Majority
p. 128(73 Hun, 138.) ROBINSON v. PASSAVANT et al. (Supreme Court, General Term, First Department. November 17, 1893.) The following is the opinion of Albert S. Thayer, Esq., the referee,. on the motion to dismiss: In 1885, Seth B. Robinson, father of the plaintiff, was engaged In business •- in New York as an importer of buttons. On September 7th, in that year, he-
Headnote
Release and Discharge—Effect.One R. owed defendant for goods,—the debt being secured by a deposit thereof,—and afterwards purchased new goods on defendant’s credit, under an agreement that R. should have them on paying the cost price, with 5 per cent, commission for the use of defendant’s credit. R. made-an assignment for creditors, and effected a composition with them, and defendant afterwards released R. and the assignee, and consented to the-reassignment to R. of all the assigned estate. R. could not pay for the new goods, and it was agreed that they should be sold from defendant’s store, under his billheads, until all R.’s indebtedness should be-cleared off; R. to get what remained either in cash or in goods. Held, that the release did not extinguish the debt for either the old or for the-new goods, nor discharge the security for either of such debts, and that R. was not entitled to the difference between the selling price of the-new goods and their cost price, with commission added, until the debt: for the old goods had also been liquidated.
Appeal from judgment on report of referee.
Action by Seth B. Robinson against Herman Passavant and others. Seth B. Robinson, Sr., to whose rights against defendants, plaintiff" succeeded, bought goods on defendants’ credit under an agreement that he should have the goods on paying the cost price and a commission for the use of defendants’ credit. Robinson, Sr., was unable to pay for the goods, and they were sold from defendants’" store; plaintiff alleging that there was an agreement that Robinson, Sr., was to have the difference between what the goods sold for and their cost price with the commission added, and seeks to recover - such amount. From a judgment dismissing the complaint, plaintiff appeals.
Affirmed.
p. 129made an assignment for the benefit of his creditors. At the time of the assignment, he was indebted to the defendants, who constituted the firm of Passavant & Co., in the sum of $18,902.84, which indebtedness was secured by a deposit with Passavant & Co. of merchandise of the nominal value, according to the schedules filed pursuant to the assignment, of $19,776.63. S. B. Robinson, Sr., succeeded in effecting a settlement with his creditors. In pursuance of this settlement, Passavant & Co. executed a general release to Mr. Robinson and his assignee, dated October 10, 1885; and the other creditors joined in executing a deed of composition, dated September 16, 1885, in which they agreed to take twenty-five cents on the dollar. During the year 1885, and at various, periods ranging from July 2d to October 13th, S. B. Robinson, Sr., ordered a quantity of new goods from Anton Aub & Co., of Paris. It appears that one way of purchasing and importing foreign goods, such as Mr. Robinson dealt in, is for the importer to procure from a commission house, like Passavant & Co., authority to buy goods in the name of the commission house. Such an authority limits the amount of money which the commission house may be bound to pay, but leaves the importer free to exercise his discretion as to' quality and price in selecting goods. The goods pm-chased are shipped by the foreign-house to the commission merchant, and delivered by him to the importer,, the terms of such delivery being payment of the cost of the goods and a commission of 5% to the commission merchant for the services rendered by him in giving the importer the benefit of his credit. The goods ordered of Anton Aub & Co., or most of them, appear to have been pm-chased in. accordance with this custom. Robinson gave the orders. Anton Aub &. Co., from time to time as they received them, sent Robinson statements-specifying the goods ordered. Most of these statements were headed, “Order given by Mr. S. B. Robinson for account of Messrs. Passavant & Co.”' The invoices were made out to Passavant & Co., and the goods were shipped to Passavant & Co. When Mr. Robinson failed, these new goods were coming in. Then happened what this controversy is founded on, —a conversation between Mr. Robinson and Mr. Sutton, of the firm of Passavant & Co. The plaintiff’s witness Alexander Ross furnishes the only evidence of what was.said. His,account of the matter is substantially as follows: “It was only a short conversation. Mr. Robinson did not know, what to do with the old goods he had on hand, unless he got a new stock that came in, and he wanted to know of Mr. Sutton about it, and Mr. Sutton said he could not give them to him unless he gave him some security; and I think he suggested the name of Mr. Striker as security, and Mr. Robinson could not give that security. So Mr. Sutton said he could not deliver the goods. I am talking of the new goods that were just arrived at the time. Then it was concluded that Mr. Sutton was to sell the goods that were coming in from his store under the heading of the firm of Passavant & Co.” Here the question was interjected, “Under what?” and the witness answered, “Under their billheads in the store of Passavant & Co.,—goods that he stored with them.” Witness then went on to say: “Mr. Robinson thought at the time it would not take more than a month, or two or three months at the furthest, until he could pay up Mr. Sutton every cent he owed. All the indebtedness would be cleared off, and he would get then whatever was remaining,—the difference, either in cash or goods, back to his store,—and that was the whole agreement at that time.” Plaintiff contends that the “new goods,” meaning the goods purchased of Anton Aub & Co. in the summer and fall of 1885, became the property of Passavant & Co. But, whoever held the legal title to them, it seems pretty plain that S. B. Robinson, Sr., was entitled to have them, subject, of course, to his assignee’s rights, on payment of cost and 5%, and that, as between Robinson and Passavant & Co., the equity in the goods belonged to Robinson, and Passavant & Co. held them as security merely. According to Mr. Ross’ account of the conversation between Messrs. Robinson and Sutton, such appears to have been the view those gentlemen took of the matter. Sutton said he could not give Robinson the goods unless he gave him security. It was a question of security, not of agreeing on the terms on which the goods-were to be handed over. Those had been already fixed. And Mr. Sutton
p. 130was to be paid every cent Robinson owed him. All the indebtedness was to be cleared off. In other words, Robinson was to get the goods merely by paying his indebtedness. The debt created by the purchase of these new goods was distinct from the indebtedness of $18,902.84. That was an old debt secured by a deposit of old goods. Some of the new goods appear to have been ordered after the date assigned by plaintiff for the conversation between Messrs. Robinson and Sutton. But assuming that the agreement entered into by those gentlemen referred to all the new goods, which appears to be the plaintiff’s understanding of the matter, it made the new goods additional security for the old debt, as well as security for the new debt growing out of the purchase of the new goods. All the indebtedness was to be paid off. But the plaintiff says, after the agreement the release from Pas-savant & Co. was delivered, the goods held at the time of the assignment as collateral for the old debt were taken in satisfaction thereof, and Mr. Robinson, Sr., became entitled to all the proceeds of the new goods after payment of cost and 5%. As to the effect of the release: The releasees named therein are Seth B. Robinson, an insolvent debtor, and John G. H. Meyers, as assignee of the said Seth B. Robinson, and the expressed consideration is one dollar. The provisions of the instrument appear to be those of an ordinary general release, with this addition: “And particularly do we release and discharge John G. H. Meyers, as assignee of Seth B. Robinson, doing business as S. B. Robinson & Co.; and we consent to his reassigning immediately to Seth B. Robinson all the property, stock, goods, chattels, merchandise, accounts, and negotiable paper heretofore, on the 7th day of September, 1885, assigned by Seth B. Robinson, doing business as S. B. Robinson & Co., to said John G. H. Meyers as assignee. And we hereby waive service of any and all papers which said John G. H. Meyers, as assignee, may be required to serve for the purpose of obtaining his release and discharge by the, court as assignee herein.’’ One thing appears to be plain,—that it was intended by this release to relieve the assignee from all liability to Passavant & Co. growing out of the assignment, and protect him in returning the assigned estate to Mr. Robinson. It would seem, also, that it was intended to discharge all personal liability of Mr. Robinson to Passavant & Co. Seth B. Robinson is the first releasee named, and no other reason for inserting his name is apparent. Looking at this release in connection with the deed of composition executed by the other creditors as together constituting a settlement-of the affairs of S. B. Robinson, it seems natural that the idea in view, in negotiating this settlement should have been that all personal liability should be destroyed, except that created as a result of the settlement. Such would have been the effect of a valid composition under the bankruptcy act of 1867. A secured creditor, if he succeeded in obtaining a judicial determination that the value of his security was less than the amount of his debt, was entitled to payment under the composition, pro rata, with the other creditors, on the excess; otherwise, he was confined to his security. And all personal liability of the debtor to his creditors, whether secured or unsecured, except the liability resulting from the composition, was discharged. Bankruptcy Act 1867, § 5103 A; In re Lytle & Co., 14 N. B. R. 457 . The new debt does not appear in the schedules filed by the assignee, and it has been urged that this is a reason for holding that the release does not apply to the new dqbt. But the parties to the release knew the facts as to the purchase of the new goods, and the conversation between Messrs. Robinson and Sutton goes to show it was supposed such a purchase created a debt to Passavant & Co., and it would seem that the release discharged the personal liability on that debt as well as any other. The release, then, protected the assignee in handing back the assigned estate, and relieved Mr. Robinson of his personal liability to Passavant & Co. Did it release the debts themselves, and discharge the security? In other words, did Passavant & Co. give up their secured claim for nothing, when the unsecured creditors were to receive twenty-five cents on the dollar? It is not to be supposed that such was the intent. Although, if the debt itself be gone, the security goes also, yet the personal liability of the debtor may go, and the debt remain as a claim against the security. In Tripp v. Vincent, 3 Barb. Ch. 613 , Walworth, O., says, at
p. 131page 614: “The release of a debt which is secured by a mortgage may discharge a lien of the mortgage upon the land. But where the debt is secured by the personal obligation of the mortgagor, as well as by a mortgage upon land, the debt still exists as a valid claim against land, although the creditor consents to discharge the personal liability of his debtor, and to lo'ok only to the land upon which the debt is a lien for the payment thereof. Whether the debt itself was intended to be discharged, or the personal liability of the debtor only, is in such cases a question of fact, arising either from extrinsic circumstances, or upon the construction of the instrument which is claimed to be a discharge of the debt". In the case of. a valid resolution of composition under the bankruptcy act óf 1867, the personal liability of the bankrupt to a secured creditor was discharged, (barring such creditor’s claim to a dividend under the composition, if he had established that his security was insufficient,) but the security remained charged with the debt Bankruptcy Act 1867, § 5103 A; In re Lytle & Co., 14 N. B. R. 457 . So a discharge in bankruptcy discharged the personal liability, but left the security. Act 1867, §§ 5075, 5119; Bump, Bankr. (10th Ed.) 761; New Loan Officers v. Capron, 17 Johns. 44 . So a creditor may discharge the principal debtor from personal liability to him, and yet retain his rights against the surety. Bruen v. Marquand, Id. 58 ; Stewart v. Eden, 2 Gaines, 121. Passavant & Co. had the power, therefore, to release Mr. Robinson from personal liability, and retain their security; and the referee is of the opinion that such was the intention in the present case, and that the release must be limited accordingly. As to the plaintiff’s contention that the release was a release of the old debt only, and the old goods were taken in satisfaction of the old debt, leaving the new goods as security for the new debt only, there is no evidence of any taking of the old goods in satisfaction; and, if such had been the transaction, it is probable the consideration for the release would have been expressed to be the receipt of the old goods. In point of fact, the expressed consideration is one dollar. The plaintiff, in' his complaint, alleges that the defendants employed Mr. Robinson to sell for them certain goods, which cost $22,800, and promised to pay him for his services the excess of the price for which he might sell over cost and 5%, and that said Robinson,pursuant to such employment, sold a portion of said goods, costing about $19,000, for about $30,000, and thereby. became entitled, pursuant to such employment, to $10,000. The agreement between Robinson arid Sutton does not appear to provide for any employment of Mr. Robinson. According to Mr. Ross’ testimony, Mr. Sutton was to sell the goods. But it seems that as a matter of fact the new goods, or some •of them, were sold from Passavant & Co.’s store through the agency of Mr. Robinson and his employes. Waiving all other questions of variance between pleading and proof, the plaintiff, in the opinion of the referee, has established nothing more than this: a claim to the proceeds of the new goods after payment of cost and 5%, and payment of the portion of the old debt remaining unpaid after exhaustion of the original security, and it is admitted that such a right entitles the plaintiff to no recovery; that an account taken on that basis would show nothing remaining to the plaintiff; that the old '.goods were insufficient to satisfy the old debt, and that the new goods were insufficient to pay their cost and 5%, and the deficiency of the old debt The motion to dismiss the complaint is granted. Argued before O’BRIEN, FOLLETT, and PARKER, JJ.
Charles De Hart Brower, for appellant.
Carter, Pinney & Kellogg, (George M. Pinney, Jr., of counsel,) for respondents.
The complaint herein alleges:
“That, in the year of 1885, Seth B. Robinson, the father of the plaintiff herein, was engaged in business as an importer in the city of New York, and that in said year, and with the knowledge and consent of defendants, said Robinson purchased for the account of defendants goods, wares, and mer
p. 132
chandise of the price and value of about $22,800, exclusive of duties; that thereafter the said goods were delivered to and received by the said defendants; that thereafter, and on or about the 10th day of September, 1885, the said defendants employed the said Robinson to sell said goods for them, and promised and agreed to pay him for his services in selling the same the excess of the price at which he might sell the same over the costs of the goods so sold, 5% added thereto; that thereupon the said Robinson, pursuant to said employment, and in reliance upon the aforesaid promises and agreement, sold a large amount of the aforesaid goods, to wit, goods of the cost of about $18,000, for the price or sum of about $30,000; that thereafter, and on the 14th day of June, 1886, the said Robinson, being then a resident of the city of New York, died intestate, and thereafter the surrogate of the county of New York, having jurisdiction in the premises, duly issued letters of administration upon the goods, chattels, and effects of said Seth B. Robinson, deceased, appointing Caroline L. Robinson, his widow, administratrix, who thereupon duly qualified as such administratrix, and entered upon the discharge of the duties of her said office; that thereafter, and on or about the 13th day of April, 1889, the said Caroline L. Robinson, as administratrix, for value received, duly sold, assigned, and set over to this plaintiff all claim which the said Seth B. Robinson had in his lifetime against the defendants on account of, or by reason of, his said services and employment, as aforesaid; and also all claim which she, the said administratrix, had by reason thereof.”
The judgment asked is for the sum of $10,000, or the difference between the cost and the price for which such goods were sold.
In determining whether the conclusion reached by the referee was correct, the first question that naturally suggests itself is as to whether the cause of action, as alleged, was proved. The answer to this is to be found in the testimony produced, which, exclusive of extrinsic matter throwing light upon the situation of the parties, the character of their dealings, and the nature of the business in which both were engaged, may be briefly summarized. It appears that Mr. Robinson, Sr., was an importer of buttons; that the defendants were commission merchants; and that in 1885 the former was indebted to the latter in the sum of $18,902.84, which was secured by the deposit with defendants of certain goods. This indebtedness is called “the old indebtedness,” and these goods, “the old goods.” Robinson, Sr., imported goods from Europe through the defendants, as commission merchants, upon a credit or authority to buy given to him by them, or otherwise upon their guaranty given to houses abroad; and, as the result of such credit extended, Robinson, Sr., became indebted to defendants for the amount of the old indebtedness, for which he had given what are called the “old goods” as security. In the spring of 1885, while thus indebted to defendants, Eobinson, Sr., went to Europe with a credit or authority to buy to the extent of $20,000 given to him by defendants upon the firm of Anton Aub & Co., of Paris. Under this credit, and between July 2 and October 13, 1885, Robinson, Sr., purchased goods which were shipped to defendants; the invoice being made in their name, and the payments being by them made to Anton Aub & Co. According to the course of business between the parties, the defendants were to deliver the goods to Robinson after their arrival in New York city, and were to be paid for them by him, all expenses being included, together with 5 per cent, commission as the charge of the defendants for giving to Robinson the credit or authority to buy. About Sep
p. 133
tember 7, 1885, Robinson, Sr., made a general assignment for the benefit of creditors. On October 10, 1885, and before all the new goods had been received, the defendants executed and delivered to Robinson and to his assignee a general release. The construction to: be given this release, and its effect and bearing upon the rights of the parties, are the crucial questions upon this appeal. At the time this release was delivered, the old indebtedness, secured by deposit of certain goods, existed, and the result of the new venture or purchase of the new goods was not ascertained. It is shown that Robinson was desirous of getting possession for purposes of sale of the new goods, and that the defendants refused to give him possession without security, which Robinson was unable to furnish. What occurred between the parties when this arrangement - was sought to be effected appears by the testimony of one Ross, who, besides Robinson and Sutton, one of the defendants’ firm, was the only person present at the interview. In answer to the question as to what was the conversation between the parties, this witness, Ross, said:
“It was only a short conversation. Mr. Robinson did not know what to do with the old goods he had on hand unless he got a new stock that came in, and he wanted to know of Mr. Sutton about it; and Mr. Sutton said he could not give them to him unless he gives him some security, and I think he suggested the name of Mr. Striker as security, and Mr. Robinson could not give that security. So Mr. Sutton said he could not deliver the goods. * * * I am talking of the new goods that were just arrived at the .time. Then it was concluded that Mr. Sutton was to sell the goods that were coming in from his store under the heading of the firm of Passavant & Co. * * * Under their billheads, in the store of Passavant & Co.,—goods that he stored with them. * * * Mr. Robinson thought at the time that it would not take more than a month, or two or three months at the furthest, until he could pay up Mr. Sutton every cent he owed. All the indebtedness would be cleared off. and he would get then whatever was remaining,—the difference, either in cash or goods, back to his store,—and that was the whole agreement at that time.”
And in another place this same witness testifies:
“Robinson was to have the whole thing. Passavant & Co.’s indebtedness would have been paid. That was all there was about it. They wanted to get themselves settled up for the old and the new goods, and clear.”
It is upon the testimony of this witness that plaintiff’s claim is predicated,—that Robinson, Sr., was to be employed by defendants to sell the new goods, and entitled to all the profits remaining after payment of costs, and 5 per cent, commission added; and an effort was made, upon the claim of such an. agreement, to show that, while that was the situation of the parties, the release in question was given, which was intended to discharge the old indebtedness in consideration of the retention by defendants of the old goods; thus giving Robinson a claim by way of compensation against defendants for anything that might be realized upon the sale of the new goods over and above what they were to receive under such alleged agreement. The testimony fails to show whether the release was prior or subsequent to this conversation detailed by the witness Ross, yet the necessity for such proof—the burden of showing which was upon plaintiff—clearly appears, when we consider that, if it had
p. 134
been shown that the release was subsequent, that would necessarily be the end of plaintiff’s case, as showing that the release was hot intended merely and solely as a discharge of the old indebtedness. The weakness, therefore, of appellant’s contention, appears—First, in the failure to prove the allegations of the complaint by showing an employment by the defendants of Robinson, Sr., and, secondly, in failing to show that the release was intended as a discharge only of the old indebtedness. There is nothing in the case to show that the arrangement with respect to the new goods was any other or different from that which had previously existed between the parties, excepting that, Robinson having failed and made an assignment for the benefit of his creditors, the defendants retained possession of the goods, billed them in their own firm name, and received payments upon the sales, to the end that they might be secured to the extent of their advances and the 5 per cent, commission. We think, therefore, that there was sufficient evidence to justify the referee in finding “that the release was riot intended to release the old debt, or the indebtedness growing out of the purchase of the new goods, or any part of either of such debts, or to discharge the security for such debts, or any part of the security for either of such debts,” and that, in the absence of any evidence preponderating the other way, such a finding, and the judgment based thereon, should not be disturbed by this court. Moreover, the conclusion reached by the referee seems the most natural, and most consonant with reason and justice. The defendants were engaged as commission merchants, lending their credit to Robinson, who subsequent to his failure stood in the position towards them of owing about $18,000, which was secured by goods nominally of the value of $19,000, and in addition thereto was indebted to them for whatever guaranties they had given to Anton Aub & Co. for the goods purchased between July and October. No good reason is assigned why they should give up their lien upon both the old and the new goods, in Robinson’s favor; but on the contrary it would seemingly be the natural arrangement between the parties that, after the application of all the security, both old and new goods, which the defendants had, to the payment of their indebtedness, whether for the old.or new goods, any surplus remaining, under the course of dealing as between the parties, should be turned over to Robinson. It is conceded by the stipulation of the counsel that the amount of such indebtedness for the old and the new goods exceeded the total credit as the result of the application of the old'goods, and what was realized from the sale of the new; so that, upon a statement of the account between the parties of all their transactions, there would be no credit balance in favor of Robinson, Sr. The theory presented by the allegations of the complaint—that the former relations between the parties were changed, and that, with respect to the new goods, Robinson entered into the employ of the defendants—is not sustained by the evidence, and is inconsistent with the prior dealings between the parties. Upon examining the record, therefore, we are of opinion that the cause of action as stated in the complaint was not made out, and that the referee was justified, for the reasons given in his able opinion,
p. 135
in dismissing the complaint, and that his conclusion should not be disturbed, but that the judgment entered upon his decision should be affirmed, with costs. All concur.
Cases cited
- Tripp v. Vincent 3 Barb. Ch. 613 p. 130
- New Loan Officers of Albany v. Capron 17 Johns. 44 p. 131