Opinion
May 20, 1971
Judgment, Supreme Court, New York County, entered on January 28, 1971, in favor of plaintiffs-respondents, after nonjury trial, unanimously reversed, on the law and the facts, and judgment directed for defendants-appellants as prayed for in the counterclaim. Appellants shall recover of respondents $50 costs and disbursements of this appeal. The individual parties and another person deposited shares of stock in three corporations, pursuant to a written contract, for the purpose of exchange for shares in the to-be-formed corporate defendant. Plaintiffs, claiming an oral agreement that the written contract was not to be effective until and if the new corporation acquired adequate public financing — an event which never transpired — sued for the return of their deposited stock. Defendants counterclaimed for completion of transfer formalities by plaintiffs for the deposited stock so that the deal might be consummated. Trial Term found the oral agreement to be a condition precedent to the coming into effect of the written contract and held for plaintiffs. We do not agree. The record discloses that proceedings under the written contract had progressed to the point of plaintiffs' deposit of their stock — an important step in fulfillment of the writing — before the alleged oral agreement came into being. The parol evidence rule would, in these circumstances, bar proof of the purported oral agreement, actually a condition subsequent. An important consideration in evaluating the factual situation is that the claimed oral agreement is nowhere reflected in the registration statement for the newly issued stock, and public policy should bar implementation of any such condition, purposely concealed, as Trial Term surmised, from the buying public. In these circumstances, there is no reason why, as required in the counterclaims, the written agreement should not proceed to fruition.
Concur — McGivern, J.P., Markewich, Kupferman, Tilzer and Eager, JJ.