Hallad Construction Corp. v. County Federal Savings and Loan Association, 32 N.Y.2d 285 (1973)

When determining if the cancellation of a contract discharges claims for prior breaches, the intent of the parties governs, and summary judgment is appropriate if no disputed extrinsic evidence exists to demonstrate a contrary intention.

Summary

Hallad Construction sued County Federal Savings for breach of a financing contract. County Federal obtained summary judgment, arguing that later agreements cancelled the initial contract, thereby discharging any prior breaches. The Court of Appeals affirmed, holding that while intent determines whether cancellation discharges prior breaches, Hallad failed to present sufficient evidence, beyond conclusory statements, demonstrating that the parties intended to preserve the prior breach claims. Without such evidence, the court could interpret the cancellation clauses as a discharge, thus justifying summary judgment for County Federal.

Facts

County Federal Savings agreed to lend Hallad Construction $2,160,000 as a building loan, convertible to a $2,400,000 permanent mortgage. Hallad presented a previously revoked building permit at closing without disclosing the revocation to County Federal. County Federal advanced $324,000 initially and then $543,000 later. Hallad claimed County Federal breached the agreement by refusing scheduled progress payments. County Federal later assigned the loan agreement to Sackman-Gilliland, with Hallad’s consent where Hallad acknowledged no defenses against the mortgage. Subsequently, Hallad, County Federal, and Sackman-Gilliland executed a new agreement that raised the interest rate and included a clause revoking and cancelling the prior agreement. Later Hallad sold the property to Solork Corporation, County Federal issued a new commitment to Solork which also revoked any prior commitments to Hallad. Hallad contended that the cancellations did not discharge County Federal’s liability for prior breaches.

Procedural History

Hallad sued County Federal for breach of contract. The Supreme Court (Special Term) denied County Federal’s motion for summary judgment, finding a triable issue of fact regarding the parties’ intent. The Appellate Division reversed, granting summary judgment to County Federal. Hallad appealed to the New York Court of Appeals.

Issue(s)

Whether the explicit cancellation of a financing agreement by later agreements, absent more, raises a triable issue of fact as to whether the parties intended to discharge prior breaches of the first agreement.

Holding

No, because to defeat summary judgment, the opponent must present evidentiary facts demonstrating a triable issue; conclusory statements, without more, are insufficient. Absent disputed extrinsic evidence of intention, the question of law is determinable from the writings and circumstances of execution by the court.

Court’s Reasoning

The court emphasized that while the intent of the parties determines whether cancellation discharges prior breaches, Hallad failed to provide evidentiary facts demonstrating an intent to preserve those claims. Hallad only offered conclusory statements asserting that no release was given. The court reasoned that to defeat summary judgment, more than ambiguous agreements permitting parol evidence are required; the specific parol evidence relied upon must be disclosed. In this case, the documents themselves, including the assignment and subsequent agreements, indicated an intention to supersede the original commitments. “Only where the intent must be determined by disputed evidence or inferences outside the written words of the instrument is a question of fact presented.” Because no such evidence was presented by Hallad, the court was free to interpret the agreements and conclude that County Federal was discharged from liability for prior breaches. The court cited Ehrlich v. American Moninger Greenhouse, 26 N.Y.2d 255 (1970), and Hertz Commercial Leasing Corp. v. Transportation Credit Clearing House, 64 Misc.2d 910 (App. Term), for the principle that conclusory statements and ambiguous agreements are insufficient to defeat summary judgment when the moving party has presented documentary evidence. The court noted the relevance of Hallad’s failure to raise any prior breaches during the negotiation of the subsequent agreements. The court also quoted Eames Vacuum Brake Co. v. Prosser, 157 N.Y. 289, 295, stating that claims for breach are determined by reference to the rescission agreement and “in general no such claim can be made unless expressly or impliedly reserved upon the rescission.”