McElwee Manufacturing Co. v. Trowbridge — 22 N.Y.S. 674

Majority

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(68 Hun, 28.)

McELWEE MANUF’G CO. v. TROWBRIDGE.

(Supreme Court, General Term, First Department.

March 17, 1893.)

Headnote

1. Set-Off and Counterclaim—Pleading.

In an action on promissory notes the answer alleged that the notes were given in consideration of a promise that was not fulfilled, and that defendant sustained damage by reason of the breach of such promise. Held, that such defense was an offset, and not a counterclaim.

2. Corporations—Proof of Incorporation—Pleading—Answer.

Under Code Civil Proc. § 1776, which provides that, in suits by corporations, plaintiff need not prove its corporate existence “unless the answer is verified, and contains an affirmative allegation that the plaintiff is not a corporation,” a plaintiff that is a foreign corporation need not prove its corporate existence where the only allegation of the answer on the subject is a denial of knowledge or information sufficient to form a belief as to plaintiff’s organization.

3. Evidence—Admissions—Offer of Settlement.

Evidence as to negotiations for a settlement of the matters in controversy may be admitted for the purpose of showing a statement of fact as to defendant’s liability made by him in the course of such negotiations.

4. Same—Transaction with Decedent—Agent.

Where it has been shown that a witness, while acting for plaintiff, was referred by defendant to a certain person, since deceased, as his agent, it is competent for the witness to testify as to what was said at the interview between himself and said agent.

Appeal from circuit court, New York county.

Action by the McElwee Manufacturing Company against Benjamin A. Trowbridge on two promissory notes indorsed to plaintiff by Don A. Gaylord & Co. From a judgment entered on a verdict in favor of plaintiff, defendant appeals.

Affirmed.

For former report, see 17 N. Y. Supp. 3 .

Defendant’s answer set up two defenses. The first consisted of denials of plaintiff’s allegations, the second was as follows: “And for second, separate, and distinct defense herein defendant shows:. That whatever note or notes were given to or obtained by said Don A. Gaylord & Go. were given and obtained under and by virtue of certain promises and undertakings by said Don A. Gaylord & Co. to defendant, made to obtain possession of said notes, which promises and 'undertakings were not fulfilled. That defendant had a contract with said Don A. Gaylord & Co. to furnish certain material for premises in the city of New York, on which he was then building. (2) That under such contract defendant paid said Don A. Gaylord & Co. large sums of money both in cash and by notes, which latter hare all been paid except the last two. That, when the last two notes were given, Don A. Gay-lord & Co. w«re behind with materials, under their contract, and had been

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notified in writing that defendant would purchase elsewhere, and hold them for the difference. That Don A. Gaylord & Go. then and there promised, if the said notes were given, they would deliver the short material that very day, and that no farther delay should occur. That upon these representations said notes were given, and Don A. Gaylord & Co. did not fulfill their agreement, and did not deliver the material as agreed, but sold the same to other parties for cash. That by reason of the breach of contract by Don A. Gaylord & Go. the defendant sustained damage, by reason of the delay and loss of income from said property, exceeding in amount the sum of $1,000.”

Argued before VAN BRUNT, P. J., and O’BRIEN and FOLLETT, JJ.

B. C. Chetwood, for appellant.

John E Eustis, (George S. Coleman, of counsel,) for respondent.

This action is brought to recover the amount of two promissory notes, the consideration of which was the furnishing of materials to be used in the construction of certain houses, and the defense to which was that this contract was never fulfilled, and that the material furnished was fully paid for. As there is no order denying a motion for a new trial, and no statement that the case contains all the evidence introduced at the trial, the only questions presented for our consideration are those of law, arising upon exceptions, which, in the order in which they are presented, we will briefly consider.

The answer having set up what defendant insists was a counterclaim, and no reply being made thereto, the defendant moved for judgment on the pleadings, which he now claims it was error not to have granted. We have examined the answer, and agree with the trial judge that it does not contain a counterclaim, no affirmative relief being demanded thereon, and being pleaded as a defense, and treated as an offset.

At the close of plaintiff’s case, defendant’s counsel moved to dismiss the complaint on the ground that the plaintiff was a foreign corporation and that there is no proof whatever of its incorporation. The trial judge at first inclined to the view that this motion must be granted, oh account of the statement in the opinion upon the former appeal, ( 62 Hun, 471 , 17 N. Y. Supp. 3 ,) that, the plaintiff having assumed the burden of proving the incorporation, “the objection that the incorporation of the plaintiff was not established would have been well taken, had not improper evidence, proving the incorporation, been admitted without objection;” no claim being made that there was any such issue. By section 1776 of the Code of Civil Procedure, it is provided that “plaintiff need not prove upon the trial the existence of the corporation, unless the answer is verified, and contains an affirmative allegation that the plaintiff is not a corporation.” The case of Vulcan v. Myers, 58 Hun, 161 , 11 N. Y. Supp. 663 , in construing this section in connection with section 1779 of the Code, held that the former section was equally applicable to foreign as well as to domestic corporations. Unless, therefore, there is an affirmative allegation that the plaintiff or the defendant, as the case may be, is not a corporation, the existence of the corporation need not be proved. Here the answer alleged that defendant “has no.

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knowledge or information sufficient to form a belief” as to the organization of the plaintiff as a foreign corporation. In the case referred to (Vulcan v. Myers) the answer contained the following denial: “Upon information and belief, it is denied that plaintiff ever was, or now is, a corporation.” This latter was held insufficient to put plaintiff to its proof, and we think the form of denial in the present answer is much weaker; and under the authority of that case, which construes the sections of the Code, and shows just when proof of organization must be made, it cannot be held that proof of incorporation is required.

The next exception refers to error assigned by appellant in admitting, over objection, evidence as to a settlement. An examination of the record, however, will show that while the court asks a question as to whether any proposition was received from the defendant, which was objected to, the answer, which was, “Yes, sir,” cannot be held to have prejudiced the defendant. The subsequent testimony of what actually occurred was not objected to; and while, in a proper case, we are disposed to enforce the rule, as held in Slingerland v. Norton, 58 Hun, 578 , 12 N. Y. Supp. 647 , that negotiations or proposals looking towards the settlement of a controversy without action cannot be received in evidence as admissions of liability, still this rule does not extend to the admission of a disputed fact, even though made in the course of such negotiations. The evidence adduced was not for the purpose of showing a compromise, or an offer to compromise, but it called out a statement of fact as to defendant’s liability, as shown by such statement. Taking, however, appellant’s view,—that it was evidence as to a settlement,— such evidence was received without objection, and thereafter no motion was made to strike it out.

In addition, certain criticisms are made upon the charge of the trial judge, but, as no exceptions were taken thereto, no question is presented for our consideration. Thus it is claimed that the judge, in his charge, dwelt on the giving of the notes by deceased agent, with knowledge of Gaylord’s shortcomings, and that this prejudiced the defendant, by making the case turn on evidence given by Gay-lord, in his own behalf, of personal and private transactions between him and the deceased, which could not be contradicted, and should have been excluded. While, in the absence of an exception, no question is raised upon the judge’s charge, the evidence given by Gaylord as to his interviews with the agent of the defendant, who has since died, was objected to; but the point thus presented we do not regard as serious.

As appears from the record, Gaylord testified that he saw the defendant, and asked him for the final payment, and that the defendant told him to see Mr. Yenni, and get it fixed up, and arrange a settlement; that he thereupon called upon Mr. Yenni; and it was to the question, “What matters did you discuss at that interview?” that the objection was made, and the exception taken. No ground of objection was given, but if we take the one now presented, that it was incompetent and improper to have allowed Gaylord to testify to conversations had with the agent of the defendant, the latter being since

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deceased, it is evident that there is no merit in the objection. It had been made to appear that Yenni was the defendant’s agent, and, as we have seen from what just preceded the giving of this testimony, Gaylord stated that the defendant told him to see Yenni, and make the arrangements with him. Under such circumstances, it was competent to show just what occurred between Gaylord, who was acting for plaintiff, and Yenni, who was concededly the agent of the defendant, and to whom Gaylord had been referred by the defendant himself.

Upon an examination of the record, we do not think that any of the exceptions are valid; and the judgment, therefore, should be affirmed, with costs. All concur.