Sager v. Gonnermann , 100 N.Y.S. 406 ( 1906 )

Tallmadge, J.

In order to create a liability against the defendant, it was necessary for the parties of the first part to procure subscribers representing 200 cows within ninety days from the date of the agreement. This was a condition precedent to liability on the part of a subscriber, and it was necessary for the plaintiff to prove, not only nonperformance on the part of the defendant, but a full performance on the part of the parties of the first part to the agreement. The plaintiff introduced in evidence the agreement and proved that it was signed by the parties whose names appear thereon and that the names were obtained within ninety days from the date of the agreement. It appears from the testimony that three of such subscribers signed for cows, aggregating twenty-two, but it does not appear that any of the other subscribers signed or wrote opposite their names any number representing cows, or that, they in any manner consented to become liable for any definite number of cows. The only light on the subject is that Exhibit “B,” introduced-in evidence, contains opposite each name certain- numbers aggregating 212. Who put the numbers on the agreement or when such numbers were written does not appear. This does not prove that the subscribers represented the numbers set opposite their respective names.

Again, the true intent and meaning of the agreement was that the subscribers who were to represent 200 cows should be responsible men — men financially able to bear their just proportion of the burden imposed by the agreement. They must furnish the number of cows set opposite their names, or be financially able to pay their proportionate part of the expenses in case they were not owners of cows. In other words, if they did not own the cows, they must represent, at least, the equivalent in financial responsibility;. so that, when assessments were made upon them as provided by the agreement, they would be in a condition to meet and liable to pay such assessments. Any other construction of the agreement would be manifestly unfair to those who were financially responsible. The signing of the agreement and the performance of the conditions therein contained meant the building and equipping of a creamery at an expense of $4,350, and that at least 200 cows should be subscribed, and that each subscriber should pay in proportion to the number of cows set opposite his name, and that he was financially able to do so. If any other meaning is given to such an agreement, then, if .two men financially responsible subscribed their names and set opposite thereto twenty cows each, and the other subscribers, opposite whose names appear the balance of the cows to make up the 200, were not the owners of any cows and were not responsible financially, the two would be obliged to bear the whole burden. Such a construction would be a fraud upon their rights. It would not be fair to hold that in such a case subscribers representing 200 cows had been obtained, because it would not result in an equal burden upon the subscribers.

The doctrine as to the interpretation of written agreements is elementary and is bom of the familiar principle, of daily application in courts of justice, that all contracts must he so interpreted as to carry out the intent of the contracting parties. Smith v. Kerr, 108 N. Y. 37.

If there is any uncertainty in the meaning of this agreement, then the rule laid down in the case of Russell v. Allerton, 108 N. Y. 288, should he invoked that, “ Where there is uncertainty or doubt as to the meaning of words or phrases used in a contract, in seeking for the intent of the parties as evidenced by the words used, the fact that a construction contended for would make the contract unreasonable and place one of the parties entirely at the mercy of the other, may properly be taken into consideration.”

In New York Exchange Co. v. De Wolf, 31 N. Y. 281, Davies, J., writing the opinion, says: “ The essence of every agreement of this kind is, that there should he perfect equality among the subscribers as to the nature and extent of their respective liabilities for the several sums subscribed by them respectively.” He further states that, if any subscriptions were obtained on different terms, then a fraud was practiced and rendered the engagement of the subscribers void.

Every party to such agreement has the right to insist upon the exercise of good faith and, when any other interpretation would mean a fraud upon the rights of some, the courts should put such a construction upon the language as to compel good faith and protection to all parties. Dick, the agent of the parties of the first part, understood that the agreement meant that the subscribers should be responsible men, as he himself testified that he said to the defendant that he expected to get and would get responsible men to sign the agreement.

Under the construction which I have given to the agreement, it was necessary that the parties of the first part obtain subscribers financially responsible, or owning cows, to actually represent the 200 cows which the agreement provided for. This was a condition precedent to any liability on the part of the defendant; and it was incumbent on the plaintiff to prove that all such conditions had been fulfilled on the part of the parties of the first part before the defendant could be made liable.

In pleading the performance of a condition precedent in a contract, it is not necessary to state the facts constituting performance, but the party may state, generally, that he, or the person whom he represents, duly performed all the conditions on his part. If that allegation is controverted, he must, on the trial, establish performance. Code Civ. Pro., § 533.

The defendant by his answer controverted such performance, and the plaintiff failed to prove such condition precedent.

It does not appear from the testimony that those who signed the agreement were financially responsible or the owners of cows aggregating two hundred, or that they even placed opposite their names the numbers 5f cows which they were to represent, excepting in three instances. This rule is recognized by the courts, and is strictly enforced. Where a contract is upon a condition precedent which is capable of being performed, a strict performance must be shown to entitle the party upon whom the condition is imposed to recover thereon. Oakley v. Morton, 11 N. Y. 25; Bogardus v. New York Life Ins. Co., 101 id. 328; Weeks v. O’Brien, 141 id. 199-202.

In Presbyterian Church v. Cooper, 45 Hun, 453, the action was based upon a subscription. The court say: “ The subscription was ‘ upon the express condition, and not otherwise, that the sum of $45,000 in the aggregate shall he subscribed or paid in for the purpose hereinafter stated, and if within one year from the date, said sum shall not be subscribed or paid in for that purpose, then this agreement to be null and of no effect’ Held, that valid subscriptions or actual payments to the amount of $45,000 were contemplated as the condition precedent to absolute liability.” This case was affirmed in 112 N. Y. 517.

The plaintiff not only failed to prove performance on the part of the parties of the first part, but the testimony shows that the conditions precedent to the liability of the defendant were not performed. It appears from the testimony that four of the subscribers to the agreement were insolvent and were not the owners of cows. The number of cows set opposite their names aggregated thirty-six. Two of the names of those who were insolvent were upon the subscription paper at the time the defendant subscribed the same, but there is no testimony showing that the defendant knew of the financial condition or- insolvency of these two subscribers. I am of the opinion, therefore, that he did not waive the provision as to the responsibility of subscribers in reference to those who had already subscribed; he could not he charged with knowledge from the mere fact that he signed the paper subsequently to their signing the same. After he signed the paper, Lacy and Van Loan, opposite whose names were fifteen cows, subscribed their names, both of whom were insolvent, which left subscribers representing two hundred cows still below the requisite number. The agent of Burnap & Bumap who procured the subscribers represented to the defendant that only responsible men would be obtained. The defendant says that this agent stated to him that only men owning farms were to be taken. Whichever statement was made, it is apparent that the agent understood that the agreement meant that the subscribers must be financially responsible, or he was attempting to deceive the defendant. The defendant had the right to believe what Dick said in this respect and was not required to verify his statement by reading the agreement or otherwise. Wilcox v. American Tel. & Tel. Co., 176 N. Y. 115.

Good faith should be exercised and called for in every transaction; and, in a paper of this character, the law writes good faith for the protection of each subscriber. Industrial & General Trust v. Tod, 180 N. Y. 215.

It also appears from the testimony that the defendant rescinded and withdrew his subscription before the requisite number of subscribers had been obtained and before Burnap & Burnap had executed the agreement on their part or become bound by it. This paper was in the nature of a proposition by which the defendant was to be bound, after certain conditions had been performed; and, unless it appeared that at the time the subscription was obtained the defendant said or did something to induce the parties of the first part to perform services or incur expenses at his request, there would be no binding force to the agreement, until the conditions that were to be performed by the parties of the first part were fully performed and the agreement was signed by said first parties. Burnap & Bumap took upon themselves the whole burden ;• they proposed to build a butter factory, after subscribers representing two hundred cows had been obtained; they were to obtain the subscribers, who were not to be bound by their subscriptions unless, within ninety days from the date of the paper, subscribers representing at least two hundred cows were obtained. There was no mutual promise or obligation in the scheme of creating a liability and, therefore,- no binding force to the subscriptions until the propositions had been carried out and the conditions fulfilled. There was no promise or mutual obligation at the inception of the arrangement. The parties were not to be bound until the happening of a certain event. Burnap & Burnap could proceed with the matter of obtaining subscriptions until subscribers representing nearly the whole number were obtained and incur no liability to the subscribers, nor be obliged to perform any other act, at least, until the balance of the subscribers were obtained and the agreement was signed by them. The agreement) .during the time of procuring the subscribers, was not binding as it was based upon no consideration. Burnap & Burnap parted with nothing at the request of the defendant and there was no mutuality; there was not the consideration which mutual promises give a contract, hence this paper can be treated only _ as a written offer or proposition. Quick v. Wheeler, 78 N. Y. 300.

The subscriptions of several furnished no consideration for the promise of any one. Twenty-third St. Bap. Ch. v. Cornell, 117 N. Y. 604.

The doctrine that a party may withdraw a proposition to enter into any obligation or relation before it has been accepted by the other party is decisive upon the facts here presented. Bert v. Farrar, 24 Barb. 518; Quick v. Wheeler, 78 N. Y. 300; Hamilton v. Patrick, 62 Hun, 74; Twenty-third St. Bap. Ch. v. Cornell, 117 N. Y. 601.

There is no direct testimony showing that.names of subscribers were obtained or any act done by Burnap & Bur-nap at the request of the defendant; and, as the mere signing of a subscription, conditioned upon the securing of a stated amount, does not constitute an express or implied request that the party to be benefited by the subscription procure other subscribers, the rescission by the defendant was complete and effectual. 117 N. Y. 60l.

I am, therefore, of the opinion that the plaintiff is not entitled to recover and that the defendant is entitled to a judgment dismissing'the complaint, on the merits, with costs.

Ordered accordingly.