Court Opinion

ID: 5825071
Source: CourtListenerOpinion
Date Created: 2022-01-12 21:20:46.845064+00
Date Added: 2024-06-11T08:43:15.880037
License: Public Domain

Cohalan, J. (dissenting).
In this action for specific performance, plaintiff appeals from a judgment of the Supreme Court, Nassau County, entered January 18, 1978, which dismissed its complaint upon the denial of its motion for summary judgment and the granting of defendants’ cross motion for summary judgment. I vote to reverse, to grant plaintiff’s motion for summary judgment for the relief demanded in the complaint, and to deny the cross motion of defendants for summary judgment dismissing the complaint.
Omega Shopping Centers, Inc. (Omega), assignor of plaintiff-appellant, and the defendants-respondents executed a contract of purchase and sale for certain real property located in Nassau County. The original date of the contract was July 30, 1976, but it was subsequently altered to take effect on August 25, 1976.
By its terms Omega was to make certain payments on certain due dates. Two payments of $25,000 each were made pursuant to the agreement. A third payment—this one of $50,000—was due on August 25, 1977. On the day before, Omega’s president (Mr. Schwerin) sent a letter to the attorneys for the defendants, in the apparent belief that as a result of a telephone call an amendment to the sale contract had been agreed upon. An immediate written response came from the sellers that no such amendatory agreement had been reached. Prior to the communications, negotiations looking to a modification of the purchase price or a novation had been in discussion for almost two months.
The plaintiff, as assignee, on September 2, 1977, caused a check for $50,000 to be delivered to cover the August 25, 1977 payment, which check was rejected. The sellers contended that all plaintiff had was an option which had not been exercised.
Thus, the issue presented in this case is whether we are *273dealing with an option to buy, or a contract of sale of real property. If it is an option, pure and simple, then I would vote for affirmance. In my view, however, the underlying instrument is a contract of sale.
In Benedict v Pincus (191 NY 377, 382-383), Judge Vann defined an option as: "an exclusive privilege to buy and a contract for an option is the agreement by which the privilege is created. Sometimes it is defined as a continuing offer, binding for the time specified the one who makes it, but not the one to whom it is made, unless he accepts when it becomes binding upon both. It neither transfers, nor agrees to transfer title to property, but confers the bare right to accept an offer within the time limited and upon the terms provided. No obligation is assumed by the holder of an option and no promise is made in the contract therefor except by the one making the offer or granting the privilege and the words used are wholly his own. While there are two parties, it is unilateral in form and nature and is signed by but one, the other becoming a party by paying the consideration and accepting the instrument.”
At bar the instrument is a standard form of contract of sale of real property with a rider of 20 numbered provisions attached.
The facts are more extensively set forth in the majority opinion and I would merely add that, with respect to the application for a change of zone and certain construction on the premises, a footnote to the rider states: "Seller shall cooperate with Purchaser in the processing of such applications and Purchaser may appeal from any adverse decisions with respect thereto.” The sellers did co-operate to the extent of joining in the application for a change of zone to permit commercial use.
The paragraph of chief concern in the rider (No. 32) has to do with the $50,000 payment due on August 25, 1977. In pertinent part, that paragraph reads: "The Purchaser agrees to pay to the Seller upon the effective date of a resolution adopted by the Town Board of the Town of Oyster Bay rezoning the premises to the zoning classification permitting the construction of the project aforementioned, the additional sum of $50,000.00 as hereinbefore set forth in the printed portion of this contract. In any and all events, however, the said sum of $50,000.00 shall be paid within one (1) year from the date hereof irrespective of whether or not the said rezon*274ing resolution shall have been adopted * * * The Purchaser shall continue to expeditiously process the application for rezoning, site plan approval and any and all other necessary permits for the construction of the project” (emphasis supplied).
In passing it should be noted that such unconditional promises to make a future payment and to pursue rezoning and construction approval are clearly inconsistent with the status of an option holder who assumes no promissory obligation prior to his exercise of the option (Benedict v Pincus, 191 NY 377, 382, supra).
The language of the rider then continues: "It is however understood and agreed that in the event this contract is cancelled by the Purchaser at a point of time more than one (1) year from the date hereof, then and in that event the Seller shall be entitled to retain the additional $50,000.00 in the event of cancellation of this contract as and for liquidated damages.” Similarly, liquidated damages play no part in the option process. Such damages would flow only from nonperformance of a contract to the detriment of the seller. Here, the purchaser is presumably ready, willing and able to perform and seeks judicial approval to do so.
The fact that the purchaser’s stated agreement to complete the purchase was conditioned on an event not wholly within its own volition, does not prevent the existence of a valid bilateral contract of purchase and sale (1A Corbin, Contracts, § 274). The highest court of our sister State, California, found no lack of mutuality of obligation where the purchaser’s promise was conditioned on his finding "satisfactory” tenants (Mattei v Hopper, 51 Cal 2d 119) or on his own approval of the developmental plan proposed by the municipality (Rodriguez v Barnett, 52 Cal 2d 154).
Concededly, as in all real estate contracts wherever a change of zone or a variance is required to assure the purchaser that he will enjoy the anticipated use of the property, there are escape clauses in the contract. At bar, the purchaser was not buying "a pig in a poke”. It wanted the land for a particular use, and absent the granting of permission for that use, could refuse to consummate the transaction. That more truly represented the happening of a condition or a contingency, not the exercise or nonexercise of an option.
There came a time in this case when the contingencies were met—or were in the process of being met—to the satisfaction *275of the purchaser, and it was willing to continue making the payments. Because Omega’s president thought the property was overpriced he attempted to negotiate the sale price downward as noted above. The negotiations were still going forward when the date arrived for the $50,000 payment.
Curiously enough the defendants (one of them an attorney), dealt during this critical period with a layman (Mr. Schwerin) rather than with his (Omega) corporation’s attorney. However sophisticated a layman may be in matters of real estate, he is not presumed to have a knowledge of the law to the degree possessed by an attorney of long experience such as Mr. McBride. Here Omega’s president was led down the primrose path while time, according to the sellers, was running out.
Even the rider—which defendants claim takes the agreement out of the contract of sale category and into the realm of an option—is studded with references to "contract”, "seller”, "purchaser”, "agreement” and "purchase price”. In fact, every one of the clauses in the rider has at least one of the words set out above in quotation marks. In the face of such verbiage only Humpty Dumpty could say that "[w]hen I use a word * * * 'it means just what I choose it to mean—neither more nor less.’ ” (Carroll, Through the Looking Glass, ch 6.)
Ordinarily I would agree that when two presumably skillful real estate attorneys sit down at a table to hammer out an agreement, neither should seek to take refuge in the principle enunciated in 67 Wall St. Co. v Franklin Nat. Bank (37 NY2d 245), i.e., that if ambiguities exist in a contract they should be read against the one who prepared it. But where—as here— the scrivener sellers’ attorney employed words of art in a 20 paragraph rider, all of them couched in contract of sale terms, he should not be permitted to claim that his manifest intent was to speak in terms of option. Intent plays a great part here and can be judged only by the terms employed. "The court should examine the entire contract and consider the relation of the parties and the circumstances under which it was executed” (Atwater & Co. v Panama R. R. Co., 246 NY 519, 524).
From all the welter of words, there emerges, in my view, the inescapable conclusion that the parties were speaking "contract”, not "option”.
If, then, the instrument is a contract of sale, time is not of the essence. Hence, a seven-day delay, occasioned as it was by the continuing negotiations, should not be fatal to the plain*276tiffs case, Equity should relieve the default in view of the $50,000 already paid to the sellers (see J. N. A. Realty Corp. v Cross Bay Chelsea, 42 NY2d 392; Lese v Lampreeht, 196 NY 32). Further, since nothing appears in the record to indicate any prejudice to the defendants, the judgment should be reversed, and plaintiffs motion for summary judgment granted.
To effectuate the decision, plaintiff should, within 20 days after entry of the order to be made herein, reproffer the $50,000 third payment to the defendants. Upon the receipt of the payment the contract of sale should be deemed resumed and the parties should proceed to its consummation in accordance with its terms.
Martuscello, J. P., and Margett, J., concur with Shapiro, J.; Cohalan, J., dissents and votes to reverse the judgment, grant plaintiffs motion for summary judgment and deny defendants’ cross motion for summary judgment, with an opinion.
Judgment of the Supreme Court, Nassau County, entered January 18, 1978, affirmed, with $50 costs and disbursements.