Court Opinion

ID: 5498214
Source: CourtListenerOpinion
Date Created: 2022-01-10 02:55:32.425575+00
Date Added: 2024-06-11T08:33:51.962176
License: Public Domain

Merwin, J.
The main question on this appeal relates to the validity and effect of that portion of the agreement of June, 1887, which specifies the object and terms upon which the real estate in question was conveyed by Loomis to the plaintiff. That agreement, as well as the original one of ¡November, 1886, provides for the payment by Loomis to Allison of the $1,300 loan, and of one-half of any loss that Allison shall sustain on his advances or stock, in case the enterprise proves unprofitable. The property in question is conveyed by Loomis to Allison for the purpose of securing the loan, and such half of the loss, notwithstanding the conveyance, Loomis is to have the use of the property free of charge, during the time that Allison holds it as security. So far, both contracts are alike. Then comes, in the latter contract, a new provision, under which Loomis claims he has the right to redeem at any time within five years from its date. If that be so, and the contract is valid, then this action cannot be now maintained. The claim of the plaintiff, in substance, is that the contract itself is not valid, and that the provision for security to the plaintiff was intended to be absolute and enforceable at the final determination of the enterprise, and that the fact that, in the fall of 1887, the enterprise was by mutual assent abandoned, made the security then complete, and due. We must, I think, assume that, as far as the question at issue here is concerned, the contract, though unsigned, was valid. Homer v. Insurance Co., 67 N. Y. 481. It was supported by a sufficient consideration. Under it, there was a new relation between the parties. Loomis resigned as treasurer, and the plaintiff was elected in his place, and became manager of the finances of the company, with the right to receive as compensation a portion of the profits. The partial control so given up by the defendant and received by the plaintiff was a sufficient consideration for the extension of time, if there was one. The parties acted under the agreement, as changed, from that time forward. The new agreement was proved and putin evidence by the plaintiff.
Was there an extension of time? The first contract left the time of payment indefinite, except as it might be fixed by the time at which the loss, if any, should be ascertained. The condition was, “ in case the enterprise proves unprofitable. ” This event might occur before the expiration of the five years, as the funds were limited. Very likely the expectation was that the enterprise would continue for the term of the corporation. It was not a certainty, as the result showed. In the new contract, the proviso was that if, at the end of five years, the profits were insufficient to pay Allison, then the right of Loomis to a reconveyance should cease, unless before that time he should pay his share of the loss. This gave Loomis five years in which to ascertain what the loss, if any, was. This, in substance, said: “The deed shall be absolute, unless, within five years, Loomis should pay.” Clearly, the intention was to give Loomis five years in which to perform his contract, and save his property. The expression is: “Unless said Loomis shall before that time tender,” etc. This contemplated the contingency that the loss might be ascertained before the end of the five years. It did not provide that the loss should be paid as soon as ascertained. The circumstance, therefore, that the business was, by mutual consent, abandoned before the end of the five years, *36would not make the mortgage immediately due. It would indicate that both parties concluded to consider the enterprise a failure. It would not shorten the time within which Loomis must pay his share of the loss, and exercise his right of redemption. The case of Harding v. Manufacturing Co., 34 Conn. 458, does not aid the plaintiff. There the security sought to be reached was furnished by the company itself. Here, assuming the corporation was abandoned, it does not follow that the provisions of an agreement between the individuals interested in the corporation, in regard to the adjustment of their rights as between themselves, were also abandoned. It must, I think, be held that Loomis had five years within which to redeem, and that no waiver of this right was shown. It follows that the judgment must be reversed. Judgment reversed upon the exceptions, and new trial ordered before another referee; costs to abide the event. All concur.