Opinion
No. 218, Docket 21277.
May 9, 1949.
Appeal from the United States District Court for the Southern District of New York.
Action by Ervin Feuerstein and Lionel Lindheimer against Adolph and Lottie K. Zukor for breach of an alleged agreement to sub-divide and develop realty. From a judgment of the District Court, plaintiffs appeal.
Affirmed.
Plaintiffs base their action on an agreement, attached to and made a part of their complaint, consisting of the following letter written to them by defendants and accepted by plaintiffs:
"May 11, 1948
"Messrs. Lionel Lindheimer and "Ervin Feuerstein "Chicago, Illinois
"Gentlemen:
"The undersigned are the owners of properties known as Mountain View Farm and Mountain View Golf and Country Club, located in Rockingham County, New York, which we desire to have subdivided and developed. We understand that you are prepared to undertake said subdivision and development and suggest you do so on the following terms: 1. We will advance the sum of $125,000.00 in cash, to be applied towards the expenses of such subdivision and development, together with proceeds of the sale of four houses upon said premises which you shall sell as soon as you see fit, all to be used to the extent the same shall be necessary.
"2. Out of the subdivision and development we shall be repaid the $125,000.00 advance, together with our cost of the four houses aforementioned, and the sum of $500,000.00. All profits of such subdivision and development over and above the amounts aforementioned shall be divided one-third to you and two-thirds to us. These profits shall be computed after the payment of all expenses, including the services of architects, engineers, builders, sales agents and all other persons who may be employed in and about said enterprise, whether on a so-called profit sharing basis or otherwise, according to usual accounting practices. You shall also be reimbursed for travelling and other personal expenses incurred by you in this matter, and shall from time to time receive payment for your personal time spent at a reasonable rate to be determined by Mr. Lindheimer.
"3. The management of the subdivision and development shall be jointly handled by Adolph Zukor, Lionel Lindheimer and Ervin Feuerstein, and in the event of the inability of Adolph Zukor to act with respect thereto, his son Eugene Zukor, shall act with Lionel Lindheimer and Ervin Feuerstein.
"4. The development shall be of the properties aforesaid, including those parts title to which may be presently vested in Rockingham Corporation. In connection with such subdivision and development, from time to time it may be found advisable to organize a corporation or corporations or a trust or trusts to hold title to all or any part of said properties or carry on any part or parts of the activities in connection therewith, and the terms of this agreement shall be reflected in the allocation of interests in said corporation, corporations, trust or trusts.
"5. Nothing in this letter shall be construed as creating a partnership between us, but solely as a statement of the terms of your employment in this matter.
"If this meets with your approval, will you please note your acceptance and we shall then all proceed with this project.
"Very truly yours, "Adolph Zukor "Lottie K. Zukor "Accepted: "Lionel B. Lindheimer "Ervin Feuerstein
"OK "Eugene J. Zukor"The complaint alleges: "That plaintiffs duly entered upon their duties under and pursuant to the terms and conditions of said agreement, and each of them duly performed all of the terms and conditions of said agreement on his part to be performed except in so far as performance thereunder was prevented by defendants.
"That prior to September 24, 1948, plaintiffs had, among other things, on behalf of defendants and with their consent and approval, employed architects, builders, salesmen and advertising and publicity representatives, and had proceeded with the construction of roads, water mains and a sales and building office on the premises described in Exhibit `A'; that the erection of one house had been commenced and others contemplated, and that contracts had been made to sell houses and parcels of land upon said premises; that defendants had advanced in connection with said activities, the sum of approximately $45,000.
"That on or about the 24th day of September, 1948, defendants breached the aforesaid written agreement and failed and refused to carry out and perform the obligations they were required to perform thereunder; that, among other things, without consultation with or the consent or approval of plaintiffs, they demanded and directed that all construction and building on said premises be discontinued, that all sales, advertising and publicity be stopped, that sales contracts theretofore entered into be cancelled, and that plaintiffs and all the persons employed by plaintiffs, as aforesaid, leave said premises and cease all activity in connection therewith.
"That on or about September 24, 1948, defendants, in violation of their obligations under the aforesaid agreement, refused to advance any further funds in connection with said enterprise and prevented plaintiffs from thereafter performing their obligations thereunder."
Defendants, without answering, moved to dismiss the complaint. Pursuant to this motion, the district court did so, and entered judgment for defendants.
Riegelman, Strasser, Schwarz Spiegelberg, of New York City (George A. Spiegelberg, Walter J. Fried and Robert H. Preiskel, all of New York City, of counsel), for appellants.
Phillips, Nizer, Benjamin Krim, of New York City (Walter S. Beck and Seymour Shainswit, both of New York City, of counsel), for appellees.
Before CHASE, CLARK, and FRANK, Circuit Judges.
The Supreme Court has told us that, in litigation like this, we must apply the rationale of the pertinent New York decisions. That is not too easy a task. For we had no part in contriving that rationale, and we must spell it out of cases decided at different dates and not by the highest court of the state, so that we are in danger of matching cases in a merely mechanical manner without an adequately sensitive comprehension of the policy which motivated the New York judges or the policy which the judges of its highest court would employ. Aware of that danger, we have done our best to avoid it.
Having done so, we conclude that, no matter what we would otherwise decide, the agreement is so indefinite as to duration as to render it terminable at will. We think that it comes within the ruling of Lyon v. Riddle, 214 App. Div. 803, 210 N.Y.S. 880, and not within that of Potter v. City of New York, 59 App. Div. 70, 71, 68 N.Y.S. 1039. In the Potter case, the court held that "the employment is for a fixed period" because "dependent upon the duration of a distinct job or piece of work, which as a job is fixed and determined by the period of time required in its fulfillment." In the Lyon case, the court distinguished the Potter case because there was not an agreement for "carrying out a particular job according to one plan or design. His work involved the constant preparation of new plans or designs, in which the element of definiteness is lacking." Plaintiffs, stressing the provision about profit-sharing, argue that they were obligated to work until the completion of the "subdivision and development." But that term, in the light of the New York cases, is insufficiently definite. If it means until completion of the project to give effect to the profit-sharing provision, the answer is that such a time might never arrive, for no one knows whether any profits will ever accrue. If it means until completion, regardless of profit or loss, the answer is that no one knows when completion will come, since we believe the New York courts would hold that to say how long it takes to finish "a subdivision and development" is almost like saying "how big is a piece of wood."
Plaintiffs have made no claim for the services performed before defendants terminated. At the oral argument, defendants' counsel stated that whatever was due plaintiffs for such services had been paid out of the funds advanced by defendants; and plaintiffs' counsel did not dispute that statement.
Plaintiffs have not in their complaint alleged any facts outside the agreement and not covered by the parol evidence rule which would lend a different interpretation to the document; we leave to the district court the question whether plaintiffs, if they so request, should be permitted to amend their complaint to include such allegations.
We do not now consider whether the agreement falls foul of the lack-of-mutuality rule, as it is discussed in the New York decisions; cf. Wood v. Lucy, Lady Duff-Gordon, 222 N.Y. 88, 118 N.E. 214; Oscar Schlegel Mfg. Co. v. Peter Cooper's Glue Factory, 231 N.Y. 459, 132 N.E. 148, 24 A.L.R. 1348.
Affirmed.
I agree generally; but with reference to the suggestion for possible amendment to the complaint, I think it needs to be made wholly clear that the district court's power in this regard is to be found in amended Rule 60(b), Federal Rules of Civil Procedure, 28 U.S.C.A., whose provisions must be satisfied before such a step can be taken.