Higgs v. De Maziroff

• Decision Date: 27 February 1934
• Citation: 263 N.Y. 473,189 N.E. 555
• Parties: HIGGS v. DE MAZIROFF.
• Court: New York Court of Appeals Court of Appeals

263 N.Y. 473

189 N.E. 555

HIGGS

v.DE MAZIROFF.

Court of Appeals of New York.

Feb. 27, 1934.

Action by P. Jackson Higgs against George De Maziroff. From a judgment of the Appellate Division (238 App. Div. 828, 262 N. Y. S. 974), affirming a judgment for plaintiff, plaintiff, pursuant to leave granted by the Court of Appeals, appeals.

Reversed, and judgment directed for plaintiff for amount demanded in complaint.

Appeal from Supreme Court, Appellate Division, First department.

Milton Gladstone and Charles E. McMahon, both of New York City, for appellant.

John H. Jackson and Francis G. Hoyt, both of New York City, for respondent.

CROUCH, Judge.

We are here concerned with a narrow phase of the parol evidence rule.

The defendant, who was the owner of certain valuable paintings, sought a loan of $25,000 from the plaintiff, who conducted an art gallery. On June 18, 1929, an agreement between the parties with respect to the transaction was entered into by means of a letter written by the plaintiff and accepted in writingby the defendant. That portion of the written agreement material here reads as follows:

‘In order to enable you to finance your plans, I agree to lend you for six months the sum of $5,000 cash and to give you a six months' note for $5,000 and one for $15,000 for nine months, in consideration of which you agree to deposit with me your paintings on the enclosed list, numbered 1 to 12, at your risk.

‘You also agree to exchange similar notes with me for the same amounts and periods, which I agree to destroy if my notes given you are not discounted or if I do not have to meet them myself.

‘It is understood that I am to sell any of these paintings at the basic prices on the corrected list and that any amount over these prices is to be equally divided between us. The first $5,000 cash which I am lending you is to be repaid before you receive any monies. After this has been done, you are to receive the basic price, and any profit is to be retained by me to offset the balance of the notes.’

Three promissory notes, all dated June 18, 1929, were made by the defendant and delivered to the plaintiff, two for $5,000 each payable in six months, and one for $15,000 payable in nine months. The plaintiffs on his part gave the defendant $5,000 in cash and promissory notes aggregating $20,000 which were discounted by the defendant who received the money thereon to his own use, and were later paid by the plaintiff at maturity. The paintings were delivered to the plaintiff, but have never been sold; $3,000 was subsequently paid to plaintiff.

The action here is upon the three notes given by defendant to plaintiff. As an affirmative defense, it was alleged that the notes were delivered subject to a condition that they were not to be paid by the defendant or enforced until the paintings were sold, and then only out of the proceeds of the sale, $5,000 out of the first money so received, and $20,000 out of the defendant's share of the surplus over the agreed basic price of the pictures. Upon the trial, defendant testified, without objection or motion to strike out, that plaintiff told him, immediately before the contract and notes were signed, that the notes would be held in his safe and not enforced until the paintings were sold.

On the one hand, it is said that plaintiff, in failing to object to the oral testimony and in failing to move to strike it out, consented that the proof was effective to modify and amplify the written agreement of June 18, 1929. The case chiefly relied upon for that contention is Brady v. Nally, 151 N. Y. 258, 45 N. E. 547. On the other hand, under the asserted authority of Wallach v. Riverside Bank, 206 N. Y. 434, 100 N. E. 50, it is said that the testimony, although admitted without objection and not denied, is wholly immaterial as matter of substantive law and cannot affect the written contract.

Since the amount, time, and manner of payment is dealt with by the writing, the intent of the parties to embody therein all that element of the oral negotiation would ordinarily be conclusively presumed. Cf. Wigmore on Evidence (2d Ed.) § 2430. Therefore it is argued that the oral testimony, though admitted without objection, has no legal effect, since the parol evidence rule is one of substantive law. For that view there is good authority in other jurisdictions. See, for instance, Mears v. Smith, 199 Mass. 319, 85 N. E. 165;O'Malley v. Grady, 222 Mass. 202, 109 N. E. 829. In this state, notwithstanding the general language of the concluding paragraph of the opinion in Wallach v. Riverside Bank, supra, the rule is otherwise.

This court, in many cases, has held, impliedly and expressly, that the parol evidence rule is one of substantive law. See, inter alia, Wilson v. Deen, 74 N. Y. 531;Eighmie v. Taylor, 98 N. Y. 288;Lese v. Lamprecht, 196 N. Y. 32, 89 N. E. 365;Ruppert v. Singhi, 243 N. Y. 156, 153 N. E. 33;Mitchill v. Lath, 247 N. Y. 377, 379, 160 N. E. 646, 68 A. L. R. 239. In the case last cited the rule was said to be ‘a rule of law which defines the limits of the contract to be construed. * * * It is more than a rule of evidence and oral testimony even if admitted will not control the written contract, * * * unless admitted without objection. (Brady v....