Benedict v. . Pincus

84 N.E. 284, 191 N.Y. 377, 29 Bedell 377, 1908 N.Y. LEXIS 1070

• Court: New York Court of Appeals
• Decided: March 10, 1908
• Status: Published

Opinions

Vann, J.

The trial court refused to allow the plaintiff to give evidence or make proof, because it felt bound by the decision of the Appellate Division, made upon a previous appeal, that the paper set forth in the complaint was an option and not an agreement for a lease. (109 App. Div. 20.) As the complaint "was dismissed upon the opening the question presented for decision is whether it alleges facts sufficient to constitute a cause of action. I agree with my brother Haight that the determination of that question depends upon the, inquiry whether the paper set forth in the complaint is a binding contract between the parties, or whether it is an option merely and to that question I now address myself.

An option is an exclusive privilege to buy and a contract for an option is the agreement by which the privilege is created. Sometimes it is defined as a continuing offer, binding for the time specified the one who makes it, but not the one to whom it is made, unless he accepts when it becomes binding upon both. It neither transfers, nor agrees to transfer title to property, but confers the bare right to accept an offer within the time limited and upon the terms provided. No obligation is assumed by the holder of an option and no promise is made in the contract therefor except by the one making the offer or granting the privilege and the words' used are wholly his own. While there are two parties, it is unilateral in form and nature and is signed by but one, the other becoming a party by paying the consideration and accepting the instrument. If the consideration is not expressed, it may be proved at the trial.

The instrument in question was signed by both parties and was treated by both, not as an option, but as an agreement for a lease. The plaintiff alleged in his complaint that it was “ a preliminary agreement for a lease ” and seven times in their answer the defendants referred to it, specifically, as an “ agreement for a lease.” When they swore to their answer they evidently regarded it as an enforceable contract at least in form, and, admitting it to be such, pleaded certain facts in avoidance. Neither the word “ option,” nor any word of like meaning, appears in the paper or in the pleadings. The signatures of both parties indicate a mutual agreement binding both, not a unilateral promise binding but one. There was no reason why Smith should sign unless he intended to bind himself to execute a lease in accordance with the terms specified. As was said by the chief judge in a recent case, “ The parties certainly thought they had made a contract, for they not only signed the written instrument, but took pains to have it witnessed.” (Ellis v. Miller, 164 N. Y. 434, 438.) The court should not hold that there was no contract when the parties admit by their signatures and pleadings that they made one. Their practical construction of the paper reflects light upon their intention, for they knew what they wanted and evidently thought they had expressed it when both affixed their signatures.

Upon reading the paper we find that it opens with the words “We agree,” and the context immediately following shows that they are the words of the Messrs. Pincus exclusively. That part was their peculiar promise. The "wording . then changes, for, as we read it, both parties unite in saying “It is understood.” Understood by whom ? Clearly by those who signed the paper, the same as if the words were “ It is understood by the undersigned.” What was under stood % Evidently, among other things, that Mr. Smith was to pay six months’ rent hi advance. Did he not promise to do this when he signed the instrument. The phrase “It is understood” is not limited by the context, but means' the same as “ It is agreed,” and thus becomes the expression of both parties, not of one only. It does not mean simply that the Messrs. Pincus understood, but both they and Mr. Smith understood. This construction has the support of authority. (Baldwin v. Humphrey, 44 N. Y. 609, 614; Barton v. McLean, 5 Hill, 256, 258; Bicharás v. Edick, 17 Barb. 260, 263; Simonson v. Kissick, 4 Daly, 143, 148; Higginson v. Weld, 80 Mass. 165, 170.)

We think that'the motion to nonsuit should not have prevailed either for the reason stated by the trial court or any other, but that the plaintiff should .have been allowed to introduce evidence and try the afction in the usual way.

The judgment should be reversed and a new trial granted, with costs to abide the event.