Dorman v. Cohen

• Decision Date: 08 February 1979
• Citation: 413 N.Y.S.2d 377,66 A.D.2d 411
• Parties: Henry O. DORMAN and International Board of Industrial Advisors, Plaintiffs-Respondents, v. Robert COHEN & Hudson County News Company, Defendants-Appellants.
• Court: New York Supreme Court — Appellate Division

Page 377

413 N.Y.S.2d 377

66 A.D.2d 411

Henry O. DORMAN and International Board of Industrial Advisors, Plaintiffs-Respondents, v. Robert COHEN & Hudson County News Company, Defendants-Appellants.

Supreme Court, Appellate Division, First Department.

Feb. 8, 1979.

Harvey S. Feuerstein, New York City, of counsel (Hannah K. Flamenbaum, Kew Gardens, with him on the brief, Herrick, Feinstein, New York City, attys.), for defendants-appellants.

Jeffrey A. Shuman, New York City, of counsel (Saxe, Bacon & Bolan, P. C., New York City, attys.), for plaintiffs-respondents.

Before KUPFERMAN, J. P., and BIRNS, EVANS and LUPIANO, JJ.

LUPIANO, Justice:

In their complaint, plaintiffs seek damages for defendants' alleged breach of a contract whereby defendants were to pay plaintiffs $1,000 per month, plus expenses, for a period of five years beginning November 1, 1976, in return for plaintiffs' services as industrial consultants (paragraphs 6-8; 10 of the complaint). The breach alleged is the unilateral termination of the contract by defendants by refusing to pay plaintiffs' salary for May, 1977 or to make any future payment (paragraphs 11 and 13 of the complaint). After joinder of issue, defendants moved for summary judgment dismissing the complaint.

General Obligations Law § 5-701(a) provides in pertinent part:

"Every agreement . . . is void, unless it or some note or memorandum thereof be in writing, and subscribed by the party to be charged therewith . . . if such agreement . . . 1. By its terms is not to be performed within one year from the making thereof . . . ."

As the contract which plaintiff is relying on is for a five-year term, the statute of frauds must be observed. It is hornbook law that the note or memorandum of the agreement, in order to satisfy the statute, "must state the entire contract with reasonable definition and certainty, so that the substance thereof will appear from the writing without any resort to parol evidence" (56 N.Y. Jur. Statute of Frauds § 165; see, Kobre v. Instrument Systems Corporation, 54 A.D.2d 625, 626, 387 N.Y.S.2d 617, 618 (1st Dept. 1976)). The writings herein relied upon by plaintiffs fail to satisfy the statute. The letter dated November 1, 1976, on the corporate plaintiff's stationery, subscribed by the individual plaintiff as "Chairman", states that plaintiffs confirm that they "are beginning a five-year, unbreakable agreement with (defendants), but breakable by (plaintiffs), for (plaintiffs') services in advising (defendants) about the great events of the world in (defendants') business, at a fee of $1,000 per month plus expenses . . . ." Defendants expressed disapproval of Plaintiffs' letter by writing a note to the individual plaintiff at the bottom of said letter, as follows:

"Since you have the right to break the agreement so do I but let's hope that will not be necessary Please watch your expenses."

This addendum was signed by defendant Robert Cohen. It is not disputed on this record that defendants mailed the plaintiffs' November 1 letter with the defendants' addendum back to plaintiffs on the same day as it was received by defendants, to wit, November 2, 1976.

Patently, the November letter, instead of proving the existence of the five-year contract claimed by plaintiffs, only establishes either of the following: (a) that no contract was ever entered into because plaintiffs' offer of a contract was rejected by defendants by the counter-offer embodied in the handwritten addendum, or (b) that the agreement was "breakable," I. e., terminable, by either party at any time during the five-year period. In either case, plaintiffs would have no cognizable claim for a breach (Cf. Watson v. Gugino, 204 N.Y. 535, 540-542, 98 N.E. 18, 20 (1912)).

The second writing relied on by plaintiffs is a second letter sent by plaintiffs to defendants dated December 28, 1976, wherein it is stated:

"Thank you for your note, but I hope that you understand that what we accomplished . . . is to me and I think to you, too, worth the overall five years. I would not want to enter into this unless it was, as you said, over a five year period. If that is not our understanding, please let me know."

The December letter is not subscribed by defendants, and even when read with the November letter, does not satisfy the statute of frauds. Indeed, this December letter either demonstrates (1) that there was never any meeting of the minds of the parties on the five-year period, or (2) that the aspect of the agreement being terminable at will by either party during the five-year period was unchanged. It is relevant to note that the December 28, 1976 letter was sent, according to plaintiffs, almost two months after the commencement of the alleged five-year agreement on November 1, 1976.

As the memorandum relied on by plaintiffs establishes at most a contract materially different from the contract which forms the basis of plaintiffs' claim, it does not satisfy the statute of frauds.

"As the Court of Appeals has stated, the memorandum required by the statute 'must be such that when it is produced in evidence it will inform the court or jury of the essential facts set forth in the pleading, and which go to make a valid contract'. If instead of proving the existence of the contract, the memorandum establishes that there was in fact no contract or evidenced a different contract in terms and conditions from that which the parties entered into, it fails to comply with the statute" (56 N.Y.Jur., Supra § 165; Mentz v. Newwitter, 122 N.Y. 491, 498, 25 N.E. 1044, 1046 (1890)).

Special Term predicated its denial of defendants' motion for summary judgment on the ground that a jury question as to intent was presented by the "writings involved herein." This was incorrect, because as a matter of law, the memorandum is unambiguous. Clearly, the defendants' handwritten addendum to the November 1 letter evidences in plain and unambiguous language their intent to have the same right of termination as plaintiffs. Since defendants' addendum showed that they intended the agreement to be terminable at will by them, a right plaintiffs also had, there is no question of fact to be determined by a jury as to whether or not defendants had such right.

"Where the language of a contract is unambiguous and the words are plain and clear, conveying a distinct idea, there is no occasion to resort to other means of interpretation, for effect must be given to the intent as indicated by the language itself. The rules of construction are to be applied to interpret language of ambiguous or doubtful meaning only" (10 N.Y.Jur., Contracts § 189).

In the memorandum relied on by plaintiffs it is explicitly stated by defendants in the addendum subscribed by them that the agreement was terminable at will during its term. Thus the defendants' explicit rejection of a material term of the contract, to wit, that the agreement was terminable at will only by plaintiffs and as to defendants would be binding for the full five-year term, cannot be deemed an acceptance of such term (see, Julliard v. Trokie, 139 App.Div. 530, 124 N.Y.S. 121 (1st Dept. 1910), Aff'd 203 N.Y. 604, 96 N.E. 1117 (1911)).

Regarding the December 28 letter of plaintiffs, since the complaint is unverified and plaintiffs' affidavit in opposition to defendants' motion for summary judgment was sworn to by plaintiffs' attorney, who had no first-hand knowledge of the facts, the record is barren of any sworn statement as to plaintiffs' mailing of such letter. However, assuming this letter was sent by plaintiffs and received by defendants, the fact that defendants never subscribed or assented to its terms in writing renders it immaterial on the issue of whether it reflects the terms of the prior oral agreement alleged to have been made by the parties. Plaintiffs cannot overcome the statute of frauds defense on the basis of a supplemental writing which was prepared by plaintiffs, but unsigned by the defendants. As noted in Solin Lee Chu v. Ling Sun Chu, 9 A.D.2d 888-889, 193 N.Y.S.2d 859, 860 (1st Dept. 1959):

"Nor may the plaintiff rely upon the unexecuted document to supply the missing terms. Unlike the situation in the Crabtree case (Crabtree v. Elizabeth Arden Sales Corp., 305 N.Y. 48, 110 N.E.2d 551) the document here offered was not prepared by the defendant or at his instance. On the contrary it was prepared by the plaintiff's attorney and offered to the defendant for signature but he refused to sign. In the Crabtree case all of the writings relied upon which when taken together contained all of the essential terms of the agreement were documents of the defendant and prepared by the defendant. To permit the unsigned document prepared by the plaintiff to serve as a portion of the requisite memorandum would open the door to evils the Statute of Frauds was designed to avoid."

Finally, the agreement urged by plaintiffs in their complaint and evidenced by their letter of November 1, 1978 (without taking into consideration the defendants' addendum to said letter) sets forth an agreement for a five-year term for certain services of plaintiffs, with the plaintiffs, but not defendants, having the option to break the agreement. No other terms are set forth by plaintiffs. Accordingly, the agreement is illusory for lack of mutuality of obligation. The memorandum (the November letter) does not speak in terms of a unilateral contract but patently envisions a bilateral contract. While mutuality of obligation does not mean equality of obligation, it does mean that each party Must be bound to some extent. In the employment agreement urged by plaintiffs as demonstrated On this record, defendants as employer of plaintiffs would be bound to honor the agreement of employment for its full five-year term, but the plaintiffs, those being employed, would have the unilateral right to cancel. As possessor of such right, plaintiffs did not, in effect, bind themselves to do anything (See, Schlegel Mfg....