Delaware Trust Co. v. Calm

When the assignors of the plaintiff exercised the option given by the sixth clause of the agreement in question, the arrangement became a contract, whereby one party agreed to purchase and, by necessary implication, the other party agreed to sell “for cash, all the right and interest of ” the latter “ in said business and ” said “ agreement.” The buyers were to pay for the “right and interest” agreed to be sold “ the actual amount of cash paid out or expended ” by the sellers “ in and about said business.” The evidence warrants the inference that both real and personal property had been acquired in the business, and that the evidence of title stood in the names of various individuals, some of whom, and among them certain “ nominees ” of the sellers, were parties neither to the agreement nor the action. Thus an executory contract came into existence as of the date when the option was exercised for the purchase and sale of both kinds of property. (Benedict v. Pincus, 191 N. Y. 377 , 383.) The contract was thus made, but neither party performed it by simply making it and no time or place for performance was specified. Moreover, in exercising the option, the plaintiff’s assignors expressed the desire to leave the matter open until certain other business could be arranged, subject, however, to the protection of the option already exercised, provided no arrangement should be made on the same basis for another year.

Under these circumstances it was the duty of the plaintiff or its assignors to tender performance on their part and to demand performance on the part of the defendants before subjecting them to the expense and annoyance of an action to recover the amount of the purchase price. Otherwise the sellers would have both money and property and the buyers nothing. The contract was for the purchase of property, not a lawsuit by which the property might be obtained. This is an action at law and unless the right to maintain it

The action was brought on the theory that it was for the recovery of a debt and that the commencement of the suit was a sufficient demand, but there was no debt. The express promise of the buyers was to purchase and pay for various rights and interests in a certain business and agreement, and the implied promise of the sellers was to transfer or assign those l-ights and interests to the purchasers, for there can be no purchase without a sale. Some of the rights were in the nature of an interest in realty and the written evidence of title stood in the names of outsiders who had been nominated by the sellers. Concurrent action was required and no debt could come into existence until the sellers had assigned or offered to assign that which they had agreed to sell. The obligations of the parties were mutual and dependent, for both were to be performed at the same time. (Dunham v. Pettee, 8 N. Y. 508 , 512; Payne v. Lansing, 2 Wend. 525 .) “The general rule is to consider all covenants dependent, in the absence of a contrary intention, for this is the way most men make their bargains, neither party intending to perform unless the other at the same time performs on his part.” (29 Am. & Eng. Encyc. of Law [2d ed J, 689.)

One party had something to sell and agreed to sell it, but it was a kind of property that required a written transfer not only from themselves but from tlieir nominees or representatives before the sale could be completed and a debt created. As was said by this court in an early case : “The purchaser is 'not bound to pay the purchase money unless he receives

“ In contracts of this description, the undertakings of the respective parties are always considered dependent, unless a contrary intention clearly appears. A different construction would in many cases lead to the greatest in justice, and a purchaser might have payment of the consideration money enforced upon him and yet be disabled from procuring the property, for which he paid it.” (President, etc., Bank of Columbia v. Hagner, 1 Pet. 455 . See, also, Page v. Shainwald, 169 N. Y. 246 , 251, and Taylor v. Blair, 59 Hun, 347 , 350.) The agreement itself was not a transfer but merely an implied, promise to transfer uj>on performance by the other party. Where a contract requires contemporaneous performance. neither party can sue at law until he has put the other in default. An offer to perform made in the pleadings or during the trial is not enough, and even that kind of an offer was not made in this case.

The respondent claims and the Appellate Division held that the contract was a “ guaranty of repayment,” but the parties did not say so. The covenant of the defendants was to purchase, not to guarantee, and to pay, not to repay. The money contributed to the joint undertaking by the plaintiff’s assignors was not advanced, but invested. One party agreed in advance to buy the other out if the latter so elected within a certain perio 1, and to pay for his interest the amount he had paid in. The election when made did not turn the promise to purchase into a promise to guarantee simply because the purchase price specified was measured by the amount invested. The.principle would be the same if. a definite sum had been named, or the purchase price had been measured in some other way. The money was not to be restored, or made good, but to be paid as the consideration for the purchase of property, or an interest therein. Any other construction would have no foundation in the language used by the parties.

Cullen, Oh. J., Gray, Edward T. Bartlett, Haight, Werner and Hiscocic, JJ., concur.

Order reversed, etc.