Maher v. Garry

The object of this suit is to obtain a judgment enjoining and restraining the defendants, as executors of Thomas Garry, from attempting to rescind, annul, terminate, or modify the contract between the plaintiffs and the said Garry, and from liquidating, selling, disposing of, or interfering with, the business, or with its assets and effects, or with the control and management thereof by the plaintiffs, and from excluding them from the premises occupied by the business, or from its books and property, upon the grounds that, by the terms of the agreement, the decedent became bound, not

The two questions.which naturally present themselves at the outset are as to whether the understanding or agreement relied upon as to Garry’s making a will could be proved by parol evidence, and, if it could, whether such shows a binding agreement. In reading the contract between the plaintiffs and Garry, it will be noticed that it contains covenants executed by both parties, and embodies provisions which assume to provide not only for the contingency of death, but for nearly every other conceivable contingency as well. Notwithstanding that thus the contract appears on its face to be complete, plaintiffs claim the right to establish, by parol, an agreement contemporaneous with the execution of the written instrument, which the respondents insist is inconsistent with the latter, but which the appellants claim is a collateral agreement, and therefore, as coming within the class of exceptions, is not a violation of the rule which excludes the admission of parol evidence to vary, contradict, or control a written contract.

In Thomas v. Scutt, 127 N. Y. 133 , 27 N. E. 961 , which is the latest expression of the court of appeals on the subject, it is said:

“It is a general rule that evidence of what was said between the parties to a valid instrument in writing, either prior to or at the time of its execution, cannot be received to contradict or vary its terms. This rule is not universal in its application, because the courts, in their efforts to prevent fraud and injustice, have laid down certain exceptions, which, although correct in principle, are sometimes so loosely applied in practice as to threaten the integrity of the rule itself. The real exceptions may be grouped into two classes, the first of which includes those cases in which parol evidence has been received to show that that which purports to be a written contract is, in fact, no contract at all. * * * The second class embraces those cases which recognize a written instrument as existing and valid, but regard it as incomplete, either obviously or at least possibly, and admit parol evidence not to contradict or vary, but to complete, the entire agreement, of which the writing was only a part. * * * Two things, however, are essential to bring a case witmn this class: First, the writing must not appear upon inspection to be a complete contract, embracing all the particulars necessary to make a perfect agreement, and designed to express the whole arrangement between the parties, for in such a case it is conclusively presumed to embrace the entire contract; second, the parol evidence must be consistent with, and not contradictory of, the written instrument.”

Are the two things essential to bring-a case within the exception allowed to the general rule present in the case at bar? Is there anything to indicate upon inspection of the written agreement that it was not designed to express the entire understanding of the parties? And is the agreement thus supported by parol “consistent with, and not contradictory of, the written instrument”? We think it would be difficult to conclude, after reading the written contract, consisting of 27 clauses, which apparently was designed to cover every possible contingency that could arise, that such an agreement

Without, however, deciding that the parol agreement is inconsistent with, and would tend to vary and contradict, the written instrument, and assuming that equity would enforce a distinct and definite agreement, and give relief regardless of the operations- of rules of -law or statute, when the result of recognizing such rules would be, not the prevention, but the commission, of a fraud, we are brought to the second consideration, as to whether the parol agreement was such a binding and definite contract that, if in writing, it would be ■enforced. If we assume, then, that Garry agreed to make a codicil .directing his executors “that, if the plaintiffs conformed to the agreement, they were to continue the business until the amount was paid, ¡and the contract fulfilled,” it will be noticed that there is an absence, not only of anything .to -indicate what is meant by “conforming” to the, agreement, but there is no time fixed when the amount to which the testator was entitled is to be paid. While living, he had “full power to determine at what time and in what manner” his -capital should be drawn; and so, under the written agreement, the ■executors have the same power. But the parol agreement is silent .as to the time and manner in which the money was to be paid; and thus the executors, if the plaintiffs are right, are under obligation io permit the business to continue for an indefinite and uncertain

The written contract imposed no obligation on Garry or his estate prior to the withdrawal of his capital. It is conceded that Garry had the right, at any time during his'life, before his capital was withdrawn, arbitrarily to cancel the agreement, and to return to •each of the plaintiffs his $4,000. He was the sole owner.of the business until such withdrawal of capital. He could sell the business, and the purchaser could cancel the agreement.0 In fact, the written agreement permitted him to do as he chose with the property, so long as any part of his capital remained in the business. And, even after it had been withdrawn, he was to fix the terms of any partnership, and the interests of the partners. If into such an agreement we read the parol understanding relied upon by the plaintiffs, can it be said that there was any binding obligation created ? It is not claimed that, if so written in, the clauses relating to the right of Garry in his lifetime to-annul and cancel the agreement at any time before his capital was withdrawn would be in any way destroyed or impaired. Therefore, in respect to the agreement to make the codicil to his will, restricting the right of his executors, this was subject, as was every other provision of the agreement, to the arbitrary will and disposition of Garry. If, during his lifetime, he had canceled the agreement, or had sold the business to another, then all the rights which the plaintiffs had under the agreement, including the provision for a codicil, would have fallen. If we are right in our reasoning, then it follows that he was at liberty at any time during life arbitrarily to change his mind in regard to making a codicil to his will, or making any provision for the security of the plaintiffs .after his death; and this power was not dependent upon his can-' celing the entire agreement, because, while any portion of his capital remained, he could annul any of its provisions. And that this was his understanding clearly appears, because he executed a codicil some time after, which, to a certain extent, complied with what plaintiffs claimed was the parol agreement, and later made a new will which had no such clause as it is now insisted he should have included therein; and thus the evidence is affbrded that he changed his mind on this subject. He was not required by the agreement to

It will thus be seen that we agree with the views of the learned trial justice that:

“The plaintiffs concededly gave to the testator the absolute power to cancel during his lifetime. The trust which they reposed in his willingness to deal justly with them was fully as great as that which they would be expected to place in him if they placed a moral reliance upon his executing a favorable provision in his will. They were willing to trust him, at the same time, not to exercise unjustly the power to cancel and also to incorporate a provision in his will continuing the business. Both acts had to be performed in his lifetime. Both acts were left, not only to his sense of justice, but to his possible perception of the danger of continuing a business decreasing in value, or increasing in risk, in times of financial distress; so that he might provide for himself or for his estate when he could no longer supervise it against the perils of the future. So considered, the whole transaction at the time of the signing of the instrument was consistent with the purposes and intentions of the parties; and it is the most reasonable supposition that the plaintiffs relied upon his willingness to allow the business to continue after his death, if, in his judgment, it should likely be safe to do so, rather than, upon a legal obligation, to prevent after his death the doing of a thing which he might do in his life, and which legal obligation was nowhere incorporated into the lengthy and expressive instrument which contained the agreement of the parties.”

Apart, therefore, from the question as to whether the oral agreement varied and wag inconsistent with the written contract, and Upon the grounds that such agreement is too indefinite to be enforced, and is not binding, we think the judgment should be affirmed, with costs.

VAN BRUNT, F. J., and WILLIAMS, J., concur.

(concurring). The extremely unfortunate position in which plaintiffs now find themselves, and the manifest injustice of the position taken by the defendants in exercising the power given to them by the contract to terminate, rescind, and annul it at any time before the withdrawal of the full sum of $151,327.45, naturally incline us to find, if possible, some method by which we can prevent such injustice being done to the plaintiffs. We are, however, confronted with the contract that the plaintiffs have themselves executed. They have seen fit to agree that the defendants’ testator, his executors, administrators, successors, or assigns, shall have this right to terminate, rescind, and annul the agreement at any time before the full amount agreed to have been paid to the defendants’ testator from the business shall have been actually paid to them; and it is that agreement that we are required to enforce. We cannot ' make a new agreement for the parties, nor can we deliberately overlook or disregard the express terms of the contract that the parties have made.

This provision of the eleventh clause of the contract is explicit, and gives to the testator and Ms executors the full and uncontrolled power, in their discretion, to terminate the agreement at any time prior to the final withdrawal of the sum specified. The evidence shows that that provision and its effect were clearly understood by the plaintiffs before they signed the instrument. Thus, with their

A different question would have been presented had the plaintiffs, before the executors had formally rescinded the contract, tendered to the executors the amount that was unpaid of the sum that Garry or his estate was entitled to withdraw from the business, and then insisted upon the contract for the contin nation of the partnership being performed. That, however, was not done. The amount had not at the time of the trial been withdrawn from the business, and,

I can see no escape from the conclusion that this judgment was right, unless we are prepared to make an entirely new contract for the parties, instead of enforcing the one that they have made. I concur, therefore, in an affirmance of the judgment.

(dissenting). I am not able to agree with the views expressed in the opinion of the court in this' cause, nor in the conclusion at which Hr. Justice INGRAHAM has arrived in his concurring opinion. It is conceded that the equities are overwhelmingly with the plaintiffs, but it is considered that the court is powerless to grant relief, by reason of supposed insurmountable obstacles in fixed rules of law applying to the contract relations existing between the parties.' In my judgment, not only do those alleged obstacles not exist, but, the intrinsic merits of the plaintiffs’ cause being so clear and indisputable, an efficient remedy may be afforded within and pursuant to well-established elementary principles of equity, without violating or ignoring any rule of law or of evidence, and without the arbitrary exercise of judicial authority. We have before us a plain case of a grievous, contemplated, and threatened wrong, imposing upon the court a plain duty, one which it should be eager to discharge, and not astute to evade, namely, to grant that measure of relief which the plaintiffs’ rights demand, and to withhold which, it seems to me, is purely and simply a denial of justice.

Many, but not all, the material facts, are mentioned in the prevailing opinion; but no reference is made to the exact situation of the parties, nor to the leonine characted of the contract made by the defendants’ testator with the plaintiffs. Mr. Garry, desiring to retire from any active connection with the business owned by him, proposed to put it absolutely in the charge of his two clerks, the plaintiffs, for them to conduct without any participation by him; they to devote their whole time and to mortgage their future for his benefit; he to retain absolute ownership of the business; they to withdraw from it only such weekly sums as were equal to the wages theretofore paid them; they to advance every dollar of necessary cash capital,—that is to say, each to advance $4,000 (and the evidence shows that the indebtedness of the business never, during any period of its currency, was greater than between $5,000 and $8,000); he (Garry) to receive, from the profits of the business made for him by the labor and the capital of these plaintiffs, the sum of $151,000, with interest at 6 per cent.; and, when that sum was paid him, the plaintiffs were to acquire, as their reward, each a one-fifth interest in the business, Garry still retaining three-fifths of the whole. Those are facts in the case which should be made prominent. Garry was to secure to himself every dollar he had in the business, real or imaginary, was to be the absolute owner, was to take no part in conduct

When the preliminaries of this contract had been settled, and the parties met to execute a written agreement, at the office of the attorney who prepared it, the plaintiffs found that there had been inserted therein a provision (that referred to in the opinion of the court), namely, that not only should the contract be determinable at the pleasure of Mr. Garry, but also at the mere instance of his executors, administrators, or assigns, upon a return of the capital contributed by the plaintiffs. It is stated in the opinion of the court that this provision was objected to by the plaintiffs. It was not only objected to, but, according to the testimony of Mr. Banning, one of the executors of Mr. Garry, it was protested against, by the plaintiffs. I do not read the testimony as the majority of the court have done. Mr. Banning distinctly swears there was a protest against signing with 'such provision. “Mr. Molohan [he says] made it before the reading was completed. That is my recollection. Mr. Molohan made a protest. Molohan said to Garry: ‘You are liable to die. What would your executors do? What position would it place us in if we would sign this?’ ” Manifestly, they would not be guilty of the folly of committing themselves to this contract, and expending years, perhaps, of faithful labor, with the use of their money, only to-find themselves thrown back upon the world at the volition or caprice of strangers, and just at a time, perhaps, when their contract would be upon the eve of fulfillment. There is no doubt that Mr. Garry recognized the reasonableness and the justice of this protest, and thereupon stated that he would make a codicil to his will directing his executors to conform to the agreement; that is, if they (the plaintiffs) conformed to the agreement, to continue the business until the amount was paid, and that the contract would be fulfilled. Thereupon the plaintiffs, as Mr. Banning says, stated that, “with that understanding, they would sign it”; and they did sign it, and thus they executed and delivered the contract, upon the distinct understanding and agreement that Garry would do as he promised. Their

It would appear that the learned judge at special term admitted all the testimony respecting the protest of the plaintiffs, and the statement and promise made by Mr. Garry to overcome it. That testimony was all objected to, and, if the objections were valid and the testimony were inadmissible, it would be folly to base any judgment upon it. But, in my opinion, that testimony was entirely competent. It was not introduced for the purpose of varying or modifying a written contract between the parties, which was to contain or might have contained all the terms and conditions of all that was in negotiation prior to the execution of the written paper. It was merely a collateral agreement, respecting, it is true, a matter in one sense germane to the whole transaction, but actually something that was distinct and separate, and intended to be-kept separate, from that which was to be comprehended in the main agreement. The case does not fall within the ruling in Eighmie v. Taylor, 98 N. Y. 288 , and Thomas v. Scutt, 127 N. Y. 133 , 27 N. E. 961 , and cognate cases, for the evidence does not affect a paper designed to signify and to execute the terms of the whole contract agreed upon between the parties, and which was adequate for the purpose of embracing all that was agreed upon. This proof was not intended to import into a written contract a term which should have been inserted therein, and the case -differs toto cáelo from those relied upon to exclude the testimony.

There are three elements, each one of radical difference: First. By specific agreement between the parties, the stipulation was not to be inserted in the main agreement, but was to be absolutely independent and collateral. Second. In the very nature of things, it could not have been inserted in the agreement, because it was something that was to be done by Mr. Garry by last will and testament or codicil thereto. It was to be done by an instrument to be executed by Mr. Garry alone, and which no one but himself could execute; and it was not contemplated in any way that any reference should be made, in the written agreement then signed, to such a codicil. ' Third. It appears without dispute that Mr. Garry, in conformity with this collateral agreement, did actually execute a testamentary paper of the character he promised to execute as a condition of the plaintiffs’ signing and delivering the contract to him. So that the evidence of the collateral contract was complete. Its terms were definite, and what was intended by Mr. Garry as performance thereof was actually made. I think, therefore, it is clear from the circumstances which surrounded the execution of the agreement, and all the attending facts, and the positive testimony of Mr. Banning, that the matter with reference to the direction to be given to the ex

If the foregoing views on this subject are correct, then it will not be disputed that it was incompetent for Mr. Garry to revoke or destroy the codicil. While the provisions of that codicil are not as broad nor as beneficial to the plaintiffs as their agreement justified them in expecting, yet, doubtless, it evinced Mr. Garry’s apprehension of what had been agreed to, and would be the measure of the plaintiffs’ rights. The parol evidence is that Garry stated that his will would contain a direction to his executors to conform to the agreement so long as the plaintiffs conformed to it. This is referred to in the opinion of the majority of the court, and it is suggested that there is no meaning of any definite character to be ascribed to these words. But Mr. Garry ascribed a meaning to them, and that is to be found at folio 169 of the case; and it is that, if the plaintiffs conform to the agreement, the business was to be continued until the amount was paid (referring to the $151,000), and that the contract would be fulfilled. There is no misunderstanding possible of this testimony. It comes from an executor of Mr. Garry’s will, a man who was present at the time the papers were executed and the collateral agreement was made; and Garry perfectly understood that, in the event of his death, so long as the plaintiffs performed their part of the contract, the business was to be continued.

Of course, equity will not undertake to enforce a contract indefinite and uncertain in its character; but what could be more definite and certain than this testimony of the executor of Mr. Garry’s own will, who was a witness to all that took place between the plaintiffs and Mr. Garry? Mr. Garry’s own understanding of the matter appears from the codicil to his will dated May 24, 1892; and here it is important to observe that this codicil was executed just 10 days after the main agreement was signed and delivered, and must have been for the purpose of carrying out the collateral contract, and of making that independent instrument which he promised to make as a condition of the plaintiffs’ signing the agreement of May 14, 1892. This codicil states that the testator wishes and desires the business established, etc., to be continued “while the same can be conducted successfully and with profit to my estate; and I desire that my said executors shall permit my friends John Francis Maher and Patrick Molohan, or any partner or partners I may have at my decease, to have the management and control of my said business as long as, in the discretion of my said executors, they manage the same profitably.” Now, this, of course, is not as broad as the agreement testified to by Mr. Banning; and yet, at. the same time, it shows that Mr. Garry’s understanding of the plaintiffs’ conforming to the agreement as testified to by Mr. Banning was so long as the same was managed profitably. This codicil clearly expresses the purpose and desire of the testator that the business shall be continued so long as

It seems to me, therefore, that the case should stand precisely as if the promised codicil were now in operation; and that the plaintiffs have the right to invoke it as a shield against the termination of the agreement by the executors; and that they have a right to come into a court of equity, and say that they have performed their contract honestly and faithfully, and to the great profit and advantage of Mr. Garry and of his estate, and to seek the protection of the court from the cruel wrong which these executors are seeking to inflict.upon them, under the color of technical rights, which Mr. Garry expressly contracted against, and which justice and equity demand should not be enforced.

I think that the judgment should be reversed, and, on the whole case, a judgment should be directed for the plaintiffs, granting an injunction restraining the defendants from interfering or molesting them in the conduct of the business so long as the same is conducted profitably.