Baldwin v. Mildeberger — 2 N.Y. Super. Ct. 176

Majority

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Simeon Baldwin & Horace D. Forbes, ads. John Mildeberger.

Headnote

A factor, who has made advances for his principal, although he has a general lien on the goods and the proceeds of the goods of his principal in his hands, as a security for his advances, is nevertheless a competent witness for his principal, unless he has a specific claim upon the subject matter of the controversy.

Where there is a mutual misunderstanding betwe'en the vendor and purchaser as to the terms of a sale, neither party is bound by the supposed agreement, there being, in such a case, no assent to the contract.

The plaintiff’s factor sold goods to the defendants, to he paid for, as he understood the arrangement, in the note of a third person payable"at a future day, endorsed by the defendants ; but as the defendants supposed, by the same note, endorsed without recourse to them. The goods being delivered, the defendants offered the note proposed to the factor, endorsed without recourse, which he refused to receive. The defendants kept the goods, and declined to make paymeut in any thing, but the note thus offered, and thereupon this action was brought to recover the value of the goods. The judge charged the jury, that if there was a mistake betwen the parties in the first concoction of the contract, the one expecting to receive a note endorsed by the defendants, absolutely and the other to give it without recourse to them, as the defendants instead of returning the goods had appropriated them to their own use, they were bound to pay for them. A verdict having been found for the plaintiffs, this charge was held to be correct, and the factor was held to be a competent witness for the plaintiff

Assumpsit for goods sold and delivered. The defendants pleaded, 1. The general issue. 2. Payment. 3. That the goods mentioned in the declaration were sold by the plaintiff on an agreement to accept in payment therefor, to the extent of six hundred and thirty-eight dollars, a promissory note for that sum, drawn by S. Penny & Sons, in favour of the defendant, bearing date the 8th day of April, 1828, payable four months after date, endorsed by the defendant without recourse, and the balance in cash. That the defendants had, according to their agreement, tendered the note and the cash, which the plaintiff refused.

Upon the second plea the plaintiff joined issue and to the third replied, admitting the tender of the money and note, but wav

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ing the facts of the agreement, relative to the terms of the sale as' set out in the plea.

The cause was tried before the Chief Justice. At the trial, the plaintiff called one Hervey Brown as a witness, who being sworn on his voir dire, stated, that he was a commission merchant, and that as the plaintiff’s factor he sold the merchandise in question to the defendants. That he had made advances to the plaintiff, but not on the goods in controversy. That the plaintiff was then indebted to him to the extent of $150, and was abundantly able to pay that debt. The witness further stated, that if there was a recovery in this case, he supposed he should be paid out of it, but the plaintiff was under no obligation to do so. The witness had no claim whatsoever on the specific proceeds of suit, nor had he any interest in the result.

Upon this statment, the council for the defendants objected to the witness, as being interested and incompetent; but the Chief Justice overruled the objection. Being sworn in chief the witness testified, that there had been a good deal of negotiation between the defendants and himself in the month of April 1828, relative to the purchase of the merchandise in question, (several hundred boxes of soap) before the sale took place ; during which, the quantity, price and time of credit were adjusted and fixed. The credit was to be for six months and when the witness went to the defendants to complete the sale, something was said to him, by the defendants, relative to a note of S. Penny & Sons, which the defendants wished him to take in part payment. To this proposition the witness replied, that he did not know the standing of the makers, and the defendant Baldwin said, that “ the note was good and he would endorse itThe witness being satisfied with this, delivered the soap accordingly, on or about the 30th of April 1828. Afterwards the witness called upon the defendants for a settlement of the matter and a calculation was made as to the amount due for the soap, an allowance being made for the difference between the credit of six months, and the time when the note 'would fall due. As the note did not amount to as much as the bill of the merchanise, there was a balance due to the plaintiff in cash, and for this balance, Baldwin wrote a receipt in his

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receipt book and handed it to the witness to for his signature. The witness then demanded the note, which was handed to him unendorsed, and this circumstance being mentioned to the defendant Baldwin, he tood back the note and asked how it should be endorsed. The witness replied, that he merely wanted the names of the defendants upon it; whereupon Baldwin endorsed the note in the name of the defendants in these words, “pay without recourse to us,” and handed it back to the witness, who refused to receive it, remarking, that he had not sold the goods for such paper. Baldwin replied, that he had, and that he would give no other. The witness then again refused to receive the note, and told the defendants, that he would allow the matter to rest until the period of credit elapsed. In the mean time, on the first of July, 1828, Penny & Sons failed, but it did not appear that the defendants had ever returned the soap or that they had offered to return it. The note referred to was the same described in the third plea of the defendants.

The defendants on their part called two witnesses, from whose testimony> it appeared, that when Brown offered the soap to the • defendants they were willing to purchase it, provided he would receive the paper of Penny & Sons, in payment therefor. That Brown at the time, postponed the giving of a definitive answer for the purpose of ascertaining the credit of the makers of the note; but afterwards called upon the defendants and told them that they could have the soap. It was accordingly delivered, and when Brown called for a settlement, the defendants gave him the note of Penny and sons, endorsed Without recourse. But he refused to receive it endorsed in this form and the defendants declined giving any other. Baldwin stated to Brown, that it could not be, that the defendants were to endorse the note, because that would make the bargain more favourable for the plaintiff than the one proposed by him. The time of credit was to be six months upon the security of the defendants alone ; whereas by the terms now demanded, the plaintiffs would have the security of Penny & Sons together with that of the defendants, and this at a credit of only three months, as the note would be due at the expiration of that time.

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upon this evidence the Chief Justice charged the Jury, that if they found the agreement between the plaintiff and the defendants was, that the defendants should endorse the note of Penny & Sons' absolutely, then their verdict should be for the plaintiffs. 3. If however there was a mistake between the parties, in the first concoction of the contract, the one expecting to receive the endorsement absolutely and the other to give it without recourse, that then as the defendants, instead of returning the article sold, had used it, they were of course bound to pay for it.

3. If the jury found, that it was expressly agreed, that the plaintiffs was to receive the note of Penny & Sons, endorsed without recourse, and take the risk of it, that then their verdict should be for the defendants.

The jury returned to the bar with a verdict for the plaintiffs, but upon the suggestion of the counsel for the defendant, and with the assent of the plaintiffs’ counsel, they were directed by the Court to state, upon what ground they founded_their verdict. The jury replied, that they founded their verdict upon the belief, that there had been a mutual misunderstanding between the parties, as to the terms of the bargain at the time of the sale.

The verdict was for the fulVamount of the goods at the price stated by the plaintiffs’ witness.

Mr. D. Lord, for the defendants, now moved for a new trial, and contended,

I. That Brown was interested in the recovery, having legally a lien upon the fund sought to be recovered, and was therefore incompetent as a witness. [Paley on Agency, 108, 9, 10. Payton v. Hallet, 1 Caines’ Rep. 364 , 379. Drinkwater v. Goodwin, Cowp. R. 251.]

II. A party to a contract cannot allege that it is void, because the terms of it were not understood, there being'no misrepresentation or mistake as to any supposed facts; and in this respect, the charge was erroneous. The real question arose from a conflict of testimony, and if the jury believed the witnesses of the defend

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ants, their verdict ought to have been in their favour, There is no case where misapprehension merely will avoid a contract,—there being neither mistake, nor ignorance of facts, nor misrepresentation. [1 Pow. on Con. 140. 2 Ib. 196. Newland on Con. 342, 432.]

The rule laid down in the charge is loose and dangerous, as it opens a door for pretended misunderstandings, which cannot be detected. At the common law this principle is carried so far, that a man may not set up his own insanity, much less his own misapprehension. [1 Pow. on Con. 14.] If misapprehension is to avoid a contract, then inquiry must be made as to the capacity and intelligence of the contracting parties, and the rule laid down is in practice impracticable.

But if this is a case of mutual mistake, why should all the consequences of it fall on the defendant? The rule of equity would be to divide the hazard ; but this would violate the contract, and destroy every thing like the practical rules known to the law.

III. Neither party did, in the present case, by evidence, attempt to show any such misunderstanding, nor was there any evidence thereof; but on the contrary, the agreement was clearly made out, according to the allegations of each party, by their respective witnesses ; and therefore, even if the law were, as was charged by the Court, the present was not a case for its application, and the Judge erred in directing the jury to apply it to this case.

IV. The verdict, finding that the parties misunderstood the terms of the bargain, was contrary to the evidence of all the witnesses on both sides.

Mr. Anthon, contra.

I. The contract of sale was complete as to quantity, price, and credit, on the 30th of April, 1828, and had no reference, at that time, to the proposition relative to the note of Penny & Sons. That was a subsequent proposition, and the defendants originally intended, and expected to pay for the merchandise. They have

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received the goods, and have appropriated them to their own use; and the plaintiff having awaited until the expiration of the originally agreed upon, was entitled to recover, unless the defendants could prove, that the plaintiff agreed to take Penny’s note in payment. This question was put to the jury in the fairest manner by the Chief Justice at the trial, and the jury were of opinion, that no such agreement existed. Their verdict was in strict accordance with the proof, for Brown testified, that he never intended to take the note of Penny & Sons in payment, and he refused to take it. At this point of time, the defendants might have rescinded the contract, and by returning the soap, might have put the parties into their original situation. This they neglected to do, and having received the benefit of the plaintiffs’ property, they are bound to pay for it.

II. If the parties misunderstood each other, relative to the conditions upon which the note was to be received, then there was no contract upon this head, and the original sale, at a credit of six months, remained according to the.original stipulation of the parties, and the defendants, not having rescinded the contract, by returning the goods, are responsible for the stipulated price, according to such original contract.

A contract is defined to be “ aggregaiio mentiumbut in relation to this note, the minds of the parties did not meet, and therefore there was no binding agreement upon this point. There was no mutual assent, and neither party was held to that to which he never intended to agree.

The risk and hardship did not rest upon the defendants alone, but the plaintiff has his risk also. If Penny & Sons had remained solvent, and the defendants had failed, then the latter would have received the amount of the note, and the plaintiff would have lost the value of his goods. The risk, then, was mutual, and perhaps equal, and there can be no complaint upon this score. [In relation to this head, Mr. Anthon cited 2 Black. Com. 442. 1 Chit. on Con. 4. 13 Ves. 427. 1 Wheat. R. 444. 5 East. 16. 8 Mass. R. 178 .]

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III. The question as to the misunderstanding of the parties was fairly left to the jury, and their verdict is tantamount to a finding, that there was no contract with regard to the note of Penny & Sons. If the parties misunderstood each other, there could be no agreement, and the charge was strictly correct on all points.

IV. Brown was an admissible witness, for he was not interested in the fund. He had a mere general lien, and a factor is always competent to testify for his principal.

According to my understanding of the charge, the Judge did not submit to the jury any thing relating to the legal effect of the contract. He merely charged them, that if there was a mutual mistake between the parties, as to the terms, upon which the note of Penny & Sons was to be received, then that the agreement was not binding as to the note, and that the' plaintiff might recover upon the original cause of action. Taking the whole charge together, and it is evident that nothing but facts were put to the jury, and their finding appears to be consistent with the evidence.

A contract resting in parol cannot be binding upon the parties^ if they do not understand the terms of it alike, for in such case there is evidently no agreement. If the terms, however, are once fixed, neither party can recede, upon the ground, that he mistook the effect of the terms. Here it seems, that the plaintiff’s agent supposed, that the goods were to be sold for an endorsed note,—. the defendants, that they were to give the note of a third person, either without endorsement, or endorsed without recourse to them. The facts are not agreed upon between the parties, and as their understanding relative to the notes was different, there was no contract, which could bind either of them.

The defendants were aware of this discrepancy before the goods were disposed of; and if they were not content to take the hazard of this doubtful state of things, they might have rescinded the contract without prejudice to themselves or the plaintiff. They did not take this course, which common prudence pointed out, but

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chose to rest sternly on their legal rights according to facts, which they expected to prove. If there be default any where, the defendants are most obnoxious to that charge and by appropriating the goods to their own use they are clearly hable in my judgment for their value.

The objection to the evidence of Brown is not well founded and perhaps it originated in a misconception. There was no appropriation of any specific fund to the use of the witness, nor had he any special claim upon the proceeds of the goods sold. Brown was the mere agent or factor of the plaintiff, and although as such he would have a general lien upon goods or the proceeds of goods in his hands belonging to the plaintiff, as a security for his advances, yet an interest of this kind never disqualifies a witness. Upon principles of policy, of convenience and necessity the agent is admitted as a witness for his principal, and there is nothing in this case to make an exception to the general rule. The witness had no specific interest in the subject matter of the controversy and he could not gain or lose by the event.

Upon the whole, I look upon the charge of the Chief Justice as substantially correct in all its parts and he was also correct in permitting Brown to testify.

I. The objection to the competency of the plaintiff’s witness, Brown, was not well taken. He was the factor of the plaintiff and as such, had a general lein, for a balance due him, on the property of the plaintiff in his hands, but no specific claim for the payment of that balance on the proceeds of the goods sold to the defendants. It has never been held, that a factor, or commission merchant, is an incompetent witness, on tho ground of interest, because he has a general lein on the proceeds of the sale of the goods of his principal. It is not such an interest in the event of the suit, as ought to disqualify him. In the case of Payton v. Mallet, (1 Caines' R. 364.) the witness, objected to, had an order from the plaintiff or his agent to be paid out of the particular fund in controversy, and declared, that he expected to be paid out of that fund. The Court considered that such order amounted to an assignment of the fund pro tanto, to the witness. That case, therefore, differs from the present.

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2. It is objected, in the second place, that the Judge erred in charging the jury, that if they found, that the parties laboured, under a mutual mistake, in the formation of the contract, they ought to find a verdict for the plaintiff.

The distinction between a mistake of a party to a contract, as to matter of fact, and a misapprehension as to matter of law, is well settled. The latter can never be alleged, to rescind a contract; the former may be. Taking the charge of the Judge, in connection with the special finding of the jury, which is stated in the case, to have been by the consent of the parties, I consider the direction given to the jury to have been, that they were to demine, whether the parties to this contract, misunderstood each other, as to its terms. In that light the direction was clearly correct.

If there was a mutual misunderstanding, at the time of the sale, as to tbe fact whether the note of Penny Sons, was to be endorsed absolutely, or upon condition that the endorser was not to be liable on the endorsment, there clearly was no agreement between the parties. The defendants were bound to prove affirmatively, that the agent of the plaintiff agreed to accept the note, in payment without the security of the endorsers, and failing to do that they are bound to pay for the goods, as they did not return them to the seller, on the discovery of the misapprehension of the bargain.

Motion for a new trial denied.

[Hallett & Walker Atty’s for plff.