Johnson v. Tyng — 35 N.Y. St. Rep. 570

Majority

p. 570

George Johnson, Resp’t, v. Charles E. Tyng, App’lt.

(Supreme Court, General Term, First Department,

Filed December 29, 1890.)

Headnote

1. Contract—Waiver of default.

Plaintiff and defendant entered into an agreement by which the latter was to furnish raw material and the former to work it up, and defendant was to pay therefor at prices fixed therein; the agreement to terminate on two months notice. In 1884 such notice was given and plaintiff stopped work, but in a few days thereafter a new contract was made. Held, that in view of the negotiations which resulted in the making of the new agreement, whatever defaults may have taken place under the former one were waived, and that plaintiff had a right of action for the amount due thereunder at the time of the making of the new agreement.

8. Same—Breach—Lien.

The new agreement provided that defendant was to"have the exclusive sale of the entire product of plaintiff’s mill; that if he failed to make payments as agreed, the agreement should on ten days notice be null and void, and any sums due should be a lien on any stock or material belonging to defendant which may then be in the mill. One of the payments not having been made, plaintiff gave the ten days notice and immediately stopped work. Held, that plaintiff thereby broke the agreement on his part and could not recover for the work done prior to the breach, and that the lien provided for did not exist until the termination of the ten days from the giving of the notice, and therefore was not available to plaintiff.

Appeal from judgment entered upon decision of the court after trial without jury.

T. M. Tyng, for app’lt; J. C. O' Connor, for resp’t.

This action was brought to recover certain moneys claimed to be due by defendant to plaintiff.

The plaintiff was a manufacturer working a steam rolling mill and the defendant was a vender of steel. In 1879 the defendant made an agreement with the father of the plaintiff by which he agreed to furnish crude steel to the father of the plaintiff, the latter to manufacture it for him at a fixed rate of compensation. The agreement was continued during the mutual pleasure of the parties and to terminate only after two months notice of such discontinuance and the completion of all contracts then entered into.

In December, 1881, the father of the plaintiff died, and subsequent thereto the defendant entered into an agreement with the plaintiff, who had succeeded to his father’s interest in the mill, which had in the meantime been removed to Pennsylvania. This agreement was a continuation of the agreement theretofore made between the defendant and plaintiff’s father, and provided that the defendant should supply raw material and the plaintiff was to work it up and defendant was to pay plaintiff at the prices fixed in the agreement and that the agreement, was to terminate on two

p. 571

months notice. Under this agreement the parties continued business over two and a half years, until the 16th of July, 1884, when notice was given terminating the same two months thereafter. At this time there was §331.56 due under this second agreement and the plaintiff stopped working thereunder. On the 31st of July, 1884, the parties entered into a third agreement which provided for its continuance for five years, during which the defendant was to have the exclusive sale of the entire product of the plaintiff’s mill with a credit of sixty days from the date of each monthly account within which to pay the amount thereof.

It further provided that in case the defendant should fail to make payment as provided in the agreement, that the agreement should upon ten days personal notice be null and void. This third agreement was performed on both sides for a year after it was made, until the 25th of July, 1885, at that time it being claimed by the plaintiff that the defendant had made default in one of his payments. He gave defendant the notice of ten days terminating the agreement and immediately stopped work. There was a balance claimed to be due upon this third agreement at this time, and for the balance due under the second agreement and under this third agreement this action was brought and recovery was had for the whole amount, and from the judgment thereupon entered this appeal is taken.

The claim of the defendant is that the plaintiff cannot recover the moneys sued for because he failed to perforin the contract under which these moneys were earned, and that the breach of the contract caused the defendant certain damages as alleged in the counterclaim.

It seems to us, in view of the negotiations between these parties which resulted in the making of the third agreement, that whatever defaults may have taken place under the second agreement were waived, and that the plaintiff would have a right of action against the defendant for the amount due under that second agreement at the time at which the third agreement was entered into..

The case in respect to the claim made under the third agreement, however, is entirely different. By the terms of the third agreement, the plaintiff was to have the right to terminate the same in case the defendant should fail to make payment as therein provided upon ten days personal notice. And the plaintiff expressly states, in the course of his cross-examination, that the object of requiring the ten days notice was to enable the defendant to hold on to the agreement for these ten days.

It appears from the uncontradicted evidence in the case that instead of waiting till the ten days to stop work, at which time the agreement became null and void by its terms, the plaintiff stopped work instantly and refused to go on during the period of these ten days, and thus broke the agreement upon his part. The terms of the agreement did not provide that the agreement should become null and void in case the defendant failed to make payment in accordance with its terms; but it gave the plaintiff the option in case of such failure to terminate the agreement by giving ten days notice, such termination evidently to take place after the

p. 572

expiration of the ten days for which the notice had been given. Therefore the position of the plaintiff is a breach upon his part of the terms of the agreement under which he claims judgment against the defendant. In order that the plaintiff should recover these various sums of money which he claims, it was necessary for him to show that he had performed the contract on his part, and until he established that proposition no right of action in his favor existed. The plaintiff not only did not establish this proposition, but it was proven that he broke the agreement itself by failure to comply with its terms. This being the condition of. the proof, we do not see how the plaintiff can recover for the work done prior to the breach.

It is urged that by the provisions of the agreement the plaintiff was to have a lien upon the termination of the agreement upon all the material which was sent to him by the defendant in case of a breach. But that lien did not exist until the expiration of the ten days after the giving of the notice, and after the agreement had become null and void. The provision is as follows: “It is further agreed that in case the party of the second part shall fail to make payments as above provided, this agreement shall,' upon ten days personal notice, be null and void, and any sum or sums which may at such time be due the party of the first part shall be a lien upon any stock pr material belonging to the party of the second part which may then be in the mill.” The words “ at such time ” evidently refer to the time when the agreement shall become null and void, namely, ten days after notice. “ The material belonging to the party of the second part which may then be in the mill.” The phrase “ then ” applies clearly to the time when the agreement becomes null and void, as aforesaid, on the tenth day after the giving of the notice, otherwise no effect can be given to the requirement of ten days notice.

There is nothing in the agreement going to show that because of the failure of the defendant to pay pursuant to its terms the plaintiff had a right then to stop. The parties had expressly provided otherwise ; they had expressly provided that for ten days after defendant had been in default he could claim that the plaintiff should perform his part of the contract although the defendant had failed to perform his.

The parties having contracted in this manner, the plaintiff cannot be heard now to claim that he should not be bound by the provisions of his contract.

We think, therefore, that the judgment was erroneous and that the same should be reversed, and a new trial ordered, with costs to appellant to abide event,

Daniels and Brady, JJ., concur.