Joseph Martin, Jr., Delicatessen, Inc. v. Schumacher

• Citation: 436 N.Y.S.2d 247,52 N.Y.2d 105,417 N.E.2d 541
• Parties: , 417 N.E.2d 541 JOSEPH MARTIN, JR., DELICATESSEN, INC., Appellant-Respondent, v. Henry D. SCHUMACHER, Respondent-Appellant.
• Decision Date: 20 January 1981
• Court: New York Court of Appeals

Page 247

436 N.Y.S.2d 247

52 N.Y.2d 105, 417 N.E.2d 541

JOSEPH MARTIN, JR., DELICATESSEN, INC., Appellant-Respondent, v. Henry D. SCHUMACHER, Respondent-Appellant.

Court of Appeals of New York.

Jan. 20, 1981.

Edward Flower, Staten Island, for appellant-respondent

David S. J. Rubin, Babylon, for respondent-appellant.

OPINION OF THE COURT

FUCHSBERG, Judge.

This case raises an issue fundamental to the law of contracts. It calls upon us to review a decision of the Appellate Division, 70 A.D.2d 1, 419 N.Y.S.2d 558 which held that a realty lease's provision that the rent for a renewal period was "to be agreed upon" may be enforceable.

The pertinent factual and procedural contexts in which the case reaches this court are uncomplicated. In 1973, the appellant, as landlord, leased a retail store to the respondent for a five-year term at a rent graduated upwards from $500 per month for the first year to $650 for the fifth. The renewal clause stated that "(t)he Tenant may renew this lease for an additional period of five years at annual rentals to be agreed upon; Tenant shall give Landlord thirty (30) days written notice, to be mailed certified mail, return receipt requested, of the intention to exercise such right". It is not disputed that the tenant gave timely notice of its desire to renew or that, once the landlord made it clear that he would do so only at a rental starting at $900 a month, the tenant engaged an appraiser who opined that a fair market rental value would be $545.41.

The tenant thereupon commenced an action for specific performance in Supreme Court, Suffolk County, to compel the landlord to extend the lease for the additional term at the appraiser's figure or such other sum as the court would decide was reasonable. For his part, the landlord in due course brought a holdover proceeding in the local District Court to evict the tenant. On the landlord's motion for summary judgment, the Supreme Court, holding that a bald agreement to agree on a future rental was unenforceable for uncertainty as a matter of law, dismissed the tenant's complaint. Concordantly, it denied as moot the tenant's motion to remove the District Court case to the Supreme Court and to consolidate the two suits.

It was on appeal by the tenant from these orders that the Appellate Division expressly overruling an established line of cases in the process, reinstated the tenant's complaint and granted consolidation. In so doing, it reasoned that "a renewal clause in a lease providing for future agreement on the rent to be paid during the renewal term is enforceable if it is established that the parties' intent was not to terminate in the event of a failure to agree". It went on to provide that, if the tenant met that burden, the trial court could proceed to set a "reasonable rent". One of the Justices, concurring, would have eliminated the first step and required the trial court to proceed directly to the fixation of the rent. Each party now appeals by leave of the Appellate Division pursuant to CPLR 5602 (subd. (b), par. 1). The tenant seeks only a modification adopting the concurrer's position. The question formally certified to us by the Appellate Division is simply whether its order was properly made. Since we conclude that the disposition at the Supreme Court was the correct one, our answer must be in the negative.

We begin our analysis with the basic observation that, unless otherwise mandated by law (e. g., residential emergency rent control statutes), a contract is a private "ordering" in which a party binds himself to do, or not to do, a particular thing (Fletcher v. Peck, 6 Cranch (10 U.S.) 87, 136; 3 L.Ed. 162. Hart and Sachs, Legal Process, 147-148 (1958)). This liberty is no right at all if it is not accompanied by freedom not to contract. The corollary is that, before one may secure redress in our courts because another has failed to honor a promise, it must appear that the promisee assented to the obligation in question.

It also follows that, before the power of law can be invoked to enforce a promise, it must be sufficiently certain and specific so that what was promised can be ascertained. Otherwise, a court, in intervening, would be imposing its own conception of what the parties should or might have undertaken, rather than confining itself to the implementation of a bargain to which they have mutually committed themselves. Thus, definiteness as to material matters is of the very essence in contract law. Impenetrable vagueness and uncertainty will not do (1 Corbin, Contracts, § 95, p. 394; 6 Encyclopedia of New York Law, Contracts, § 301; Restatement, Contracts 2d, § 32, Comment a).

Dictated by these principles, it is rightfully well settled in the common law of contracts in this State that a mere agreement to agree, in which a material term is left for future negotiations, is unenforceable (Willmott v. Giarraputo, 5 N.Y.2d 250, 253, 184 N.Y.S.2d 97, 157 N.E.2d 282; Sourwine v. Truscott, 17 Hun. 432, 434). ^* This is especially true of the amount to be paid for the sale or lease of real property (see Forma v. Moran, 273 App.Div. 818, 76 N.Y.S.2d 232; Huber v. Ruby, 187 Misc. 967, 969, 65 N.Y.S.2d 462, app. dsmd 271 App.Div. 927, 67 N.Y.S.2d 710, see, generally, 58 A.L.R. 3d 500, Validity and Enforceability of Provision for Renewal of Lease at Rental to be Fixed by Subsequent Agreement of the Parties). The rule applies all the more, and not the less, when, as here, the extraordinary remedy of specific performance is sought (11 Williston, Contracts (Jaeger 3d ed.), § 1424; Pomeroy, Equity Jurisprudence, § 1405).

This is not to say that the requirement for definiteness in the case before us now could only have been met by explicit expression of the rent to be paid. The concern is with substance, not form. It certainly would have sufficed, for instance, if a methodology for determining the rent was to be found within the four corners of the lease, for a rent so arrived at would have been the end product of agreement between the parties themselves. Nor would the agreement have failed for indefiniteness because it invited recourse to an objective extrinsic event, condition or standard on which the amount was made to depend. All of these, inter alia, would have come within the embrace of the maxim that what can be made certain is certain (9 Coke, 47a). (Cf. Backer Mgt. Corp. v. Acme Quilting Co., 46 N.Y.2d 211, 219, 413 N.Y.S.2d 135, 385 N.E.2d 1062 (escalation of rent keyed to building employees' future wage increases); City of Hope v. Fisk Bldg. Assoc., 63 A.D.2d 946, 406 N.Y.S.2d 472 (rental increase to be adjusted for upward movement in US Consumer Price Index); see, generally, 87 A.L.R. 3d 986; Lease Provisions Providing for Rent Adjustment Based on Event or Formula Outside Control of Parties.)

But the renewal clause here in fact contains no such ingredients. Its unrevealing, unamplified language speaks to no more than "annual rentals to be agreed upon". Its simple words leave no room for legal construction or resolution of ambiguity. Neither tenant nor landlord is bound to any formula. There is not so much as a hint at a commitment to be bound by the "fair market rental value" which the tenant's expert reported or the "reasonable rent" the Appellate Division would impose, much less any definition of either. Nowhere is there an inkling that either of the parties directly or indirectly assented, upon accepting the clause, to subordinate the figure on which it ultimately would insist, to one fixed judicially, as the ...