Mallad Const. Corp. v. County Fed. Sav. & Loan Ass'n

Decision Date02 May 1973
Citation344 N.Y.S.2d 925,32 N.Y.2d 285
CourtNew York Court of Appeals Court of Appeals

Harold William Harrison, Great Neck, for appellant.

Harry Giesow and Samuel Gottlieb, New York City, for respondent.


In an action for breach of a financing contract, plaintiff construction company appeals from an order granting summary judgment to defendant lender. The question is whether a triable issue is raised by general averments,without more, that express cancellation of one agreement by later agreements was not intended to discharge prior breaches of the first agreement.

The order should be affirmed. It is true, of course, that whether a later agreement discharges matured obligations under a prior agreement is a question of intention, as Special Term concluded. Nevertheless whether a submission on the issue of intention raises a triable issue of fact, is a separable question, the outcome of which will determine whether summary judgment will lie. Although parol evidence would have been admissible to show that the later agreements were not intended to discharge prior breaches of the first agreement, no such evidence, aside from conclusory statements, was submitted in the opposition papers. The documents submitted by defendant are, therefore, properly interpreted by the court on the motion for summary judgment to establish an intention of the parties to discharge any prior breach.

On September 6, 1967, defendant County Federal Savings and Loan Association agreed in writing to lend Mallad Construction Company $2,160,000 for a period of 18 months as a building loan, and, at the end of that period, to convert the building loan into a permanent mortgage of $2,400,000. The commitment was extended by agreement on December 8, 1967. On March 13, 1968, in conformity with these agreements, plaintiff Mallad and defendant lender executed a building loan agreement. The lender was thus obliged to make percentage advances at different stages of completion of the planned apartment building in the City of Glen Cove, New York.

At the closing of the loan agreements, Mallad exhibited a building permit which had been previously revoked by the city, without advising the lender of the revocation. The lender advanced $324,000. Mallad had, indeed, before the closing, begun an action to declare the permit valid. That declaratory action was not finally determined until July 30, 1969. On that date the lender advanced an additional $543,000. If the building was not then complete, the obligation to advance further funds terminated, by the terms of the original agreement, on July 31, 1969, the day after the additional advance.

Mallad contends that the lender breached its agreement by refusing to make scheduled progress payments before July 30, 1969. Previously, on February 24, 1969, a progress payment had been requested and denied, because the City of Glen Cove was appealing from a judgment, after trial, sustaining the permit. Apparently, some construction had continued while the validity of the permit was being litigated.

On October 9, 1969, the lender assigned the building loan agreement to Sackman-Gilliland Corporation with Mallad's written consent. Mallad acknowledged in favor of the assignee that there were 'no defenses or offsets to (the) mortgage nor to the note which it secures.' It now argues that this acknowledgment or estoppel certificate only protected the assignee of the mortgage and note, and did not discharge the original lender from prior breaches of its obligation to extend financing.

The earlier loan agreements having expired, a new written agreement was executed on October 30, 1969 by Mallad, the lender, and the lender's assignee, Sackman-Gilliland. The later agreement changed the terms of the earlier agreement by raising the interest rate substantially. A clause provided: 'It is agreed that this commitment is non-transferable and will be effective only with Mallad Construction Corp and its present principals and its acceptance shall constitute a revocation and cancellation of the prior agreement between the parties hereto dated September 6, 1967 and revised December 8, 1967.' No breach of this last agreement is asserted. Instead, Mallad contends that while canceling the earlier agreement, it did not discharge the lender for any prior breach. The lender, on the other hand, contends that it was discharged, even for an alleged completed breach, if there were one.

Sometime after the later agreement was executed, Mallad sold the partially-completed structure to Solork Corporation. On February 25, 1970, defendant lender issued a further commitment to Solork upon substantially the same terms as the October 30, 1969 agreement with Mallad. This new commitment, consented to by plaintiff Mallad, contained a clause providing: 'It is agreed that this commitment is non-transferable and will be effective only with Solork Corporation * * *, and its acceptance shall constitute a revocation and cancellation of any prior commitments issued by our Association to Mallad Construction Corp. covering the same premises.' Plaintiff Mallad contends that this provision again says nothing about a discharge for a prior breach. Defendant lender counters that this last agreement reinforces the later October 30 agreement relieving it of any obligation under the earliest agreement.

In support of its motion for summary judgment, the lender avers the facts as stated above. In opposition, Mallad avers that 'no where in these motion papers was any release given by plaintiff to the defendant nor can any of these closing documents be interpreted as granting a release. While the prior commitment was revoked, the plaintiff's claim for damages * * * was never released.' It also avers that no general release was ever demanded or given.

Special Term stated that 'whether cancellation of a contract is also a discharge of a prior breach is a matter of intention, to be ascertained from all the circumstances', and held that there was, therefore, a triable issue of fact. In reversing, the Appellate Division majority held that the conduct of the parties, as evidenced by the later assignment and subsequent agreements, manifested an intention by the parties to supersede the original commitments and to discharge all obligations arising under them.

To defeat summary judgment the opponent must present evidentiary facts sufficient to raise a triable issue of fact, and averments merely stating conclusions, of fact or of law, are insufficient (e.g., Ehrlich v. American Moninger Greenhouse, 26 N.Y.2d 255, 259, 309 N.Y.S.2d 341, 344, 257 N.E.2d 890, 892; P.D.J. Corp. v. Bansh Props., 29 A.D.2d 927, 289 N.Y.S.2d 32, affd. 23 N.Y.2d 971, 298 N.Y.S.2d 988, 246 N.E.2d 749; 4 Weinstein-Korn-Miller, N.Y.Civ.Prac., 3212.05c, esp. p. 32--142.36; 6 Carmody-Wait, N.Y.Prac. (2d ed.), § 39:29). Thus, it is not enough for the opponent to show that an agreement is ambiguous permitting the introduction of parol evidence. The opponent must also disclose in evidentiary form the particular parol evidence, if any, on which it relies. (Ehrlich v. American Moninger Greenhouse, 26 N.Y.2d 255, 309 N.Y.S.2d 341, 257 N.E.2d 890, Supra; Hertz Commercial Leasing Corp. v. Transportation Credit Clearing House, 64 Misc.2d 910, 316 N.Y.S.2d 585 (App.Term), revg. 59 Misc.2d 226, 298 N.Y.S.2d 392.) Otherwise, there are only documents to interpret, and the court may resolve ambiguities appearing in the documents on a motion for summary judgment (see Rentways, Inc. v. O'Neill Milk & Cream Co., 308 N.Y. 342, 349, 126 N.E.2d 271, 274; Hertz Commercial Leasing Corp. v. Transportation Credit Clearing House, Supra; 4 Williston, Contracts (3d ed.), § 601; 10 N.Y.Jur., Contracts, § 190).

The test on summary judgment is whether the issue is one of law or of fact (CPLR 3212, subd. (b)). The courts have declared on countless occasions that it is the responsibility of the court to interpret written instruments (4 Williston, Contracts, § 601, Supra). The problem of analysis of the instrument is to determine 'what is the intention of the parties as derived from the language employed' (Id., § 600, at p. 280). Thus, where a question of...

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