Woodmere Academy v. Steinberg

• Decision Date: 12 May 1977
• Citation: 395 N.Y.S.2d 434,41 N.Y.2d 746
• Parties: , 363 N.E.2d 1169, 97 A.L.R.3d 1047 WOODMERE ACADEMY, Respondent, v. Saul P. STEINBERG, Appellant.
• Court: New York Court of Appeals Court of Appeals

Page 434

395 N.Y.S.2d 434

41 N.Y.2d 746, 363 N.E.2d 1169, 97

A.L.R.3d 1047

WOODMERE ACADEMY, Respondent, v. Saul P. STEINBERG, Appellant.

Court of Appeals of New York.

May 12, 1977.

David L. Foster and Frederick L. McKnight, New York City, for appellant.

Samuel Gottlieb, Milton Shalleck and Nathan Silverman, New York City, for respondent.

FUCHSBERG, Judge.

Woodmere Academy, a nonprofit educational institution, brought this action to recover the balance due under a charitable pledge agreement. The defendant, Saul P. Steinberg, counterclaimed for the return of moneys he had paid on account. The parties are now here on defendant's appeal from an order of the Appellate Division, First Department, which, reversing an order of Special Term, granted summary judgment to the plaintiff.

The issue is whether defendant's contentions that the pledge was subject to certain unfulfilled oral conditions and had been induced by fraudulent misrepresentations raise triable issues of fact or legal defenses. We conclude they do not.

The agreement which is at the root of this case arises out of a fund-raising drive which the academy launched in 1969. One of its main objects was the construction of a school library building. It is undisputed that in August of that year Steinberg, whose children then attended the school and whose wife for a time was a member of its board of trustees, agreed to contribute $375,000. The pledge was in writing and recited that it was made "in consideration of the gifts of others". It specified that payments were to be made in installments of "$50,000 in 1970, $50,000 in 1971, and balance in 1972". It contained no other conditions or limitations. The first installment was paid in January, 1971.

By letter dated December 12, 1972, plaintiff, at defendant's request, agreed to extend the time for payment of the balance. Defendant, an experienced business executive who makes a point of the fact that prior unhappy experiences with charity-giving had alerted him to a need for great caution in such matters, signed that letter only after he had arranged for his own attorney to participate in the drafting and approval of its language. It reads:

This will confirm the agreement reached between us concerning payment of your pledge of $375,000. to The New Era Fund of Woodmere Academy. We received $50,000. in January 1971, and the balance of $325,000. was originally to have been paid $50,000. by the end of 1971, and $275,000. by the end of 1972.

We agree to extend the time for payment of the present balance of $325,000. from the original due dates, provided that we receive payment in cash, check or immediately marketable securities as follows $125,000. simultaneously with the exchange of this letter between us, and $200,000. by December 31, 1972.

In recognition of your concern and interest in Woodmere Academy, our library, as you know, has been named "The Barbara Steinberg Learning Center." You have our unconditional and unqualified assurance that the building will continue to be so designated as long as it is a part of the school, and will be so referred to in any communication, writing or message over which we have control, inasmuch as we view our obligation in this respect in the nature of a trust.

We would appreciate your indicating your confirmation of the foregoing by signing and returning the enclosed copy of this letter together with your payment of $125,000.

Sincerely yours,

THE WOODMERE ACADEMY

By Order of the Board of Trustees

By:

(s) Stanley B. Rich,

President

I confirm and agree to the foregoing.

I c

(s) Saul P. Steinberg

Defendant paid the $125,000 installment upon delivery of the letter, but approximately a year later, at a time when he no longer resided in the community where the school was located and his children no longer attended its classes, he advised the academy that another commitment rendered him unable to pay the balance during 1973. After some further communications between them, the parties were unable to agree upon a new schedule and, defendant having failed to make further payments, in August, 1974 plaintiff, having completed the library, elected to bring this suit.

In essence, Steinberg's claim is that his undertaking was conditioned upon (1) the collection of pledges from other contributors in a total amount equivalent to the sums the academy received from Steinberg, (2) the academy's earmarking of such matching funds solely for the construction of the library at a cost which was not to exceed $750,000, (3) its pursuit of a plan for merger with the neighboring Lawrence School and (4) the academy's agreement to manage its financial affairs "wisely and soundly" and disburse its funds "carefully". He goes on to allege, in rather broad and conclusory fashion, that the pledge was fraudulently induced because, among other things, the merger with the other school was not actively pursued and, despite verbal assurances he had received to the contrary, the school was not in sound financial condition because it had occasion to borrow money from a bank. For its part, the academy states that it undertook, dehors the writings, to obtain matching funds from others; on the motion for summary judgment, it submitted uncontroverted documentary proof that it had done so. It emphatically denies all the other items on which the defendant insists his pledge was conditioned.

Additionally, the academy urges that, even if defendant's allegations were true, they would not constitute a defense. For the reasons which follow, we agree.

Preliminarily, we observe that, as a matter of public policy, pledge agreements calculated to foster eleemosynary enterprises are enforceable (I. & I. Holding Corp. v. Gainsburg, 276 N.Y. 427, 433, 12 N.E.2d 532, 533; Allegheny Coll. v. National Chautauqua County Bank, 246 N.Y. 369, 159 N.E. 173; Liberty Maimonides Hosp. v. Felberg, 4 Misc.2d 291, 158 N.Y.S.2d 913 (Cooke, J.); cf. Restatement 2d, Contracts (Tent.Draft), § 90). Indeed, courts, in the enforcement of such agreement seek to resolve doubtful questions so as to avoid their repudiation (Eastern States Agric. & Ind. League v. Estate of Vail, 97 Vt. 495, 505, 124 A. 568 and authorities cited therein). "To lightly withhold judicial sanction from such obligations would be to destroy millions of assets of the most beneficent institutions in our land, and to render such institutions helpless to carry out the purpose of their organizations" (Brokaw v. McElroy, 162 Iowa 288, 293, 143 N.W. 1087, 1089).

That is not to say that liability for the fulfillment of such a pledge may not be conditioned upon the performance of some act by the beneficiary (Allegheny Coll. v. National Chautauqua County Bank, supra, 246 N.Y. p. 375, 159 N.E. p. 175). However, as with contracts generally, when the pledge is made in writing, unless conditions are expressed, or at least implicit, in the agreement itself, parol evidence may not be used to supply them except to show conditions precedent to the effectiveness of the agreement (Hicks v. Bush, 10 N.Y.2d 488, 491, 225 N.Y.S.2d 34, 36, 180 N.E.2d 425, 427) or fraud in the inception (see Tioga County Gen. Hosp. v. Tidd...