Orenstein v. Kahn

• Decision Date: 20 June 1922
• Citation: 119 A. 444,13 Del.Ch. 376
• Court: Court of Chancery of Delaware
• Parties: HARRY ORENSTEIN, Defendant below, Appellant, v. MAX KAHN, Complainant below, Appellee

119 A. 444

13 Del.Ch. 376

HARRY ORENSTEIN, Defendant below, Appellant, v. MAX KAHN, Complainant below, Appellee

Court of Chancery of Delaware

June 20, 1922

APPEAL FROM COURT OF CHANCERY. On and prior to the twenty-ninth day of April, 1920, Max Kahn, the appellee, was the owner of certain real estate in the city of Wilmington, on which was erected a building, a portion of which was used by him as a residence and the remainder as a store. He also owned the store fixtures and stock of merchandise in said store.

On the said twenty-ninth day of April, 1920, he agreed to sell the said real estate, as well as the store fixtures and stock of merchandise in said store, to Orenstein, the appellant. At the time the agreement was made, five hundred dollars ($ 500) was paid by Orenstein to Kahn and the following written memorandum of the agreement was executed by the parties and delivered to Kahn:

"Wilmington April 29th, 1920"

"Received of Mr. Harry Orenstein five hundred dollars ($ 500.00) deposit on property 1900 Penn. Ave. purchase price fourteen thousand dollars ($ 14,000.00) settlement to be made on or before June 25th, 1920.

"Fixtures seven hundred dollars ($ 700.00) stock to be paid at market prices.

"[Signed] Max Kahn.

"[Signed] Lillian Kahn.

"In case title is not clear, deposit to be returned. [Signed] Harry Orenstein."

Orenstein having failed to complete the purchase of the real and personal property described in the above contract or receipt a bill in equity for specific performance of that part of the same referring to the real estate was filed against him by Kahn, on the third day of August, 1920. The case was pleaded to issue and heard before the Chancelllor on oral testimony.

The Chancellor held the contract between the parties to be divisible and entered a decree directing Orenstein to perform his contract as to the purchase of said real estate. See 12 Del.Ch. 344, 114 A. 165.

The decree of the Chancellor, also, provided for the transfer of the title to the fixtures, used in connection with the said store to Orenstein, at his option on payment therefor.

Orenstein appealed from the decree of the Chancellor to this court assigning among other grounds of error:

(1) "That the Court of Chancery erred in decreeing specific performance of a portion of the contract between the said Max Kahn and the said Harry Orenstein."

(2) "That the Court of Chancery erred in finding that the contract between Kahn and Orenstein, so far as the same related to the stock of merchandise, was divisible from the contract so far as the same related to the real estate and fixtures, and in decreeing specific performance of that portion of the same which related to the real estate."

The fair inference from the evidence is that the moving cause for the making of said contract, so far as the appellant Orenstein was concerned, was a desire on his part to purchase the property known as No. 1900 Pennsylvania Avenue. While the evidence is conflicting as to Orenstein's main purpose in agreeing to buy this property, it clearly shows that the said contract was made by him with the immediate purpose and intention of using said property as a place of business to be run for him by his brother. That said purpose was known to Kahn and that Orenstein and his brother, together with Kahn, "looked over" the store of fixtures and stock of merchandise in said store before all of the details of the sale were agreed upon, and before the agreement for the same was written and executed.

The evidence does not disclose the nature or character of the store fixtures, but they evidently were not treated by the parties as composing a part of the real estate.

Decree reversed.

Robert H. Richards and Aaron Finger, for the appellant.

Caleb E. Burchenal and Charles C. Keedy, for the appellee.

PENNEWILL, C. J. and HARRINGTON, RICHARDS and RODNEY, JJ. sitting.

OPINION

HARRINGTON J.

The assignments of error referred to, raise the question whether the contract between Kahn and Orenstein is divisible into three separate, distinct and independent contracts, or whether it is one entire and indivisible contract, referring to three kinds of property.

The decision of this question necessarily disposes of this case and makes the consideration of any other assignments of error unnecessary.

In construing contracts, the essential question is to ascertain the intention of the parties. This rule, therefore, necessarily applies in ascertaining whether a contract is divisible, or entire. Bamberger Bros. v. Burrows, 145 Iowa 441, 453, 124 N.W. 333; 59 Am. St. Rep. note at page 279; Clark v. West, 137 A.D. 23, 122 N.Y.S. 380; Shinn, et al., v. Bodine, et al., 60 Pa. 182, 100 Am. Dec. 560.

The cases cited by the appellee, Kahn, admit this rule. Barlow Mfg. Co. v. Stone, 200, Mass. 158, 86 N.E. 306; Pierson v. Crooks, 115 N.Y. 539, 555, 22 N.E. 349, 12 Am. St. Rep. 831; Wooten v. Walters, 110 N.C. 251, 14 S.E. 734, 736.

The intention of the parties, in this respect, must be ascertained from the terms and subject matter of the contract, as well as from the other facts and circumstances shown by the evidence. Johnson Forge Co. v. Leonard, 19 Del. 342, 3 Penne. 342, 51 A. 305, 94 Am. St. Rep. 86, 57 L. R. A. 225; Gilmore v. Samuels, 135 Ky. 706, 123 S.W. 271, 21 Ann. Cas. 611; Hartford, etc., Co. v. Cambell, (Conn.) 95 Conn. 399, 111 A. 864; Morris v. Wibaux, 159 Ill. 627, 43 N.E. 837; 2 Elliott on Contracts, § 1543; 13 C. J. 562; 6 R. C. L. § 858 (p. 861).

This court in Johnson Forge Co. v. Leonard, above cited, expressed this rule as follows:

"Whether the contract is entire or severable is frequently a matter of interpretation, depending on the intention of the parties to be gathered from their acts, under all the facts and circumstances of the particular transaction."

It is urged, however, that where a contract relates to several items or kinds of property, and the consideration is apportioned on its face to each item or class of property covered by it, such a contract is construed as divisible and not entire; the apportionment of the consideration being ordinarily conclusive as to the intention of the parties, at least in the absence of clear and definite proof of a contrary intent.

The following cases were cited in support of this contention: Barlow Mfg. Co. v. Stone, 200 Mass. 158, 86 N.E. 306; Young, etc., Mfg. Co. v. Wakefield, 121 Mass. 91; Pierson v. Crooks, 115 N.Y. 539, 555, 22 N.E. 349, 12 Am. St. Rep. 831; Reeves & Co. v. Block, 31 S.D. 60, 139 N.W. 780; Nichols, etc., Co. v. Wiedemann, 72 Minn. 344, 75 N.W. 208, 76 N.W. 41; Westbrook v. Reeves, 133 Iowa 655, 111 N.W. 11; B. & O. L. & P. Co. v. Wilson, 57 Neb. 396, 77 N.W. 762, 77 N.W. 762; Odessa Tramways Co. v. Mendall, 8 Ch. 235; Wilcox v. Badger Motor Car Co., 99 Neb. 189, 155 N.W. 891: Wooten v. Walters, et al., 110 N.C. 251, 14 S.E. 734, 736.

The Delaware cases of Reybold v. Henry, 8 Del. 279, 3 Houst. 279, Thurber v. Royal Ins. Co., 15 Del. 251, 1 Marvel 251, 40 A. 1111, and Elliott v. Jones, 11 Del. Ch. 283, 101 A. 874, were also cited as being to the same effect.

The court below adopted this contention apparently holding that there was nothing to show a contrary intent in this case and using the following language:

"It is clear, however, that these three parts of the contract are divisible from each other, or at least that the agreement as to the merchandise is severable as to remedy from the two subject matters. Divisibility of contracts depends largely upon the character of the consideration; if it be single, the contract covering several matters is entire; but if it is expressly or by necessary implication apportioned, the contract is severable."

While the fact that the consideration is apportioned is undoubtedly an important element in ascertaining whether a contract was intended to be divisible or entire and in the absence of any fact or circumstance showing a contrary intent, may even be conclusive, it is now well settled that where there are other circumstances involved, it is only one of the essential facts to be considered. Producers' Coke Co. v. Hillman, 243 Pa. 313, 90 A. 144; Bamberger Bros. v. Burrows, 145 Iowa 441, 453, 124 N.W. 333; Morris v. Wibaux, 159 Ill. 627, 43 N.E. 837; Shinn, et al. v. Bodine, et al., 60 Pa. 182, 100 Am. Dec. 560; Packard v. Byrd, 73 S.C. 1, 51 S.E. 678, 6 L. R. A. (N.S.) 547; Williston on Contracts, § 861, note 38; 59 Am. St. Rep. note, p. 279; 6 R. C. L. p. 858; 13 Corpus Juris, 563.

In Morris v. Wilbaux, above cited, the court said:

"The entirety of the contract depends upon the intention of the parties, and not upon the indivisibility of the subject-matter. The severable nature of the latter may often assist in determining the intention, but will not overcome the intent to make an entire contract when that is shown."

Bamberger Bros. v. Burrows, above cited, uses precisely the same language.

In Producers' Coke Co. v. Hillman, above cited, the court also said:

"The distinguishing mark of a divisible contract is that it admits of apportionment of the consideration on either side so as to correspond to the unascertained consideration on the other side. Where such a purpose appears in the contract, or is clearly deducible therefrom, it is allowed great significance when ascertaining the intention of the parties.

"It is a mistake, however, to suppose that in every case it is conclusive in itself. It is determining only when there are no opposing signs or marks. Where these latter are present, it becomes a question of preponderance."

In determining whether a contract is divisible or entire, the essential question, therefore, is:

"Did the parties give a single assent to the whole transaction, or did they assent...