Court Opinion

ID: 5859798
Source: CourtListenerOpinion
Date Created: 2022-01-13 01:15:14.458851+00
Date Added: 2024-06-11T08:44:22.600692
License: Public Domain

Murphy, P. J.
(dissenting). Plaintiffs appeal from a final judgment of the Supreme Court, New York County (Helman, J.), entered September 18, 1981, which dismissed the complaint after a nonjury trial. The appeal from that final judgment brings up for review any order which necessarily affects it (CPLR 5501, subd [a], par 1). Therefore, upon this appeal, the order of the Supreme court, New York County (Helman, J.), entered March 17, 1977, denying Ertinger’s motion and Dean Witter’s cross motion for summary judgment, will be reviewed. (Matter of Neuner v Weyant, 63 AD2d 290, app dsmd 48 NY2d 975.) In seeking summary relief, Wolfram L. Ertinger, now deceased, submitted an affidavit stating that he had been a vice-president and director of Laird, Bissel & Meeds, Inc. (Laird). On April 4,1968, Laird’s board of directors passed a corporate resolution which provided for retirement pay of $18,000 per year for a director. To the extent here relevant, the resolution provided: “Notwithstanding any provision hereof, in the event that the broker-dealer business presently being conducted under the name and good will of the Corporation shall cease by reason of liquidation of the Corporation or any successor firm, whether voluntary or involuntary, the liability hereunder to you shall cease. In the case of merger, the firm would attempt to have the pension continued, but could not, of course, guarantee that this would be the case”. Ertinger retired on March 31, 1972 at the mandatory retirement age of 70. In accordance with the corporate resolution of April 4, 1968, he received a monthly pension payment from April 1, 1972 until March 31, 1973. On April 2, 1973 Laird merged into Dean Witter & Co., Inc. (Witter), because of pressing financial problems. Section 1 (b) (ii) of the merger agreement provides, in part, as follows: “(ii) All rights of creditors and all liens upon any property of the Constituent Corporations * * * shall attach to the Surviving Corporation and may be enforced against it to the same extent as if such debts, liabilities and duties had been incurred or contracted by it, all to the extent and as provided in Section 259(a) of the Delaware General Corporation Law”. In a letter dated April 4, 1973, Witter terminated Ertinger’s pension payments. It was Ertinger’s contention upon the motion that Witter was fully responsible for the payment of his pension benefits since that obligation was extant at the time of the merger. In support of its cross motion for summary judgment, Witter submitted affidavits from various officers in Laird and Witter. Each of the officers averred that Witter did not, as part of the merger, assume the obligation to pay a pension benefit under the corporate resolution of April 4, 1968 to retired directors, such as Ertinger. Special Term denied the parties’ motions for summary judgment. It found that Ertinger could not avail himself of the paroi evidence rule in view of the fact that he was not a party to the merger agreement. (Folinsbee v Sawyer, 157 NY 196,199.) The court otherwise found that factual issues existed as to the intent of the parties with respect to the pension plan at the time of the merger. Special Term’s reliance upon the Folinsbee case was misplaced. The Court of Appeals in Oxford Commercial Corp. v Landau (12 NY2d 362) limited the holding in the Folinsbee case. Specifically, the highest court stated (12 NY2d, at pp 365-366): “It is too well settled for citation that, if a written agreement contains no obvious or latent ambiguities, neither the parties nor their privies may testify to what the parties meant but failed to state. Although it is sometimes broadly observed that the paroi evidence rule has no application to any except parties to the instrument (see, e.g., Robert v. United States Shipping Bd. Emergency Fleet Corp., 240 N. Y. 474, 478; Folinsbee v. Sawyer, 157 N. Y. 196, 198-199), it is clear that in the case of a fully integrated agreement, where paroi evidence is offered to vary its terms, the rule operates to protect all whose rights depend upon the instrument even though they were not parties to it”. The language in *520the merger agreement was very clear. All debts and liabilities of Laird were attached to Witter and could be enforced against Witter as if such debts and liabilities had been incurred by Witter. Those debts and liabilities were to be enforced under the provision of subdivision (a) of section 259 of the Delaware Corporation Law. Hence, Special Term should have rejected the paroi evidence offered by Witter to contradict and vary the straightforward terms of the merger agreement (Thomas v Scutt, 127 NY 133, 137). Laird’s board of directors had never rescinded the resolution of April 4, 1968. Consequently, the pension benefit was a debt and obligation assumed by Witter. Thus, the order of the Supreme Court, New York County (Helman, J.), entered March 17, 1977, should be modified, on the law, by granting Ertinger’s motion for summary judgment on the first cause of action against Witter. That first cause should, accordingly, be remanded for an assessment of damages. Hence, a trial was only needed to resolve the remaining causes of action. Wolfram Ertinger died before the commencement of trial; his executors prosecuted the case on his behalf. It is the defendants’ contention that the plaintiff executors waived their right to enforce the paroi evidence rule by failing to object to the testimony of the defense witnesses at trial. The appendix submitted supports defendants’ contention that no formal objection to the defense testimony was taken on that specific ground. The paroi evidence rule is one of substantive law (22 NY Jur, Evidence, § 599, p 111). No effect can be given to testimony concerning prior or contemporaneous discussions if the trial court is asked in due form to instruct the jury that the discussions were merged in the written agreement. (Loomis v New York Cent. & Hudson Riv. R. R. Co., 203 NY 359, 367.) This case was tried by the court without a jury. It should be stressed that the trial court had previously ruled, upon the parties’ motions for summary judgment, that the paroi evidence rule was not applicable to this proceeding. Therefore, any formal objection taken by plaintiffs at trial to the defense testimony would have been futile. Despite the plaintiffs’ failure to object to the defense testimony varying and contradicting the clear terms of the merger agreement, it is evident from the appendix that the trial court was actually cognizant of plaintiffs’ continuing objection to that paroi evidence. In its oral decision after trial, the court stated: “It has been contended here by the plaintiff that the use of the merger agreement of the term ‘all debts, liabilities, and duties’ automatically observed an obligation to pursue the responsibilities of the May 4,1968 resolution adopted by LBM and that at the time that the merger agreement was signed, some five years later, the Dean Witter Company automatically became responsible for the terms and provisions of that resolution. In that regard, the Court has permitted paroi evidence.on both sides for the purpose of having any explanation that could be offered by either side as to the intent and meaning of the quoted words ‘all debts, liabilities, and duties of the constituent corporation’ explained”. Thus, at the end of this nonjury trial, the court was fully aware that plaintiffs were exclusively relying upon the merger agreement to support their case. Implicitly, plaintiffs were advancing the paroi evidence rule and it is apparent from the court’s language that it realized that fact. Had a trial been necessary to resolve the first cause, the paroi evidence rule would have compelled a determination on that cause in plaintiffs’ favor. It should be noted, in passing, that plaintiffs never violated that rule at trial. The proof adduced by plaintiffs, including their Exhibits Nos. 13 and 14, in no way varied or contradicted the critical terms of the merger agreement. With regard to the second, third, fourth and fifth causes of action, plaintiffs’ proof at trial was totally deficient. Consequently, those causes were correctly dismissed against all the defendants. However, to reflect the grant of summary judgment on the first cause, the final judgment of the Supreme Court, New York County *521(Helman, J.), entered September 18, 1981, should be modified, on the law, to reinstate the first cause against Witter and to remand that matter for an assessment of damages. The final judgment, as modified, should otherwise be affirmed.