Goodman v. Cohen — 43 N.Y. St. Rep. 680

Majority

p. 680

Israel D. Goodman, Resp’t, v. Jacob Cohen, App’lt.^[1]

(Court of Appeals, Second Division,

Filed March 15, 1892.)

Headnote

1. Contract—Statute of frauds.

Defendant, a dealer in damaged goods, agreed to purchase $600 worth of plaintiff’s goods which had been damaged by fire and to pay therefor to the insurance companies, which were to pay the same to plaintiff in addition to the damages fixed by defendant as appraiser; the latter also agreed that if either of the companies failed he would pay its share directly to plaintiff. Held, that defendant did not agree to pay for the goods if the company did not pay for them, hut to pay for them in any event, either to the company or to the plaintiff, and so the contract was not within the statute of frauds.

2. Same—When contract not void as against public policy.

There was nothing in the contract that was necessarily so opposed to public policy as to call upon the court to interfere without an exception.

(Follett, Oh J., and Landon, J., dissent.)

Appeal from a judgment of the general term of the court of common pleas for the city and county of New York, affirming a judgment entered upon the verdict of a jury and also affirming an order denying a motion for a new trial.

Action to recover the sum of $105.26, the alleged purchase price of certain goods claimed to have been sold by plaintiff to defendant, upon the promise of the latter to pay said amount to the Citizens’ Insurance Company of Mobile, provided it should not suspend business, or go into liquidation, or become insolvent within sixty days, and if either of those events happened, upon the further promise to pay said sum to the. plaintiff.

The complaint alleged the making of said agreement, the delivery of the goods to the defendant thereunder, the insolvency of said insurance company within the period specified, a demand of payment and a refusal by defendant to pay. The answer was a general denial.

The facts, so far as material, appear in the opinion.

JBenno Loewy, for app’lt; Arthur Furber, for resp’t.

Upon the trial it appeared that in January, 1887, the plaintiff was a dealer in men’s underwear at No. 80 Bast Broadway, in the city of New York. His stock of goods was insured to the amount of $4,750 in four insurance companies, including the Citizens’ of Mobile, and, a loss having happened by a fire that occurred on the 3d of said month, one Sunshine, selected by the plaintiff, and the defendant, selected by the insurance companies, were duly appointed appraisers to estimate the damages, with power to select a third person as umpire if they could not agree. The appraisers met, but after much effort could not unite in making an award. The defendant had been instructed by the representative of all the companies to make the appraisal as brief as practical, to avoid choosing an umpire if possible, and if’ there were a few items that the appraisers could not agree upon, to allow them as a total loss and take the goods, which the insurers were authorized by their respective policies to do. Some damaged goods that cost $500 were in fact delivered by the plaintiff to the defendant, who took them away, sold them and turned the proceeds over to the insurance companies, and on the trial he claimed that he did this as agent of the insurers, pursuant to their directions and under the provisions of the policies permitting it.

On the other band, the plaintiff claimed that the defendant, in order to facilitate an adjustment of the disputed items of damage, purchased said goods for himself at their cost price, and in his own ñame and behalf promised to pay $500 for the same to the several insurance companies in proportion to the amount of their respective policies, but as there was some doubt as to the financial condition of the Citizens’ Insurance Company of Mobile, that he further promised that if that company should become insolvent or fail within sixty days, he would pay its proportion, or $105.26, to the plaintiff. The amount so to be paid to the companies was to be included in the award, as if the goods thus sold had been a total loss, and the plaintiff was to get his pay from all except the Citizens’ Company when the award was paid, and from that company also unless it failed, in which event the defendant was to pay plaintiff directly for a proportionate part of the goods. Bach party supported his theory by the direct and positive testimony of several witnesses, and the defendant’s version was to some extent corroborated by documentary evidence. The jury, however, found for the plaintiff, and hence the contract, even if unusual in form and improbable in fact, must for the purpose of this appeal be regarded as established in accordance with his theory. After the sale and delivery of the goods the appraisers made an award, which included said goods as totally lost, and each company, except the Citizens’ of Mobile, paid its proportion of the award to the plaintiff.

The defendant claims that the agreement was a special promise by him to answer for the debt or default of the insurance companies, and that it was void because not in writing. This depends on who bought the goods. If the insurance companies bought them

p. 682

the debt thereby created was for them to pay and the promise of the defendant was to answer for their debt, but, as the jury have found, he bought the goods for himself, and hence the debt was his own. The promise was to pay for goods purchased by the defendant; not to pay any part of the damages caused by the fire.

The agreement was not made by him in behalf of the companies, but in his own behalf. The companies did not elect to take the goods, but the defendant elected to buy them of the plaintiff, who owned them at the time, and in consideration of the sale he promised to pay the price agreed upon to the appointees of the plaintiff, and so far as the amount in question is concerned, to the plaintiff himself in a certain contingency, which subsequently took place. The defendant was not .to become liable upon the default of another, but was absolutely liable by the terms of the agreement. There was no original promise by one and a collateral promise by another, 'hut a single promise made by the defendant for a consideration moving directly to himself. He did not agree to pay for the goods if the company did not pay for them, but to pay for them in any event, either to the company or to the plaintiff. The contingency mentioned did not affect his liability, but only the method of discharging it, as he was to pay the same amount whether it happened or not. So far as the purchase of the property is concerned, and that is all that is here involved, there was only one debt, and that was never binding on the company, but on the defendant alone. We think that the contract, as the jury found it, was not within the statute of frauds. Mallory v. Gillett, 21 N. Y., 412 ; Leonard v. Vredenburgh, 8 Johns., 29 ; Rector, etc., v. Teed, 120 N. Y., 583 , 588; 31 St. Rep., 908 ; Wales v. Stout, 115 N. Y., 638 ; 23 St. Rep., 982 ; Milks v. Rich, 80 N. Y., 269 .

The claim that there was no evidence that the Citizens’ Insurratice Company had failed is not well founded, for one of the witnesses testified to an admission 'of the defendant that he knew it had failed. There was other testimony on the same subject in favor of the plaintiff’s theory, and no effort was made by the defendant to show that said company was solvent.

It is further claimed that the agreement, as testified to by the plaintiff and his witnesses, was void as against public policy, because the defendant had no right while acting as an appraiser to buy any part of the subject of the appraisal for himself. No such defense was pleaded in the answer, and the question is raised by no exception taken upon the trial, but we are asked to consider it upon the ground that the court should upon its own motion refuse to enforce a contract if it is obviously opposed to the policy of the law.

The defendant, while acting as an appraiser, acted as a judge and if the contract necessarily tended to bias his judgment or affect his impartiality in that capacity it was doubtless void as against public policy. The contract, however, if performed according to its terms, could have had no such effect. The defendant, in his own behalf and not in behalf of the companies he represented, purchased damaged goods and agreed to pay what they were worth before they were damaged to the companies in

p. 683

terested, in proportion to their interest. The purchase price was included in the award on the same basis as if the goods had been a total loss, but as the companies were to receive the same amount from the defendant they could lose nothing. On the other hand, the defendant would lose by the transaction, unless he could sell the unsound goods at their value if sound, or persuade, for he could not compel, the companies to reimburse him for the difference. In other words, he took upon himself the burden of loss, so far as the goods in question were damaged. To that extent, by force of the contract now attacked as illegal, the companies were in effect relieved of the obligation of their policies.

Certain goods of the plaintiff had been damaged to the amount of $1,134.50, which was agreed upon by the appraisers.. Certain other goods worth $500 at cost price had also been damaged, seriously, as claimed by the plaintiff, but slightly, as claimed by the defendant The appraisers could not agree upon the amount of damage that these goods had sustained. In order to close the matter up the defendant agreed to buy them of the plaintiff for $500, and instead of paying that sum directly to him, to pay it to , the companies and include it in the award, making it $1,634. As stated by one of the witnesses, the defendant said to the plaintiff: “ In order to close the damages, I am going to buy personally $500 worth of goods and in order that it should not appear crooked before the companies, I will divide it proportionately, according to the amount of insurance of each company. I will give them my check for it, and they in return will give you their check.” In case one of the companies failed, he added: “I will give you my check for it at the expiration of the time.”

He was to pay the companies for the goods he took, and they were to pay the plaintiff. By no possibility could the defendant make anything out of the matter, and it was only by the voluntary action of the companies that he could be saved from loss. While we deprecate the tendency of any contract, however fair and honest it may be, whereby an arbitrator deals with the rern adjudicandam, we see nothing in the contract under consideration that necessarily is so opposed to public policy as to call upon us to interfere without an exception, because if the point had been raised upon the trial it might have been shown that the purchase was made by the defendant with the knowledge and consent of all the insurance companies.

After examining all the exceptions to which our attention has been directed, we find no error requiring a reversal of the judgment, which should, therefore, be affirmed, with costs.

All concur, except Follett, Ch. J., and Landon, J., dissenting.