Cortesi v. R & D Construction Corp. , 137 A.D.2d 901 ( 1988 )

Mahoney, P. J.

Appeal from an order of the Supreme Court (Kahn, J.), entered February 13, 1987 in Albany County, which, inter alia, granted plaintiffs’ motion for summary judgment.

In November 1983, the parties signed a contract for the construction and sale of a home. The contract specified April 30, 1984 as the closing date. There was also a mortgage contingency clause which gave plaintiffs 45 days to notify defendants of their inability to obtain financing. Upon such notice, the contract would be canceled and plaintiffs would be entitled to a refund of all but $500 of their down payment. On December 13, 1983, plaintiffs received a mortgage commitment from a bank. This commitment, however, was not useful to plaintiffs since its expiration date was well before the contractual closing date. Although plaintiffs aver that they notified defendants of the problem orally and in a note mailed to defendants with a copy of their commitment letter, defendants deny receiving such notice. In a letter dated December 22, 1983, plaintiffs informed the bank that unless the mortgage commitment could be extended, their application would have to be withdrawn. No extension was forthcoming and plaintiffs were without financing at the end of December 1983.

On February 9, 1984, the parties met and modified the contract in several respects. The closing date was changed from April 30, 1984 to July 15, 1984. In addition, changes in the specifications for the house were made, adding almost $3,800 to the purchase price. The parties apparently made no written reference to the mortgage contingency provision at the February 9, 1984 meeting, although plaintiffs contend they believed that a new 45-day period commenced under this "new” contract. Thereafter, plaintiffs applied to two banks for a mortgage but were denied because plaintiff Susan Cortesi had lost her job. Plaintiffs notified defendants on March 14, 1984 of their inability to obtain financing and asked defendants to return their $6,000 down payment, less $500, as stated in the contract. Defendants refused to return the deposit because the 45-day contingency period had long since expired and was not renewed by the modification.

Plaintiffs commenced this action seeking a return of their deposit, plus damages. Defendants counterclaimed for damages arising out of plaintiffs’ breach of contract. Plaintiffs moved for summary judgment on the complaint and for dismissal of defendants’ counterclaim. Defendants cross-moved for summary judgment dismissing the complaint. Supreme Court granted summary judgment to plaintiffs and dismissed defendants’ counterclaim. This appeal by defendants ensued.

The February 9, 1984 modification resulted in a new contract, and the terms of the old contract which were not modified remained viable (see, Beacon Term. Corp. v Chemprene, Inc., 75 AD2d 350, 354, lv denied 51 NY2d 706; Millet v Slocum, 4 AD2d 528, 530-531, affd 5 NY2d 734). Thus, since it was not eliminated or modified, the mortgage contingency provision remained effective. Defendants contend that the 45-day period had expired by the time the modification was made and that the modification could not somehow revive it. This interpretation is belied by a reading of the contract. The mortgage contingency clause, which defendants drew, provides for a 45-day period but does not state when the period starts running. With this ambiguity, defendants cannot successfully contend that the 45-day period had expired at the time the contract was modified. Since the mortgage contingency clause survived the modification, it should not be given an interpretation which would render it meaningless. The only reasonable interpretation of the clause is that it began running anew on February 9, 1984 when the contract was modified.

This interpretation is supported by a commonsense analysis of the facts. The parties knew that plaintiffs needed financing to complete the transaction and that the mortgage contingency clause provided an opportunity for plaintiffs to avoid the contract if they could not obtain financing. Defendants’ interpretation assumes that the parties executed a new, indeed a larger, contract with no mortgage contingency whatsoever. Such interpretation of the parties’ intent strains logic. Supreme Court properly granted summary judgment to plaintiffs.

Order affirmed, with costs. Mahoney, P. J., Weiss and Mikoll, JJ., concur.