Lister Elec., Inc. v. Incorporated Village of Cedarhurst

• Court: New York Supreme Court — Appellate Division
• Writing for the Court: Before LAZER
• Citation: Lister Elec., Inc. v. Incorporated Village of Cedarhurst, 484 N.Y.S.2d 897, 108 A.D.2d 731 (N.Y. App. Div. 1985)
• Decision Date: 04 February 1985
• Parties: LISTER ELECTRIC, INC., Respondent, v. INCORPORATED VILLAGE OF CEDARHURST, Appellant.

Page 897

484 N.Y.S.2d 897

108 A.D.2d 731

LISTER ELECTRIC, INC., Respondent, v. INCORPORATED VILLAGE OF CEDARHURST, Appellant.

Supreme Court, Appellate Division Second Department.

Feb. 4, 1985.

Harry S. Taubenfeld, Cedarhurst (Nathaniel M. Swergold, Cedarhurst, of counsel), for appellant.

Joseph F. Carlino, P.C., Mineola (Arlen K. Bolstad, New York City, of counsel), for respondent.

Before LAZER, J.P., and MANGANO, BRACKEN and NIEHOFF, JJ.

MEMORANDUM BY THE COURT.

In an action, inter alia, to recover damages for breach of contract, defendant appeals, as limited by its brief, from so much of a judgment of the Supreme Court, Nassau County, dated May 20, 1983, as (1) awarded plaintiff the principal sum of $44,277.02 on its first and second causes of action and (2) dismissed defendant's counterclaim.

Judgment affirmed insofar as appealed from, with costs.

The defendant village offered a contract for public bidding, calling for the installation of, inter alia, street lighting equipment within the village. Plaintiff's assignor, Broadway Maintenance Corporation (Broadway), successfully bid on the contract and the parties executed the contract on September 24, 1970. The contract was for a term of 120 months and provided, inter alia, that the village could lease the equipment with an option to purchase. The contract was thereafter assigned by Broadway to plaintiff on or about April 25, 1979. By letter dated August 21, 1980, defendant advised plaintiff that it had chosen to exercise its option to purchase all of the equipment installed by plaintiff's assignor "as of August 31, 1980", i.e., during the 120th month of the contract.

The parties agree that pursuant to the contract, the defendant could, by exercising its option to purchase in the last month of the contract, purchase any item of equipment installed during the first 21 months, for the monthly lease price multiplied by a factor of 100. The parties disagree, however, as to the meaning of the language used in the contract for determining the value of any items of equipment installed after the 21st month.

Specifically at issue in the case at bar is the meaning of the provision in the contract which purported to provide a formula for calculating the purchase price of those items of equipment installed after the 21st month of the contract.

The relevant provision is clause (iii) of section I of the bid proposal, which was incorporated by reference into the contract. It states:

"(iii)--Any fixture installed after the 21st month shall be valued at the time of 'Exercising Right of Purchase' for the entire system as: monthly lease price times (100 minus the number of months elapsing between the 20th month and the month of installation)".

In its dispute with defendant, and in its verified amended complaint herein, plaintiff argued that this language was clear and unambiguous and supported its claim that the price of the street lighting equipment, which defendant chose to purchase in accordance with its option, was $44,277.02.

In its answer, defendant interposed (1) a general denial and (2) a counterclaim wherein it alleged that the purchase price formula stated in clause (iii) was the product of "mutual mistake" of the defendant and plaintiff's assignor. Specifically, defendant argued in its counterclaim that (1) the last words in that paragraph should have been "exercise of option to purchase" rather than "installation" and (2) the words actually used in the contract led to a result "obviously not intended by the parties to this contract", i.e., "the longer the lease ran before the exercise of the option to purchase, the greater the payment for each individual item". Accordingly, defendant demanded that the contract be reformed by amending the relevant paragraph to read as follows:

"(iii)--Any fixture installed after the 21st month shall be valued at the time of 'Exercising Right of Purchase' for the entire system as: monthly lease price times 100 minus the number of months elapsing between the 20th month and the month of the exercise of the option to purchase".

In accordance with that reformation and resulting formula for determining the value of the equipment, defendant argued that plaintiff was obligated to accept its check of $14,900.94, which it had previously tendered as payment for the fixtures.

After a nonjury trial, Special Term held for plaintiff on its first two causes of action, in the principal sum of $44,277.02.

Special Term correctly held that (1) the language in the contract establishing the formula for fixing the purchase price of equipment installed after the 21st month of the contract was clear and unambiguous and (2) a plain and literal reading thereof supported plaintiff's claim for the principal sum of $44,277.02.

Special Term was also correct in holding that defendant failed to meet its burden of establishing, by clear and convincing evidence, that the language used was the result of mutual mistake and that reformation was appropriate in the case at bar (Backer Mgt. Corp. v. Acme Quilting Co., 46 N.Y.2d 211, 219-220, 413 N.Y.S.2d 135, 385 N.E.2d 1062).

Moreover, on oral argument of this appeal defendant abandoned the argument that the contract should be reformed due to mutual mistake.

On the instant appeal, defendant argues that the language contained in clause (iii), and the resulting formula for fixing the...