Court Opinion

ID: 5933341
Source: CourtListenerOpinion
Date Created: 2022-01-13 05:16:38.416918+00
Date Added: 2024-06-11T08:46:54.207143
License: Public Domain

Levine, J.
(dissenting). I respectfully dissent. The key issue for the resolution of the entire dispute between the parties is whether plaintiff acquired a legally enforceable right to acquire fee-simple title to the five-acre subject parcel as a third-party beneficiary of the sales contract for the entire tract between defendant Lake Minnewaska Associates (hereinafter LMA) and the Nature Conservancy. Plaintiff relies upon article X of that agreement, which provided for the exclusion from the promised conveyance of the entire tract of the improved parcel plaintiff occupied and another parcel occupied by Edward Luddicke and Janet Luddicke, and further provided for LMA to convey those parcels to plaintiff and the Luddickes, respectively, by deeds containing restrictions, inter alia, against further subdividing and commercial use.
New York has adopted the criteria of Restatement (Second) of Contracts § 302 to determine whether a nonparty benefi*131ciary of a promise in a contract has a right to enforce the promise as an "intended beneficiary” (see, Restatement [Second] of Contracts § 302 [1]) rather than an "incidental beneficiary” (see, Restatement [Second] of Contracts § 302 [2]; Fourth Ocean Putnam Corp. v Interstate Wrecking Co., 66 NY2d 38, 44-45). "Essential to status as an intended beneficiary under subdivision 1 of [section 302] is either that 'performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary’ or that 'the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance’ ” (Fourth Ocean Putnam Corp. v Interstate Wrecking Co., supra, at 44 [emphasis supplied]). Concededly, the purpose of the conveyance of title to plaintiff was not to satisfy anyone’s pecuniary obligation (see, Restatement [Second] of Contracts § 302 [1] [a]). Thus, in this case the issue comes down to whether the "circumstances indicate[d]” that the Nature Conservancy, the promisee of any promise of LMA to convey title to plaintiff, "intend[ed] to give [plaintiff] the benefit of the promised performance” (Restatement [Second] of Contracts § 302 [1] [b]), and parol evidence was properly admitted to establish such surrounding circumstances (see, Cutler v Hartford Life Ins. Co., 22 NY2d 245, 253; 4 Corbin, Contracts § 779D, at 50).
The uncontradicted evidence was that only LMA, the promisor, and its principals had any intent to benefit plaintiff and that the exclusion of the parcel plaintiff resided on from the sale of the entire tract was made in recognition of plaintiff’s years of service as a faithful employee and the difficulties he would encounter in relocating. LMA, as promisor, did not bargain for any promise or performance from the Nature Conservancy in exchange for the undertaking to convey the parcel to plaintiff, nor did it receive any such consideration. I find no evidentiary support whatsoever in the record for the majority’s supposition that the Nature Conservancy for some unknown reason intended and then insisted that LMA completely divest itself of any interest in the subject, improved five-acre parcel. Rather, the only inference to be drawn from the evidence is that article X was inserted in the contract at the insistance of LMA. Thus, the evidence of the circumstances surrounding the inclusion of the undertaking to convey to plaintiff in article X of the contract between LMA and the Nature Conservancy does not support plaintiff’s status as an intended beneficiary having enforcement rights under Restatement (Second) of Contracts § 302.
*132Another highly respected authority on the law of contracts likewise would deny plaintiff’s rights as a third-party beneficiary because of the foregoing lack of donative intent on the part of the Nature Conservancy as promisee. Thus, Corbin states that "[i]n third party cases, the right of such party does not depend upon the purpose, motive, or intent of the promisor” (4 Corbin, Contracts § 776, at 16). Unless the third party is a creditor beneficiary of the promisee, the enforcement of any undertaking of the promisor may only be had "if the promised performance will be of pecuniary benefit to [the third party] and the contract is so expressed as to give the promisor reason to know that such benefit is contemplated by the promisee as one of the motivating causes of his making the contract” (4 Corbin, Contracts § 776, at 18 [emphasis supplied]). And, Corbin reiterates that "[i]n the present text it has been assumed that one who claims as a 'donee’ beneficiary must show that the promisee bargained for the promise with a donative intention” (4 Corbin, Contracts § 779D, at 49).
It follows from the foregoing that, contrary to the majority’s conclusion, the fact that in the contract between LMA and the Nature Conservancy plaintiff is expressly named as the beneficiary of the promise to convey the parcel is not sufficient to entitle him to enforcement rights as a third-party beneficiary. Under the case law dealing with the specific issue, if the promisee lacked donative intent toward the third party, the latter, even if expressly named or immediately identifiable at the time of the contract formation, is still considered merely an incidental beneficiary without any right to enforce the promise (see, Walters v Calderon, 25 Cal App 3d 863, 102 Cal Rptr 89; Ridder v Blethen, 24 Wash 2d 552, 166 P2d 834; see also, Matter of Conay, 29 Misc 2d 1090, 1093, affd 284 App Div 950). Putting the resolution of the key issue in its simplest terms, LMA inserted the contract provision for the conveyance to plaintiff as a purely gratuitous undertaking out of a sense of loyalty or moral obligation to a faithful employee who had already been fully paid for his services. Totally absent here is any evidence of plaintiff’s detrimental reliance on that purely gratuitous undertaking. Had LMA directly made the promise to plaintiff to confer upon him a gift of the parcel, plaintiff would not have thereby acquired any right to enforce it in the absence of detrimental reliance (see, Pershall v Elliott, 249 NY 183, 188-189; Parsons v Teller, 188 NY 318, 325-326). Plaintiff should acquire no greater right of enforce*133ment merely because the purely gratuitous undertaking to convey was made in a contract with another party.
If I am correct in my conclusion that plaintiff acquired no rights as a third-party beneficiary of the contract of sale between LMA and the Nature Conservancy, the failure to disclose that agreement to plaintiff becomes irrelevant to the validity and effectiveness of the agreement between plaintiff and defendant Lake Minnewaska Mountain Houses, Inc. (hereinafter LMMH) and the deed to LMMH which plaintiff signed in blank, all as transacted on May 14, 1987. In his testimony, plaintiff conceded that he read the May 14, 1987 agreement before signing it and that he understood that, in order to be permitted to continue to occupy the house on the subject parcel for a period of years, he had to sign the agreement and the deed, the validity of which he now attacks. Because plaintiff had no right to acquire the title to that parcel as a third-party beneficiary prior to the May 14, 1987 transaction, it would be a manifest injustice to permit him to claim title to the parcel on the basis of the deed delivered to him on May 14, 1987 and yet disavow the restrictions and limitations on his interest in the parcel by claiming the invalidity of the balance of that transaction; he should therefore be estopped from doing so (see, Rothschild v Title Guar. & Trust Co., 204 NY 458, 464; City of Buffalo v Balcom, 134 NY 532, 536; Mayor of City of N. Y. v Sonneborn, 113 NY 423, 426; Boulder Brook Acres v Town & Vil. of Scarsdale, 112 AD2d 336, lv dismissed 66 NY2d 603; Matter of City of New York [Klondike Realty Corp.], 80 AD2d 611, 611-612).
Clearly, plaintiff has already received all of the interest in the subject parcel to which he was entitled. Thus, for all of the foregoing reasons, I would affirm the order and judgment dismissing his complaint.
Mahoney, P. J., Weiss and Harvey, JJ., concur with Casey, J.; Levine, J., dissents in a separate opinion.
Ordered that the order and judgment are reversed, on the law and the facts, with costs, it is declared that the deed executed by plaintiff on May 14, 1987 is void and that plaintiff is a third-party beneficiary of the provision in the contract between defendant Lake Minnewaska Associates and the Nature Conservancy whereby defendant Lake Minnewaska Associates agreed to convey certain property to plaintiff, and the agreement executed by defendant Lake Minnewaska Mountain Houses, Inc. and plaintiff on May 14, 1987 is rescinded.