Anostario v. Vicinanzo

• Decision Date: 31 March 1977
• Citation: 56 A.D.2d 406,392 N.Y.S.2d 933
• Parties: Paul A. ANOSTARIO, Appellant, v. Vincent E. VICINANZO et al., Respondents.
• Court: New York Supreme Court — Appellate Division

Page 933

392 N.Y.S.2d 933

56 A.D.2d 406

Paul A. ANOSTARIO, Appellant, v. Vincent E. VICINANZO et al., Respondents.

Supreme Court, Appellate Division, Third Department.

March 31, 1977.

Gordon, Gordon & Siegel, Schenectady (Arnold M. Gordon, Schenectady, of counsel), for appellant.

Richard T. Horigan, Amsterdam, for respondents.

Before KOREMAN, P.J., and SWEENEY, KANE, MAHONEY and LARKIN, JJ.

KANE, Justice.

In this action for specific performance and related relief, plaintiff alleged that although he had an agreement with the defendant whereby they were to purchase certain realty through the vehicle of a corporation in which each was to become an equal shareholder, the defendant wrongfully breached the same and completed the transaction for his own benefit. Defendant denied making such an agreement and further pleaded the Statute of Frauds as an affirmative defense (see General Obligations Law, § 5--703, subd. 1). Trial Term heard the proofs and arguments of the parties and plaintiff now appeals from its judgment dismissing his complaint for want of sufficient compliance with the requirements of that statute.

The record demonstrates that the National Commercial Bank and Trust Company was the prime tenant in a seven-story office building located in downtown Amsterdam, New York, which it owned through an intermediary and desired to sell. Defendant, the attorney for this branch of the bank, was a member of its regional advisory board, maintained offices in the building, was aware of the bank's position, and wanted to buy the property on advantageous terms. After some negotiations had taken place, he approached his friend and former client, the plaintiff herein, and invited his participation in the proposed transaction.

On December 31, 1971 the parties traveled to Albany and signed an agreement with the owner in which, for a consideration of $560,000, title to the property would be conveyed to a corporation to be created by them. Plaintiff and defendant obviously intended to minimize any individual financial risks for the contract was also subject to contingencies that the proposed corporation, or they as its promoters, be able to secure a $575,000 mortgage loan and a specific long term lease continuing National Commercial Bank and Trust Company as a tenant with rents reserved in an amount that would largely amortize the mortgage obligation. If they were unable to meet the foregoing contingencies, the deposit of $35,000 called for in the contract was to be returned by the seller. The defendant left his personal check for the down payment with a representative of the seller, but told the plaintiff funds would have to be borrowed to cover it.

On January 3, 1972 the parties jointly executed a promissory note in favor of the National Commercial Bank and Trust Company for $37,000, deposited the proceeds in a joint account, and sent their jointly drawn check for $35,000 to the seller's representative in replacement of defendant's instrument. The proposed corporation was formed through defendant's efforts on March 3, 1972 and, three days later, the parties assigned their interest in the December 31, 1971 contract to this corporation. In the meantime defendant had obtained a mortgage commitment from the Albany Savings Bank in the sum of $580,000. The closing took place as scheduled on March 31, 1972; title was transferred to the new corporation; National Commercial Bank and Trust Company executed a lease for a portion of the building and made its first monthly rental payment; the note of the parties was repaid and cancelled; and, after settling with the former owner and paying a fee of $7,500 to a mortgage broker whose son was an officer of the Albany Savings Bank, the new corporation commenced its control of the property. Defendant attended to all matters connected with the closing and remains the sole shareholder of the new corporation.

According to plaintiff's version of these events, his assistance had been solicited to manage the building and service tenants after the takeover, while defendant had accepted for himself the responsibility of handling the negotiations and legal matters preceding the acquisition agreeing that they would share equally in this enterprise. Defendant, on the other hand, recounted that he had consistently asked plaintiff to contribute capital in exchange for a minority interest in the project, but that the amount of this investment was never fixed or tendered. Finally, both parties agreed that their relationship ended sometime after the assignment and before the closing.

Upon this set of facts Trial Term correctly decided that the alleged contract fell within the Statute of Frauds and was not exempt from its requirements by operation of the so-called joint venture exception. It is clear that plaintiff sought to enforce an oral agreement which had the purchase of real property as its final objective (Rizika v. Kowalsky, 285 App.Div. 1009, 139 N.Y.S.2d 299) and it is equally plain that he voluntarily assented to carry out that plan in corporate form, thereby precluding a joint venture association between the parties (Weisman v. Awnair Corp. of America, 3 N.Y.2d 444, 165 N.Y.S.2d 745, 144 N.E.2d 415; see Carpenter v. Weichert, 51 A.D.2d 817, 379 N.Y.S.2d 191). In addition, we also agree with Trial Term that none of the writings proffered by plaintiff, either separately or collectively, adequately spelled out the terms of the supposed agreement (Crabtree v. Elizabeth Arden Sales Corp., 305 N.Y. 48, 110 N.E.2d 551; Marks v. Cowdin, 226 N.Y. 138, 123 N.E. 139). However, although not argued by the parties, we are persuaded that the instant judgment should be reversed and a new trial granted to plaintiff because his evidence did establish yet another exception to the Statute of Frauds, namely, that of part performance.

Originally entitled 'An Act for the Prevention of Frauds and Perjuries' (29 Car. 2, ch. 3, § 4 (1677)), it has earnestly been debated for almost 300 years whether enforcement of its provisions accomplished more mischief than good by protecting frauds rather than preventing them. In recognition of this difficulty, the doctrine of part performance has been carved out of the present day enactment, as an exception to the ritualistic construction often accorded to it, on the theory that equity will not permit its interposition as a shield for the perpetration of fraud (General Obligations Law, § 5--703, subd. (4); see Canda v. Totten, 157 N.Y. 281, 51 N.E. 989; Ryan v. Dox, 34 N.Y. 307). Even though this doctrine is founded on relatively simple principles of equitable estoppel (see 56 N.Y.Jur., Statute of Frauds, §§ 246, 334), a line of judicial authority has evolved over the years producing somewhat technical rules governing its application.

In Burns v. McCormick, 233 N.Y. 230, 135 N.E. 273 and Woolley v. Stewart, 222 N.Y. 347, 118 N.E. 847 the plaintiffs sought to compel the specific performance of alleged oral contracts for the conveyance of real property. They met with no success because their actions in claimed part performance of the agreements were susceptible of differing explanations. It is worthy of note, however, that in Burns the performance required was said to be that '* * * which alone and without the aid of words of promise is unintelligible or at least extraordinary unless as an incident of ownership, assured, if not existing' (Burns v. McCormick, supra, 233 N.Y. p. 232, 135 N.E. p. 273), whereas in Woolley it was...