Crane Co. v. National Nassau Bank

The complaint alleges that prior to September- 30, 1913, defendant was financing one McKinnon, who was a contractor carrying out certain city work; that on that date the defendant agreed to pay the plaintiff $700 out of the third payment under one of McKinnon’s contracts, which payment had been theretofore assigned to defendant by McKinnon; that on December 29, 1913, the defendant, “in order to defraud the plaintiff, willfully, wrongfully, and unlawfully assigned the third payment” to one Olvaney without notice to or protection of plaintiff; -that the third payment was made by the city about February 11, 1914, but defendant failed to pay the $700 to plaintiff. The material part of the answer alleges that after the promise to plaintiff had been made, McKinnon became unable to complete his contract, and forfeited the same, so that nothing was due him from the city, and that this was known to plaintiff; that upon such default, the defendant, at the request of the city and to prevent the delay and expense of á reletting of the contract, assigned to one Olvaney whatever payments should become due under the old contract, so that Olvaney might complete the work; that defendant had no interest or profit, directly or indirectly, in the assignment, and that.at the time thereof no money was due to defendant for a third payment, or otherwise; and that defendant never received any money, directly or indirectly by way of such third payment.

Although there is no allegation in the answer that the assignment to Olvaney was made with the knowledge of the plaintiff (but only that Olvaney’s default was so known), the controversy at the trial re

At the close of plaintiff’s case no motion to dismiss was made. At the close of defendant’s case, defendant’s counsel moved to dismiss on the ground that plaintiff (a foreign corporation) had not proved its right to do business in this state, or to sue in this state (an allegation put in issue by the answer), and on the further ground that no -cause of action had been proved against the defendant, and that it had not been shown that defendant had received this payment or derived any benefit from the contract. The court reserved its decision, and -thereafter the case was reopened and the evidence of Olvaney that he had not deposited the third payment with the defendant was introduced. Defendant then renewed its motion to dismiss on the grounds just mentioned, which motion was there denied, and defendant excepted. Plaintiff’s counsel thereupon requested to go to the jury upon all the issues. The court ruled that there waá no evidence from which the jury could draw a conclusion of fraud, and that the essential question for the jury' was that of the consent of the plaintiff to the assignment. Both sides excepted to this ruling, and defendant also asked to go to the jury on all questions of fact, which request was overruled, and defendant excepted. The judge then charged the jury, in substance, to determine whether the plaintiff had expressly or impliedly consented to the assignment to Olvaney; that the burden of showing such knowledge or consent on the part of the plaintiff was upon the defendant,

[1] It is at once apparent that, in the state of the record, when the learned judge below set the verdict aside, he had no right to dismiss the complaint (Brown v. Grossman, 128 App. Div. 496 , 112 N. Y. Supp. 827 ), but should have ordered a new trial. It may be that on this appeal that error would become merely technical, if this, court should determine that the complaint should have been dismissed at the close of defendant’s case when defendant made its motion to that effect, and that this court might, under the liberal provisions of section 1317 of the Code of Civil Procedure, although disapproving the practice followed in the court below, nevertheless itself dismiss the complaint; .but this question, as I shall show, need not be decided.

[2] On the pleadings and the proofs, it is evident that the plaintiff disclosed a possible cause of action. .The defendant, having for a good consideration promised to pay plaintiff $700 out of the third payment to be received by defendant, impliedly covenanted to do nothing of its own motion to disable itself, directly or indirectly, from receiving this third payment upon the familiar principle which is followed in a long line of cases, beginning with Stirling v. Maitland, 5 B. & S. 840, Ogdens v. Belcher, 2 K. B. (1904) 410, and running through Horton v. Hall & Clark Co., 94 App. Div. 404 , 88 N. Y. Supp. 73 ; Hearn v. Stern & Bro., 111 App. Div. 101 , 97 N. Y. Supp. 566 ; Wells v. Alexandre, 130 N. Y. 642 , 29 N. E. 142 , 15 L. R. A. 218 ; Genet v. D. & H. Canal Co., 136 N. Y. 593 , 608, 609, 32 N. E. 1078 , 19 L. R. A. 127 ; Wilson v. Mechanical Organette Co., 170 N. Y. 542 , 63 N. E. 550 .

On the other hand, the contract may properly be construed as containing a further implied term, to the effect that if for any reason outside of either direct action or control of the defendant (such, for example, as the failure of McKinnon) no third payment should be made, the defendant would be released from its liability on its promise to plaintiff. See Krell v. Henry (1903) 2 K. B. 740; Lorilard v. Clyde, 142 N. Y. 456 , 463, 37 N. E. 489 , 24 L. R. A. 113 ; Abbaye v. U. S Motor Cab Co., 71 Misc. Rep. 454 , 128 N. Y. Supp. 697 , 699.

[3] Upon this analysis, therefore, it is clear that after plaintiff had proved the contract and the assignment of the third payment by the defendant to Olvaney, it had made out a prima facie case. It thereupon became incumbent upon the defendant to show that the assignment to Olvaney was a mere formality to accommodate the city, and that in point of fact no direct payment covered by the contract of the plaintiff had ever been made, because of McKinnon’s default, or else, apart from any reasons therefor, that the plaintiff had consented to

[4] On the other hand, plaintiff, never having even undertaken to prove that the third payment was or could have been earned by Mc-Kinnon, and would in consequence have been received by defendant, proved no damages; but of this failure of proof on the part of plaintiff defendant took no advantage, making no reference thereto on its motion to dismiss.

Finally, so far as the record discloses, all sight seems to have been lost of defendant’s objection that plaintiff had not proved its capacity to sue in this state; and the question whether defendant actually received the money paid Olvaney by way of third payment also remained apparently unanswered.

I confess that after a careful reading of the record I cannot understand on what theory plaintiff expected to recover upon the evidence adduced by it, nor upon what theory defendant based its defense. Under the circumstances, the attempt of the learned judge below to limit the deliberations of the jury to the single issue of the knowledge and acquiescence of the plaintiff in respect of the assignment by defendant to Olvaney proves unavailing. The only possible solution seems to be a new trial, at which the issues presented by the pleadings may be properly presented and tried out.

Judgment and order reversed, and new trial ordered, without costs of this appeal to either party. All concur.