Performance under the contract, unless modified by the parties, is predicated on the buyer and the seller entering into an agreement whereby the buyer and the seller agree upon all essential terms of the purchase transaction. The question here is what terms are essential to a meeting of the minds between the parties and when is the broker's performance completed and a binding contract entered into? Can the parties leave matters in the contract to future agreement? Can they omit terms such as the down payment, interest rate, cash or credit, location, acreage, purchase price, whether a mortgage will be taken back by the seller, or other matters of this nature and still have a binding agreement? How much will the court read into the agreement in order to find a binding contract?

1. Provisions for future agreement and future negotiations: In a number of situations the parties to the land sales agreement may agree to agree on further terms in the future. Sometimes the parties enter into what has come to be known as the "binder" agreement. The parties generally believe that they are bound by their agreement, the details of which are left to be worked out in the future. How binding are these so called "binders?" What function do they serve? Can the parties agree to agree in the future? What terms are necessary to a contract and which may be left to future agreement? Which will be implied by the court? Have the courts in New York been consistent in their treatment of these questions or has their treatment further compounded the confusion with which you must deal and the uncertainty which follows? Is that uncertainty necessarily bad? Can you think of instances in which the uncertainty gives you leverage in representing you client where you enter upon the scene after the "binder" has been entered into?

Bruce J. Bergman, Real Estate Binders - Lawyer Beware, New York State Bar Journal, November, 1979 p. 550

Many, if not most, typical real estate transactions begin with a document generally known as a "Binder"na dangerous piece of paper which has been a source of considerable confusion, dissatisfaction and litigation. Nevertheless, brokers insist upon it because it is viewed as a means to secure a commission. The seller insists upon it to "insure" his sale. The buyer demands it to "preserve" his purchase.

But the binder often will not accomplish the end desired by broker, seller and buyer and knowledgeable attorneys and real estate writers unanimously warn against signing them.

Milton Friedman, in his widely used text "Contracts and Conveyances of Real Property", refers to binders this way:

"Unfortunately, it is with these (binders) that so many of our transactions begin. When they are enforceable as contracts they are apt to bind a party before he can think twice about a proposal to see his lawyer. Sometimes they are enforceable, sometimes they are not, and often they are so doubtful that nobody can confidently predict their effect until the outcome of a lawsuit. In no case are they satisfactory."

It has been stated another way by no less an authority than James Pedowitz, former Vice President and Eastern Regional Counsel for the Title Guarantee Company and Pioneer National Title Insurance Company, who noted in a lecture some years ago that:

"The problem with binders is that if it is unenforceable it is unsatisfactory, if the client wants it enforced. It is certainly unsatisfactory from the attorney's point of view when he cannot with confidence advise his client as to the exact legal effect of the particular binder, without resort to expensive and lengthy litigation. Not in the least, a binder almost never covers all of the terms and provisions that an attorney for a seller or a buyer would prefer to have, let alone insist on having, in a well prepared contract of sale."

In Alexander Bicks' PLI monograph "Contracts for the Sale of Realty", as revised by Herman M. Glassner and William R. Kufield, the admonition was that:

"It cannot be emphasized too strongly that clients--both sellers and purchasers-should be urged not to sign binders. As prepared by many realtors, the may be complete enough in setting forth the details of the proposed sale, so that a court will enforce them as contracts. In such cases, the parties will have been deprived of an opportunity to include the clauses necessary for their protection. Clients may realize too late that they will be bound to perform a contract unwittingly executed."

Even the document's description should be a source of suspicion. If it actually "binds", should it not be referred to as a "short form contract," because that is just what it would be? And if there is no binding effect, are the possible moral computations, tenuous and ephemeral at best, worth all the trouble?

Still further, binders, almost invariably prepared by brokers, cite the broker as the procuring cause of the transaction and provide for the payment of a broker's commission. Even without such language in a binder, the signing of the binder can be substantial ammunition supporting a broker's claim to commission earned, although the deal collapses--something competent counsel would not otherwise countenance since he would cause to be signed an appropriate commission agreement before any contract is executed.

Yet, in spite of all the sage advice, the potent pitfalls and a variety of other factors militating against binders, prospective sellers and buyers, aided by the entreaties of brokers, continue to demand them.

When a lawyer prepares a contract of sale, while there may always be room for questions of interpretation, it would be most unlikely that an unenforceable document would emerge. With anything less than a 'full contract" as that concept is generally understood by attorneys, there is more room for doubt -- which is probably the primary problem with binders and like attempts to seal a bargain for realty.

An overview of some of the basic critical aspects of an agreement is as follows:

-- Pursuant to the Statute of Frauds there is a general requirement that a contract of sale, or a note or memorandum thereof, be in writing.

-- The signature is to be by the principal or an authorized agent. (Care must be exercised as to the expression of the agent's authority in different jurisdictions. For example, in New York, the agent's authority must be in writing, while in Rhode Island it may be granted by parole.)

-- The agreement need not be in the "form" of a contract.

-- An agreement can be complete even though blanks for a broker's name and amount of commission have not been filled in.

-- More than one writing can be interpreted together to satisfy the Statute of Frauds. (But there is often the difficult problem of whether the writings constitute an offer and acceptance or an offer and a counteroffer. In addition, where the parties have signed different pieces of paper, there is the issue of whether they've agreed upon the same things.)

Assuming the hornbook requisites have been satisfied, there is a particularly thorny problem of qualifications added to binders which either render them essentially useless or just questionable. Neither situation is productive.

For example, subjecting the binder to "details to be worked out", (so long as it contained the basics: parties, subject matter, mutual promises, price and consideration, discussed infra) in one jurisdiction at least was held to have no effect on the otherwise valid agreement. If there was later a disagreement on those "details", one of the parties will be saddled with something he would not have agreed to but for a binder substituting for a full contract.

Specific language in a binder that the parties are not to be bound until execution of a formal agreement has been honored by courts. (Why then sign a binder?)

What if the binder is agreed to be "subject to a formal contract"? It depends, and those are words laden with trauma. The courts would have to look at each case to determine whether the intention of the parties was to be immediately bound, with the "formal contract" to just be a more artistic version of their understanding, or if the intention was not to be bound at all until execution of the more formal writing. Obviously with court and counsel wrestling with the effect of such qualifying language, a layman certainly cannot be expected to knob what he is getting into.

Of course, the confusing question of qualifying language need not be reached until it is determined that the essential elements of a contract have been met. These elements are usually said to be:

(1) The parties (rarely a problem);

(2) Mutual promises (rarely a problem);

(3) Subject matter, including an identification description;

(4) Price and Consideration.

The property must be described with reasonable certainty, which is obvious, but more illusory than it might first appear. Clearly, if a legal description is given, there can be no dispute. Beyond a legal description, however, there is considerably less certainty.

The general rule as to sufficiency of description is that it must identify the property or supply the "key" to identification, and parole evidence will be admissible to identify the property where there is such a basis in the description, although no parol evidence will be permitted to add to or vary the description. But even the general rule is of minimal comfort in a given fact situation. The annotation covering this point runs to one hundred pages! (23 A.L.R.2d 6)

Some of the difficulties with the description in the binder are illustrated by the following examples:

-- A description of the "Joe Jones House" may be clarified by parol evidence but not if Jones owns more than one house, in which event the description would be insufficient.

-- Where a binder attempted to incorporate by reference a description in two title policies, even though incorrectly referred to as two "deeds" it was upheld by a court.

-- Where the property is part of a seller's larger parcel, a recital of dimensions or area without delineating the boundary between the subject of the sale and the property to be retained will cause the binder to fall. (This stringency, perhaps surprisingly, would not apply to deeds, as opposed to binders).

-- A description of the property by street and number, such as "32 Main Street" may be sufficient, but not always. (In Washington State there must be a legal description). For example, the highest court in the State of New York ruled upon the adequacy of a street number description and found it adequate. However, in a later case, the description in the agreement was:

"Property known as and by the street number 1141 Bedford Avenue, being an 8 family brick and stone apartment building on a lot about 33 x 95 irregular."

In actuality, the dimensions were 33 feet, 1-1/4 inches fronting on Bedford Avenue, 93 feet 10 inches deep on the northerly side, tapering to a width of 14 feet 1-1/2 inches in the rear. The Court's ruling was that the actual description was not in compliance with the contract and the buyer was not required to complete the purchase.

-- As a corollary to the prior example, a street number description may be inadequate where the seller owns some additional property used in connection with the house, but not necessarily acquired at the same time, or not otherwise essential to the house.

Most binders held unenforceable have failed because of inadequacy in setting forth the terms of payment. As will be seen from the examples to be listed, this is a particularly vexatious problem. If the binder is fatally defective, everyone has wasted time and probably the expense of litigation. If the binder does survive, someone was probably stuck with payment provisions he never expected.

Here are some areas of difficulty in expressing consideration for the transaction:

-- In a leading New York case, the language in the binder was:

"The price is $32,625, payable $12,625 cash; balance of $20,000 to remain on 1st mortgage for 5 years. The sum to be paid on signing of contract to be agreed upon. The balance of cash payment on passing of title (giving date)"

The court ruled that in this instance the amount to be paid on contract was an essential element which had not been agreed upon. Hence, no contract was said to exist.

-- Language such as a price of $30,000 "subject to a mortgage of $1 4,000" would probably be upheld in Connecticut where the $1 4,000 would be interpreted as a credit-to-the buyer. Georgia, on the other hand, would find the language too indefinite and would deny specific performance.

-- A binder provision compelling seller to pay taxes and assessments which would become liens upon title closing, except current taxes, would be too ambiguous as to its effect on an assessment payable in installments over a period of years.

-- Terms calling for purchaser to "assume" existing assessments is too vague to determine if purchaser could deduct their amount from the purchase price.

-- Mention of a monetary consideration payable "as per terms agreed" violates the Statute of Frauds. There might very well be an oral agreement as to the amount, but it is unincorporated in the writing.

-- Where payment of the purchase price is to be deferred to a future time, but the due date is not specified, the binder will be unenforceable. (Perhaps incongruously, where a balance was made payable "on terms to be agreed", the binder was valid if the purchaser tendered cash).

-- A clause providing for payment of 30% in cash while deferring the balance "to be agreed upon with interest not exceeding 6% would be unenforceable as insufficient explanation of terms of payment.

-- Where a purchase money mortgage is to be taken back but no rate of interest or maturity date is specified the majority rule is that the agreement is too vague to be enforceable. The minority view, followed in New York and New Jersey, will imply interest at the legal rate with payment due on demand. The minority presumption, however, will not prevail if some other part of the proposed agreement indicates an intention not to create a demand obligation.

While the foregoing problems are the most common, they do not by any means complete the list of litigated language in binders. Where the time for closing has been left out, it's been fought over in court--the result that the court would fix a reasonable time.

But, where the parties have contracted to close title at a time to be mutually agreed upon, an essential element is missing, rendering the agreement unenforceable.

Neglecting provisions for the apportionment of taxes, insurance, rents and mortgage interest will not void the binder because the law will supply provisions, albeit terms the parties would not have preferred.

And even this ancillary list can go on and on--which is precisely one of the main objections to binders. From state to state, and even within a particular jurisdiction, it may be extremely difficult, if not impossible, for an attorney to tell his client whether that binder actually "binds". And if it does bind, it most certainly will contain less than all the provisions counsel would insist upon for the protection of his client. We then harken back to the authorities who advise against signing binders.

As we've seen, attempts to qualify binders with language such as "subject to a more formal contract" may or may not be effective. A provision such as "subject to the approval of counsel" or, preferably, 'This binder not to be effective unless and until specifically approved by seller's (or buyer's) attorney" would probably negate the binder's effect until that approval was obtained. Again, however, if a qualification is successful, and it usually will be uncertain, what then was the point of the binder? The final answer is none, except to make the client happy.

Probably the most practical service an attorney can render a client desirous of signing a binder is to make himself available for a formal contract. If a seller or buyer wants to be bound, let him be bound by an agreement that contains requisite detail and safeguards. Let him have that to which he is entitled. The public is not properly served by the execution of questionable and incomplete documents.

In the following three cases, attempt to distinguish one from the other. What is the rule in New York? Is a single rule capable of being stated based on a reading of these cases? Does the court's treatment do violence to the expectations and intent of the parties to the agreement? What interests was the court attempting to protect in each of these cases? What ought to be the rule in New York?

43 N.Y.S.2d 934 (1943)

OPINION: WALSH, Justice. This is a motion under Rules of Civil Practice 106 to dismiss the complaint on the ground that it fails to state a cause of action upon the face thereof.

It must be assumed that the allegations of the complaint are true for the purposes of this motion. The defendant, the owner of No. 950 East 17th street, Brooklyn, 'hired licensed real estate brokers and agents to obtain a purchaser for him and to act as his agent to enter into an agreement of sale with said purchaser.' On May 12, 1943, said brokers and the plaintiff executed the following memorandum of sale: 'May 12th, 1943. Memorandum of Sale of property No. 950 East 17th Street, Brooklyn, N.Y., to Dr. William Bell, of No. 1601 Beverly Road, Brooklyn, New York. [Provision for repair] Price: $12, 500.00 Mortgage at 5%$7, 000.00 Cash on contract and title $5,500.00 Contract to be made on or before May 25th, 1943. To bind this agreement a deposit of Two Hundred Dollars ($200.00) is hereby acknowledged. This deposit taken subject to owner's approval. Also subject to satisfactory agreement on details between Buyer and Seller. Deposit to be returned, if, for any reason, agreement cannot be reached between Buyer and Seller. William Bell Purchaser. Brokers: Friedberg & Co. Friedberg & Co. By Joseph Hiff.' Three days thereafter 'the plaintiff and the defendant met, and the said defendant approved the deposit of $200 given by the plaintiff and both the plaintiff and the defendant agreed on all details as set forth in the agreement of sale' above quoted. The plaintiff and defendant, through their attorneys, fixed 10 A.M. May 19, 1943, as the time and the office of the attorneys for the defendant as the place 'for the signing of a formal contract containing the same terms as set forth in the memorandum' above quoted. The plaintiff appeared at the time and place, and the defendant did not appear but in fact signed a contract of sale for the property on the previous day.

Plaintiff sues for specific performance. Defendant moves to dismiss.

The question presented is whether the parties have made an enforceable agreement, for the specific performance of which plaintiff may now have judgment.

The memorandum of sale is not an enforceable contract for the reason that it does not contain the essential terms of such a contract and it was not treated or intended as a final contract between the parties. The memorandum of sale is at best a record of the agreement as far as reached, leaving substantial matters to be settled in the formal contract. Spielvogel v. Veit, 197 App. Div. 804, 189 N.Y. S. 899. Among the substantial matters not provided for were the following: the amount to be paid on the signing of the contract (Ansorge v. Kane, 244 N.Y. 395, 155 N.E. 683); the duration of the $ 7,000 mortgage. Spielvogel v. Veit, supra. Were the latter the only important term omitted, of course, an existing open mortgage or a demand mortgage might be assumed. Pollak v. Dapper, 219 App.Div. 455, 220 N.Y.S. 104.

The memorandum of sale by its very terms provides that "Contract to be made on or before May 25th, 1943." The parties subsequently agreed to make such contract on May 19, confirming the expectation that the memorandum was not the contract.

"Provision for execution of a formal contract does not defeat the validity of a memorandum, apparently complete and intended to be a contract." Pollak v. Dapper, supra [219 App.Div. 455, 220 N.Y.S. 105]; see also Pelletreau v. Brennan, 113 App.Div. 806, 99 N.Y.S. 955, and Roberts v. Hoberg, 212 App.Div. 595, 209 N.Y.S. 437. However, the memorandum in the instant case was not complete nor was it intended to be a contract. The memorandum was made 'subject to satisfactory agreement on details between Buyer and Seller.' While the complaint alleges that the plaintiff and defendant on May 15 agreed on all details, those details were, as alleged in the complaint, 'as set forth in the agreement of sale annexed thereto.' The agreement of sale, that is, the memorandum of sale, does not contain the substantial matters above referred to. The memorandum of sale further provided, 'Deposit to be returned, if, for any reason, agreement cannot be reached between Buyer and Seller.' The parties never reached an agreement; their minds did not meet.

This is another example of the use of the alleged binders which do not bind the seller, but bind the purchaser at least to the extent of his deposit.

While the court may doubt the ability of the plaintiff to prove the authority of the broker to enter into an agreement of sale in this case, that is not a factor in its determination. The broker did not make a contract.

The court also disregards the failure to comply with Real Property Law, section 259. Compliance with the statute of frauds need not be alleged by the plaintiff, and a motion to dismiss for failure to comply with the statute should be made under Rule of Civil Practice 107, as the defect does not appear upon the face of the complaint.

'The contract was never completed. The transaction was destitute of legal effect. Specific performance is therefore impossible'. Ansorge v. Kane, supra [244 N.Y. 395, 155 N.E. 685]; see also Savage v. Weigel, 128 Misc. 618, 219 N.Y.S. 99; Petze v. Morse Dry Dock & Repair Co., 125 App.Div. 267, 109 N.Y.S. 328.

The motion to dismiss the complaint is granted.

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113 N.Y.S.2d 880 (1952)

OPINION: RUBENSTEIN, Surrogate. On August 26, 1950, the following instrument was subscribed by testator:

"Received of William Davidson, 1555 Unionport Road, Bronx, New York City, the sum of 50.00 dollars being a deposit on account of the purchase price of 4000.00 dollars for Lot #77 & 78 premises located at Maple Lane, Sparkle Lake, Yorktown Heights, New York. This is not to be considered a contract, the agreement of the parties with respect to terms of sale will be set forth in a contract of sale to be prepared and executed by the parties within 30 days. It is understood that this purchaser intends to obtain a 6. I. mortgage to cover the purchase price and fa mortgage cannot be thus obtained the purchase will not go through with the sale."

Thereafter Davidson, who is the petitioner herein, made application for and obtained approval of a $ 3,000 mortgage loan and so advised testator. On September 15, 1950, petitioner paid an additional deposit of $ 450 and testator duly acknowledged receipt thereof as further payment on account of the purchase price. On October 3, 1950, the testator died and respondent-executrix refused to close the title.

This proceeding was brought to compel compliance with the instrument. It is respondent's claim that its terms are vague and indefinite and do not satisfy the requirements of Real Property Law, ' 269. She asserts also that the subsequent confirmation thereof being oral is ineffective to give validity of the instrument.

In De Goode v. Burton, 141 App.Div. 22, at page 25, 125 N.Y.S. 682, at page 663, the essential elements of a valid contract to sell real property were thus stated:

'The rule is well established that a note or memorandum sufficient to take a contract of sale out of the operation of the statute of frauds must state the whole contract with reasonable certainty, so that the substance thereof may be made to appear from the record itself without recourse to parol evidence. Such essentials must appear, without the aid of parol proof, either from the memorandum itself or from a reference therein to some other writing or thing; and such essentials, to make a complete agreement, must consist of the subject-matter of the sale, the terms, and names, or a description of the parties.'

An examination of the instrument in the light of this pronouncement discloses that it contains the names of the seller and purchaser, the terms of sale and a description of the premises. It is signed by the person to be charged and is sufficient to constitute a binding obligation, see also N. E. D. Holding Co. v. McKinley, 246 N.Y. 40, 157 N.E. 923; Wertheimer v. Boehm, 241 N.Y. 575, 150 N.E. 561; Tobias v. Lynch, 192 App.Div. 54, 182 N.Y.S. 643, affirmed 233 N.Y. 515, 135 N.E. 898; Lukawski v. Devlin, 214 App.Div. 734, 210 N.Y.S. 680, affirmed 243 N.Y. 583, 154 N.E. 614; Murphy v. Mahoney, 187 Misc. 316, 63 N.Y.S.2d 912; MacLaeon v. Lipchitz:, Sup., 56 N.Y.S.2d 609, affirmed 269 App.Div. 953, 58 N.Y.S.2d 337.

Respondent argues that by the further terms of the instrument the parties intended it was not to be considered a contract because a more formal contract of sale was to be prepared thereafter. This is immaterial since it is clear that merely the form of the contract was subject to future approval, only 'the agreement of the parties' already reached was to have been 'set forth' in the formal contract. 1130 President Street Corporation v. Bolton Realty Corporation, 300 N.Y. 63, 89 N.E.2d 16, 16 A.L.R.2d 617; Sanders v. Pottlitzer Bros. Fruit Co., 144 N.Y. 209, 39 N.E. 75, 29 L.R.A. 431. With reference to respondent's other claim that the instrument was conditioned upon petitioner's obtaining approval for a G. I. mortgage and therefore is unenforceable, it will suffice to state that this mortgage was in fact obtained. It is common practice for this Court to pass upon contracts which contain provisions to the effect that the contract is not to be enforceable until it is approved by the Court. There is no substantial difference between the provision in the instrument at bar and the practice referred to. The receipt of September 15, 1950, is in writing and by its terms is referable to the original instrument. It indicates testator's intention to carry out the terms of the original agreement. Petitioner is entitled to receive a deed of the premises upon complying with the terms of the agreement. The prayer of the petitioner is granted and an order may be submitted with provisions therein fixing a date for closing of the title and delivery of the deed within a reasonable time after the entry of said order.

Proceed accordingly.

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103 N.Y.S.2d 686 (1951), reversed 113 N.Y.S.2d 59 (1st Dept 1952)

OPINION: QUINN, Justice. The plaintiff, in August 1950, evinced an interest in purchasing the newly-erected, two-story dwelling at 17 Dorset Road, Beech Hill, Scarsdale, New York, which the defendant, as owner and builder, had up for sale. The plaintiff, with his wife, inspected the house and discussed with the defendant the details of its completion according to the taste and wishes of the plaintiff. Although the amount of the purchase price remained open, the parties, early in their negotiations, had fixed upon the part of the purchase price to remain on bond and mortgage and the rate of interest thereon. Their difference lay in the balance of cash to be paid. This difference was vexed by the question of the items of incidental work to be done by the defendant in completing the house according to the specifications of the plaintiff. The extent and cost of this work entered materially into the dicker over the price.

Finally, on August 28, 1950, the parties, at the invitation of the plaintiff, sat down to compose their differences. The defendant wrote out in ink an orderly list of the various finishing touches required by the plaintiff. On the back of this same piece of paper scramble of penciled figures, in random disarray, speak with laconic eloquence of the familiar haggle which took place between the parties. Of unique significance among these figures is one written originally by the defendant as '40350'. It was then altered, by the plaintiff writing a '2' over the '3'. This amended figure was then overwritten in ink by the plaintiff to read '40250'.

The Court entertains no doubt that this represents the ultimate price upon which the minds of the parties met.

The plaintiff thereupon freely delivered to the defendant the sum of $ 2000.00 in the form of checks, which the defendant later collected and still retains. There was no stipulation, nor implication, that the checks or their proceeds were to be held by the defendant as security for the plaintiff's performance; nor that plaintiff reserved the right to rescind absolutely or conditionally.

Beneath the final figure of '40250', on the same piece of paper, the plaintiff wrote the name and address of his attorney and told the defendant to arrange through him the preparation of a more formal contract. The defendant did as the plaintiff directed, but, before an appointment suitable to the convenience of plaintiff's attorney could be arranged, the defendant was notified that plaintiff had changed his mind about buying the house and required the return of the two thousand dollars he had paid.

The plaintiff, sticking to his refusal to go through with the purchase, alleges a cause of action for 'money had and received' and seeks to recover $ 2000 from the defendant.

At all times up to and including the trial of this action the defendant continued ready and willing to perform on his promise and to do all the things he had undertaken to do.

Had a minute been made of the result of the bargaining between the parties, it would recite that, in return for the promise of the defendant to convey the improved real property known as 17 Dorset Road, Scarsdale, New York, completed according to an agreed list of finishing-details, the plaintiff promised to pay the sum of $ 40,250: $ 20,000 to be on bond and mortgage at 4 1/2% interest and the balance in cash less the sum of $ 2000 paid on account. A more formal contract to be made later.

By these terms the parties had agreed upon the essentials of a contract. It was not fatally lacking in certainty or completeness. Weintraub v. Kruse, 234 N.Y. 575, 138 N.E. 452. Its failure to fix the date for the execution of the more formal agreement contemplated, or the time for the delivery of the deed and possession; its silence on the terms and due date of the mortgage, the form of the deed, the assumption of the risk of loss, the customary adjustments for taxes, insurance premiums and the like, were not such lacunae as to rob this terse, parol accord of its substance as a contract. True, such matters ordinarily are of major importance in a contract for the sale of land; but not of such prime, essential rank as to be the sine qua non of an otherwise sufficient agreement. It is not as though these terms were omitted because the parties were at odds and unable to agree upon them. The plaintiff and defendant just hadn't gotten around to discussing them. They could be left to future negotiation. If the parties settled them then, all well and good. If not, insofar as they might be necessary to give effect to the agreed purpose and intent of the parties, they would be implied. Ansorge v. Kane, 244 N.Y. 395, 399, 155 N.E. 683, 685; Morrison v. Brenmohl, 137 App.Div. 4, 122 N.Y.S.81.

The contract failed of validity only because of its defect in form: No written memorandum of it had been signed by either party. Unquestionably it is void and unenforceable. Real Property Law, '259.

It is the most elementary of commonplaces to say that, in any action on the contract by either party, the plea of the Statute of Frauds would be a complete bar. This is something far different from saying, as the plaintiff inter alia seems to, that the violation of the statute gives rise to a cause of action for the recovery of benefits conferred in its despite. As the legal cliche has it, the statute was designed for use as a shield only, never as a sword. Certainly no such action is expressly authorized by the terms of the statute. And no such action is warranted under any term of the contract-- which the plaintiff, in any event, repudiates and condemns and has refused to perform. Nor is any such action recognized in the law of torts.

'The principle is fundamental and unquestioned (that) He who prevents a thing from being done may not avail himself of the nonperformance, which he has, himself, occasioned, for the law says to him, in effect; 'This is your own act, and, therefore, you are not damnified". Cardozo, J., in Imperator Realty Co. v. Tull, 228 N.Y. 447, 457, 127 N.E. 263, 266, quoting Dolan v. Rodgers, 149 N.Y. 489, 491, 44 N.E. 167, and other abundant authorities.

If any action lies at all it can only be on some principle of quasi contract, in that retention of the plaintiff's $ 2000 by the defendant, so offends against good conscience that the Court ought to imply a promise in law on the part of the defendant to repay.

The unfortunate thing for the plaintiff is that in this State, the criteria by which the law, in point of conscience, is moved to indulge the fiction of a new or different contract and impose an obligation to refund, where none in fact exists, were long ago examined and declared inapposite to a case of this precise character:

'The contract here upon which the money was paid, although it was so far void that the law would lend no aid in enforcing it, was not contrary to law. It was neither immoral nor illegal. It was one which the parties had a right to make and carry out. There was no fraud or mistake. The money was voluntarily paid by the plaintiff upon a promise made by the defendant. The former knew at the time he could not oblige the latter to perform, but which promise, nevertheless, he agreed to accept as a consideration for the money. The money was not received by the defendant as a loan but as a payment. It was not received for the plaintiff's use and as long as the defendant is willing to do what he agrees to do in consideration of the payment, the law will not presume any promise to repay it, but will leave the parties to stand where they voluntarily placed themselves by their arrangement until the defendant refuses to carry it out.' Collier v. Coates, 17 Barb. 471.

The uniform current of authority in this state still seems to run in complete accord with the last cited case and squarely against the claim of the plaintiff, viz., Ketchum v. Evertson, 13 Johns. 359; Abbott v. Draper, 4 Denio 51; Collier v. Coates, supra; Keystone Hardware Corp. v. Tague, 246 N.Y. 79, 158 N.E. 27, 53 A.L.R. 610; Quinto v. Alexander, 123 App.Div. 1, 107 N.Y.S. 422; Graham v. Healy, 154 App.Div. 76, 138 N.Y.S. 611; Schutzbank v. Schaeffer, Sup., 194 N.Y.S. 458; Schaefer v. Steuernagel, 114 Misc. 546, 187 N.Y.S. 261.

'When a part payment is made under a binder such as the one in suit, the party making the payment, the vendee, may not recover it thereafter if he has willfully refused to make any genuine effort to reach an agreement as to the details left open for subsequent adjustment. Such refusal will indeed be effective to thwart specific performance at the suit of the vendor. It will not confer a cause of action for money had and received, a cause of action rooted in principles of equity.' Keystone Hardware Corp. v. Tague, supra, 246 N.Y. at page 85, 158 N.E. at page 28.

The conclusion is inescapable that the $ 2000 paid by the plaintiff in part performance of this oral contract for the purchase of real property, cannot be recovered in the face of the defendant's willingness to convey the property on the performance of the conditions by the plaintiff.

Judgment for the defendant dismissing the complaint.

OPINION: PER CURIAM. As the transaction involved a sale of real property and no contract or memorandum thereof expressing the consideration was subscribed by the party to be charged, the oral agreement was unenforceable. Section 259, Real Property Law; Robinson v. Karr, 273 App.Div. 790, 75 N.Y.S.2d 460. In addition, the evidence here showed the parties had not agreed upon all the essential terms of their agreement. In the circumstances, the two checks, each for $ 1,000, were given as a deposit only in contemplation of a contract subsequently to be made and are recoverable in any event as there was no proof of damage. Weber v. Williams & Morford Co., Sup., 144 N.Y.S. 619; Karp v. R. Ritter & Co., Inc., 110 Misc. 668, 180 N.Y.S. 769, opinions by Lehman, J.; Morris v. Lurie, Sup., 103 N.Y.S. 213; Cohn v. Smarr, 214 App.Div. 589, 212 N.Y.S. 304.

Judgment reversed, with $ 30 costs, and judgment directed for plaintiff for $ 2,000, with interest and costs.

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How do you distinguish Bell from Degenkolb? Does an express stipulation that the agreement is preliminary appear to have any impact on the decision of the court? Should it? Is there any question of public policy, either explicit or implicit, which underlies this decision? How would you argue, if you represented the buyer or the seller attempting to get out of the contract on the theory that there was no agreement? If the court allowed the buyer to get specific performance with a provision that a mortgage had to be secured, does mutuality exist such that the seller could force the buyer to attempt to secure a mortgage?

281 A.D.451 (3rd Dept 1953)

OPINION: HALPERN, J. This is an appeal from an order granting summary judgment in favor of the plaintiff, the purchaser of certain real property, in an action for specific performance, and from the judgment entered in accordance with the order. The principal question is whether the Statute of Frauds (Real Property Law, ' 259) was complied with.

In reviewing an order granting summary judgment in favor of the plaintiff, we must accept the defendant's version of the facts as true except to the extent to which we may reject any part of it as incredible as a matter of law. If the evidentiary facts set forth by the defendant are sufficient to raise a question of fact as to any point vital to the plaintiff's case, the order must be reversed.

It seems to us that there is a triable issue of fact in this case which precludes the granting of summary judgment.

It appears from the pleadings and affidavits that after prolonged negotiations the parties agreed upon $46,000 as the price to be paid for the property. However, according to the defendant's version of the transaction, the amount of the down payment to be made by the purchaser upon the execution of the contract 'Was only tentatively agreed upon", the plaintiff offering to pay $1 ,000 and the defendant insisting upon a payment of at least $2,000. This was left open to be finally determined at the time of the preparation and execution of the formal agreement, it being understood that the agreement would be prepared by the defendant's attorney. An effort was made to reach the defendant's attorney but he was not available and thereupon the real estate broker drew up a memorandum which was executed by the parties. This memorandum read as follows:

"May 26, 1952

"I, Louis Spector, agree to sell to Eugene J. Nathan, 9 Horicon Avenue, Glens Falls, N.Y., the property located at 53-59 Park Street and the adjoining land owned by me for Forty-six thousand and no/I 00 ($46,000.00) Dollars free and clear of all encumbrances and I agree to pay to Martin A. Ginsburg and Nathan Proller collectively, One thousand five hundred and no/I 00 ($1,500.00) Dollars as commission for the sale. Title to be closed not later than August 1, 1952.

LOUIS SPECTOR

EUGENE J. NATHAN

Accepted:

Witness: Martin A. Ginsburg"

The memorandum was obviously intended to be a mere binder, pending the preparation and execution of the formal contract. It will be noted that nothing was said in the memorandum bout the down payment.

A few days later the plaintiff notified the defendant by telephone that he was willing to pay $2,000 down and at a subsequent meeting In the office of the defendant's attorney the plaintiff tendered the $2,000 but the defendant refused to accept it and refused to enter into any agreement for the sale of the property.

The principles of law to be applied in this situation are well settled. The fact that the memorandum contains all the essential terms of a contract of sale is beside the point. The question is whether the memorandum was a sufficient memorandum of the contract, if any, which was made by the parties. The memorandum "does not integrate, but merely evidences, the oral agreement". (Friedman & Co. v. Newman, 255 N.Y. 340, 343; N.E.D. Holding Co. v. McKinley, 246 N.Y. 40, 45; 1 Restatement, Contracts, '' 228, 237.) The memorandum is not subject to the parol evidence rule. It may be shown by parol evidence (1) that the memorandum was incomplete and that the oral agreement contained terms not set forth in the memorandum, or (2) that the oral agreement was in itself incomplete and that the parties left essential terms open for further negotiation. In the former case, it would have to be held that the memorandum was insufficient under the Statute of Frauds and that the agreement between the parties was unenforceable for that reason; in the latter case, it would have to be held that there was no agreement between the parties and hence that there was nothing to enforce. (N.E.D. Holding Co. v. McKinley, supra.)

If we accept the defendant's version of the transaction, as we must upon a motion of this character, we must conclude that the parties had not reached a complete agreement at the time of the execution of the memorandum. 'The amount to be paid on the signing of the contract was an important element of the complete contract. It was left open. The contract was never completed. The transaction was destitute of legal effect." (Ansorge v. Kane, 244 N.Y. 395, 399-400.)

It may be assumed that upon the plaintiff's subsequent acquiescence in the defendant's demand for a $2,000 down payment, prior to the defendant's withdrawal of the offer to sell the premises, a complete contract came into being. However, this complete contract is not evidenced by the memorandum. The promise to make a down payment was an essential term of the agreement; its omission from the memorandum was fatal. "Nor was it a minor matter for the owner whether nothing should be paid when the contract was signed and she should wait two months for her money, or whether she should receive a substantial sum, the stronger to bind the agreement, on which she also might receive interest, or even a greater increment, if she had her hands on it. In this connection we observe that the broker demanded that his full commission of ten per cent be paid on the signing of the contract which further suggests that the down payment had more than theoretical importance to the vendor" (Ansorge v. Kane, supra, p. 399).

The statement quoted from the Ansorge case is directly in point. In this case too, it was orally agreed that the broker would be paid one half of his commission upon the execution of the formal contract.

It is thus clear that section 259 of the Real Property Law has not been complied with and that the contract is unenforceable.

"It is not sufficient that the note or memorandum may express the terms of a contract. It is essential that it shall completely evidence the contract which the parties made." (Poel v. Brunswick-Balke-Collender Co., 216 N.Y. 310, 314.)

"So, although the contract appearing in the memorandum seems to be complete upon its face, if, In fact, there were additional terms, the memorandum is Insufficient because the memorandum must state the essential terms of the oral contract. Thus, if there is *** a term of credit, or security, or if the place or time of delivery or payment is agreed upon, these must be included in the memorandum." (2 Williston on Contracts [Rev. ed.], ' 575.)

As a matter of fact, the complaint and the plaintiff's affidavits lend considerable support to the defendant's version of the transaction. The plaintiff admits that there was talk about a down payment and that the defendant had insisted upon $2,000 and that the plaintiff had originally offered to pay $1,000. However, the plaintiff claims that this all took place after the execution of the memorandum and that there was no mention of a down payment in the oral negotiations which led to the preparation and execution of the memorandum. It is difficult to accept the plaintiff's version on this point since it is hard to understand why the plaintiff volunteered subsequently to make a down payment if there had been a complete agreement of sale without a down payment at the time of the execution of the memorandum. In any event, there is at least a question of fact as to whether a down payment had been discussed prior to the execution of the agreement and had been left open for further negotiation and had been ultimately agreed upon. This controversy cannot be disposed of by summary judgment.

The order and judgment should be reversed and the motion for summary judgment should be denied, without costs. Insofar as the order appealed from denies the defendant's motion for judgment on the pleadings, it should be affirmed, without costs.

DISSENT: Coon, J. (dissenting). It is undisputed that the parties entered into negotiations for the sale by the defendant to the plaintiff of certain business property in the city of Glens Falls, N.Y., and that the negotiations culminated in both parties signing the agreement in writing, which is quoted in the opinion of the court.

This brief contract contains all the essential elements of a contract for the sale of real estate and is binding upon both parties. The court at Special Term correctly decided the motion papers presented no triable issue of fact and properly granted summary judgment. The order and judgment should be affirmed.

FOSTER, P.J., and BREWSTER, J., concur with HALPERN, J.; COON, J., dissents in memorandum in which BERGAN, J., concurs.

Order and judgment reversed, on the law, and motion for summary judgment denied, without costs. Insofar as the order denies the defendant's motion for judgment on the pleadings, it is affirmed, without costs.

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133 Misc. 312 (1928)

OPINION: LEWlS, J. The complaint sufficiently alleges the breach of an agreement on the part of the defendant to accept title and seeks to recover damages therefor. The memorandum sued upon is an enforceable agreement. It sets forth a description of the property, the payment of $ 5,000 on account of the purchase price, $ 10,000 on the signing of the contract, $ 21,000 by taking the property subject to existing mortgages for that amount, $ 22,750 by a purchase-money mortgage for three years, 'to be drawn in the usual way and under the usual conditions. Made by the purchaser or assigns,' and the balance of $ 34,250 in cash or by certified check.

Provision is also made that title is to be closed on September 1, 1925, and for the place of closing. The agreement is no less a contract because the parties contemplated the execution of a more formal instrument. Sanders v. Pollitzer Bros. Fruit Co., 144 N.Y. 209, 39 N. E. 75, 29 L. R. A. 431, 43 Am. St. Rep. 757. The statute of frauds is not set forth as a defense, and in any event the defense of the statute is only available to a vendor. Quinto v. Alexander, 123 App.Div. 1, 107 N.Y.S. 422; Brune v. Vom Lehn, 112 Misc. Rep. 342, 183 N.Y.S. 360, affirmed 196 App.Div. 907, 187 N.Y.S. 928. 300 West End Ave. Corp. v. Warner, 223 App.Div. 267, 228 N.Y.S. 44, is to the contrary, but the weight of authority in this department is opposed to the views expressed by the majority opinion.

The defendant in his brief, submitted after trial, claims for the first time that the phrase in the agreement, 'the purchase money mortgage is to be drawn in the usual way and under the usual conditions,' renders the agreement indefinite and insufficient. The actual words used, drawn, way, and conditions, are matters of import. They differ from the words in the phrases considered in Elterman v. Hyman, 192 N.Y. 113, 84 N. E. 937, 127 Am. St. Rep. 862, 15 Ann. Cas. 819, and Goldberg v. Norek, 101 Misc. Rep. 371, 166 N.Y.S. 1023. In those cases the expressions clearly had reference to what was to be contained in the mortgage as to its substantive clauses of terms and conditions. In the instant case the expression has no clear reference as to what was to be contained in the mortgage, and it is likely refers merely to the manual or mechanical way and conditions of the drawing or draughtmanship of the mortgage; e. g., the practical or customary way of the seller's attorney drawing the papers under condition of the buyer paying the scrivener's fee. If, however, it be assumed that the phrase did contemplate the clauses of terms and conditions, then have in mind that the contract stated the amount of the purchase-money mortgage, that it was to run for three years with legal rate of interest implied, and was to be made or executed by the purchaser, it is obvious that all that was left was the scrivener's task of putting these substantive terms into legal form, and thus the phrase has no more indefiniteness or uncertainty than has the common stipulation for a formal contract of sale to express the agreed terms. The statutory form of the mortgage (section 258, Real Property Law) would satisfy these terms. If more was intended, there does not appear to have been any discussion of possible differences at the time.

The defendant suggests, in a tentative way, that the phrase may have had reference to the amortization of the mortgage. Had there been discussion at the time of the contract as to whether there was to be an amortization clause, or if it was on the trial contended that such a clause was usual, it would have been competent to show it as a fact (Goldberg v. Norek, supra; Mesibov, Glinert & Levy v. Cohen Bros. Mfg. Co., 245 N.Y. 305, 157 N. E. 148), but it cannot be held that an amortization clause or what amortization clause is usual as matter of law (cases supra, and Ansorge v. Belfer, 248 N.Y. 145, 161 N. E. 450). And that amortization was not intended is decisively evidenced by the statement contained in the contract providing for payment of the principal in a fixed period of three years.

The status of the title is to be determined as of the day of closing and not as of the day of contract. If there were $ 21,000 of mortgages existing on September 1st it would be of no consequence that other mortgages, either in excess or less than that amount, were liens on the property prior to that time. It does appear that on September 1st plaintiff's assignor was the owner of the property, had good and marketable title thereto, and that the existing mortgages were as stated in the agreement. Neither on the trial nor in the brief of the defendant is it claimed that there was a failure to tender the deed on September 1st. The measure of damages is the difference between the contract price and the market value at the time of performance, September 1, 1925.

I therefore direct judgment for the plaintiff in the sum of $ 20,000.

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The contract must be signed by the parties to be charged. Thus, where a husband signed a contract which purports to bind his wife, the court in Aubrey Gates, 199 N.Y.S.2d 80 (1959), held that there was no binding contract affecting the wife. Likewise, where the broker for the seller signed on behalf of the buyer, without any recitation of the buyer's name or further authority to enter into a binding agreement for him, the court held in Irvmore Corp. v. Rodewald, 253 N.Y. (1930), that without a signature from the party to be charged, the statute of frauds had not been complied with.

Where the price is note specified, and there is no means of determining what agreement the parties had as to the price, the court will not enforce the agreement as a binding contracts. See In re McVoy's Estate, 94 N.Y.S.2d 396 (Queens 1950).

Where the parties to the agreement contemplated a purchase money mortgage, and the terms were note stated, the court held that a material element of the contract was missing. The binder agreement was thus void. Osta v. Jarrett, 278 N.Y.S.2d 8, 27 A.D.2d 882 (3rd Dept 1967). The provisions of a purchase money mortgage, amount, interest rate, and form of bond and security are all essential elements of a binding contract.

A receipt for deposit without any of the terms of the agreement, or even a check, endorsed and cashed, without any reference to essential terms and conditions of the contract has been held to be insufficient to create a binding contract in New York. See e.g., Crum Elbow Sportsmen's Association v. Whelan, 189 Misc. 117 (S.Ct. Dutchess 1947), on the question whether endorsement of a check will suffice to create a binding contract. Wagner v. Zonghetti Construction Company, 115 N.Y.S.2d 410 (Bronx 1952), addresses the question whether a receipt as a deposit is sufficient to bind the parties.