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SOMMER v. HILTON HOTELS CORP.

May 22, 1974

Sigmund SOMMER, Plaintiff,
v.
HILTON HOTELS CORPORATION, Defendant


Gurfein, District Judge.


The opinion of the court was delivered by: GURFEIN

GURFEIN, District Judge:

This is a motion for summary judgment, pursuant to Rule 56, by the plaintiff Sigmund Sommer in his action to obtain the return of a deposit of $100,000 made in connection with an offer to purchase the Statler Hilton Hotel ("the Hotel") in New York City from the defendant, Hilton Hotels Corporation ("Hilton") for $20,000,000. The action was removed to the federal court on diversity of citizenship, 28 U.S.C. ยง 1441. New York law governs. Guaranty Trust Co. v. York, 326 U.S. 99, 65 S. Ct. 1464, 89 L. Ed. 2079 (1945). The history of the transaction is as follows, as evidenced by the affidavits of the parties.

 By letter dated August 24, 1973, the plaintiff, through his agent, offered to purchase the Hotel. The letter contained the following terms and conditions, among others:

 
"1. Purchase Price -- $20,000,000. This sum is broken down as follows: existing first mortgage currently reduced to approximately $9,450,000; balance all cash.
 
* * *
 
4. It is our understanding that all store or commercial leases in the property either expire on or before December 31, 1976 or contain provisions permitting termination without penalty in the event of demolition.
 
* * *
 
7. Naturally this transaction, if and when approved by your Board of Directors, is subject to appropriate documents being drawn mutually satisfactory to both parties. . . ." *fn1"

 Thereafter, the defendant transmitted to the plaintiff what the defendant represented to be a complete listing of the expiration dates of all commercial leases in the hotel. It appeared from this list that there were only five leases which did not conform to condition No. 4 in plaintiff's offer. By letter of September 24, 1973, the plaintiff advised the defendant that he was agreeing to amend his offer to accept the property subject to the five non-conforming leases. Under cover of this September 24, 1973 letter, the plaintiff enclosed a check payable to the defendant and stated as follows:

 
"As evidence of good faith, I am enclosing a check in the amount of $100,000 drawn on the Kings County Trust Company to the order of Hilton Hotels Corporation to be credited on account of the purchase price if satisfactory contracts are executed or to be returned to me promptly on October 2, 1973 if my offer has not been accepted or if the sale does not materialize for whatever reason."

 By letter dated October 8, 1973, the defendant wrote to the plaintiff as follows:

 
"I am pleased to advise you that I have been authorized on behalf of Hilton Hotels Corporation, to accept your offer to purchase from Hilton its interest in the New York Statler Hilton, including furniture and operating equipment in use at the time of delivery, on the terms outlined in Mr. Max Philippson's letter to me of August 24, 1973, as modified by your letter to me of September 24, 1973, and Mr. Philippson's further letter to me of September 26, 1973, for a purchase price of $20 million, payable by the purchaser taking subject to the existing first mortgage and paying the balance in cash at the time of closing.
 
As indicated in the above letters, this agreement is subject to mutually satisfactory documentation, including appropriate provisions to reflect our understanding that the current assets of the hotel operation will be transferred, and the current liabilities assumed, on a dollar-for-dollar basis, and other ...

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