Conrow v. Little

& Co., and that they would deliver it to them for that purpose. Thereupon Little & Co. entered into an agreement with Branscom to do the type-setting and electrotyping for the books, and print the same upon the paper so to be delivered to them by the plaintiffs for that purpose, and Branscom was to pay Little & Co. cash for the work.

The plaintiffs fulfilled their agreement with Branscom, delivered to him or on his account pap r of the value of $3,589.50, and beside loaned and advanced to him $4,096.07, making a total indebtedness of $7,685.57. Included in that was the price of 150 reams of paper that the plaintiffs under their contract with Branscom delivered directly to Little & Co., on the 21st, 22d and 23rd days of October, 1884, and the bill therefor under date of October 23rd, was made out and given to Branscom, and stated the delivery of the paper to J. J. Little & Co.

Immediately upon the making of their contract with Branscom, Little & Co. proceeded to execute it, and before the 29th of October in composition and electrotyping, printing and otherwise, did work on account of the books to the amount in value of $950.24. In doing this they actually used four out of the 150 reams, and still retained 146 reams. No part of the debt due them has been paid. It appears that Branscom fraudulently induced the plaintiffs to enter into their agreement to supply him with paper, by delivering to them as genuine a note of $7,000, dated August 9, 1884, purporting to be made by the “ Mississippi Mills,” payable six months after date to the order of Col. Ed. Richardson, and to be endorsed by him, and on the 9th of September, 1884, Branscom gave a note of $5,000 of like tenor to Little & Co., which they received on account of printing. It turned out, however, that both notes were forged. On learning that fact, and •on the 31st of October, the plaintiffs commenced an action against Branscom in the superior court of New York city, for the recovery ■of the sum of $7,685.57, alleging the fraud practiced upon them to induce the sale of goods' and loan of money, and claiming judgment for this sum. On the 1st of November they obtained an attachment in that suit from one of the justices of the court, against the property of Branscom, and it was levied upon money of Branscom on deposit in the National Shoe and Leather Bank. On the 18th of November, $2,915, part of the money so levied on, was drawn from the bank by plaintiffs on Branscom’s check made and given to them on that day, and applied on account of the money theretofore loaned to them. The sheriff also, on the 5th of November, levied on the 146 reams of paper then in the hands of Little & Co. In July, 1875, the attachment suit was discontinued but in the meantime, on the 6th of December, 1884, the present action was begun.

The plaintiffs alleged that Little & Co. claimed a lien upon the 146 reams of paper for the sum due them, viz.: $956.25, and asked for judgment that the defendants acquired no lien upon or right to said paper, and that the plaintiffs have judgment against them for its possession and return, or for the value, viz.: $1,445.40. The defendants set up their lien and the attachment

proceedings, and, upon trial, asked for a dismissal of the complaint, but the learned trial judge denied that application and directed judgment according to the prayer of the plaintiffs. Concerning its correctness the judges of the court below differed, but a majority were for affirmance.

Upon the facts found we think the judgment should have been the other way.

First. As between Conrow Brothers and Little & Co., the question is, which of two innocent persons should suffer from the fraud of a third ? It is plain that, except for the intervention of the former, and their assurance that they were to manufacture the paper for Branscom, and that it would be forthcoming when required, the latter would not have undertaken the work which Branscom wanted. It is true this assurance was given in ignorance of Branscom’s fraud, but it was the occasion of the defendants’ agreement, and if the plaintiffs are now permitted to take away the paper delivered in apparent fulfillment of their promise, and as the property of Branscom, they, not less than Branscom, will be wrongdoers, although, in making that promise, they had no intention to do harm. I think the inquiry is the same as if Branscom had committed no fraud, and was in equity and morals the real owner of the paper, as he was in law. It had been manufactured for him and delivered pursuant to his order, and he had the written title. This was as the plaintiffs had assured defendants it would be. They must, therefore, be held to stand in Branscom’s place, and to have taken the risk when they placed the goods as Branscom’s goods in defendants’ possession. Whatthen as against Branscom were the defendants’ rights or interest in the paper ? In regal’d to the four reams on which work had been actually done, no question arises. The lien is conceded. Upon the others no work had been done, and the claim is for the general balance of debt due on account of the job for the completion of which the paper had been delivered.

It cannot be said that the two things were unconnected, for, Jirst, each was. indispensable to the other, the work done by the ■defendants was useless if no paper was to be had for printing and the paper was useless unless type and plates were provided for imprint. And in the next place the work and paper are connected by the very agreement and understanding of the parties. The defendants refused to enter upon the work of preparing type and plates until assured that the paper was to be furnished and no delivery of the work was to be made except upon cash payment. Whatever the aspect of the contract at its inception and at its close, the defendants refused to rely to any degree upon the personal credit of Branscom, and from this and other circumstances attending the method of dealing of the parties, and the transaction itself, a contract of lien is necessarily to be implied. Possession was acquired by contract, and when through the owner’s fault completion of the work was prevented, a liability was incurred to pay such damage as the defendants should sustain. This would at least include a recompense for the labor done and

materials prepared for use, and for that the law gives a lien or right of detention. It attached the moment the paper came into their possession for the purpose of having work done upon it, and remains good until discharged by payment not only for labor literally expended upon the paper itself, as by printing, but for any act done, or labor performed, or money expended in the preparation of instrumentalities by which that labor was to be performed, as types, cuts, illustrations, electrotypes and other things of like nature and object. The defendants’ claim does not go further, and neither Branscom nor the plaintiffs can, without the violation of legal principles, be permitted to retake the property until that payment is made.

There is another ground for judgment in favor of the defendants. The contract between Branscom and the plaintiffs was, upon the discovery of Branscom’s fraud, voidable at their election. As to him the plaintiffs could affirm or rescind it. They could not do both, and there must be a time when their election should be considered final. We think that time was when they commenced an action for the sum due under the contract, and in the course of its prosecution applied for and obtained an attachment against the property of Branscom as their debtor. They then knew of the fraud practiced by him and disclosed that knowledge in the affidavit on which the attachment was granted and became entitled to that remedy because it was made to appear that a cause of action existed in their favor by reason of “ a breach of contract to p;iy for goods and money loaned, obtained by fraud.” The attachment was levied and the action pending when the present action, which repudiates the - contract and has no support except on the theory of its disaffirmance, was commenced. The two remedies are inconsistent. By one the whole estate of the debtor is pursued in a summary manner and payment of a debt sought,to be enforced by execution; by the other specific articles are demanded as the property of the plaintiffs. One is to recover damages in respect of the breach of contract; the other can be maintained only by showing that there was no contract. After choosing between these modes of proceeding the plaintiffs no longer had an option. By bringing the first action after knowledge of the fraud practiced by Branscom, the plaintiffs waived the right to disaffirm the contract, and the defendants may justly hold them to their election. The principle applied in Foundry Co. v. Hersee, 103 N. Y., 26 ; 3 N. Y. State Rep., 100, and Hays v. Midas, 104 N. Y., 602 ; 6 N. Y. State Rep., 472, require this construction, for the present contains the element lacking in those cases, viz., knowledge of the fraud practiced by the vendee; and by reason of it the plaintiffs were put to their election.

It is not at all material to the question that the plaintiffs discontinued the first suit before bringing the present to trial; for it is the fact that the plaintiffs elected, this remedy and acted affirmatively upon that election, that determines the present issue. Taking any step to enforce the contract is a conclusive election not to - rescind it on account of anything known at the time. After that

the option no longer existed, and it is of no consequence whether or not the plaintiffs made their choice effective. It does appear, however, that after the attachment was levied upon Branscom’s money, part of the money so levied upon was paid over to the. plaintiffs. It is not important that it was drawn on Branscom’s check, for the attachment was still in force and the suit pending, and the effect of that proceeding as to third parties could not be defeated by adopting another instrumentality to get the money out of the bank. Nor could its voluntary application upon a debt other than that contracted for the paper permit the plaintiffs to reassume the title to it. . In either aspect of the case the plaintiffs failed to make out a cause of action. The rights which the defendants assert were acquired in. good faith and for value, and in reliance upon the plaintiffs’ representations. To the truth of those representations, verbal and written, the plaintiffs may lawfully be held. They are diréctly within the well established rule that where one states a thing to another with a view to the other altering his position, then the person to whom the statement is made is entitled to hold the other bound, and the matter is regulated by the state of facts imported by the statement. Griswold v. Haven, 25 N. Y., 603 ; McNeil v. Tenth Natl. Bank, 46 id., 325. The defendants’ rights, therefore, are greater than Branscom’s, and should be indefeasible.

In the second place the plaintiffs by their conduct have voluntarily affirmed the contract which formed the basis of the defendants’ transaction with Branscom, and it cannot now be repudiated to the defendants’ loss.

It follows that the judgments of the courts below should be reversed, and a new trial granted, costs to abide the event.

All concur.