Fursmidt v. Hotel Abbey Holding Corp. (1960)

Fursmidt v. Hotel Abbey Holding Corp.
Supreme Court of New York Appellate Division, 1960.
10 A.D.2d 447, 200 N.Y.S.2d 256

Facts: Fursmidt and his father (P) had been providing valet and laundry services at the Hotel Abbey (D) for many years.  In February 1958, Fursmidt entered into a new three-year agreement with the Hotel to continue to provide laundry and valet services.  Per this agreement, Fursmidt was to pay the defendant $325 per month.  The agreement between the parties contained a clause that stated that the plaintiff’s performance must meet with the approval of the defendant.  In September 1958, the defendant informed the plaintiff that he was to discontinue his services.  Thereafter, the plaintiff left the premises and was soon replaced by a third party.  The plaintiff filed suit claiming the defendant had no right to terminate the contract.  The defendant claimed that the plaintiff’s services did not meet their approval or satisfaction, and counter claimed for damages they claimed were caused by the plaintiff’s inadequate and improper service.  The trial court held that it was not enough for the defendant to be dissatisfied; the dissatisfaction must be grounded in reason.  Consequently, the jury was asked to resolve whether the defendant was dissatisfied, and whether this dissatisfaction was reasonable.  In other words, the court substituted the judgment of a reasonable man in place of the judgment of the defendant.

Issue: When a contract permits one party to decide the sufficiency of service, must the “reasonable man” standard be used to determine that sufficiency?

Holding: No.

Analysis/Decision: Contracts calling for the satisfaction of a party fall into two general categories.  Agreements relating to fitness, utility or marketability, require the use of the “reasonable man” standard.  Alternatively, agreements involving fancy, taste, sensibility, or judgment a literal construction of satisfaction should be used.  In this case, the agreement was closer to the category of taste or judgment.  The defendant exercised strict control over the plaintiff.  To the customers of the Hotel, it would appear as if the plaintiff were an employee of the Hotel, rather than one acting as an independent contractor.  Therefore, the trial court erred in their instructions to the jury.  However, the defendant’s dissatisfaction, which may entitle termination of the agreement, would not automatically entitle them to recover damages.  Reversed on the law and a new trial ordered.

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