Breakstone v. Buffalo Foundry & Machine Co.

This action was brought to recover the amount on a vacuum rotary a contract with the defendant for the sale thereof, by which the title was to remain in the defendant until payment of the full purchase price; and the right of recovery is predicated on the retaking of the property by the vendor and its failure to sell the same within the time prescribed by section 65 of the Personal Property Law. The defendant manufactured vacuum rotary drum dryers used in drying milk into powder or milk flour for commercial purposes, and its plant was at Buffalo, N. Y. The contract for the sale of the dryer was in writing, and consists of a proposal, made by the appellant under date of November 16, 1909, to Richard Heim of Canastota, N. Y., and of an acceptance by him thereof on the 22d day of the same month. The dryer was to be and was manufactured according to specifications annexed to the contract, and was a very bulky and heavy machine, requiring three freight cars for its transportation. It was sold for $12,000, f. o. b. cars at Buffalo, but was to be and was installed by the vendor at Heim’s creamery at Truxton, N. Y., the vendee also paying for the services of the erecting engineer. The terms of sale were $1,500 at the time of the execution of the contract, $1,500 within two months thereafter, $2,000 when the machine was ready for shipment, and the balance to be evidenced by notes,

On the day the trustee was appointed, his attorney and the attorney for the appellant had a conversation with respect to these two machines, the contracts under which they were sold, and the balance unpaid thereon. According to the testimony of the attorney for the trustee, the attorney for the appellant stated that no payment had been made for several months on account of the machine at Truxton, and that the appellant was desirous of taking possession and realizing on it, and he stated that he hoped to sell both plants, and that he thought they could be sold to better advantage together, and requested a reasonable time to enable him to endeavor to do so, and asked whether the appellant would insist upon its lien against the machine at Canastota, and the attorney for the appellant thereupon stated that his client.would release the lien on the Canastota machine, and give him a reasonable time in which to endeavor to find a purchaser for the Truxton machine, “if the trustee was willing, at the expiration of such time, when we were satisfied that we could not find a purchaser, so that we could realize anything upon the equity, to release the machine to him without further trouble or expense,” and that he talked the matter oyer with the trustee, "who thought it was “the proper arrangement to make,” and that he informed the attorney for the appellant “that that would be satisfactory.” Appellant, evidently relying on that agreement, refrained from exercising its legal right to retake the machine at once, and gave the trustee all the time required to endeavor to sell the machine. It appears that thereafter, and on the 11th day of April, 1911, on the petition of the trustee, the attorney for the appellant appearing and interposing no objection, the referee in bankruptcy made an order authorizing the sale of the Truxton plant and of this machine separately.

The attorney for the trustee further testified that, after the arrangement with the attorney for the appellant, he endeavored to sell the machine, but was unable to find a purchaser, but secured a bid for the Truxton plant without the machine from the plaintiffs; that he endeavored to sell the machine to the plaintiffs; who had one mortgage on the Canastota plant and another on both plants, and they refused to entertain any proposition with respect to purchasing it, and one of them assigned as a reason “that he had no confidence in the milk flour proposition, and did not want the machine at any price”; that he presented plaintiffs’ offer to the referee in bankruptcy in the presence of a

[ 1 ] Levy’s mortgage, which the plaintiffs assumed, was in process of foreclosure at the time, and the appellant was a party defendant. Levy had agreed to discontinue the action to enable the trustee to sell the plant. On the 22d of May, 1911, the attorney for the plaintiffs wrote the attorney for the appellant, inclosing a stipulation of discontinuance of the action. A letter from the attorney for the appellant in reply thereto, and a proposed stipulation as a substitute for the one inclosed to him, and a letter from the attorney for the plaintiffs in reply thereto, were offered in evidence by the appellant and excluded; but they were marked for identification and are in the record. This ruling, we think, was error, for the evidence thus excluded bore on the defense of waiver, release, or estoppel. It was recited in the proposed stipulation that the appellant “need not hold said machine after retaking and advertise the same for sale, or sell the same at auction, as provided by statute, the provisions of said statute and all of them being expressly waived by the parties hereto, the intent hereof being to give the entire property in said machine to the defendant, Buffalo Foundry & Machine Company, without further accountability on its part to any of the parties hereto”; and it was stated in the letter from the attorney for the plaintiffs in reply thereto, among other things, “I cannot see how the inclosed stipulation could in any way change the status of your rights; * * * I personally would have no hesitancy in signing the stipulation you sent me,” but that all other parties had signed the stipulation which he had señt to the attorney for the appellant, and some of them had refused to sign the stipulation which the latter had sent to him.

The court also erroneously excluded another letter written by the attorney for the plaintiffs to the attorney for the appellant under date of May 27, 1911, referring to' the stipulation which the latter desired, and stating, among other things, that the plaintiffs “have no objections whatsoever against your taking possession of the machine in question,” but that he could not get the consent of the other parties to the action to sign the stipulation requested by the attorney for the appellant. These letters and other evidence to show the rental value of the machine during the time it was used under the conditional contract of sale and its actual value when retaken were offered on the defense of waiver or estoppel, and they were excluded by the learned trial court on the erroneous theory, frequently expressed during the trial, as shown by the record, that waiver was no defense in an action such as this. The appellant showed that its sales manager called on Isaac Breakstone,

There were no further negotiations between the parties, and the appellant continued to dismantle the machine and to load it onto cars on a siding adjacent to the creamery, used by the plaintiffs for the receipt and delivery of freight to and from the creamery, but owned by the Lehigh Valley Railroad Company. The cars were requisitioned by appellant’s machinist from the railroad company, for shipment to Buffalo. The first car left the plant on June 17th, and arrived in Buffalo on the 26th. The second car left the plant on June 28th and arrived in Buffalo on July 3d. The third car was loaded on the siding on the 29th of June, but it broke down, and the railroad company refused to move it. The freight was thereafter transferred from that car by the agents of the appellant, in the exercise of due diligence, to another car, on the 9th of July, 1911, and on the 11th of July, the railroad company issued a bill of lading therefor and shipped it on that day, and it arrived in Buffalo on the 15th of July. The freight was evidently unloaded and taken to the plant of the appellant, where it was sold at public auction on the 5th day of September, 1911, pursuant to a notice in writing duly mailed to one of the plaintiffs at his address on the 18th of August, 1911, and to another notice to both plaintiffs at their address on the 2d of September, 1911, which was the day after this action was brought, and on the sale the appellant bid in the property for $1.

At the close of the evidence, the attorney for the appellant moved f or a direction of a verdict, reserving his right to go to the jury, if the motion should be denied, on the ground that the plaintiffs had waived their rights or were estopped from asserting the claim on which this action was brought. The motion was denied, and his requests to go to the jury were denied, and he excepted; and on motion of counsel

[2] We do not agree with the learned counsel for the appellant that article 4 of the Personal Property Law (chapter 41, Consolidated Laws; Laws of 1909, c. 45), relating to contracts for the conditional sale of goods and chattels, does not apply to property sold under a conditional contract of sale where at the time the contract is made the property is not in esse, but is to be manufactured. That was the construction placed upon the former statute on this subject, which was article 9 of the Lien Law, being chapter 418, Laws of 1897 (Consol. Laws, c. 33). Duntz v. Granger Brewing Co., 41 Misc. Rep. 177 , 83 N. Y. Supp. 957 , affirmed 96 App. Div. 631 , 89 N. Y. Supp. 1103 , affirmed 184 N. Y. 595 , 77 N. E. 1186 ; Washington Trust Co. v. Morse Iron Works & D. D. Co., 106 App. Div. 195 , 94 N. Y. Supp. 495 , modified 187 N. Y. 307 , 79 N. E. 1022 . See, also, Graves Elevator Co. v. Callanan, 11 App. Div. 301 , 42 N. Y. Supp. 930 . But we think the effect of the amendment thereto by chapter 698 of the Laws of 1904 was to bring such property within the provisions of the statute, and it has been so held. Crocker-Wheeler Co. v. Genesee Recreation Co., 140 App. Div. 726 , 125 N. Y. Supp. 721 ; McLean v. Bloch, 52 Misc. Rep. 545 , 102 N. Y. Supp. 838 .

[3] Nor do we agree with counsel for the appellant that the sale was made within the 30 days succeeding the first 30 days after the appellant retook the property, as required by section 65 of the Personal Property Law. It was not essential, to set the provisions of the statute running, that the vendor should retake the property by actually taking physical possession thereof. It was held in Crowe v. Liquid Carbonic Co., 208 N. Y. 396 , 102 N. E. 573 , that the leasing of the property to the vendee’s successor in possession of the premises was sufficient to constitute a retaking, and to set the statutory period running. In the case at bar, the property must all be deemed to have been in the possession of the appellant, at least when the last of it was loaded on the third car, which broke down; for on the stipulation it cannot be said that the car was in the possession of the plaintiffs. Therefore it was not sold within the 30 days succeeding the first 30 days after the appellant took possession.

[4-8] Counsel for the appellant also contends that the contract was not assignable by the vendee to the bankrupt, or by the trustee of the bankrupt. We think it was, and, while the vendee could not release himself from liability, it was competent for him to assign the contract to the corporation, and for it to assume his liability, and thus also!, become liable to the vendor. The trustee in bankruptcy succeeded to the rights of the bankrupt under the contract, which rights were subject to the absolute right of the appellant to retake the property on account of the defaults in paying installments due, without any negotiations either with the assignee or the trustee in bankruptcy, and to hold the same subject to redemption, and, if not redeemed, to sell it pursuant to the statute, or, without retaking the property, to file a claim in the bankruptcy proceedings for the amount unpaid. Although there appears to have been no express reference in the negotiations to filing such a claim for this machine, it is manifest that the negotia

Notwithstanding the formal petition for the sale and the order approving it, it appears by the uncontroverted testimony of the attorney for the trustee that an arrangement for the release of the property to the appellant had been negotiated before the final order approving the sale, and there was evidence upon which it might have been found by the jury, if it was not uncontroverted as matter of law, that the plaintiffs consented and agreed to carry out this arrangement as a condition of having the machine included in the formal order approving" the sale, and in the bill of sale to them, and that they did this for the purpose of avoiding the delay incident to calling a meeting of the creditors and having them formally authorize the trustee to release the property in accordance with his agreement with the attorney for the appellant. If the plaintiffs were not as matter of law estopped from asserting any interest in the machine or rights under the contract, which was not assigned to them, the jury might have found on the evidence, under proper instructions, that they were estopped, and that the appellant was led and induced by their conduct to retake the property, instead of asserting its claim against the trustee in bankruptcy, or against them, on the theory that they succeeded to the liability on the contract if they succeeded to any rights thereunder.

In construing this evidence it is to be borne in mind that there was no sale or assignment of the contract to the plaintiffs. If they succeeded to anything more than the right to the trustee’s possession of the property, subject to the rights of the appellant, it must be upon the theory that the transfer to them of the right of the trustee in and to the machine transferred to them also his equity, and they had notice that he had agreed to release that. If they had not taken the property on the understanding that the transfer to them was merely formal’, for the purpose of delivery to the appellant, they would doubtless have had the right to acquire title thereto by paying the balance of the contract price; but, on the evidence in this case, I think it is clear that the plaintiffs did not become liable to the appellant for the balance of the contract price, for they did not assume the contract, or the obligations of the vendee thereunder; and it was, according to the evidence adduced in behalf of the appellant, expressly understood that they did not want the machine and had no interest therein. We do not deem it necessary to decide whether plaintiffs, if they had in fact, and in good faith, without notice of the agreement between the trustee and the appellant, purchased for value the interest of the trustee in the machine, would thereby, without an assignment of the contract, have been his successor in interest under the statute and

The judgment and order should therefore be reversed, and a new trial granted, with costs to appellant to abide the event.

CLARICE and DOWLING, JJ., concur.

T concur in the reversal of the judgment upon the grounds: First, that it was error not to have submitted to the jury the question whether or not plaintiffs had not waived any rights they may have had to the property, or had estopped themselves from asserting any rights in reference thereto; and second, that, assuming that the contract between the original vendee and defendant was assignable, and might have passed under the sale by the trustee in bankruptcy, it was not assigned thereby, because the plaintiffs never accepted it or assumed the vendee’s obligation under it.

HOTCHKISS, J., concurs.