, Mr. Molohan objected to signing it under its present conditions. He said, ‘Mr. Garry,’ who was present, and myself, that as far as Mr. Garry was concerned, that he would trust him, and sign it, but he said, ‘You are liable to die. [He was looking sickly at the time.] What would your executors do? What position would it place us in if we would sign this?’ Mr. Garry replied, stating that he would make a codicil to his will directing his executors to conform to the agreement; that is, if they conformed to the agreement, to continue the business until the amount was paid, and that the contract would be fulfilled.” And thereupon the agreement was signed. Upon cross-examination, this witness stated that his recollection was that “there was objection made at the time of reading certain paragraphs. I could not, without looking at the agreement, remember the numbers of the paragraphs to which objection was made.” “There was a protest against signing under such provisions. Mr. Molohan made it, before the reading was completed. That is my recollection. Mr. Molohan made a protest. As I have stated before, he said to Mr. Garry: ‘As far as you are concerned, I would trust you under the circumstances. But you are a sickly man. You may die; and, in case the executors should desire to close this business, what would our position be?’ Mr. Garry then stated to them that he would add a codicil to his will, directing his executors to have that business continued provided these young men, Maher and Molohan, would comply with the contract.” It was .stipulated that the lawyer who drew the agreement would give similar testimony to that above detailed, with the addition that he would testify “that Mr. Molohan’s statements at the interview with regard to his confidence in Mr. Garry were that he was willing to trust Mr. Garry as to continuance of the business during the latter’s lifetime, but that he objected to trusting Mr. Garry’s executors under the agreement as drawn.” Thereupon the plaintiffs said that with that understanding they would sign it, which they did; and thereafter they entered upon the conduct of the business, and complied with all their duties under the contract, including the payment of $4,000 each, as required by its terms, which, in the event of the contract being canceled, was to be returned, and which, with interest, has been tendered by the defendants. During the intervening period between the date of the contract and the commencement of this suit, Thomas Garry, before his death, and, since that time, his executors, have withdrawn $114,844.76 out of the $151,000 and upward which constituted his capital, and which latter .sum, under the agreement, he was entitled to draw before the plaintiffs acquired any rights in such business. After the execution of the agreement, Garry executed a codicil to his will, in which he incorporated a provision somewhat similar to that which he had promised to provide. He subsequently executed another will, which contained no such iwovision, by which these defendants were appointed as executors; and, as such, claiming the right to do so, they have notified the plaintiffs, since the death of Garry, of their desire to cancel and annul the agreement..
Argued before VAN BRUNT, P. J., and WILLIAMS, PATTERSON, O’BRIEN, and INGRAHAM, JJ.
Frederic R. Kellogg, for appellants.
Samuel Untermyer, for respondents.

Opinion:
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 from 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 parol evidence, and, if it could, whether such shows a binding agreement. In reading the contract between the plaintiffs and Garry, it will be noticed that it contains covenants executed by both parties, 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 a collateral agreement, and therefore, as coming within the class of exceptions, is not a violation of the rule which excludes the admission of parol evidence to vary, contradict, or control a written contract.
In Thomas v. Scutt, 127 N. Y. 133, 27 N. E. 961, 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 a written instrument as existing and valid, but regard it as incomplete, either obviously or at least possibly, 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 witmn this class: First, 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; second, 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 27 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 same 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 prohibiting 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. Not 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 drawn; 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 io 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 N. Y. 400; Crosdale v. Lanigan, 129 N. Y. 004, 29 N. E. 824. 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.0 In 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 not claimed that, if so written in, the clauses relating to the right of Garry in his lifetime to-annul 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 arbitrary 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 can-' celing 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 affbrded that he changed his mind on this subject. He was not required by the agreement to indicate in any way Ms 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 his 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 be performed in his lifetime. Both acts were left, not only to 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 wag 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, F. J., and WILLIAMS, J., concur.