[*1]
| Maple Press Co. v Mancini |
| 2012 NY Slip Op 51951(U) [37 Misc 3d 1210] |
| Decided on October 2, 2012 |
| Supreme Court, Broome County |
| Lebous, J. |
| Published by New York State Law Reporting Bureau
pursuant to Judiciary Law § 431. |
| This opinion is uncorrected and will not be
published in the printed Official Reports. |
Supreme Court, Broome County
The Maple Press
Company, Plaintiff,
against
Andrew R. Mancini, and DANIEL R. LEVENE, Defendants.
|
CA2012-0155
COUNSEL FOR PLAINTIFF:BOND, SCHOENECK & KING, PLLC
BY:JAMES P. WRIGHT, ESQ., OF COUNSEL
ONE LINCOLN CENTER
SYRACUSE, NY 13202-1355
COUNSEL FOR DEFENDANTS:HINMAN, HOWARD & KATTELL, LLP
BY:RONALD L. GREENE, ESQ., OF COUNSEL
82 EXCHANGE STREET
P.O. BOX 5250
BINGHAMTON, NY 13902-5250
Ferris D. Lebous, J.
This action was commenced by Plaintiff on January 23, 2012, seeking
$23,299.50 that Plaintiff claims is owed pursuant to a promissory note entered into between the
parties in 1989.
Defendants deny that Plaintiff is owed any money under the contract as the parties
entered into an Installment Sales Contract in 2010 which released both parties from any further
liability. Both parties have moved for summary judgment.
On August 8, 1989,
Defendants purchased property from Plaintiff and leased it
back to Plaintiff. As part of that transaction, a Promissory Note was signed by
Defendants stating that they would pay plaintiff $23,299.50 without interest if one of two events
contained in the lease occurred: Plaintiff exercising it's option to purchase pursuant to Article 31
in which event Plaintiff would receive the amount of the Promissory Note as a credit against the
purchase price; or pursuant to Article 32 which related to the lease being terminated and Plaintiff
permitting the separation the buildings, in which event Plaintiff would have to bear the cost with
Plaintiff receiving a credit against its expenses in the amount of the fair market value of the land
as if it was unimproved. If Defendant gave this credit to Plaintiff, Plaintiff would return
Defendant's Promissory note to Defendant. The promissory note incorporated by reference all the
terms of the lease agreement. The lease continued until November 1, 2010.
On November 1, 2010 the parties entered into an Installment Sales Contract for
Plaintiff to purchase the property back from Defendants, but the agreement was a separate
agreement and not an exercise of Plaintiff's rights pursuant to Article 31 of the lease. The
agreement for the sale of the property back to Plaintiffs contained a provision (paragraph 6 of the
Installment Sales Contract) whereby each party released the other from any obligation arising out
of the lease.
The release language does not mention the promissory note. The Installment Sales
Agreement also stated that the lease would remain in effect until October 31, 2010 and would be
considered terminated at that time.
Plaintiff now claims that because the lease was terminated by the consummation of
the sale of the property back to Plaintiff, Defendants are liable to Plaintiff for the payment of the
Promissory Note in the amount of $23,299.50 pursuant to paragraph 32 of the lease agreement.
There was no evidence that Plaintiff raised the issue of the Promissory Note nor sought a credit at
closing for the amount of the Promissory Note when the parties closed on the sale of the property
back to Plaintiff on November 1, 2010.
Defendants claim that the provisions in the promissory note were conditions
precedent, and since neither condition precedent occurred, Defendants are not liable to Plaintiff
for the $23,299.50. In the alternative, Defendants claim that they are not liable because Plaintiff
signed a release that released Defendants from any liability pursuant to the terms of the lease, or
that there are questions of fact that preclude the granting of summary judgment.
ANALYSIS
Contract
Interpretation:
Where the terms of the contract are clear, the interpretation of the contract is a
question of law for the court to decide without referring to extrinsic evidence. (Ruttenberg v.
Davidge Data Sys. Corp., 215 A.D 2d 191 [1st Dept., 1995]). If there is ambiguity, then it is
a question of fact for a jury to decide. (Id.; see also, Coloney v. Coloney, 80 AD3d 840 [3rd Dept., 2011]).
Condition Precedent:
"A condition precedent is an act or event, other than a lapse of time, which,
unless the condition is excused, must occur before a duty to perform a promise in the agreement
arises." (Oppenheimer & Co., Inc. v. Oppenheim, Appel, Dixon & Co., 86 NY2d 685,
690 [1995]).
There are two types of conditions precedent: express and implied. Express conditions
must be performed, implied conditions can be met with substantial compliance. (Latham Land I, LLC v. TGI Friday's
Inc. 96 AD3d 1327 [3rd Dept., 2012]).
In the case before the court, the promissory note states that Defendants would pay the
$23,299.50, " upon the happening of the following events." Subsection (b), which Plaintiff is
relying upon, states "Upon termination of the aforesaid lease without exercise by The Maple
Press Company of its option to purchase as set forth in section 32 of said lease agreement."
Section 32 of the lease agreement sets forth payment for the separation of the
buildings and the credits that Plaintiff will receive. Pursuant to Section 32 of the lease agreement,
Plaintiff was to receive a credit towards the separation of the buildings in an amount equal to the
fair market value of the real estate, and if Plaintiff was given this credit, Plaintiff would return
the promissory note to Defendants. However, although the lease was terminated, it was because
the parties entered into a new agreement and not under either condition in Sections 31 and 32 of
the lease.
There is no ambiguity here. The promissory note is clearly conditioned upon the
happening of one of two events, to wit: the exercise by Plaintiff of its right to purchase the
property under the terms of Section 31 of the lease agreement, or, under the terms of Section 32
of the lease agreement, a separation of the buildings and a credit to Plaintiff in the amount of the
fair market value of the real estate. These are express conditions precedent to Defendants'
obligation to pay the amount of the promissory note. Further proof that these are conditions
precedent is that payment of the promissory note was to be in the form of a credit against the
purchase option price, or in exchange for a credit to be given by Defendants to Plaintiff. Clearly
it was anticipated that any remuneration from the promissory note would be either as a credit or
in conjunction with a credit which would, in the normal course, be settled at the closing of the
transaction. Plaintiff apparently never sought a credit for payment under the promissory note at
the time the transaction between the parties closed on November 1, 2010.
Since neither of the express conditions required to trigger payment under the terms
of the promissory note occurred, Defendants are not liable to Plaintiff for the promissory note.
[*2]
With regard to the release signed by the parties,
the release relieved the parties from liability under the terms of the lease agreement. It is clear
that the purpose of the release was to extinguish the rights and liabilities of the parties related to
the lease. Although the release does not mention the promissory note, since payment under the
terms of the promissory note was dependent upon the parties' rights and liabilities under the
terms of the lease agreement, the release signed by the parties also released any liability of the
defendants under the terms of the promissory note. Any other interpretation would result in
Defendants remaining liable for an obligation under the terms of the lease, which would be
contrary to the purpose of the release. (See, e.g., Foundry Capital Sarl v. International Value Advisers, LLC, 96 AD3d
620 [1st Dept., 2012].
NOW, therefore, it is hereby
ORDERED, that Plaintiff's motion for summary judgment is denied, and it
is further
ORDERED, that Defendant's cross-motion for summary judgment is
granted, and the complaint is dismissed.
ENTER
Dated: October 2, 2012s/ Ferris D. Lebous
At Binghamton, New YorkHon. Ferris D. Lebous, J.S.C.
Footnotes
Footnote 1:There is no factual dispute with
regard to the history of the transactions between the parties.