Church of God of Prospect Plaza v. Fourth Church of Christ, Scientist, of Brooklyn

• Decision Date: 22 September 1980
• Citation: 431 N.Y.S.2d 834,76 A.D.2d 712
• Parties: CHURCH OF GOD OF PROSPECT PLAZA, Respondent-Appellant, v. FOURTH CHURCH OF CHRIST, SCIENTIST, OF BROOKLYN, New York, Appellant-Respondent.
• Court: New York Supreme Court — Appellate Division

Page 834

431 N.Y.S.2d 834

76 A.D.2d 712

CHURCH OF GOD OF PROSPECT PLAZA, Respondent-Appellant, v. FOURTH CHURCH OF CHRIST, SCIENTIST, OF BROOKLYN, New York Appellant-Respondent.

Supreme Court, Appellate Division, Second Department.

Sept. 22, 1980.

Thacher, Proffitt & Wood, New York City (Dwight B. Demeritt, Jr. and Anthony Limitone, Jr., New York City, of counsel), for appellant-respondent.

Stephen A. Humsjo, Islip, for respondent-appellant.

Before HOPKINS, J. P., and DAMIANI, MARTUSCELLO and WEINSTEIN, JJ.

DAMIANI, Justice.

This is an appeal by the defendant from a judgment of the Supreme Court, Kings County, which awarded the plaintiff money damages for breach of a contract to sell real property owned by the defendant and upon which its church edifice was erected. The plaintiff cross-appeals from so much of the judgment as failed to direct specific performance of the contract.

Because of a decline in its membership the defendant, Fourth Church of Christ, Scientist, of Brooklyn, New York, decided to sell its house of worship and move to a smaller facility which it also owned. Plaintiff, Church of God of Prospect Plaza, offered to buy the real property and, after negotiations, defendant's membership voted unanimously to sell the same in accordance with plaintiff's offer. In accordance with defendant's instructions, its attorneys prepared a proposed contract and sent it to plaintiff. Plaintiff executed the contract and returned it with a deposit according to the instructions given by the attorneys for the defendant.

At about the same time, defendant received an offer from a sister church to merge their congregations and also received an all cash offer for the property from yet another prospective purchaser. Subsequent to the return of the contract signed by the plaintiff, defendant's membership voted to consolidate with the sister church and to rescind the acceptance of plaintiff's offer. The contract was never executed by the defendant.

In light of the merger, plaintiff was content to forgo its rights to purchase the property, but when it subsequently developed that the merger was not permitted by defendant's mother church and defendant entered into a contract of sale with the other buyer which had made an "all cash" offer, plaintiff decided to commence this action. In fact, the merger was eventually approved, the contract between defendant and the second offeree was canceled and that offeree purchased the property of defendant's sister church. Defendant's attorneys, who had obtained court leave approving all the transactions except the contract with the plaintiff, never informed the court of the plaintiff's status.

On a prior appeal in this action, we reversed an order granting summary judgment to the defendant and remitted the action to determine whether certain signed corporate minutes of the defendant authorizing the sale constituted a sufficient memorandum of the contract of the parties to satisfy the Statute of Frauds (Church of God of Prospect Plaza v. Fourth Church of Christ, Scientist, of Brooklyn, N.Y., 59 A.D.2d 732, 398 N.Y.S.2d 581). Pursuant to court ordered discovery, plaintiff obtained the defendant's signed corporate minutes authorizing the sale and thereafter it sought summary judgment. Special Term held that the "corporate minutes were duly executed and constituted a sufficient signing to satisfy the Statute of Frauds and an adequate acceptance of the plaintiff's offer" and it set the action down for a determination of the fairness of the contract and as to whether there were any valid reasons for refusing plaintiff's request for performance of the agreement (see Religious Corporations Law, § 12). After an evidentiary hearing the Referee determined that the contract was fair and enforceable and offered the defendant an alternative of either specifically performing the contract or paying damages in the amount of the difference between the contract price of $150,000 and the fair market value of $225,000 at the date of the hearing, plus plaintiff's attorney's fees. The judgment appealed from was entered in accordance with the defendant's election to pay damages.

The corporate minutes of the defendant indicate that its membership unequivocally accepted the offer of the plaintiff to purchase its church property on the terms proposed by the plaintiff. Although the vote of defendant's membership constituted an acceptance, such acceptance was not effective until communicated to plaintiff (see White v. Corlies, 46 N.Y. 467, 469; 1 Corbin, Contracts, § 67; Simpson, Contracts (2d ed.), § 36). At defendant's direction, its attorneys sent plaintiff a written instrument for execution on its behalf which embodied the same terms as had been proposed by plaintiff and agreed upon at defendant's membership meeting. The sending of the transmittal letter and this formal written instrument for execution constituted sufficient notice of acceptance.

Defendant contends that it never intended to be bound until the written contract was executed by both parties. In determining whether the parties entered into a contract, it is necessary to examine the words and deeds of the parties which constitute the objective manifestations of their intent (see Brown Bros. Elec. Contrs. v. Beam Constr. Corp., 41 N.Y.2d 397, 399, 393 N.Y.S.2d 350, 361 N.E.2d 999). A review of the record demonstrates that the parties had come to a meeting of minds on the terms of their contract and all that remained was the mere memorialization of their agreement in a formal document. As the Court of Appeals explained in the case of Matter of Municipal Consultants & Publishers v. Town of Ramapo, 47 N.Y.2d 144, 148-149, 417 N.Y.S.2d 218, 219-220, 390 N.E.2d 1143, 1144, 1145:

"Generally, where the parties contemplate that a signed writing is required there is no contract until one is delivered (Scheck v. Francis, 26 N.Y.2d 466, 311 N.Y.S.2d 841, 260 N.E.2d 493; Schwartz v. Greenberg, 304 N.Y. 250, 107 N.E.2d 65). This rule yields, however, when the parties have agreed on all contractual terms and have only to commit them to writing. When this occurs, the contract is effective at the time the oral agreement is made, although the contract is never reduced to writing and signed. Where all the substantial terms of a contract have been agreed on, and there is nothing left for future settlement, the fact, alone, that it was the understanding that the contract should be formally drawn up and put in writing, did not leave the transaction incomplete and without binding force, in the absence of a positive agreement that it should not be binding until so reduced to writing and formally executed (Disken v. Herter, 73 App.Div. 453, 77 N.Y.S. 300, affd. 175 N.Y. 480, 67 N.E. 1081; 1 Williston, Contracts, § 28; see, also, Matter of Meister, 39 A.D.2d 857, 333 N.Y.S.2d 41, affd. 32 N.Y.2d 626, 342 N.Y.S.2d 658, 295 N.E.2d 385; Belmar Contr. Co. v. State of New York, 233 N.Y. 189, 194, 135 N.E. 240, 241)."

Neither the minutes of the defendant's corporate meeting at which plaintiff's offer was accepted nor the transmittal letter expressly or impliedly reserved the effectiveness of the agreement until the formal contract was signed. Accordingly, we find that the parties duly contracted for the sale of defendant's church edifice to plaintiff.

Defendant next contends that that contract is unenforceable by reason of the Statute of Frauds (see General Obligations Law, § 5-703, subd. 2). It is our opinion, however, that the plaintiff's written offer, the signed corporate minutes of the defendant accepting the terms of that offer and the formal unsigned contract prepared by defendant's attorneys which unequivocally refers to the same transaction, when read together, constitute a sufficient memorandum of the contract to satisfy the Statute of Frauds (see Scheck v. Francis, 26 N.Y.2d 466, 470-471, 311 N.Y.S.2d 841, 260 N.E.2d 493; Crabtree v. Elizabeth Arden Sales Corp., 305 N.Y. 48, 54-56, 110 N.E.2d 551; DFI Communications v. Greenberg, 41 N.Y.2d 602, 606-607, 394 N.Y.S.2d 586, 363 N.E.2d 312).

The next question is whether the Referee to hear and determine erred in granting approval of the contract between plaintiff and defendant pursuant to the provisions of certain relevant statutes. Subdivision 1 of section 12 of the Religious Corporations Law provides that in order to sell any of its real property, such a corporation must apply for and obtain leave of court pursuant to section 511 of...