## Facts

- Frederick Hicks and others, including Clinton G. Bush and related shareholders, executed a written July 10, 1956 agreement to combine corporate interests into a new holding company, Bush-Hicks Enterprises, Inc.
- The writing required participants to submit stock subscriptions within five days and provided that if the new company did not accept any subscriptions within 25 days, all obligations would terminate.
- Hicks transferred the stock of his corporations to the contemplated holding company, but the Bush interests did not transfer their stock and the combination never became effective.
- Hicks sued for breach of contract, seeking specific performance (including delivery of stock) and an accounting.
- Defendants asserted that the writing was executed subject to an oral condition that it would not become operative unless $672,500 in equity expansion funds was obtained; those funds were not raised.
- Hicks argued the writing stated all conditions and that the alleged oral condition was barred by the parol evidence rule.

## Issues

1. Whether parol evidence is admissible to prove an oral condition precedent to the legal effectiveness of a written agreement when the condition does not contradict the writing’s express terms.
2. Whether the alleged oral financing condition was inconsistent with the written subscription and 25-day acceptance/termination provisions.
3. Whether failure to satisfy the oral condition meant no binding contract became effective, defeating claims for specific performance and related relief.

## Decision

- The New York Court of Appeals affirmed the judgment for defendants.
- The court held that parol evidence may be admitted to show the parties agreed the writing would not become effective unless a stated condition precedent occurred, provided the condition does not contradict the writing’s express terms.
- The court concluded the oral condition requiring procurement of $672,500 in equity expansion funds did not contradict the writing, which was silent on financing.
- Because the trier of fact found the oral condition was agreed to and it was not fulfilled, the agreement never became operative as a binding contract.

## Legal Principles

- Parol evidence is admissible to prove a condition precedent to the legal effectiveness of a written agreement if the condition does not contradict the express terms of the writing.
- The parol evidence rule bars proof that varies or contradicts an integrated writing, but does not bar proof that the parties intended the writing to be conditional and not operative until an external event occurred.
- An oral condition may be treated as collateral where the writing does not address the subject matter and the condition concerns whether the contract becomes effective rather than altering performance terms.
- When a validly proven condition precedent to effectiveness is not satisfied, no enforceable contract arises, and contract remedies premised on an operative agreement are unavailable.

## Conclusion

The court upheld admission of testimony that the merger writing would not take effect unless specified financing was obtained, holding such proof is allowed when it does not conflict with the writing’s terms; because the financing condition was not met, the parties never became bound by the agreement.


Hicks v. Bush, 10 N.Y.2d 488 (N.Y. 1962)