Donald Friedman & Co. v. Newman

• Decision Date: 06 January 1931
• Citation: 174 N.E. 703,255 N.Y. 340
• Court: New York Court of Appeals Court of Appeals
• Parties: DONALD FRIEDMAN & CO., Inc., v. NEWMAN.

255 N.Y. 340

174 N.E. 703

DONALD FRIEDMAN & CO., Inc.,

v.NEWMAN.

Court of Appeals of New York.

Jan. 6, 1931.

Action by Donald Friedman & Co., Inc., against Leo Newman. From a judgment of the Appellate Division (230 App. Div. 103, 243 N. Y. S. 408) directing judgment for plaintiff after reversing on the law and facts a judgment of the Special Term dismissing complaint and awarding judgment for defendant on defendant's counterclaim, defendant appeals.

Reversed, and complaint and counterclaim dismissed.

Appeal from Supreme Court, Appellate Division, First Department.

H. Louis Jacobson, H. H. Nordlinger, and David Haar, all of New York City, for appellant.

Aaron H. Marx and Walter E. Godfrey, both of New York City, for respondent.

LEHMAN, J.

The plaintiff corporation is a dealer in bank and insurance company stock. As the result of negotiations conducted over the telephone, it agreed to sell to the defendant ten shares of Chase National Bank. Then, in accordance with the usual custom in its business, it prepared a paper known as a ‘Confirmation of Sale.’ The ‘confirmation’ was written on the business stationery of the plaintiff, signed by the plaintiff, addressed to the defendant and thereafter signed by the defendant. At the top appears the word ‘Confirmation,’ and it reads as follows:

‘We beg to confirm our Sale to you to-day of 10 shares Chase National Bank at 1060-10600

‘Accepted. L. Newman (signed)

‘Delivery

‘Bank of U. S.

‘Pitkin Avenue

‘Yours truly,

‘Donald Friedman & Co., Inc.

‘[Signed] by B. Willung.’

The plaintiff refused to deliver the stock in accordance with the terms stated in the ‘confirmation.’ It claims that in the telephone conversation the parties agreed to a sale at $1,160 per share, and that in the ‘confirmation’ the price of 1060 per share was inserted by mistake. It insisted upon performance by the defendant in accordance with the terms of the alleged oral agreement. The defendant denied the mistake and insisted upon performance of the contract in accordance with the terms contained in the written memorandum or confirmation.

The defendant brought an action in the Municipal Court for damages caused by the refusal to deliver the stock at the price stated in the written confirmation. The plaintiff brought an action in the Supreme Court for reformation of the paper writing, purporting to confirm the sale, and asked damages for the refusal to accept and pay for the stock in accordance with the contract of sale. By order of the Supreme Court the two actions were consolidated and were tried together at Special Term. At the trial the defendant was permitted to amend his answer by inserting a plea of the statute of frauds. There was conflicting testimony as to the price at which the parties agreed the sale should be made. The trial judge resolved this conflict in favor of the defendant. The Appellate Division reversed the finding, and gave judgment in favor of the plaintiff, decreeing that ‘the said Confirmation of Sale setting forth the purchase price as $1060 per share for 10 shares Chase National Bank be reformed and corrected so as to express the true agreement between plaintiff and defendant as regards the said purchase price,’ and awarding to the plaintiff damages for the defendant's failure to accept and pay for the stock at that price.

The contract between the parties was oral. The paper executed thereafter, denominated ‘confirmation of sale,’ was, as its name and form clearly indicate, merely intended as a memorandum of the oral contract. It is evidence of an oral contract previously made. The oral contract is unenforceable, unless a ‘note or memorandum thereof be in writing.’ Personal Property Law (Consol. Laws, c. 41), §§ 31, 85. Neither party may percover damages for the breach of the oral contract, unless the paper writing signed by the parties sufficiently evidences the contract actually made.

‘It is not sufficient that the note or memorandum may express the terms of a contract. It is essential that it shall completely evidence the contract which the parties made. If instead of proving the existence of that contract, it establishes that there was * * * a contract in terms and conditions different from that which the parties entered into, it fails to comply with the statute.’ Poel v. Brunswick-Balke-Collender Co. of New York, 216 N. Y. 310, 314,110 N. E. 619, 620;Berman Stores Co. v. Hirsh, 240 N. Y. 209, 148 N. E. 212. The memorandum is not subject to the parol evidence rule, for it does not integrate, but merely evidences, the oral agreement. It ‘may be shown by parol to be inaccurate or incomplete.’ Mesibov, Glinert & Levy v. Cohen Bros. Mfg. Co., 245 N. Y. 305, 313, 157 N. E. 148, 151.

The statute of frauds merely declares ‘void’ or ‘unenforceable’ a contract not in writing or evidenced by a note or memorandum in writing. It does not declare expressly or by implication that a written note or memorandum of an oral contract is conclusive evidence of the terms of the contract. Doubtless a note or memorandum may constitute an admission of the making of the oral contract and of its terms, but neither the parol evidence rule nor the statute prevents the introduction of evidence contradicting the admission. Except as evidence of the oral contract, the memorandum has no force or effect, unless and until the oral contract has been established by a preponderance of evidence. Then, if accurate and complete, it prevents the interposition of the statute of frauds as a bar to the enforcement of the oral contract.

Here the Appellate Division has found that the plaintiff sold to the defendant ten shares of Chase National Bank stock for which the defendant agreed to pay to the plaintiff the sum of $11,600. We cannot say that this finding is not in accordance with the weight of evidence. The defendant's cause of action was based upon the allegation that the sale was made at a lower price. He failed to establish that allegation to the satisfaction of the ultimate trier of the fact. The court was not called upon to exercise such equitable powers as it might have to defeat an unconscionable assertion by the defendant of a legal right. Proof that the plaintiff's admission contained in the memorandum was made through mistake justified the court in rejecting the admission. It could not by its fiat change the plaintiff's admission into an affirmation by the defendant of the contrary. Nor was such change necessary to defeat the defendant's cause of action. The cause of action failed when the court rejected the proof intended to establish it.

The court did, however, go further. It assumed a power to ‘reform’ the paper writing so that it might constitute an accurate memorandum of the oral contract of sale, as actually made, and thus enable the plaintiff to assert a right to damages for breach of a contract, which would be ‘void’ or ‘unenforceable’ under the provisions of the statute of frauds. It is fair to say that neither party seriously challenged the existence of such a power. The attention of the court and litigants was directed to the question of fact litigated at the trial rather than to questions of law. The questions of...