Drake v. White Sewing Machine Co. — 133 A.D. 446

Majority

p. 446

Frank C. Drake and James B. Drake, Respondents, v. White Sewing Machine Company, Appellant.

Third Department,

June 24, 1909.

Headnote

Principal and agent — rescission of agency—notice to partner — recovery of moneys paid pursuant to contract.— offset.

Notice of the cancellation of a contract of agency given to one member of a firm of agents is binding upon the other from the date of the notice, although not brought to his attention by his fellow-partner.

Where a contract required an automobile agent to purchase three cars from his principal, and the latter, pursuant to the terms of the contract, canceled the agency, the agent having paid a portion of the purchase price of the cars and having received only one of them, may maintain- an action to recover the ■ deposit paid on the other cars, although he failed to furnish shipping directions as requested by the principal.

In an action by the agent to recover such deposits after a rescission of the agency by the principal, the latter cannot escape' the effect of its rescission by charging the agent with the full value of the car received where he was entitled to twenty per cent discount, and where there was no promise on'his part to pay any additional sum if the agency were canceled.

p. 447

Appeal by the defendant, the White Sewing Machine Company, from a judgment of the Supreme Court in favor of the plaintiffs, entered-' in the office of the clerk of the county of Madison on the 4th day of January, 1909, upon the report of a referee.

Upon the 23d day of February, 1905, an agreement was entered into between the defendant and F. C. Drake & Son, living at Oneida, for the agency by the said Drake & Son of the automobile manufactured by the defendant. Through correspondence between the defendant and Mr. F. C. Drake, this plaintiff, Mr. Drake was required to purchase of the defendant three cars. Upon these three cars he was required to make a deposit of $250 each. He subsequently made this deposit of $750, but received one car only. The failure to receive the other two cars was entirely due to the plaintiff, by reason of his refusal to give directions for shipment, for which he was asked a number of times. The contract of agency ¡provided that the agreement was to take effect from and after its acceptance by the defendant, and to continue until September, 1905, or until dissolved by mutual consent. The contract further provided, “ but it may be dissolved by either party giving notice, and in case of violation of this contract by said second party, the first party may cancel it without notice.” Upon August seventeenth the defendant wrote to F. C. Drake & Son as follows : “ We hereby notify you of the cancellation of our agency contract from this date. If you are in a position to assure us of a considerably larger volume of business for the coming season we shall be pleased to take up with you the matter of a new agency contract.” That letter was received by the son, but was not called to the attention of F. O. Drake, this plaintiff, until October eleventh, at which time F. 0. Drake &■ Son received from the defendant the following letter : “ On August 17th we notified you of the cancellation of our agency contract^ but have received no acknowledgment of the same. We still have your two unfilled orders for Model £E’ cars on file together with your deposit of $500.00, and wish to now notify you that unless order is received from you by return mail for immediate shipment of the two cars we shall charge your account with the 20% discount allowed on the.first car and consider the matter closed. We cannot furnish you our Model ‘ F ’ cars in place of the Model £ E’s ’ ordered by yon as we have concluded other agency

p. 448

arrangements for their sale in your territory; nor can we continue to bill you repair parts at agent’s discount.” The plaintiffs have recovered the $500 advanced upon the two cars not taken.

H. W. Coley, for the appellant.

E. L. Hunt, for the respondents.

In the contract itself there seems to have been no express provision requiring the plaintiff to purchase the three cars. That was expressly stipulated, however, before the contract was signed, and the $750 seems to have, been sent to the defendant by the plaintiff before the signing of the contract. This agreement, however, seems to be treated in the correspondence and by the conduct of the parties as part of the agency contract. It undoubtedly is a part of the contract- and was not. included in the written contract because of the fact that the money had been sent before the written contract was signed.

The plaintiff has no right to recover these moneys paid, by reason of any breach of contract on the part of the defendant. • There was no implied promise to return it. The express promise claimed by plaintiff to have been made with the agent' of the defendant and before the making of the contract will be deemed to have been superseded by the contract itself. The contract itself provides: “ This contract supersedes all contracts of prior date.” It cannot-be material whether or not the defendant was injured by the failure to furnish shipping directions. The request for those directions was reasonable, and the defendant had no right to ship the cars to1 Oneida after the failure of the plaintiff to give any directions as asked fbr.

The defendant’s difficulty, however, lies in its cancellation of this contract. ■ This cancellation was brought to the-attention of the son, who was one of the firm. It did not come to the attention of the father, however, until- in October. The defendant had done all that was required of it to cancel the contract as of August seventeenth. In Whiting v. Derr ( 121 App. Div. 239 ) the rule is stated: “It is well settled in principle and by authority that where, there has been a total failure of consideration, or where a contract

p. 449

has been abandoned, or has teen rescinded, an action will lie for money had and received to recover back any money paid by either of the contracting parties to the other in furtherance of the contract.” The authorities cited in that case seem to sustain the proposition, and under this authority the plaintiff would seem to have the right to recover the $500 paid.

Nor can the defendant escape the effect of its rescission by charging the plaintiff now with the full $2,500 for his car. As an .agent he got twenty per cent discount. There was no promise on his part to pay any additional sum if the agency was thereafter canceled. The right to charge the additional $500 which is claimed to be an offset to the claim of the $500 paid under the contract and for which this suit is brought, was not stipulated for in the contract.

I recommend, therefore, that the judgment be affirmed, with costs.

Judgment unanimously affirmed, with costs.

Cases cited

Whiting v. Derr 121 App. Div. 239 N.Y. App. Div. 1907-07-23 p. 448