Opinion
February Term, 1899.
Edmund Luis Mooney, for the appellant.
Paul E. De Fere, for the respondents.
The single question presented on this appeal relates to the construction of the agreement made by the parties. The plaintiff insists that the agreement was not only that his salary should be paid while he rendered services to the corporation, but that he should be employed for two years and paid a salary of $5,000 per year during that period. The defendants claim that it was merely an understanding that they would obtain for the plaintiff his appointment as engineer, and would guarantee punctual payment to him of his salary during the period named, and that the conditions that he should render services and that the company should continue to exist or do business were necessarily implied.
Where ambiguity exists in a written instrument it is entirely competent to look at surrounding circumstances to ascertain the meaning and intent of the parties thereto. Where, however, the language is sufficiently clear and explicit, resort should be had to the language employed, construed in the light of the situation of the parties, the consideration, the subject-matter, the object to be secured and the purposes to be effected by the instrument. It is conceded that prior to the date of the agreement in suit the Kinsman Company had been formed pursuant to a contract to which both the plaintiff and the defendants were parties, for the purpose of developing the plaintiff's inventions. Under it nearly all the stock was issued to the plaintiff, and after disposing of a part of it as agreed, he was to retain the controlling interest; and future sales, except as permitted, of stock were to be upon the written consent of all parties. Desiring to obtain a larger if not controlling interest, the defendants entered into negotiations with the plaintiff, and as a result an offer was submitted to the latter in writing, whereby the plaintiff, for sums and upon conditions named, was to turn over 4,500 shares of stock and to cancel the prior agreement, which proposition the defendants accepted in writing without qualification. And as this prior proposition was not only accepted but embodied in the contract, resort may be had thereto for the purpose of correctly construing the agreement.
In the plaintiff's proposition of October 11, 1893, wherein the 4,500 shares were offered to be sold to the defendants, the consideration was not only the cash to be paid, but the further consideration thus expressed: "Provided I am paid an annual salary for two years of five thousand ($5,000) dollars per annum, in equal monthly installments, as a vice-president or consulting engineer of the Kinsman Block System Company." To such proposition we find, over the signature of the defendants, the following: "We accept the above proposition October 12, 1893." On the day after this proposition was made, a more formal agreement was entered into, the second recital therein being as follows: "Whereas, the parties to said agreement have mutually agreed to cancel the same, except so far as said agreement refers to the American and foreign patents of said Kinsman, and to that end a proposition, bearing date October 11th, 1893, was made by said Kinsman to Harvey Fisk Sons, which proposition was accepted by them on October — 1893. Now, therefore, in consideration," etc.
It is to be observed that the proposition was made the basis of, and incorporated into, this agreement of October twelfth; and any doubt that might exist if this agreement stood alone is cleared up by the language employed by the plaintiff in submitting his proposition of October eleventh, in which he offered to sell 4,500 shares of stock for a fixed consideration, including not only the cash, but the further provision to which we have alluded, namely, that he was to be paid a salary of $5,000 per annum for two years. We think that this is susceptible of but one meaning, namely, that the defendants obtained the plaintiff's stock under a contract, whereby they not only agreed that his salary should be paid while he rendered services to the corporation, but guaranteed that he should receive the stated amount for two years. The plaintiff did not intend to surrender his stock and a controlling interest in the company and leave it in the power of the defendants to employ him or not, or to place the company in the hands of the receiver as the result of insolvency following their control, or that the payment of such sum should be in any way subject to an implied condition that the company should continue to be a going concern. What the plaintiff intended, as expressed in his proposition, was the securing of some position or relation to the company and the payment of the amount stipulated; and as the defendants accepted such proposition unconditionally and without any qualification, what the plaintiff demanded is controlling upon the question of what he should obtain. Here the receiver was appointed upon the application of the defendants, and that fact is relied upon to release them from their obligation. But it is not made to appear that the corporation was dissolved; and the mere bringing of a suit, alleging insolvency and obtaining the appointment of a receiver, did not abrogate the contract of the company or the obligation of the defendants.
We think that not alone upon the language employed, but on the other facts appearing, this case is clearly to be distinguished from Lorillard v. Clyde ( 142 N.Y. 456); De Luka v. Goodwin (Id. 194) and People v. Globe Mutual Life Ins. Co. (91 id. 174). In the Lorillard case the parties had entered into an agreement to combine their business and transfer the same to a corporation, the defendants to have the management of the business and to guarantee to the plaintiff a dividend of not less than seven per cent upon his shares for seven years. The corporation was organized and the business carried on by it for about five years, when a receiver was appointed on the application of Lorillard and the corporation subsequently dissolved. The plaintiff sued to recover the amount guaranteed, and the court therein said: "The contract * * * assumed that the corporation would be in existence during the whole period over which the guaranty extended. The guaranty was not for the yearly payment of a sum equal to seven per cent on the capital of the plaintiff in the corporation, or on the nominal amount of his stock. It was, that the dividends of the corporation should annually for seven years equal that sum." As pointed out in that case, the application for the appointment of the receiver was made by the plaintiff; while here it was upon the application of the defendants. There the corporation was dissolved; here all that appears is that a receiver was appointed. But the main distinction, and one that, apart from these differences in facts, would be controlling, is that the language of the two agreements is entirely different. This remark is equally applicable to the other cases cited.
Furthermore we think it would be both inequitable and unjust to import into the agreement an implied condition contrary to the meaning and intent of the parties, and thus enable the defendants, after obtaining the control of the corporation and its management, to apply for and secure the appointment of a receiver on the allegation of insolvency, and to use this as a ground for refusing to comply with an agreement which in effect called upon them, as a consideration for the delivery of the stock, to pay $10,000 in monthly installments covering a period of two years. That the payment of such sum was what the plaintiff desired to secure and the defendants agreed to pay as the consideration for the stock, is evident from the character of the employment which the defendant was to obtain. The agreement did not specify that he was to render any particular services, but provided that he was to be appointed as the vice-president or consulting engineer, which necessarily excludes the idea that he was to have his whole time continuously employed with the details of the company during the period, as a condition precedent to his right to receive the stipulated sum.
Having reached the conclusion that the court below erred in its construction of the contract, it follows that the judgment should be reversed and a new trial ordered, with costs to the appellant to abide the event.
VAN BRUNT, P.J., BARRETT, RUMSEY and PATTERSON, JJ., concurred.
Judgment reversed, new trial ordered, costs to appellant to abide event.