Cassard v. Hinman — 19 N.Y. Super. Ct. 8

Majority

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George Cassard, Plaintiff and Respondent, v. E. W. Hinman Defendant and Appellant.

Headnote

1. No one can enforce a contract which his agent has fraudulently obtained, \ although he neither authorized nor had notice of the fraud prior to the execution and delivery of the contract.

2. Where such agent was a broker, and induced the defendant to employ him as such to negotiate the contract, and made representations calculated and designed to induce the defendant to enter into it, and the defendant entered into it relying on such representations and the advice of the broker, believing the latter to be in his own exclusive interest; and such broker was at the time the secret and fraudulent agent of the plaintiff to obtain such contract from the defendant: Held, that no action could be maintained by the plaintiff against the defendant for a breach of it.

3. Where the defense to an action upon a contract to sell and deliver merchandise at a future day is, that the alleged contract was not, when made, intended by either party to be actually performed, but was in the intent and understanding of both parties a gambling contract to be settled by the payment of differences; what was said at the making thereof by the parties making it, is competent evidence upon the question of the truth of the facts stated as a defense, although such contract was negotiated on behalf of one party by a broker.

(Before Hoffman, Pierrepont and Moncrief, J. J.)

Heard, November 1st, 1859;

decided, January 7th, 1860.

This is an appeal by Elisha W. Hinman the defendant, from a judgment in favor of George Cassard the plaintiff, entered on a verdict rendered on a trial had before Mr. Justice Slosson and a jury, on the 10th day of February, 1859.

The action was commenced on the 6th day of September, 1856, upon three several contracts in writing, signed by the defendant, one dated April 22d; one April 26th and one May 9th, 1856; each for the sale of (500) barrels of pork, and each of which is in the same form. The one dated April 22d, is in these words, viz.:

“New York, April22, 1856.

“ For value received, I have this day sold, and in consideration of one dollar paid me by George Cassard, I hereby agree to sell and deliver to George Cassard, a merchant, Baltimore, Md.t or to his authorized agent, viz.: five

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hundred (500) barrels of new mess pork, inspected by either Lawson, Gretty or Lewis, of this city, deliverable in either of their yards all the month of August, 1856, seller's option, five.days’ notice, to buyer to receive the same; at the rate of sixteen dollars ($16) per barrel, cash on delivery.

E. W. HINMAN".

Sealed and executed in presence of

Philip Nathan.”

The defendant refused to deliver the pork; and its market price being higher, at the time specified for its delivery, than the contract price, this action is brought to recover such difference in price with interest thereon, as damages.

The answer, first, denies that the defendant “ did, by any valid or legal or obligatory act or thing, make or enter into said supposed contracts,” and denies that plaintiff has tendered the stated price; second, avers that the defendant was led and induced, by one P. Nathan, a broker, to sign the contracts, and to entploy him as his agent to negotiate the same) that Nathan was at the time the secret and fraudulent agent of the plaintiff in the same matter, and made misrepresentations which are stated and on which the defendant relied, and by which he was induced to sign the contracts; third, it avers that it was the mutual design and intention of both the plaintiff' and the defendant, at the making of the said supposed contracts, that the same should not be specifically performed in whole or in part, but on the contrary that at the maturity of said supposed contracts, the differences between the then market value of said pork and the said contract prices therefor should be paid by the one party to the other as performance or satisfaction of said supposed contracts.

The answer had also set up as a fourth defense, that the con- ' tract was entered into by the plaintiff as part of a design on his part, to obtain the control of all the pork in the market, and then to resell at a greatly enhanced price and to obstruct and hinder the proper course of trade, and rmjustly and unlawfully raise the price of pork to the injury of the public, and that the contract was on that ground illegal and void. This defense had been demurred to, and the demurrer thereto was sustained.

At the trial the Judge excluded evidence to prove the second defense, on the ground that the part of the answer stating it was insufficient as a pleading.

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He also excluded evidence of any conversation between the defendant and Nathan, at the time “ of making the writings,” “ as to the performance by receipt afid. delivery of pork, or the settlement by payment and receipt of differences.” The defendant excepted to each decision.

The court directed a verdict for the plaintiff for the difference between the contract price and the market price, at the time for performing the contracts, with interest from that time, and the defendant excepted to each branch of such instruction.

The jury accordingly found a verdict for $3,200, and judgment having been entered thereon, the defendant appealed to the G-eneral Term.

Some of the allegations employed in stating the second defense, not adverted to above, are recited in the opinion of the court.

Wm. M. Allen, for the defendant (appellant).

I. The court erred in admitting evidence of damages, and in refusing to dismiss the complaint.

II. The court, at the trial, erred in refusing to receive evidence in support of the second defense.

The defense is well pleaded; and is a full, legal and meritorious defense to the plaintiff’s action. (Story on Agency, §§ 31, 210-214; Paley on Agency, 33, and notes; New York Central Ins. Co. v. Nat. Prot. Ins. Co., 4 Kern., 85, 91; Utica Ins. Co. v. Toledo Ins. Co., 17 Barb., 132 .)

III. The court erred in excluding evidence offered by the defendant, to show the intention of the defendant, and the expressed intention and understanding of both the defendant and the agent of the plaintiff. (Cassard v. Hinman, 14 How. Pr. R., 84; 1 R. S., 662, §§ 8, 10; id., p. 710, §§ 6, 7; 8 and 9 Vic., ch. 109, § 18; Grizewood v. Blane, 20 Eng. L. & Eq., 290; S. C., 11 Com. B., 538; S. C., 8 Eng. L. & Eq., 415; Rourke v. Short, 34 id., 219; Williams on Personal Property, 80; Addison on Contracts, 117; Bunn v. Riker, 4 Johns., 426 ; 1 R. S., 223, §5; 3 R. S., 3d ed., 55, notes on §§ 8, 9, 10.)

IV. The fourth defense is valid. The judgment on the demurrer to that defense is erroneous, and should be reversed.

The offenses of forestalling, regrating, and engrossing the market are criminal at common law, and all contracts in fur

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therance of criminal designs are void. (4 Bl. Com., 158; 3 Just., 196 ; Wharton’s Criminal Law, 688, 689; Wharton’s Precedents, 587, and notes; 2 R. S., p. 692, § 8, sub. 6; People v. Fisher, 14 Wend., 9 , 14, 15; Loomis v. Edgerton, 19 id., 419; Hilton v. Eckersley, 32 Eng. L. & Eq., 198; Pepper v. Haight, 20 Barb., 438 .)

James C. Carter, for the plaintiff (respondent).

Among other points which in the view of the case taken by the court at General Term, it is not material to state, argued,

1. That the making of the contracts, the readiness and willingness of the plaintiff to perform on his part, and the neglect and refusal of the defendant, are alleged with great distinctness in the complaint, and are not denied by the answer. The cause of action is therefore admitted.

Under such a contract it is not necessary for the vendee to allege and prove á tender on his part. Readiness and willingness to receive and pay are sufficient. (Rawson v. Johnson, 1 East., 203; Waterhouse v. Skinner, 2 Bos. & P., 447; 2 Chit. Pl., 269-271, notes; Porter v. Rose, 12 J. R., 209.)

Defendant should have given notice of an intention to deliver. (Quarles v. George, 23 Pick., 400 .)

II. The allegations contained in the second defense set up in the answer, if admitted to be true, as stated, -constitute no defense to the action; and evidence under that defense was, therefore, properly excluded.

(a.) The contracts were not ffiade by the broker Nathan. They are set forth in the complaint, and are signed by Hinman himself. Whatever, therefore, the nature of Nathan’s agency was, and it is left vaguely enough by the plea, it was not an agency to make the contracts. Hinman acted on his own behalf. This relieves the case at once of the first ground of objection.

(b.) The plea does not allege that the agency of Nathan was to make the contracts, or that he had any authority to make them.

(c.) The plea does, however, speak of persuasion, inducement, representation, &c., all of which necessarily suppose that the mind of Hinman, and not that of Nathan, was the one which assented to the contract.

2. It is clear that the plea states no case of false representations.

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(a.) If the representations actually alleged to have been made by Nathan came up to the requirements of the law, it would still be necessary that it should appear that Nathan was Oassard’s agent to make, and did make, the contracts, and that such representations were made in the course of the business of making such contracts. But neither of these things appear.

(b.) But no false representation whatever is alleged. Not a single fact is alleged to have been wrongly stated, and a false representation is not predicable of an opinion as to the present, much less the future, market value of merchandise. [Foley v. Cowgill, 5 Blackf., 18 ; Sandford v. Handy, 23 Wend., 260 ; Hawkins v. Campbell, 1 Eng., 513.)

(c.) Nothing is clearer than that a man may state a false opinion as to the value of an article which he is selling, as an inducement to the purchaser, with impunity.

3. A further difficulty in the way of the defendant is, that he shows no reason why the plaintiff should be bound by Nathan’s representations, even if such representations were false and fraudulent. The plea does not allege that the plaintiff ever authorized Nathan to make such representations, nor does it allege that Nathan was in fact the plaintiff’s agent for making the contracts, or that he did make them.

III. The exception in folio 13, is frivolous. An inquiry as to a man’s intentions in making a contract, without reference to whether the other party knew them or not, is manifestly irrelevant.

IV. The question as to what was said between Nathan and the defendant, was clearly inadmissible. Nothing had been shown in the case to make the conversation between the defendant and a third person binding on the plaintiff.

V. The final exception to the direction of the Judge, is not well taken.

1. The question was, whether the evidence contained anything tending to show a mutual understanding between Oassard and Hinman, that the pork should not be specifically delivered, but that differences should be paid. It is plain that the evidence, so far as it tends to prove anything on this point, tends to prove that there was no such understanding.. The defense had wretchedly failed, and there was no alternative but to instruct the jury that the plaintiff was entitled to a verdict.

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2. It was right to direct the jury to allow interest. In such cases the loss of interest is always an element of the damages. (Fitch v. Livingston, 4 Sandf., 492 ; Van Rensselaer v. Jewett, 2 Comst., 141; Dana v. Fiedler, 1 E. D. Smith, 484; opinion of Woodruff, J., and 12 N. Y. R., [2 Kern.,] 40.)

The judgment should be affirmed.

The legislature abolished all forms of pleading in use at the time the Code was passed; and provided that a defendant might state in his answer any matter constituting a defense, “ in ordinary and concise language.” If the second defense set up in this case was good in law, and so pleaded as to answer the requirements of the statute, it was error to exclude the defendant from giving any evidence under that pleading.

If the broker, who negotiated these contracts, persuaded the defendant to employ him as his agent in the matter, and while professing to act as the defendant’s confidential broker and agent, and only for the defendant’s interest, was “ the secret and fraudulent agent of the plaintiff to induce the defendant to make such contracts," and while pretending to act for the defendant, and to guard the defendant’s interest, he was in the employ and secret service of the plaintiff and using his information, ability and influence to entice the defendant into these contracts to the prejudice of the defendant and the advantage of1 the plaintiff,” while “the defendant was ignorant of such fraud and treachery, and confiding in the broker, as the defendant’s true and faithful agent, he entered into the contracts ” which the said broker well knew would be of great loss to the defendant and of great gain to the plaintiff, and if the broker being in the secret service of the plaintiff and deceiving the defendant, craftily combined together with the plaintiff to procure from the defendant those contracts, which he knew would be injurious to the defendant, for whom he was professing to act as a confidential and faithful agent, and which he knew would be beneficial to the plaintiff, in yhose secret service he was employed, and with whom he had craftily combined to procure these contracts, then, these contracts are void in law, and the plaintiff cannot recover npon them.

All this is substantially pleaded in the second defense, and in such language as, we think, answers the requirements of the Code.

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The plaintiff could not have been misled or taken by surprise on the trial, and no such suggestion was made. A demurrer had been interposed to the third and fourth, defenses, which had been argued both at Special and General Terms, and the demurrer to the third defense was overruled, but no demurrer or motion whatever had been .made touching the second defense. It was urged that there was no evidence that the plaintiff had authorized the broker to make the representations alleged. There was the clearest proof, given by the plaintiff himself, that the broker Nathan was his agent in the negotiation and completion of those contracts; and we think the law well settled that no . one can avail himself of the advantages of a contract which his agent has fraudulently obtained, and, on suit brought, deprive his adversary of the right to prove the fraud, on the ground that the principal did not authorize his agent to commit it. If these contracts were obtained by fraud they are void, and the plaintiff can no more, in such case, avail himself of his agent’s fraud than of his own. We do not wish to intimate that there was any fraud in the procurement of these contracts; we merely wish to say that, under the pleadings, the defendant had the right to offer evidence of fraud; and that, if the proofs showed that the plaintiff’s agent procured these contracts from the defendant by fraud, that such fraud would vitiate the contracts.

Another exception, taken by the defendant, arises under the following question:

“ Q. At the time of making the writings between you and Cassard, was anything said by Nathan as to the performance by receipt and delivery of pork, or the settlement by payment and receipt of differences ? and if so, what ?”

(This question was objected to by the plaintiff’s counsel, on the grounds, 1st. That it was relevant only to the third defense; 2d. And, as to that, it was offering parol evidence against the writings; and, Sd. There was no proof to show any authority in Nathan, except to negotiate as a broker between the parties, as to the contracts actually made, and in evidence. The Court sustained the objection, and excluded the question; to which decision the defendant’s counsel objected.)

We think it plain that this inquiry was relevant to the third defense; and, as to that defense, this Court have, at a General

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Term, held by five Judges, fully expressed their opinion, as follows : (Then follows the opinion which has since been reported in 1 Bosw., 207 .)

As the proof was clear that Nathan was the plaintiff’s agent, we think what he said at the time of making the written contracts may be received as evidence going to show whether or not these were gambling contracts and void by the statute. There are many contracts, good on their face, which may be rendered void or voidable by parol evidence; such as a bond or note which is usurious, or given for a gaming debt, or for any illegal consideration, or by an infant, &c.

We think the judgment should be reversed, and a new trial granted, with costs to abide the event

Ordered accordingly.