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Oxford Commercial Corp. v. Landau

Court of Appeals of New York

February 28, 1963, Argued ; April 4, 1963, Decided

No Number in Original

Opinion

 [*364]   [**230]   [***866]  After plaintiff corporation had discovered that one of its directors, Morton Carlin, had been [****6]  siphoning off its assets to rescue the latter's own corporations from collapse, the two parties, represented throughout by lawyers, engaged in extensive negotiations looking toward a settlement. The agreement ultimately adopted, giving evidence of careful thought and draftsmanship, leaves no doubt that it contemplated finality to the settlement and an end to all litigation except that expressly excluded. For his part, Carlin agreed to make payments in satisfaction of the claims against him and, for its part, the plaintiff, in addition to "releasing" Carlin, agreed that it would not bring "any suit, against any person whomsoever" except those specifically named. "Oxford,"  [**231]  the plaintiff herein, the agreement of settlement recites,

"agrees that it will not institute any suit, and as well Werber and Klimerman, in their capacity as stockholders of Oxford, will not institute any suit, against any person whomsoever, except in connection with present or future suits to collect the collateral belonging to Oxford, referred to above, or to proceed against Inland Credit Corporation or The First National  [*365]  City Bank in connection with the said Zaifred suit mentioned [****7]  above in which Oxford, Werber and Klimerman are parties defendant."

Following execution of the agreement, the plaintiff brought this action against the defendants who had been employed as the corporation's sole accountants. The complaint contains three causes of action. The first charges them with aiding and abetting Carlin in drawing off the plaintiff's assets into Carlin's other enterprises and concealing these facts from the plaintiff by false financial statements. The other two causes of action charge the defendants (1) with "gross negligence" in not having discovered the frauds perpetrated by Carlin and (2) with breach of an agreement to faithfully perform their duties as accountants for the plaintiff. The defendants moved for summary judgment dismissing the complaint, contending that they were protected by, or the beneficiaries of, the plaintiff's promise in the settlement agreement not to sue "any person whomsoever" and that the parol evidence rule prohibits the introduction  [***867]  of oral testimony to prove otherwise. In opposition, the plaintiff maintains that it is entitled to show that the parties to the agreement contemplated that its promise was to encompass [****8]  not the defendants but only members of Carlin's family, his associates, members of his organizations and certain business concerns.

The court at Special Term agreed with the defendants and dismissed the complaint. A divided Appellate Division reversed, finding issues presented which required a trial, and granted leave to appeal upon a certified question.

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12 N.Y.2d 362 *; 190 N.E.2d 230 **; 239 N.Y.S.2d 865 ***; 1963 N.Y. LEXIS 1260 ****; 13 A.L.R.3d 309

Oxford Commercial Corporation, Respondent, v. Fred Landau et al., Individually and as Copartners Doing Business as Fred Landau & Co., Appellants

Prior History:  [****1]   Oxford Commercial Corp. v. Landau, 16 A D 2d 218.

Appeal, by permission of the Appellate Division of the Supreme Court in the First Judicial Department, from an order of said court, entered April 19, 1962, which (1) reversed, on the law, a judgment and order of the Supreme Court at Special Term (Saul S. Streit, J.), entered in New York County, granting a motion by defendants to dismiss the complaint, and (2) denied the motion. The following question was certified: "Was the order of this court entered herein on the 19th day of April, 1962, reversing the order of Special Term and the judgment entered thereon and denying the defendants' motion for judgment, properly made?"

Disposition: Order reversed, etc.

CORE TERMS

parties, settlement, promise, integrated agreement, parol evidence rule, certified question, specifically named, express exclusion, cause of action, negotiations

Contracts Law, Contract Interpretation, Parol Evidence, General Overview, Evidence, Types of Evidence, Documentary Evidence, Parol Evidence, Ambiguities & Contra Proferentem, Contract Ambiguities, Latent Ambiguities, Defenses, Ambiguities & Mistakes