New York Bronze Powder Co. v. Benjamin Acquisition Corp.

716 A.2d 230 (1998)

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Nature of the Case

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Facts

New York Bronze (P) entered into an agreement with Benjamin Acquisition Corp. (D) for D to purchase from P assets of the business then known as Benjamin Rich Company. The price was to be $4.5 million with assumption of certain Rich liabilities. Shortly before closing, D expressed concern over the valuation of certain assets. A modification of the purchase agreement was reached with $350,000 of the purchase price to be deferred and taken in a nonnegotiable note to P for $350,000. Under that agreement, D undertook to prepare a balance sheet to be delivered to P no later than June 14, 1990, that if the audited balance sheet reflected a net worth of less than $4.5 million, D was entitled to a dollar for dollar credit on the $350,000 deferred purchase price. The deal was closed under the modified agreement, but the accounting firm never completed its audit. D never made nor tendered any cash payment on the note. P sued D for nonpayment on the note and breach of the modified asset purchase agreement. P got the verdict and D appealed. The Court of Special Appeals held that the italicized portion of the note (page 422 Calamari 3rd) created a condition, the nonoccurrence of which extinguished D's obligation to pay the $350,000 or any part thereof; as P had not surrendered the note they were not entitled to payment. P then appealed.