Fiore v. Fiore, 46 N.Y.2d 971 (1979)

Courts cannot rewrite a clear and unambiguous contract term through interpretation; contract language should be given its plain meaning when the intent is clear on the face of the agreement.

Summary

This case addresses the interpretation of a stock agreement among three brothers who owned a corporation. The plaintiff argued that the agreement’s terms should be interpreted to include their sons, thereby restricting stock transfer. The New York Court of Appeals held that the agreement was unambiguous, explicitly referring only to the original parties (the brothers) and the corporation. The court refused to rewrite the contract under the guise of interpretation, emphasizing that unambiguous terms must be enforced as written, even if doing so might not fully achieve the agreement’s broader purpose.

Facts

Three Fiore brothers owned all the shares of Fiore Brothers, Inc. In 1953, the brothers entered into a stock agreement. The agreement aimed to keep the corporation’s stock ownership within the family (the brothers, their spouses, and sons) as much as possible. The agreement referred to the brothers as “individual parties.” The plaintiff argued that “individual parties” was ambiguous and should be interpreted to include the sons. The defendant argued the language was clear and unambiguous, applying only to the original three brothers.

Procedural History

The lower court interpreted the agreement in favor of the defendant, finding no ambiguity. The Appellate Division affirmed. The plaintiff then appealed to the New York Court of Appeals.

Issue(s)

Whether the phrase “individual parties” in the 1953 stock agreement is ambiguous and can be interpreted to include the sons of the original signatories, thereby restricting stock transfer to those sons.

Holding

No, because the agreement clearly defines “individual parties” as the three Fiore brothers who were the original signatories, and courts may not rewrite unambiguous contract terms through interpretation.

Court’s Reasoning

The court emphasized the principle that courts cannot rewrite a contract under the guise of interpretation when the terms are clear and unambiguous. The court stated, “The courts may not rewrite a term of a contract by ‘interpretation’ when it is clear and unambiguous on its face.” The agreement identified four parties: the three Fiore brothers and “Fiore Brothers, Inc.” It then distinguished between the “Corporation” and the “individual parties.” The court reasoned that the phrase “individual parties” logically referred only to the three brothers. Further, the agreement specifically identified the “individual parties” as “the sole owners of all of the shares of the capital stock of Fiore Brothers, Inc… amounting in all to one hundred and fifty (150) shares” and itemized the shares held individually by the three brothers. This explicit enumeration left no room for doubt that “individual parties” referred only to the brothers. Even though the agreement’s stated purpose was to keep ownership within the family as much as possible, the court refused to expand the clear meaning of the contract’s terms to achieve that purpose.