SCALIA v. GLIELMI, N.Y. App. Div., Judgment, Law, casemine.com

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Smart Summary

Factual and Procedural Background

By agreement dated January 7, 1988, the defendant purchased the Little Italy Deli of Midtown, Inc., including business assets and lease, from the plaintiffs. The purchase price included a $145,000 promissory note payable in monthly installments over ten years. The agreement and note were contingent on the defendant executing, upon expiration of the existing lease, a new five-year lease at the maximum rent of $2,700 per month with an option to renew for an additional five years. On September 8, 1988, the defendant executed only a one-year lease, made no effort to secure the five-year lease with renewal option, and continued payments under the promissory note through August 7, 1989. The plaintiffs sued to recover the unpaid balance on the note. After a nonjury trial, judgment was entered in favor of the plaintiffs. The defendant appealed, arguing that the condition of executing the five-year lease failed, which terminated the promissory note by its terms.

Legal Issues Presented

Whether the defendant’s failure to execute the five-year lease with an option to renew, as required by the agreement, resulted in termination of the promissory note.
Whether the defendant waived the condition precedent by accepting a one-year lease and continuing performance under the agreement.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Oak Bee Corp. v. Blankman Co., 154 A.D.2d 3, 7	The party for whose benefit a condition is inserted in an agreement may waive the condition.	The court relied on this principle to find that the defendant waived the condition by accepting a one-year lease and continuing payments.
Weinprop, Inc. v. Foreal Homes, 79 A.D.2d 987	Supports the principle that a condition in an agreement may be waived by the party for whose benefit it was inserted.	Used to reinforce the court’s conclusion that the defendant waived the condition precedent.

Court's Reasoning and Analysis

The court examined the condition precedent requiring the defendant to execute a five-year lease with an option to renew. It acknowledged the defendant’s failure to fulfill this condition. However, the court emphasized the well-settled legal principle that a party for whose benefit a condition is inserted may waive that condition. The defendant accepted a shorter one-year lease and continued to make payments under the promissory note for several months. By these actions, the defendant effectively waived the condition that the five-year lease be executed. Consequently, the court affirmed the judgment in favor of the plaintiffs, concluding that the promissory note remained enforceable despite the defendant’s failure to secure the stipulated lease term.

Holding and Implications

The judgment is affirmed, with costs.

The court’s decision directly upholds the enforceability of the promissory note despite the defendant’s failure to fulfill the lease condition, on the basis that the defendant waived the condition by accepting a one-year lease and continuing payments. No new precedent was established; the ruling applies established principles of contract law regarding waiver of conditions precedent. The effect is that the plaintiffs may recover the unpaid balance on the note, and the defendant remains obligated under the terms of the agreement.

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PETER SCALIA et al., Respondents, v. PAUL GLIELMI, Appellant.

Ordered that the judgment is affirmed, with costs.

By agreement dated January 7, 1988, the defendant purchased the Little Italy Deli of Midtown, Inc., including the business assets and lease, from the plaintiffs. The purchase price included a $145,000 promissory note payable in installments of $1,400 per month for 10 years. The agreement and the promissory note were made contingent on the defendant executing, upon expiration of the existing lease on the premises, a new five-year lease at the maximum rent of $2,700 per month, with the option to renew the lease for an additional five years.

On September 8, 1988, the defendant executed a new lease for the subject premises for a one-year period, made no effort to secure a five-year lease with an option to renew, and continued making payments to the plaintiffs pursuant to the promissory note through August 1989. The defendant's last payment to the plaintiffs was made on August 7, 1989. The plaintiffs brought the instant action to recover the balance which remained unpaid on the promissory note, and, after a nonjury trial, judgment was entered in their favor. On this appeal, the defendant claims that because he did not execute a five-year lease at the maximum rent of $2,700 per month with an option to renew for five years, the condition in the agreement failed, and therefore the promissory note terminated by its own terms.

It is well settled that "the party for whose benefit a condition is inserted in an agreement may waive the condition" (Oak Bee Corp. v. Blankman Co., 154 A.D.2d 3, 7; see, Weinprop, Inc. v. Foreal Homes, 79 A.D.2d 987). We find that the buyer waived his right to rescind or terminate the agreement and the promissory note when he accepted a one-year lease, and continued to perform under the terms of the agreement through August 1989. Mangano, P.J., O'Brien, Pizzuto and Santucci, JJ., concur.

SCALIA v. GLIELMI