indicating that a new contract may discharge prior obligations “expressly or through implication”Summary of this case from Baldwin v. Emi Feist Catalog, Inc.
Argued June 2, 1920
Decided July 7, 1920
Abraham Benedict and Adam K. Stricker for appellant. Leo R. Brilles for respondent.
The plaintiff seeks a judgment directing the defendant to specifically perform a contract between the parties. The demurrer of the defendant that the complaint does not state facts sufficient to constitute a cause of action was overruled by the Special Term and sustained by the Appellate Division. The complaint was not, under the leave of the Appellate Division to amend, amended, and was dismissed by the final judgment, which was affirmed by the Appellate Division.
The complaint alleges, in effect, and the demurrer admits the facts: The contract in question, in writing and under seal, was dated December 7, 1918. It recited the existence of various differences and controversies between the parties; the pendency of an action by the defendant here against the plaintiff, who is defending it, to recover fifty-one thousand four hundred seventy dollars and twenty-four cents with interest, and the desire of the parties to compromise and settle "all matters in dispute between them of every kind and nature whatsoever, including the matters and things embraced in said action above referred to," and stipulated that the plaintiff should pay the defendant on December 9, 1918, twelve thousand five hundred dollars, and he or his legal representative should pay her on January 1, 1919, and on the first day of each month thereafter during her life, two hundred and fifty dollars; the defendant "upon the receipt of said $12,500" should immediately reassign to the plaintiff all policies of insurance upon his life and indorse a certain designated check payable to the parties jointly, and "contemporaneously with the receipt of said sum of $12,500," sign and deliver to him a letter retracting all derogatory statements made by her against plaintiff or his wife, should refrain from making similar future statements, and should return to him a designated last will and testament executed by him and all his books, papers or documents "such as old notes, checks and letters, including all letters heretofore written by" him to her "and all other property." It further provided, "In consideration of the payment by the party of the first part (the plaintiff) to the party of the second part (the defendant) of said $12,500, and his promise to pay her the sum of $3,000 per annum for the balance of her life, said party of the second part promises and agrees that she at no time or under any circumstances or conditions directly or indirectly will engage in any speculation of any kind or nature, without first obtaining the written consent" of the plaintiff, and in the event of her violation of such promise he shall be under no further liability or obligation to support or make further payment to her. "General releases shall be exchanged between the parties hereto; the release from the party of the second part to the party of the first part to be made and executed by her individually and as executrix of the Estate of Charles Z. Moers, deceased, and in addition said party of the second part is to make, execute and deliver a general release in favor of the wife of the party of the first part, Theresa Moers;" the plaintiff duly tendered to the defendant the sum of twelve thousand five hundred dollars and the general release, as provided by the contract, executed by him, and full performance on his part of the contract; the defendant refused performance in all respects on her part and threatens and intends to and will, unless restrained by the court, proceed with the prosecution of the pending action brought by her against the plaintiff here; the plaintiff will suffer irreparable damage and has not an adequate remedy at law. The relief is demanded: judgment of specific performance by the defendant, and injunction against the prosecution of the pending action in her behalf. The defendant asserts and argues that the contract is an accord only, and, therefore, not binding upon her because she refused the satisfaction it provided. The Appellate Division sustained the assertion. The assertion is ill-founded and erroneous.
There is no doubt that a mere accord without satisfaction is unenforcible, and that an accord with tender of satisfaction unaccepted is of like quality. An executory agreement for accord of a pending action without satisfaction made under it does not bar the prosecution of the action, and tender of performance is insufficient for that purpose. A mere accord without a satisfaction is ineffective and does not supersede or discharge the original contract or claim. A new executory agreement, whether performed or not, may be accepted in satisfaction of a previous obligation or liability and if it is so accepted the remedy for breach thereof is upon the new and not the old agreement. But, as a rule, it is the accepted performance of the agreement and not the mere promise or tendered performance which amounts to a satisfaction. An accord not executed does not discharge the original claim. Whether there is an accord and satisfaction ordinarily involves a pure question of intention, which is, as a rule, a question of fact. If the evidence directly or through reasonable inference creates no conflict concerning the intention it is a question of law. ( Kromer v. Heim, 75 N.Y. 574.) These rules, however, do not apply to the present case.
The contract in the instant case is not a mere accord, or an accord executory. It is a new and superior contract superseding and extinguishing the contract or contracts upon which the original action between the parties was based, and the action itself. It relates to matters of differences and controversies other than, as well as, those involved in the original action. It concerns all the claims and grievances of the plaintiff against the defendant and of the defendant against the plaintiff. Each party enters into new agreements and assumes new obligations. Mutual releases shall be executed extinguishing all disputes and controversies between them. Those new and reciprocal covenants and obligations were considerations legally sufficient to invest the contract with completeness and binding effect. It is immaterial that certain obligations on the part of the defendant were to be performed "upon the receipt of said $12,500," or "contemporaneously with the receipt of said sum of $12,500." Refusal by the defendant to receive the moneys accomplished nothing. It did not extinguish her agreements or absolve her from the obligations they created. It is enough that the agreements of the parties were new or created by the contract, were absolute and not dependent or conditional, were reciprocal and affected legal rights of either or both of the parties — a case of mutual promises, one of which is the consideration for the other. A recent definition of a sufficient consideration in a bilateral contract is: "Mutual promises in each of which the promisor undertakes some act or forbearance that will be, or apparently may be, detrimental to the promisor or beneficial to the promisee, and neither of which is rendered void by any rule of law other than that relating to consideration, are sufficient consideration for one another." (1 Williston on Contracts, section 103f.) A new executory contract between a claimant and the person charged, by which they reciprocally agree to do or not to do an act or acts not obligatory by contract or law, which will affect a legal right of either, and which, expressly or through implication, includes the settlement of the original claim, is not a mere accord, but is the substitute for the original claim or contract, which is merged in it, and is, in and of itself, binding upon the parties. ( Davis v. Spencer, 24 N.Y. 386; Bryant v. Gale, 5 Vt. 416; Billings v. Vanderbeck, 23 Barb. 546; Crowther v. Farrer, 69 Eng. C.L. 675; Vedder v. Vedder, 1 Denio, 257; Morehouse v. Second National Bank of Oswego, 98 N.Y. 503; Allison v. Abendroth, 108 N.Y. 470; Williams v. London Commercial Exchange Company, 10 Exchequer, 569; Merry v. Allen, 39 Iowa 235.)
The agreement set forth in the complaint was valid and binding upon both parties. It expressly contracted that each party should execute and deliver to the other a general release. It, as a matter of law, makes manifest the intention of the parties that the original action and all disputes and controversies between them were merged into it. There was sufficient legal consideration in it. The plaintiff had duly offered to perform on his part. The defendant threatens and intends to prosecute the original action and to withhold wholly performance on her part. The allegations of the complaint permit the plaintiff to invoke equitable jurisdiction. ( Very v. Levy, 13 How. [U.S.] 345; Burke v. Burke, 212 N.Y. 303, 307.) In the case last cited Judge, now Chief Judge, HISCOCK stated the rule: "The general rule of course is that equity will not entertain such an action as this to restrain an action at law unless special reasons demonstrate that full justice cannot be done in the latter action, and that an action in equity is necessary to secure to a party a more complete enjoyment of the rights to which he is entitled than could be obtained in the action at law. If the equitable action holds out no promise of relief which may not be secured in the other and more restricted proceeding there is no occasion for interference and it will be withheld." In view of our conclusion we have not deemed it necessary to consider, in connection with the question of consideration, the effect of the fact that the contract was under seal.
The judgments should be reversed, with costs in all courts; the demurrer should be overruled, with leave to withdraw demurrer and answer the complaint within twenty days on payment of costs.
HISCOCK, Ch. J., CHASE, POUND, CRANE and ANDREWS, JJ., concur; CARDOZO, J., concurs in result.
Judgments reversed, etc.