Sugden v. Magnolia Metal Co.

Headnote

Contracts—Recession by parties—Election.

Plaintiffs entered into a contract with defendant for the purchase of goods, and the exclusive right to sell in certain countries. The contract provided that, if plaintiffs should break the agreement in any particular, all their rights thereunder should cease. After plaintiffs had made pay- ■ ments under the contract, including part of the price of goods not deiiv- , ered, disputes arose, and plaintiffs refused to receive any more goods, but afterwards offered to receive ail the goods, and to pay the price thereof, and damages for the delay; hut defendant insisted that plaintiffs, by their .breach, had terminated the contract, but did not offer to return the ad vane payments made by plaintiffs. Plaintiffs assigned their claim for such advance payments, and the assignee sued defendant therefou Held, that plaintiffs, by such assignment, were precluded from asserting that the , contract was continued in force by defendant’s retention of such money.

Appeal from special term, New York comity.

Action by John Sugden and others against the Magonlia Metal Company. From an order denying a motion to continue a preliminary injunction restraining the defendant

from intefering with their business, plaintiffs appeal. Affirmed.

On February 16, 1894, the plaintiffs, as trustees of a corporation to be formed, to be called the “Magnolia Anti-Friction Metal Company, of Gréat Britain, Limited” (styled the "English Company”), and the defendant (styled the American Company”), entered into a contract whereby the former agreed to purchase of the latter 3,000,000 pounds of magnolia metal, at ten cents a pound. Part of this amount, the contract recites, has been delivered and paid for. The unordered balance of 1,000 tons was to be delivered in 12 monthly installments, of not less than 92 tons each, com mencing with the first of the ensuing March. The plaintiffs, however, were given the option of taking, instead, net less than 46 tons a month, in which case they were to pay, at or before the end of each month, four cents a pound upon the balance of metal necessary to make the purchase for that, month 92 tons. If, on March 1, 1890, the plaintiffs should not have taken the whole 3,000,000 pounds, they were to take the balance in such quantities as they might choose, not less than one-fourth each quarter year from March 1, 1895. During the continuance of this agreement, the English Company obtained the sole right to sell the magnolia metal in Fmgland and all its dependencies except Canada, and many other countries specified, upon the continent and elsewhere. As soon as the English Company should have ordered and paid for the full 3,000,000 pounds of metal and sent the American Company written notice that it would not avail itself of an option given it to require ,the American Company to take back part of the metal, the English Company became entitled to all the business which then existed, or might thereafter be developed by it in the countries where it was licensed to sell; and the American Company contracted to execute all necessary instruments of transfer. If, on the other hand, the English Company should break the agreement in any particular, the American Company became entitled" to take possession of its business, and the English Company agreed to relinquish it. This agreement was to be substituted for a prior agreement made March 25, 1891, upon the organization of the English Company; and upon its incorporation, the prior agreement was to be canceled. The company was never organized, but subsequent correspondence between the parties gave plaintiffs, if they fulfilled the terms of the agreement the same rights the company would have had. The plaintiffs had not ordered all of the metal on March, 1, 1895; and on September 1, 1895, the second quarterly shipment day thereafter, a shipment of 126 tons was due. On August 24th the plaintiffs had written specifying where the metal

was to be sent. Defendant was about to make this shipment ■ when the first dispute between it and the plaintiffs arose. A suit brought by one Hoveler against Edward C. Miller, one of the defendant’s officers,' to annul an English patent upon the magnolia metal, was pending in the English courts. Defendant had agreed to defend this suit, as part of the agreement, with the plaintiffs. It had retained English counsel, and a disagreement had arisen between them respecting the payment of a bill. At this time the solicitors threatened to withdraw from the action, whereupon, on September 12, 1895, plaintiffs cabled and wrote the defendant, refusing to accept the draft for the shipment which' was about to be made, or to have further dealings with it, until satisfied that the solicitors would be paid and the defense of the suit continued. Defendant replied that it intended to fulfil all the conditions of its contract; that the plaintiffs’ refusal to accept the draft was a breach on their part; and that it had stored the metal for the plaintiffs’ account, and drawn for the amount. A long correspondence followed, during which the plaintiffs steadily adhered to their position, and claimed damages on account of the defendant’s failure to ship goods, at no time consented to pay the contract price for the metal without conditions or deductions. The matter was subsequently placed in the hands of Mr. Constant, an American attorney, who, on February 28, 1896, served an unconditional offer to receive and pay for the whole balance of metal under the contract of February 16, 1894, and agreed to pay the damage caused by plaintiff’s delay. The defendant, however, asserted that the plaintiff's had, by their breach terminated the contract. At the time of the disagreement, in September, 1890, the defendant had in its possession advance payments upon metal not ordered by the plaintiffs during the year from March 1, 1894, to March 1, 1895, amounting to about $36,000. This sum it has not offered to return. Prior to the date of their offer to receive the unshipped metal, the plaintiffs assigned their claim to this sum to one Lawlor, who brought suit thereupon in the supreme court, New York county, and obtained an attachment against the defendant’s property.