Dustan v. McAndrew — 23 N.Y. Super. Ct. 130

Majority

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John F. Dustan, Plaintiff, v. Alexander McAndrew et al., Defendants.

Headnote

1. Under a contract to purchase a certain quantity of merchandise within a specified period, at the purchaser’s option, if he refuses to perform it within the time fixed, the remedy is two-fold, either to hold the goods subject to his order and at once sue him for the contract price, or to sell them after notice to him for the best price which can be- obtained, and sue for the difference between that and the contract price; but in adopting the latter course, the vendor is not bound to sell immediately, but may wait as long as he chooses to take the risk of the purchaser's solvency, holding them meanwhile subject to the purchaser’s order on his making payment.

2. After such a sale, on notice to the purchaser, the measure of damages in an action against him for breach of the contract, is the difference between the best price that could be obtained at the sale, and the contract price,with interest; the market price on the latest day fixed by the contract is immaterial. *

3. Where a contract for the sale of merchandise provides that it shall be subject to the inspection of one of the vendors, or some other person mutually satisfactory, but does not make the inspector’s decision conclusive on the parties, it is not essential that previous notice of the inspection should be given to the purchasers, and they cannot refuse to perform the agreement . merely on the ground that they are not satisfied with the inspection.

4. Where one holding an executory contract for the sale to him of merchandise, assigns it to third persons, and the vendor in the contract tenders performance directly to the latter, a demand by them for the performance of a condition precedent on the part of the vendor, must be made upon the vendor, and not alone upon the assignor of the contract.

(Before Robertson, White and Monell, J. J.)

Heard, November 12, 1862;

decided, January 5, 1863.

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The exceptions taken upon the trial of this cause, before Mr. Justice Moxell and a Jury on the 27th of March, 1862, were directed by the Court to be heard, in the first instance, at the General Term, and judgment in the meanwhile to be suspended.

In August, 1860, the plaintiff made a contract with the Messrs. Browns, to purchase from them a quantity of hops at 17 cents per pound, deliverable at the “ option ” of the Browns during the months of October and November of that year, subject to the inspection of J. S. Brown, (one of the vendors,) or other mutually satisfactory. The terms were “ cash on delivery.” On the 7th of September, 1860, the plaintiff sold the contract to the defendants (who were A. McAndrew and Samuel Wann) upon condition that they should fulfill the conditions of the contract, and pay to the plaintiff, in addition, on delivery of the hops, ten and one-half cents per pound. The Browns were not parties to the transfer of the contract, and never released the plaintiff.

On the 28th of November, 1860, the Browns addressed a letter to the plaintiff, saying:

“ We will deliver from stores Nos. 61 Cedar street, 32 “ Broadway, 41, 46 and 52 Water street, and 68, 80, 80¿ “ Pearl street, in the City of New York, the 100,000 “ pounds of hops, pursuant to your contract with us, dated “ 24 August, 1860, on Friday, the 30th day of November, “ instant.”

On the same day the plaintiff inclosed the foregoing letter to the defendants, with the following note :

“ I beg to inclose a letter from Messrs. J. S. & W. Brown, notifying their readiness to deliver the 500 bales of hops, purchased of them and resold to you, of which please to take notice.

“ Yours, truly,

“ JOHN F. DUSTAN.

'* To Messrs. McAndrew & Wann.”

On the same day the Browns sent the following letter to the defendants:

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“ Hew York, Hov. 28,1860.

“ Messrs. MoAndrew & Warn :

“ Gentlemen — We will deliver from the stores, Ho. 53 Cedar street, 32 Broadway, 41, 46 and 52 Water street, and 68, 80 and 80£ Pearl street, in the City of Hew York, the 100,000 pounds of hops, pursuant to contract of John F. Dustan with us, dated August 24th, 1860, on Friday, the 30th day of Hovember, instant.

Yours, &c.,

“ J. S. & W. BROWN,

“ 22 Water street.”'

Ho answer to their letters was received, or communication had with the defendants in respect to them until the 30th of Hovember, when the plaintiff called on them and notified them that the hops were ready for delivery, and requested them to comply with their Contract, take delivery of the hops, and pay for them. They did not do so. The plaintiff paid the Browns the contract price of the hops, and on the 24th of December took possession of them. On the 24th December, the plaintiff sent the defendants the following letter:

“ 68 Beaver Street, )

“ New York, Dec. 24th, 1860.)

“ Messrs. McAndrew & Wann :

“ Gentlemen — The 100,000 lbs. hops mentioned in contract of J. S. & W. Brown with me of 24th Aug., 1860, and in contract of yourselves with me, of 7th of Sept., 1860, are now at the store Ho. 4 Bridge street, awaiting the fulfillment by you of the terms of your contract, and I hereby tender to you the said hops, and demand from you the payment of the sum of $27,500, the amount of such contract price. Unless you comply with the terms of said contract, on or before the 26th day of December inst., I will proceed to sell the same on your account, and hold you for any deficiency.

“ Your obed’t serv’t,

“ JOHN F. DUSTAN.”

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The introduction of this letter was objected to by the defendants’ counsel. The objection was overruled and the defendants excepted.

The defendants declined to take the hops, and they were placed in the hands of a broker, who sold them, on the 26th December, at 20 cents per pound.

The hops had been inspected by J. S. Brown, the person named in the contract. The plaintiff testified, that when the hops were tendered to the defendants, they made some excuse about their wanting them inspected; that he forgot the words, but thought they wanted some party beside Mr. Brown to inspect the hops; that he told them that the contract called for the inspection of Mr. Brown, and that he had inspected them.

Some evidence was given of the market value of hops on the 30th November, and also on the 26th of December.

The defendants moved to dismiss the complaint, which was denied, and the defendants excepted.

Alexander McAndrew, one of the defendants, testified that they sent an inspector to examine the hops, and that they refused to receive them on the sole ground that they had not had an opportunity to examine them and ascertain their quality. There was also evidence given by the defendants that several persons had gone to examine the hops and had been refused; but there was no connection shown between such persons and the defendants.

It was admitted by the defendants that the price obtained for the hops on the 26th of December, was a fair price.

The plaintiff claimed to recover:1 the difference between the price agreed to be paid by the defendants, (27¿- cents,) and the price obtained for the hops on the 26th December (20 cts.)

The defendants’ counsel requested the Judge to submit the questions of fact to the Jury, which he declined to do, and the defendants excepted. Such requests are noticed in the opinion of the Court.

The Judge held that there was no question of fact to go

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to the Jury; and he directed them to find a verdict for the plaintiff, for the amount claimed, with interest, to which direction the defendants excepted.

James L. Campbell, for defendánt.

I. The nonsuit asked should have been granted.

I. The vendor was bound to tender an actual, not a mere constructive delivery. 2. The defendants had a right to see the thing tendered and have an examination in their presence. The examination of Mr. Brown was not binding on them; he was a party in interest, and moreover his inspection was ex parte. (McMahon v. N. Y. & Erie R. R. Co., 20 N. Y. R., 463.) 3. Defendants were entitled to have the hops on the 30th of November, and time was of the essence of the contract. They could not be inspected in one day — it took two or three. As inspection precedes acceptance, which is a part of delivery, it was impossible, on the 30th November, that these hops could be delivered within the stipulated time.

II. The Court erroneously assumed that there tras no evidence, that defendants demanded an inspection by a disinterested person.

III. The rule of damages was erroneous. The right of action, if any, accrued, and the breach was complete on the 30th November. The price at which Dustan subsequently sold them was immaterial.

IV. The letter, therefore, of December. 24, and the subsequent questions as to the disposition of them, were erroneously admitted.

John N. Whiting, for plaintiff.

I. The fulfillment of the contract, by Messrs. Brown and the plaintiff, was perfect on the 30th of November, 1860.

II. The defendants became bound to fulfill the contract on the 30th of November, unless it should appear that the quantity was less, or the quality inferior to that contracted for. (McMahon v. N. Y. & Erie R. R. Co., 20 N. Y. R., 463.)

IH. The course adopted by the plaintiff in taking de

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livery of and paying for the property, and selling it for the defendant’s account, upon notice, was in strict conformity to his rights, and exceeded his duty to the defendants. (Story on Sales, §§ 436, 437; Sands v. Taylor, 5 Johns., 395 ; Bogart v. O'Regan, 1 E. D. Smith, 590; Bement v. Smith, 15 Wend., 493 ; Orr v. Bigelow, 20 Barb., 21 ; Graham v. Jackson, 14 East, 498 ; Thompson v. Alger, 12 Met., 428 ; Hanna v. Mills, 21 Wend., 90 .)

IV. The charge of the Justice was in all respects correct.

V. The defendants’ exceptions on the trial were not well taken.

VI. The verdict is in conformity with the proofs and the facts in the case.

By the terms of the contract, the vendors had the option to deliver the hops on any day during the months of October and November, either the first, the last, or any intermediate day. They were subject to J. S. Brown’s inspection, “or other mutually satisfactory.” The defendants purchased the contract from the vendee subject to all its provisions, which they agreed to fulfill; aud they also agreed to pay the vendee, on the delivery of the hops, ten and one-half cents per pound.

The notice from the Messrs. Browns, on the 28th November, of their readiness to deliver the hops from the warehouses where they were stored, was sufficient as a tender of the hops. (Slingerland v. Morse, 8 Johns., 474 ; La Farge v. Rickert, 5 Wend., 187 .) The hops had been inspected by the person designated in the contract, and the storage receipts and inspector’s certificate were offered to be delivered to the defendants and were refused.

Upon the failure of the defendants to receive the hops and pay the contract price, the plaintiff had a right to perform for them; and their refusal to receive the hops from him, authorized a sale, after notice, at the best market price which could be obtained. (Sands v. Taylor, 5 Johns., 395 ; Bement v. Smith, 15 Wend., 493 .)

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The market value of hops on the 30th November was immaterial. The plaintiff’s remedy, after tender and refusal, was two-fold. First. To hold the hops, subject to the , order of the defendants, and at once sue for the contract price; of, second, to sell the hops, after notice to the defendants, for the best price which could be obtained, and sue for the difference between that and the contract price. (Cases above cited.) The plaintiff was not bound to sell the hops on the 30th November. He could hold them just so long as he was willing to take the risk of the solvency of the defendants. They were subject to the order of the defendants, who could, at any time, have paid for the hops, and availed themselves of a better market. Whenever the plaintiff desired to close the transaction, he could have given notice to the defendant and have proceeded to sell on their account.

It was admitted by the defendants that the hops brought what was a fair price on the 26th December. The market value at any other time was,- therefore, immaterial.

The objections to reading the several letters in evidence, were not well taken. They were necessary and proper to lay the foundation of the plaintiff’s right to recover. They proved the offer to deliver the hops, demand of payment and notice of the subsequent sale.

The rule of damages was correct. The plaintiff was entitled to recover the difference between the contract price and the sum he obtained for them on the 26th December, -with interest on that difference from the day of sale. (Sands v. Taylor, Bement v. Smith, supra, 2 Pars, on Con., 484; Sedg. on Damages, 282.)

The objection made by the defendants was that they had not had any opportunity to examine the hops. Mr. McAndrew, one of the defendants, was asked what took place between him and the plaintiff in reference to the contract, and he answered: “I do not recollect seeing him “ until I told him that we could not take those hops with- “ out having an opportunity to examine them; that was

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“ the ground, and the sole ground, of our objection; that we “ had not had an opportunity to examine them and ascertain “ their quality.”

I think the fair construction of the contract is that the inspection of J. S. Brown, should, prima facie, be sufficient proof of the quality and quantity of hops, unless the inspection of some other person, mutually satisfactory, was agreed upon. I do not understand that his inspection was objected to, but the defendants claimed the right to examine for themselves. The certificate of the inspect- or was not conclusive and it was proper - for the defendants to have shown that it was incorrect. The selection of an inspector was for the vendors’ convenience, to enable them, on the day fixed, to tender performance of their contract, and the correctness of any inspection by him was open to inquiry by the defendants. They could not object, therefore, to receiving the hops merely on the ground that they were not satisfied with the inspection, even though they had objected on that ground. The vendors had done all the contract required of them; they had procured the inspector’s certificate, which was the only condition precedent to their performance.

The facts in this case distinguish it from McMahon v. N. Y. & Erie R. R. Co., (20 N. Y. R., 463,) relied on by the defendants’ counsel. There the contract provided that the work should be executed under the direction of the engineer of the company, by whose measurement the quantity of work was to be determined, and whose decision, relative to the execution of the work, the quantity, &c., should be final and binding upon both parties. The action was by the contractor for work and labor, and the defendants insisted that he was concluded by the measurement of their engineer. The Referee found that the measurements were erroneous, in fact, were made ex parte, without notice to the contractor, and without giving him an opportunity to be present; and that the defendants were requested to have measurements made by the engineer, or to have those already made, reviewed, which the defendants refused.

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The Oourt say, the engineer’s estimate, if legally made, is absolutely conclusive upon the rights of the plaintiff, and therefore “ he ought, in justice, to have at least the opportunity of being present, when that in which he is so deeply interested is done.” That as the contractor in such cases, is dependent entirely upon the skill and integrity of the company’s agent, he ought at least to have such protection as a right to notice might afford.

In the case now before the Oourt, there was no condition in the contract that the inspection of J. S. Brown was to be binding or conclusive upon the parties.. As has been already said, it was inserted for the convenience of the vendors, and was not in itself proof of absolute verity.

But the learned Judge in the case above referred to, says: - “this conclusion alone, without some excuse on .the “part of the plaintiff for not having procured a proper “final estimate to be made, would not support the decision “ of the Referee. But such an excuse is afforded by the “ latter part of the paragraph in the statement of facts, “already cited, which states that the defendants ‘were “ requested ’ to have estimates, measurements, &c., made, “ and that they ‘ refused.’ ”

I am not able to find in the case before us, any evidence of a request made to the vendors, to have the hops inspected, or that any objection was made to them in respect to the quality or quantity. Upon the purchase of the contract from the plaintiff, the defendants became the vendees, and were bound to treat directly with the Browns in respect to the delivery of the hops. The contract with the Browns then belonged solely to the defendants, and the plaintiff had no interest in it. His only interest was in the ten and one-half cents advance. If the defendants claimed another •inspection, such claim was made to the plaintiff; if they objected because they had had no opportunity to examine the hops, they objected to the plaintiff. I think if they had a right for these reasons to object, it should have been to the Browns, with whom, by the assignment, they had

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become the contracting parties, and who had tendered to them, directly a delivery of the hops.

¡ To reverse the case. Suppose the defendants had demanded a delivery of the hops, tendering the price, as the contract gave them the option of delivery, and it had been refused on the ground that they could not procure the certificate of the inspector, would their inability to furnish an inspection be a defense ? I think not. They could deliver without a certificate, the inspection being for their benefit alone. The inspection, therefore, was not a condition precedent to a delivery. The delivery or tender of delivery would be good without it, and it did not conclude the defendants from showing it to be “ erroneous in fact,” as was done in McMahon v. N. Y. & E. R. R. Co. (supra.)

If these views of the law of the case are correct, it follows, that there was no question of fact to be submitted to the Jury. The Browns had a right to deliver on the last day, and demand payment. On the refusal of the defendants to receive and pay, the plaintiff had a right to perform for them, and they are answerable for the additional price they agreed to pay.

There was no dispute about any of the material facts in the case, and there was therefore nothing to submit to the Jury.

The requests to charge, made by the defendants’ counsel, were of propositions contrary to those here stated, and were properly refused.

• None of the exceptions were well taken, and judgment should therefore be ordered for the plaintiff on the verdict.