
    SARAH J. PIRSSON, et al., Appellants, v. OLIVER M. ARKENBURGH, Respondent.
    
      Contract for the payment or vacation of an assessment—Deposit as security or indemnity—Forfeiture not favored in the law.
    
    The four different papers executed by Bronson, the assignor of the plaintiffs, namely, (1.) The contract of sale, (2.) The deed to the defendant, (3.) Agreement between Bronson and the N. T. Life Ins. Co. for the deposit of the money as security, and (4.) The agreement in regard to said money between Bronson and defendant, must be construed together in order to ascertain what the contract was between Bronson and the defendant; and when so construed, clearly establish a contract of indemnity and not a contract for the absolute forfeiture of the whole deposit, in excess of what was necessary to pay the assessment, in case Bronson failed to pay or to procure its vacation within one year.
    A forfeiture is not favored in the law, and it is a rule in the construction of contracts, under which forfeiture is claimed, that a conclusion that forfeiture was intended should be avoided if the facts and circumstance justify such a conclusion.
    In the case at bar, it clearly appears by the contract that ample security and indemnity were sought in the premises, and no forfeiture intended.
    Before Sedgwick, Oh. J.,Freedman and Ingraham, JJ.
    
      Decided February 6, 1890.
    Appeal from judgment in favor of defendant, entered upon a verdict of the jury directed by the court, and from an order denying plaintiffs’ motion for a new trial.
    
      John Alexander Beall, attorney and of counsel, for appellants, argued :—
    I. There were four different papers executed by Willett Bronson, all of which are intimately connected and must be construed together in order to ascertain the contract. These papers are: (1.) The contract of sale, (2.) The deed to Arkenburgh (3.) The agreement between Bronson and the New York Life Insurance Company for the deposit as security, (4.) The agreement between Bronson and Arkenburgh. These papers express and define the contract. And this contract was that Mr. Bronson having already deposited with the Insurance Company security for the payment of the disputed assessment, and having afterwards sold the property to the defendant, subject to the assessment, the money so deposited might be applied to the payment of the assessment if it was not vacated or set aside within one year, the surplus, if any, to be returned to Mr. Bronson. The paper or agreement of April 19,1883, was never intended as a substitute for the contract of sale and deed, but was merely supplemental to them. This agreement was made at the request of defendant at the time of passing the title, and was made solely because the defendant objected that the deed did not carry out the original contract, and did not specify the time in which the assessment was to be paid. (1.) It is a general and well-established rule of law that every contract which is in its language or terms ambiguous, or in any way susceptible of more than one interpretation, is to be construed, not only from the words of the contract itself, but also from the circumstances surrounding the parties. Now, the paper or agreement of April 19, 1883, on which the learned judge below rested, his decision, very explicitly refers to and makes a part of that agreement, the previous agreements relating to the same subject matter. So that all these papers ought manifestly to be construed together to ascertain the intentions of the parties and the contract between them. The cases upon this point are numerous. Clark v. N. Y. Life Ins. & Trust Co., 64 N. Y. 33, 37; Knapp v. Warner, 57 Ib. 668; Parshall v. Eggert, 54 Ib. 18; Coyne v. Weaver, 84 Ib. 390. While the circumstances surrounding the execution of a contract cannot be used to contradict what is expressed therein, this rule does not confine the court in construing the contract to the very instrument in question ; other contemporaneous writings between the parties relating to the same subject-matter are admissible in evidence to explain or qualify the agreement under consideration. Wilson v. Randall, 67 N. Y. 338. The rule in ethics is that ‘when the terms of a promise admit of more senses than one, the promise is to be performed in that sense in which the promisor apprehended at the time the promisee received it,’ arid this is the established rule at law as well as in morals. In the language of the books it is to be interpreted in the sense in which the promisor had reason to suppose it was understood by the promisee. White v. Hoyt, 73 N. Y. 512. In the absence of all proof there is no presumption that either party intends to give up the benefit of covenants of which the conveyance is not a performance or satisfaction. Morris v. Whitcher, 20 N. Y. 41; Sage v. Truslow, 88 Ib. 243. The provision as to payment of assessment in contract was not merged in the deed. (2.) If it be claimed that the contract of sale and deed, both of which contain the explicit provision for the return of the surplus after paying the assessment, are merged in the subsequent agreement of April 19th, and that the provision was waived and abrogated by failure to express it, the answer is obvious that the doctrine of merger is not favored in the law, and depends entirely on the intention of the parties. Courts do not favor the doctrine of merger where it would violate the intention of the parties and work injustice. Hill v. S. B. & N. Y. R. R., 8 Hun, 299 ; McGregor v. Bd. of Education (Jany. 23,1888). Upon all the circumstances surrounding the case, the agreement of April 19, 1883, ought to be construed in connection with the deed and the previous agreements in order to ascertain the intention of the parties. No other method of construction is reasonable.
    II. The contract was substantially performed by Willett Bronson, the assignor of the plaintiffs. That contract was that the assessment, the validity of which was contested, should be paid unless vacated. To secure such payment he had deposited with the Insurance Company, the mortgagee, an ample sum. The assessment was reduced and only a portion (less than one-half) of the sum deposited as security was required to pay it. The defendant paid the assessment, after awaiting the result of the litigation by which it was reduced, and then collected from the Insurance Company the whole deposit made by Bronson as security, with interest thereon. The payment of the assessment was therefore made from the fund deposited by and belonging to Bronson, or his assignees. This was a performance of the contract by Bronson, not only substantial, but complete. If claimants acted in good faith and honestly performed contract in all substantial particulars, they should not be compelled to forfeit the whole payment by reason of inadvertent or slight defects. Glacius v. Black, 50 N. Y. 145; Johnson v. De Peyster, Ib. 666. Where in a building contract the contractor in good faith intended to comply and has substantially so done, although there may be slight defects caused by inadvertence or unintentional omission, which are susceptible of remedy without difficulty so that an allowance will give to the other party a full indemnity, he may recover the contract price less the damages on account of such defect. Woodward v. Fuller, 80 N. Y. 312; Heckmann v. Pinkney, 81 Ib. 211.
    III. The defendant claims, or seems to claim, that by failing to pay or vacate the assessment within one year, the plaintiffs forfeited to him the whole deposit in excess of what was necessary to pay the assessment. Now the rule is well settled that equity does not favor a forfeiture, and it will not be sustained if by any means the court can avoid it. Jackson v. Topping, 1 Wend. 388 ; Livingston v. Tomkins, 4 J. C. 415. In the construction of all contracts under which forfeiture is claimed, it is the duty of the court to interpret them strictly in order to avoid such a result, for a forfeiture is not favored in the law. Bouv. Inst., § 780 [1814]; Duryee v. Mayor, &c 62 N. Y. 594; Lorillard v. Silver, 36 Ib. 578. While no particular form of words is necessary to create a limitation or condition, it is yet essential that the intention to create them shall be clearly expressed in some words importing ex vi termini, that the vesting or continuance of the estate or interest is to depend upon a contingency provided for. Craig v. Wells, 11 N. Y. 315 ; Bouv. Inst., § 753, Lyons v. Hersey, 103 N. Y. 270. In an action to recover for legal services in reducing or vacating an assessment under a contract that they be completely performed by the 1st of May, 1881. Nothing was accomplished until after that time. The defendant assented to the proceedings going on after that day. He did not at the time, nor until this action was threatened, claim that the contract was at an end. Held, that the contract was not avoided, and plaintiff could recover (60 N. Y. 448). Deering v. McCahill, 51 N. Y. Supr. Ct. 260. Even if a forfeiture might have been claimed by defendant, it was waived by his failure to insist upon it, and by waiting the result of the litigation to vacate the assessment. The defendant had the right to pay the assessment immediately on the expiration of the year. That was what he insisted should be done. He elected, however, not to do so, but to wait the result. By so doing, he acquiesced in and became a party to that proceeding. This was a waiver of any forfeiture.
    
      
      Robert F. Little, attorney and of counsel, for respondent, argued :—
    The contract of sale became merged in the deed when delivered, and cannot be referred to for the purpose of charging the defendant respecting any of its terms. Defendants’ Ex. A, is a contract—a dispositive instrument—and is to be construed according to its plain intendment, which is, that Bronson and the plaintiffs shall be excluded from any right to the funds in question after payment by the Insurance Company to the defendant upon his compliance with the terms thereof. The recital in Ex. A, of the clause in the contract of sale, whereby Bronson should have one year from March 22, 1883, within which to pay said assessment, excludes all other clauses or provision of said contract, and was evidently inserted to explain why the defendant should not call on Bronson or the New York Life Ins. Co., for the payment of the assessment till March 22, 1884, and also, to make clear to the Insurance Company, whose agreement gave Bronson till January 29, 1885, to remove the assessment, why the defendant could call on them for the money on or after March 22, 1884, after paying said assessment.
   By the Court.—Freedman, J.

Upon the whole case the contract under which'$1,700. remained on deposit as security for the payment of the assessment, subject to which Willett Bronson conveyed the lots to the defendant, must be gathered from four different papers executed by Bronson. . These papers are: (1.) the contract of sale, (2.) The deed to defendant, (3.) The agreement between Bronson and the N. Y. Life Ins. Co. for the deposit as security, and (4.) the agreement between Bronson and the defendant.

They are so intimately connected that they must be construed together in order to ascertain what the real contract was. When thus construed they clearly establish a contract of indemnity, and not a contract for the absolute forfeiture of the whole deposit in excess of what might be necessary to pay the assessment in case Bronson failed to pay, or to procure the vacation of the assessment within one year. A forfeiture is not favored in the law and it is, therefore, a rule in the construction of contracts under which forfeiture is claimed, that, if it can be fairly done, the conclusion shall be avoided that a forfeiture was intended. In the case at bar the conclusion can be readily avoided, for the surrounding circumstances fairly show that all that was intended in fact was ample indemnity.

The plaintiffs, to whom all the right, title and interest of Bronson in and to the moneys so deposited were transferred by several assignments, are therefore in a position to maintain the action for the recovery of the balance remaining unexpended after the payment and extinguishment of the assessment by the defendant, and it was error on the part of the trial judge to direct a verdict for the defendant. The judgment and order should be reversed, and a new trial ordered with costs to abide the event.

Sedgwick, Oh. J., concurred.

Ingeaham, J.-—(concurring).

I agree with Judge Feeedman as to the construction of the contracts.

The money deposited with the Trust Company was Bronson’s, deposited before the contract with the defendant was made as a fund from which the assessment was to be paid. It is nowhere transferred to defendant, nor is there anything that would show that the parties intended the defendant should be entitled in any contingency to the money. It was provided that if the assessment was not paid by Bronson in one year, the money should be paid to defendant by the Trust Company, but it was paid to defendant as the plaintiffs’ money for the special purpose of repaying defendant the amount that he had been compelled to pay to discharge the assessment under the covenant contained in the deed. The balance that remained after paying that assessment was still Bronson’s money, and Bronson was entitled to maintain an action for money had and received to recover such balance.

I think plaintiffs were, therefore, entitled to recover, and that the judgment should be reversed.  