Bannatyne v. Florence Milling & Mining Co.

The case presented by this record is not the usual one of an agent who has earned an agreed commission by procuring a willing purchaser, but rather of one whose recovery is for damages sustained by reason of the refusal of the owner of property to fulfill such of his promises as constituted conditions precedent to the securing of a purchaser. The propositions of fact which the jury must necessarily have found in plaintiffs’ favor in order to reach the verdict rendered are, briefly, that the defendant agreed to permit the plaintiffs to sell its mills and mining property, to allow them a reasonable time in which to make the sale, to do such acts and execute such papers as ishould be reasonably necessary for that purpose, to abstain from •other negotiations in the meantime, upon the faith of which plaintiffs expended much time and money, but without result, because the defendant refused to execute the paper which was essential to the incorporation under the English law, a fact well known to the defendant when consent was given to the efforts which plaintiffs made to sell the property.

The appellant makes the point, among others, that such findings are contrary to the evidence and the weight of evidence, and, therefore, the judgment based thereon should be reversed. But its position is not well taken : the evidence upon each proposition is abundantly sufficient to support the disposition made of it, not excejffing the one which in effect declares that defendant and its agent, who owned all its stock, knew in advance of the substantial expenditure of money made by the plaintiffs for the purpose of promoting the' formation of a corporation under the English law, to become the owner of this property; and that one of the preliminary steps

The appellant now insists, as it did upon the trial, that the contract alleged in the complaint is void under the Statute of Frauds. As this defense is neither presented by the averments of the complaint, nor pleaded in the answer, it cannot now be made available to the defendant. (Wells v. Monihan, 129 N. Y. 161 ; Crane v. Powell, 139 id. 379.) If the pleadings presented the question fairly for consideration, we should feel constrained to hold that the statute is not applicable.

This action is not prosecuted by the plain tiffs on the theory that defendant made a valid contract with them for the sale of lands to such a purchaser as the plaintiffs might select, but rather that defendant made the plaintiffs its agent and persuaded them to undertake the task of selling property as to which prior and not nnfrequent efforts had resulted fruitlessly.

That defendant had fixed the terms of the agency; understood fully the character of the work to be undertaken ; appreciated the fact that it involved a substantial expenditure of money as well as skillful labor; and knew long before its refusal to do the act, essential to further progress in the scheme upon which they had embarked, that plaintiffs were acting in reliance upon its promises. And when it so acted as to terminate in effect the agency thus created the law enjoined upon it the legal duty of compensating the agents for the injury sustained.

This position of the plaintiffs is so well grounded in principle as to require neither discussion nor the citation of authority.

It is also insisted that the court erred in refusing .to charge two requests made by defendant’s counsel: First. “ If the jury find that plaintiffs are entitled to damages for breach of contract they can only take into consideration actual damages.” If that request be considered separately from the one which follows it, there would seem to be no justification-for its refusal other than that the court had already charged the jury upon that subject, in language which must have met the approval of defendant’s counsel, for no exceptions were taken to the charge as made in respect to the subject of damages.

Of course the plaintiffs were only entitled to recover compensa

The contract between these parties provided that plaintiffs should receive $50,000 if they succeeded in getting up an English .company and selling the property to it for the price fixed upon by the defendant. It also appears that the necessary expenses of the plaintiffs in the undertaking would equal the sum of $5,000, and that they had actually paid out in one item the sum of $500, which payment was made necessary in the carrying out of the plan undertaken.

Evidence was also produced by the plaintiffs tending to show that had they been permitted they would have succeeded in getting up an English company to which the mines would have been sold.

The plaintiff Mackay was not without previous experience and success in similar transactions, and it was made to appear that he had interested influential people in the scheme, who had agreed to become directors in the new company, so that there was evidence from which the jury might have inferred that their undertaking would have proved successful, but for the defendant’s conduct in refusing to take the necessary steps in that direction, and instead selling the mines to other parties. Such being the case it would seem to be within the rule as laid down in Wakeman v. Wheeler & W. Manufacturing Company ( 101 N. Y. 205 ), in which the court considered what might be taken into consideration in estimating the

Such we deem to have been the purpose of the two requests, and their denial, therefore, does not call for a reversal.

The judgment should be affirmed, with costs.

Follett, J., concurred.

I concur in the result of Mr. Justice Pabeee’s opinion, only I think he is mistaken in his statement that it has ever been decided in any case where the result depended upon this issue that, where the existence of the contract is denied in a pleading, and want of compliance with the Statute of Frauds is the ground relied upon, such ground must be stated in the pleading, and because, if it has beén so decided, such decision is contrary to all the authorities cited to support it.

Mr. Justice Paeeer cites as his authority the statement of Judge FiNoh, contained in the case of Wells v. Monihan ( 129 N. Y. 164 ), in which case the latter says: “ So far as the defense in this case rests upon the Statute of Frauds, it must fail for two reasons. No such defense has been pleaded, and it is not raised by the averments of the compiaint and without one or the other of these conditions, the defense, if existing, cannot .be made available; ” citing Porter v. Wormser ( 94 N. Y. 450 ). And then the learned judge proceeds to dispose of the validity of the contract upon other grounds.

Upon an examination of the case of Porter v. Wormser et al. (supra), cited by Judge FiNch, it does not seem to have held the proposition which it is cited to support. All that was decided in

It is true that the head note in Vaupell v. Woodward (supra) seems to support the dictum of Chief Judge Andbews, but an examination of the opinion shows upon what ground the decision proceeded. The opinion upon this point is as follows: “ The first objection to the complainant’s claim is on the ground that the contract between the parties is not in writing subscribed by the defendant. The bill alleges that the parties entered into a contract by which one agreed to sell to the other 200 shares of stock upon terms which are fully stated. The answer admits the making of the contract as set forth in the bill. On this state of the pleadings the court has nothing to do with the question whether the contract is in writing or -.by parol. The chancellor’s decision in Cozine v. Graham (2 Paige, 177) is conclusive, that where it does not appear by the bill that the con bract is not in writing, the defendant admitting the contract must insist by plea or answer that it is not in writing, or he cannot raise that objection to its validity. And in. such case no proof of the agreement is necessary.”

Neither of these cases support the proposition enunciated in Porter v. Wormser and Wells v. Monihan (supra), that “ the general rule is that the defense of the Statute of Frauds must be pleaded, except where the complaint on its face discloses a case within the statute.” Upon the contrary, the chancellor in Cozine v. Graham, (supra) expressly states that “ if the agreement is denied the plaintiff must produce legal evidence of its existence, which can only be done by producing a written agreement, duly executed according to the provisions of the statute. If the agreement is admitted by the pleadings, no evidence to prove its existence is necessary, and the court never inquires whether it was or was not in writing.”

The rule, therefore, undoubtedly was, until the dicta of Chief Judge ANDsews and Judge FiNCH in the cases cited, that where the contract was denied in an answer the objection that the contract was within the Statute of Frauds, when the plaintiff attempted to prove his contract, was available to the defendant. Such a rule is entirely in harmony with our general rules of pleading, viz., that where an agreement is denied in an answer the plaintiff must support his allegation by legal proof of its truth, and this he cannot do in the case of a contract void under the Statute of Frauds unless in writing without proving a written contract. Every other agreement is void by the express provisions of the statute, and is, therefore, no contract; and proof of such an oral agreement furnishes no basis for an obligation.

The eases of Hamer v. Sidway ( 124 N. Y. 538 ) and Crane v. Powell (139 id. 379) may be cited, as also holding contrary to the above rule, but an examination of those cases will show that the cases cited to support the rule therein expressed either contain mere dicta upon the point or that the cases therein cited do not support the

In the case of Crane v. Powell ( 139 N. Y. 379 ) it was held that where, in an action upon an agreement within the statute, defendant did not plead the statute and perniitted the plaintiff to prove without objection a verbal agreement, a motion to dismiss the complaint on the ground that the agreement was within the statute and void, made at the close of the plaintiff’s evidence, was properly denied upon the ground that the admission of incompetent evidence of the agreement without objection was a waiver of the statute, the same as an admission of the contract in an answer would be, and various cases are cited to support this proposition, none of which, however, support the contention of the learned judge writing the opinion except the dicta in the cases of Porter v. Wormser, Hamer v. Sidway and Wells v. Moniham, (supra).

In the case of Harris v. Knickerbacker ( 5 Wend. 638 ), cited in Crane v. Powell, the rule laid down is precisely that which is here contended for. The court says: “ It appears from the cases that it remained for a long time doubtful as to the manner in which a defendant could avail himself of this statute, and under what circumstances he was deemed to have renounced it. I apprehend that it is now settled that if the defendant admits the agreement and insists on the statute, he can protect himself from a decree for specific performance notwithstanding his admission, but if he admits the agreement but neither pleads the statute nor insists on it in his answer, he is deemed to have renounced the benefit of it. (6 Yes. 39.) If the bill states generally a contract which the law requires •to be in writing, the court will presume that it is made with the requisite formalities to give it validity until the contrary appears. The defendant in answering may .either plead that the contract was not in writing or insist upon that fact in his answer. If he meets the allegation of a contract in the bill with a general denial, and the complainant is put to his proof to establish it, he must show'a writ

The rule laid down is that if the contract is denied, and it is one which comes within the statute, the plaintiff must show a written contract.

In the case of Duffy v. O'Donovan ( 46 N. Y. 226 ) all that was held was that the objection could not be raised, for the first time on appeal, that no contract was proved valid by the Statute of Frauds, where the contract was admitted by the answer. And then the rule was laid down that “ if the defendants had intended to insist upon the Statute of Frauds, or the invalidity of the contract for any other reason, they should ham denied the maTcing of the same and put the plaintiff to proof, or set up the special matter relied upon.”

In the case of Marston v. Swett et al. ( 66 N. Y. 209 ), also cited, the correct rule is again laid down. It is that “ if the contract alleged in the complaint had been denied, or the Statute of Frauds had been set up as a defense, then it would have been necessary upon the trial to prove that the contract was in writing, if it was one which the statute required to be in writing.”

Tire rule undoubtedly was, prior to Porter v. Wormser (supra), that where the contract was absolutely denied the Statute of Frauds was available to the defendant. And it might further be contended, under our system of pleading, that if the agreement is admitted by the answer, even if it is attempted to be attacked by another allegation in the answer as no contract, because not in writing, such a defense cannot be available, because the agreement being admitted by the pleadings, the court will not inquire whether it was .or was not in writing. (Cozine v. Graham, supra.) This is the rule laid

Such, also, is the rule of pleading declared in our Court of Appeals in the case of Fleischmann v. Stern ( 90 N. Y. 110 ). In this case it was held that where a material averment of the complaint is not put in issue, such averment must, for the purposes of the trial, be taken as true; and the defendant is not at liberty to deny the existence of the facts constituting the cause of action stated in the complaint, or to prove any state of facts inconsistent therewith. And certainly, where the agreement is expressly admitted in the answer, the same rule must apply.

The defense of the statute seems to be only available, therefore, when the obligation of the contract is denied, and not otherwise.

In the case at bar the contract was denied. The plaintiff was, therefore, obliged to prove a contract valid under the statute.

Judgment affirmed, with costs.