Gallup v. Lederer — 8 N.Y. Sup. Ct. 282

Majority

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ALBERT S. GALLUP and others v. SAMUEL M. LEDERER.

Headnote

Fraudulent sale—agent—private instructions to—custom—evidence of.

A broker applied to the plaintiff to purchase certain goods, claiming to act for the defendant. The plaintiff agreed to sell them, gave an invoice of them to the broker, made out in defendant’s name, and delivered the goods, by his own car-man, at the defendant’s store, the clerk receiving them giving a receipt, which stated that the goods were received from the plaintiff. The broker, having fraudulently induced the defendant to believe that the goods were his, received from him their full value: Held, that the plaintiffs had not invested the broker with any evidence of title, nor put it in his power to deceive the defendant and induce him to purchase the goods under the belief that they were the broker’s property, and that plaintiffs could recover of the defendant, the purchase-price of the goods.

Defendant, after testifying that any boy or salesman at the door would receipt for the number of packages received, was asked, whether he ever authorized any clerk to sign a receipt, stating who the owner of the goods was; iield, that the evidence was properly excluded; that from defendant’s own statement, the person receiving the goods, appeared to be authorized to sign the receipt; and that no private instruction, not communicated to the other party, was admissible for the purpose of qualifying this authority.

Defendant proposed to prove that it was a custom among merchants, to sign the receipts presented by carmen with goods, without any inquiry, on the part of the

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receiving cleric or porter, as to the ownership of the goods, or the place from which they were received. Held, that the evidence was properly excluded; that the custom, proposed to be proved, was .entirely unreasonable, as it placed the consequence of one person’s negligence and inattention upon another in no way connected with him, having no control-over his conduct, and for whose acts he could be in no proper sense responsible.

Defendant was asked whether, at the time of the sale, there was a custom among brokers to sell goods in their own name and receive pay therefor. Held, that the evidence was properly excluded. It was not proposed to prove a general custom upon that subject, but simply a custom of brokers, which might very well be unknown to all other persons.

To render a custom valid and binding upon a party to a transaction included within it, the proof should show it of such long continuance, or general application, as reasonably tó warrant the conclusion that it was known to the party designed to be affected by it, or that he had actual knowledge or notice of its existence.

Where a custom is to be proved, the inquiry is not after the opinions of traders and merchants in respect to the law upon a mercantile transaction, but for the evidence of a fact, to wit, the usage or practice, in the course of mercantile business, in the particular case.

Defendant purchased and received the goods at thirty cents per yard. The court charged the jury that the plaintiff was entitled to recover the market value of the goods at the time they were demanded of the defendant. Held, that this was error; that the broker was authorized to sell, and the action was to recover upon the sale made, and, in theory, it affirmed the sale and bound the plaintiff by its terms.

Motion by defendant for a new trial, on exceptions ordered to be heard, in the first instance, at the General Term.

Plaintiffs were manufacturers of bleached sheetings, and William E. Churchill was one of their agents in New York.

In August, 1866, one Westbrook, a broker, called upon Churchill and stated that he wanted fifteen cases of Arkwright sheetings, for a first-rate party, and asked the price. The price was agreed upon, and seven cases of the goods were delivered to the defendant on the ninth of August, and a receipt, signed by one of his clerks, was taken by Churchill’s carman. Westbrook assumed to act as the agent of the supposed purchaser. An invoice was made out to Lederer, calling for payment in thirty days, and delivered to Westbrook. On the same day, Westbrook, who had, in fact, no authority to act for Lederer, made out an invoice of the goods in his own name, and collected the amount of the goods at a price he agreed upon with Lederer, and gave a receipt therefor as for a sale

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made by himself, Lederer believing him to be the owner of the goods.

At the trial, the court directed a verdict for the plaintiff, and ordered the exceptions to be heard, in the first instance, at the General Term.

Boardman & Boardman, for the defendant.

W. I. Butler, for the plaintiff.

This action arose out of a similar transaction, to that involved in the case already considered between Bassett and the present defendant.^[5] So far as the legal rights of the parties are concerned, no necessity exists for a re-examination of them: They must be determined according to the disposition of the other case. But in this case, evidence was excluded, which, the court, in the other, allowed to be given, and a verdict was directed for the plaintiffs for the value of the goods sold, instead of the price at which the defendant purchased them. The defendant testified that West-brook acted as the broker in purchasing the goods, and that any boy or salesman at the door, would receipt for the number of packages received. It appeared also that the receipts given for the goods, sent to the defendant’s store by the plaintiff’s agent, stated them to have been received from him. The defendant, after that, was asked whether he ever authorized any clerk to sign a receipt, stating who the owner of the goods was. This was excluded on the plaintiff’s objection, and the defendant excepted. As the receipt, stating from whom the goods came, was in the form commonly used in business transactions, the admission of this evidence would have been of no service to the defendant, for the persons receiving the goods, appeared, by the defendant’s own statement, to be authorized to sign the receipt of the carman who brought them, and no private restriction, not communicated to the other party to the transaction, was admissible for the purpose of qualifying the authority, which appeared to be ample for the purpose the business required.^[4]

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The offer to prove the preceding dealings between the broker, Westbrook, and the defendant, was very properly overruled. Those dealings had no possible connection with the transaction in controversy, and the plaintiff was in no way concerned in them. They could not be considered as affecting his rights, and were entirely irrelevant to the case. Even though they may have been just and fair in all respects, they could afford no protection to the defendant against the plaintiff’s demand, when that proved to be well founded by the facts and circumstances constituting the transaction out of which it arose.

The custom offered to be shown, that merchants sent invoices with goods sold at the time of their delivery, stating the names of the vendor and vendee, the quantity, numbers, packages and prices of the goods, could have no effect upon the rights and obligations of the parties, even if it had been received. For, as the plaintiff did nothing which could be construed or received as an indication that the goods were owned by the broker, he could not be deprived of his property in them, or his right to the price for which they were purchased by the defendant, although the invoice delivered to the broker, was fraudulently suppressed by him, and for that reason, never exhibited to the defendant. The sale was made by a person known to the defendant to be a merchandise broker and speculator; and, as the goods were never placed in his possession by the plaintiff, the defendant should have ascertained that circumstance and inferred from it, that he acted simply as a broker in the transaction, and not as a merchant selling his .own property. The fact that the broker deceived him, and, on account of such deception, he failed to discover the true relation he sustained to the business, was no fault of the plaintiff, since it was practiced without his authority or knowledge, and he did nothing to render the deceit successful.

The custom proposed to be proven, that merchants signed the receipts, presented by cartmen with goods, without any inquiry on the part of the receiving clerk or porter, as to the ownership of the goods, or the place from which they were received, was entirely unreasonable, because it placed the consequences of one person’s negligence and inattention, upon another in no-way connected with him, having no control over his conduct, and for whose acts, he

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could be in no proper sense responsible. A custom, tolerating carelessness and inattention in the ordinary affairs of business, would be inconsistent with the legal, as well as social duties, which one person in those affairs, owes to another. It would be not only unreasonable, but opposed to well-settled legal obligations, to maintain the validity of a custom like that the defendant proposed to prove upon this subject. In the same line of defense, the defendant was asked, whether, at the time of the sale, there was a custom of brokers to sell goods in their own name and to receive pay therefor. This inquiry was excluded by the court, and the defendant’s counsel excepted. If a custom, • sanctioning such a course of conduct on the part of brokers, would be valid, the inquiry was not broad enough, to render the proof admissible; for it might very well have been so restricted, as to time and persons, as to afford no grounds for supposing the plaintiff to have had any notice or knowledge of its existence. The defendant did not propose to prove a general custom upon that subject, but simply a custom of brokers, which might very well be unknown to all other persons. To render a custom valid and binding upon a party to a transaction included within it, the proof should show, or propose to.show, it of such long continuance, or general application, as reasonably to warrant the conclusion that it was known to the party designed to be affected by it, or that he had actual knowledge or notice of its existence.^[5] This, as well as the other offers of proof of custom, were plainly defective in this respect, and for that reason properly excluded.

The effect of such a custom, so far as it extended, would be to abrogate an existing, well-establishéd principle of law, designed for the protection of persons selling their property through the agency of brokers; and nothing less than actual or presumed assent to its application, should be allowed to render it obligatory,^[4] To prove the existence of a custom, something more than the

† † Rogers v. Mechanics’ Ins. Co., 1 Story’s Rep., 603; 2 Cowen & Hill’s Notes, 3d ed., 508,509; Higgins v. Moore, 34 N. Y., 417 ; Barnard v. Kellogg, 10 Wallace, 383, and cases above cited.

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judgment or .conclusion of the witness, called to support it, is required. A custom is the result of usage, and can only be properly shown, by proof .of the usage from which it may be claimed to be derived. The inquiry in such cases is not after the opinions of traders and merchants, in respect to the law upon a mercantile question, but for the evidence of a fact, to wit, the usage or practice in the course of mercantile business in the particular case.^[5] The inquiry made of the witness, was properly excluded, for the additional reason that it required him to give his conclusion, instead of detailing the facts which might sustain that conclusion.

The exceptions taken to the other evidence excluded, are so clearly untenable, as to require no consideration. It was evidently improper to allow the defendant to construe the receipt or determine its effect, by answering whether it afforded any indication of the ownership of the goods; neither could it have been proper to show that purchasers allowed their goods to remain in warehouses, undelivered, until the title to them had passed through various other persons. Such a practice had no relevancy, whatever, to the transaction upon trial.

The court charged the jury, that the plaintiff was entitled to recover the market value of the goods, at the time when they were demanded from the defendant. To this direction, the defendant excepted. That value was shown to be from thirty-two to thirty-five cents per yard; while they were purchased and received by the defendant, for the price of thirty cents per yard. The broker was authorized to sell, and the action was to recover upon the sale made. In theory it affirmed the sale and bound the plaintiff by its terms. This direction was therefore improper, so far as it permitted the plaintiff to recover a greater price than that for which the goods were purchased by the defendant. For that reason, the verdict must be set 'aside and a new trial ordered, with costs to abide the event,-unless the plaintiff shall, within twenty days after notice of this decision, stipulate to reduce the verdict to the amount due the plaintiff, at the price of thirty cents per yard, as of the date when it was rendered. In which event, the motion will be denied,

* Allen v. Merchants’ Bank, 32 Wench, 215, 223; Rogers v. Mechanics’ Ins. Co., 1 Story’s Rep., 603, 607, 608; Lewis v. Marshall, 7 Man. & Grang., 729.

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and the plaintiff have judgment upon the verdict, without costs of the present motion.

Brady, P. J., and Westbrook, J., concurred.

Ordered accordingly.

Footnotes

* See ante, p. 262.
† † 1 Parsons on Con., 2d ed., 40-42 ; Story on Agency, 4th ed., §§ 73, 126, 127.
* Vol. 2, Cowen & Hill’s Notes to Phillips’ Evidence, 3d ed., 508, 509; Southwestern Freight Co. v. Stanard, 44 Missouri, 71, 82 ; Sipperly v. Stewart, 50 Barb., 62 ; Walls v. Bailey, 49 N. Y., 464 .