Satenstein v. Satenstein, 50 N.Y.2d 769 (1980)

When a restrictive agreement concerning property transfer is ambiguous, extrinsic evidence is admissible to determine the parties’ intent.

Summary

This case concerns the interpretation of a restrictive agreement regarding the transfer of property. Edward Satenstein entered into an agreement with the Chaloux’ which included a clause stating that neither grantee shall transfer or convey the premises without first offering it back to the grantor. Upon the death of the surviving grantee, the question arose whether the transfer of the property by intestate succession (without a will) triggered the right of first refusal. The Court of Appeals held that the agreement was ambiguous regarding transfers upon death and that extrinsic evidence should be considered to determine the parties’ intent. Therefore, the motion for summary judgement was denied.

Facts

Edward Satenstein entered into a restrictive agreement with George and Florence Chaloux regarding property. The agreement stated that “[n]either of the grantees shall transfer or convey said premises to any person or corporation without first offering to sell and reconvey the above described premises to the grantor, his heirs or legal representatives”. The agreement expressly excluded involuntary transfers during the Chaloux’ lifetime. George and Florence Chaloux both died, and the property was transferred through intestate succession.

Procedural History

The defendant moved for summary judgment, arguing that the restrictive agreement did not apply to transfers by intestate succession. Supreme Court denied the motion. The Appellate Division reversed, granting summary judgment to the defendant. The plaintiff appealed to the Court of Appeals.

Issue(s)

Whether the restrictive agreement between Edward Satenstein and the Chaloux’ is ambiguous regarding the transfer of property by intestate succession, thus requiring the consideration of extrinsic evidence to determine the parties’ intent.

Holding

Yes, because the agreement’s language regarding transfer is broad, and while it addresses transfers during the grantees’ lifetimes and after their death, it fails to explicitly address transfers *upon* death, creating an ambiguity that warrants the consideration of extrinsic evidence.

Court’s Reasoning

The Court of Appeals found the restrictive agreement to be ambiguous. The court noted that the use of the verb “transfer” broadened the meaning beyond the typical understanding of “convey”. The agreement expressly excluded involuntary transfers during the Chaloux’ lifetime but did not explicitly exclude involuntary transfers upon death. While the agreement addressed the right of first refusal during the Chaloux’ lifetime and *after* the death of the survivor, it failed to make any provision for its application *upon* the death of the survivor. The court stated, “The failure to make unmistakable provision with respect to this inescapably foreseeable contingency, as could so easily have been done, results in an ambiguity.” Because of this ambiguity, the Court held that the plaintiff should be allowed to present extrinsic evidence to determine the parties’ intent. The court cited Hartford Acc. & Ind. Co. v Wesolowski, 33 NY2d 169, 172 and Mallad Constr. Corp. v County Fed. Sav. & Loan Assn., 32 NY2d 285, 290-291, supporting the use of extrinsic evidence when interpreting ambiguous agreements.