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GASS v. ARONS
Case Summary: Sigmund S. Gass v. Alexander Arons (City Court of New York, Bronx County, Feb. 24, 1928)
Factual and Procedural Background
The plaintiff, Sigmund S. Gass, sued the defendant, Alexander Arons, to recover $2,708.33 with interest from January 31, 1924, for breach of contract arising from the defendant's failure to pay one-half of the rent on a loft leased to the parties as tenants in common. The case proceeded to trial on November 14, 1927, with a jury impaneled and three witnesses (including the plaintiff) testifying. After the plaintiff rested, the parties and counsel met with the trial judge in chambers and reached a settlement.
Under the agreement reached at that conference, the defendant promised to pay a total of $1,400 in full settlement of this action and of another judgment previously obtained by the plaintiff in the Municipal Court relating to the same lease. The payment schedule was: $150 on January 15, 1928, and $50 on the fifteenth of each month thereafter until the $1,400 was paid, with five days' grace beyond each fifteenth. The agreement provided that, in the event of default in payment of any installment, the plaintiff could enter judgment for the full amount sought in this action ($2,708.33). A written stipulation reflecting these terms was to be prepared and signed by the parties the day following the conference.
After the conference, the defendant refused to sign the written stipulation and refused to make any payments. He swore by affidavit that he had understood the matter was to be taken under consideration by him and that a stipulation would be prepared and signed only if he assented to the terms. The defendant's trial attorney did not appear on the subsequent motion and the defendant represented himself; the judge reports the attorney had stated at the conference that he would have nothing further to do with the matter if the defendant failed to comply with the terms.
Legal Issues Presented
- Whether the defendant's oral assent to a settlement agreement reached in the judge's chambers is an admission authorizing the court to render judgment under section 476 of the Civil Practice Act.
- Whether the writing requirement of Rule 4 of the Rules of Civil Practice prevents enforcement of an oral settlement agreed to in chambers (and partly outside the courtroom), particularly where the parties relied on that agreement and the plaintiff lost the opportunity to finish the trial.
- Whether an oral stipulation or settlement, the terms of which were repeated to and agreed upon by the defendant before the court, is binding despite the subsequent refusal to sign a prepared written stipulation.
Arguments of the Parties
Plaintiff's Arguments
- The plaintiff relied on the defendant's oral assent reached during the conference and accepted the settlement terms, including the five days' grace requested by defendant.
- Because the plaintiff accepted the settlement during trial and had the case marked as settled, he lost the opportunity to finish the trial at that term; consequently, he should be able to enforce the agreement and obtain the relief promised.
- The defendant's discussion of and assent to the terms constitute admissions permitting judgment under statute and the relevant procedural rules and authorities.
Defendant's Arguments
- In an affidavit the defendant stated his understanding was that the settlement terms were to be taken under consideration by him and that a stipulation would be prepared and signed only if he assented — he therefore refused to sign and to make payments.
- The defendant did not appear with counsel on the subsequent motion; his counsel had effectively withdrawn if the defendant failed to comply.
Table of Precedents Cited
| Precedent / Authority | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Section 476, Civil Practice Act | Permits the court to render judgment at any stage of an action if warranted by admissions of a party. | The court treated the defendant's discussion of and assent to the settlement as admissions that warranted entry of judgment in favor of the plaintiff. |
| Rule 4, Rules of Civil Practice | Provides that agreements relating to matters in an action are not binding unless in writing and subscribed, except for oral stipulations between counsel made in open court. | The court interpreted the rule as not barring enforcement here because the settlement functioned as an oral stipulation made in the context of court proceedings (discussion occurred in chambers to avoid jury hearing) and was accepted in open court. |
| Lee v. Rudd, 120 Misc. 407 | Support for upholding oral settlement agreements made out of court or verbally where a party has relied in good faith; verbal stipulations can be effectual to prevent prejudice. | The court relied on Lee v. Rudd to justify enforcing the oral agreement reached in chambers and to permit the motion for judgment based on the settlement and the plaintiff's reliance. |
Court's Reasoning and Analysis
The court began by noting the statutory authority of section 476 of the Civil Practice Act, which permits judgment to be rendered at any stage of an action when warranted by admissions of a party. It concluded that the defendant's participation in the conference, his active discussion of offers and counter-offers, and his explicit agreement to the terms (which were noted in writing by the judge and repeated to the defendant) constituted admissions sufficient to support the entry of judgment.
The court addressed the apparent conflict with Rule 4 of the Rules of Civil Practice, which generally requires agreements to be in writing, by observing that the rule does not apply to oral stipulations made in open court. Although the negotiations and final assent occurred in the judge's chambers rather than the open courtroom, the court treated the arrangement as falling within the same principle because the jury had been excluded from the discussion to permit settlement negotiations without jeopardizing a resumption of trial if settlement failed. Thus, the substantive protection that Rule 4 provides—preventing informal, undisclosed agreements from binding parties—was not offended where the agreement was accepted in court proceedings and the plaintiff acted in reliance upon it.
The court also relied on precedent in Lee v. Rudd for the proposition that an oral agreement to settle need not be in writing to be enforceable if one party reasonably relies on the agreement in good faith. Applying that precedent, the court found that the plaintiff had relied on the defendant's assent (forfeiting the opportunity to finish the trial that term) and therefore would be prejudiced by allowing the defendant to repudiate the settlement after the judge had recorded and repeated its terms in chambers.
The court further noted practical circumstances supporting its conclusion: the conference consumed nearly an hour, the defendant actively participated in the negotiations, and the defendant's attorney had effectively disassociated himself if the defendant failed to comply. The defendant's later refusal to sign a prepared written stipulation and to make any payments did not alter the court's view that a binding settlement had been reached and accepted in the course of judicial proceedings.
Holding and Implications
Holding: The court granted the plaintiff's motion and enforced the settlement reached during trial proceedings. The court ordered the plaintiff to submit an order with notice of settlement.
Implications:
- The immediate effect is that the settlement agreement reached in chambers was treated as binding and enforceable; the plaintiff may proceed to submit the appropriate order reflecting the settlement. The defendant's subsequent refusal to sign the written stipulation and to make payments did not prevent enforcement of the settlement that the court found had been accepted.
- Because the court based its decision on statutory authorization, procedural rule interpretations, and existing case law (specifically Lee v. Rudd), the opinion enforces the principle that oral settlements reached in the context of court proceedings (even if discussion occurs in chambers to exclude the jury) can be binding where a party has clearly assented and the opposing party has relied to its detriment.
- The opinion does not purport to announce a new rule of law; rather, it applies existing statute, rule, and precedent to the facts before the court to prevent prejudice resulting from a party's repudiation of an agreement reached and accepted during the course of trial proceedings.
Source: Opinion of Donnelly, J., City Court of New York, Bronx County, Feb. 24, 1928 (Gass v. Arons).
DONNELLY, J.
The action is brought to recover the sum of $2,708.33, with interest from January 31, 1924, for breach of contract arising out of the failure of the defendant to pay to the plaintiff one-half of the rent of a certain loft leased to the parties as tenants in common. The action came on for trial before me on November 14, 1927; a jury was impaneled; three witnesses, including the plaintiff, had testified and the plaintiff had rested his case, when a conference between the parties and their counsel was had with me in my chambers, as the result of which the defendant agreed to pay to the plaintiff in full settlement of this action, and of another judgment obtained against him by this plaintiff in the Municipal Court and arising out of the lease which is the subject of this action, the sum of $1,400, payable as follows: $150 on January 15, 1928, and $50 on the fifteenth of each and every month thereafter until said sum of $1,400 shall have been fully paid. In the event of default in the payment of any of the said installments, judgment was to be entered by the plaintiff against the defendant for the full amount for which this action is brought, namely, $2,708.33. It was also understood and agreed between the parties that the defendant was to have five days' grace beyond the fifteenth of each and every month for the payment of any of the installments.
A written stipulation embodying these terms was to be prepared and signed by the parties on the day following the agreement before me. This stipulation the defendant refused to sign and likewise refuses to make payment of any of the installments, alleging, in an affidavit submitted by him personally on the return day of this motion, that his understanding was that the matter was to be taken into consideration by him and, if he assented to the terms, a stipulation would be prepared and signed.
The attorney who appeared for the defendant at the trial and at the conference before me did not appear on this motion, nor is the defendant now represented by any other attorney or counsel. The non-appearance of defendant's attorney on this motion is undoubtedly due to the fact that at the conference before me he stated, in substance, that if the defendant did not comply with the terms of the agreement, he, the attorney, would have nothing further to do with the matter.
At the conference before me the terms of the settlement as above set forth were noted by me in writing and repeated to the defendant, who agreed to them. At the defendant's request, the plaintiff agreed that five days' grace beyond the fifteenth of each and every month would be given to defendant for the payment of the installments.
The conference in my chambers at which the settlement was reached consumed practically an hour and offers and counter-offers were made and discussed in detail before the terms were finally agreed to. The defendant was fully cognizant of the arrangements that were made and he took an active part in the discussion of each of the steps leading up to the agreement reached.
By section 476 of the Civil Practice Act it is provided: "Judgment may be rendered by the court in favor of any party or parties, and against any party or parties, at any stage of an action * * * if warranted by the * * * admissions of a party or parties * * *."
Defendant's discussion of and assent to the terms of the settlement constitute the admissions upon which judgment may be rendered against him by the plaintiff.
Rule 4 of the Rules of Civil Practice reads: "An agreement between parties or their attorneys relating to any matter in an action or a proceeding shall not be binding unless in writing subscribed by the party, or by his attorney or counsel, or reduced by consent to the form of an order and entered. This rule shall not apply to oral stipulations between counsel made in open court."
The instant application seems to me to come within the principles enunciated in Lee v. Rudd ( 120 Misc. 407), where an oral agreement, made out of court for the settlement of an action, was upheld, and the motion made thereon for judgment was granted. In the instant case the settlement of the action was made in open court. The mere fact that the actual discussion of and assent to the terms of the settlement took place in chambers and not in the court room is immaterial. The purpose of excluding the jury was to avoid the discussion in their hearing of matters which would have precluded a resumption of the trial before them if the action had not been settled. As was said in Lee v. Rudd ( supra): "An agreement to settle does not have to be in writing;" and, further: "Even if a stipulation be verbal, the court will hold it to be effectual so as not to prejudice, deceive or defraud the opposite party, if he has relied and acted upon the agreement in good faith." (Citing cases.) In the instant case the agreement was accepted in good faith by the plaintiff who, in reliance upon the defendant's assent to it, consented to have the case marked settled during trial upon the record, and thus lost his opportunity to finish the trial at the term of court at which it was begun, when he was ready so to do. Motion granted. Submit order with notice of settlement.
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