Hyperlawhypertext legal database De Wolf v. Crandall 31 N.Y. Super. Ct. 556

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De Wolf v. Crandall

31 N.Y. Super. Ct. 556 1 Sweeny 556 Court N.Y. Super. Ct. Decision date 1869-10-30 English

Delivered by Fithian, J.

Contents

Majority

p. 556
DAVID R. DE WOLF, Plaintiff and Respondent, v. EBENEZER V. CRANDALL et al., Defendants and Appellants.

Headnote

Where the language of a contract is so uncertain, or the subject-matter to'which it ia intended to apply is so doubtful, that the true, intent -and meaning of the instrument cannot be satisfactorily ascertained from the contract itself, parol evidence is admissible to explain.
On a question of fact, where there is evidence tending to sustain the cause of action or defence, the case should be submitted to the jury.
A new trial granted for error in the judge in excluding competent evidence, and in taking case from the jury which should have been submitted to them.
Before Monell, McCunn, and Fithian, JJ.
[Decided October 30, 1869.]
This case was tried before Mr. Justice McCunn and a jury.
The action was brought to recover two instalments of money agreed to be paid by the defendants to the plaintiff, by virtue of the written contract following. The instalments claimed became due December 31, 1867, and January 1, 1868. The contract sued on was set forth in the complaint, and admitted by the answer, and is as follows :
6 This memorandum of agreement, made and entered into this 23d day of March, in the year of our Lord 1867, by and between David R. De Wolf, of the City of New York, in the United States of America, merchant, party of the first part, and Ebenezer V. Crandall, George Umphray, and Henry V. Crandall, all of the City of New York aforesaid, merchants, of the second part, witnesseth that the said parties hereto of the first part and second part, for and in consideration of the sum of one dollar by each party paid to the other party, the receipt whereof is hereby mutually acknowledged, do covenant and agree as follows: the party of the first part does for himself, his heirs, executors, administrators, and assigns, covenant and agree to sell,
p. 557
relinquish, transfer, and deliver to the party of the second part the good-will and interest of the business now being conducted and carried on at No. 103 Broad street, in the City of New York, under the name, style, and firm of D. R. De Wolf & Co., as a shipping and commission business (the co-partnership now existing is to terminate and be dissolved by the 1st day of May next), together with the lease of the office now occupied at No. 103 Broad street, which has three years yet to run from the 1st day of May next, at an annual rent of nine hundred dollars, which rent is to be paid by the parties of the second part; all the office furniture now in the office, excepting the safe, one desk, one chair in the private or inner office, all the books, papers, stationery, and any and all articles of a private nature which have not been mentioned belonging either to the party of the first part or to any other person; the inner or private office is to be retained and occupied by the party of the first part, with the furniture now in it, free from any rent or charge whatever, the use of which is his during the term of the lease ; also the business of the vessels when in this port, in which the party of the first part now at the present time owns a share, or which he may be able or can control, except the making of charters or procuring of freights for the same (in which case the commissions are to be divided), or effecting insurance on either the vessels or their freights, or buying any articles for them. It is understood that the direction and control of the vessels are not hereby given up, neither any restraint from selling and disposing of the same in any way. The sale and delivery of the business to take place oil and after the 1st day of May next ensuing, and all business of any nature which may have been commenced prior to the 1st day of May, or any vessels which may have arrived up to the 1st day of May, shall be considered the business of the party of the first part, and shall be continued and finished by the present firm. The said party of the first part agrees that from and after the 1st day of May next he will not start, commence, or do any business of the same nature or kind in the City of New York during the term of five years
p. 558
next ensuing, commencing from the first day of May next. This is not to be understood as debarring him from buying and selling’ to any extent, nor from acting as broker in merchandise, ship, or commercial broker (except buying for and shipping to any of the customers of the present firm), insurance broker, or chartering vessels for others or on his own account, or making advances on or for vessels, or for any person, or furnishing new, vessels with outfits, &c.
“And the said parties of the second part, for themselves, their heirs, executors, administrators, and assigns, hereby covenant and agree jointly and severally with the said party of the first part, upon the delivery and relinquishment of the business aforesaid, to pay to the said party of the first part the sum of twenty thousand dollars in good and lawful money of the United States of' America, the payment to be made as follows, viz.: two thousand dollars in cash on the 1st day of May, three thousand dollars on ' or before the 31st day of December next ensuing, and seven hundred and fifty dollars on the first day of each quarter of the year, commencing on the 1st day of January, 1868, and so com tinning on the first day of each quarter until the whole amount of twenty thousand dollars shall have been paid, making tl)e last payment due and payable on the first day of October, 1872.
“And the said party hereto of the first part binds himself to the parties hereto of the second part, and the said several parties of the second part bind themselves to the said party of the first part, in the penal sum of twenty thousand dollars for the faithful performance of this agreement.
“ It is understood and agreed that the parties of the second part shall not sell nor dispose of nor make any change in the business without first offering it to the party of the first part.
“In witness whereof, the said parties have hereunto their hands and seals subscribed and set the day and year first above written.
[l. s.] DAVID B. DE WOLF,
[l. s.] EBENEZEB V. CRANDALL,
[L. S.] GEO. UMPHRAY,
[L. S.] H. V. CRANDALL.”
p. 559
The answer set up two defenses : First, that the plaintiff had not performed or kept the covenants in the agreement on his part to be performed and kept, and could not, therefore, maintain any action for a breach of defendants’ covenants; and second, a separate defenes by way of counterclaim, alleging a breach of various covenants on the part of the plaintiff, and counterclaiming damages therefor, as follows :
The defendants, for a further and separate answer and counterclaim to the complaint, allege that, in violation of the contract or agreement in the complaint set forth, the plaintiff has, since the 1st day of May, 1867, done and carried on, in the city of ¡New York, business of the same nature and kind as that in the said agreement sold and agreed to be relinquished and delivered to the defendants, and has done the business of the vessels in which the plaintiff was part owner when in this port, and of vessels which he could control, besides the making charters and procuring freights for the same, and effecting insurance on vessels and freight and buying articles for them, and has bought and sold merchandise for and to the customers of the said late firm of D. R De Wolf & Co., and other persons, in violation of his said agreement.
That by reason of the premises the defendants have sustained injury and damage to the amount of ten thousand dollars, or thereabout, which the defendants claim to recover against the plaintiff in the action.
Wherefore the defendants demand judgment against the said plaintiff for the amount of their damages aforesaid, with costs of defending this action.
The plaintiff replied, denying the counterclaim.
The plaintiff proved the transfer and delivery to defendants of the office, business, and place of business, furniture, &c., to defendants at the time specified in the contract; that defendants took possession and entered upon the prosecution of the business specified in the contract, paid the first instalment therein provided for, and have continued in the business ever since, but have refused, after demand made, to pay any subsequent instalment.
p. 560
The defendants gave evidence to show that the plaintiff had violated his covenant not “ for five years to start, commence, or do any business of a similar kind in the city of New York;" in this, that plaintiff had, against defendants’ objection, continued at the same place to do a general “shipping and commission business,” in all respects as he had done before the execution and delivery of the agreement. Also, that plaintiff had persisted, in disregard of defendants’ remonstrance, in doing the general business as well of “ vessels ” in which he “ owned a share,” as those which he “ could and did control;" all of which business he had expressly and specifically sold to the defendants. Also, evidence tending to show that plaintiff had “bought for custom ers of defendants’ firm,” and did all the general business of ships whose owners had been customers of the old and continued to be customers of the new firm. Also, that plaintiff had endeavored to and had dissuaded persons, who had been customers of the old firm, from continuing with the new firm of defendants, and had successfully diverted such business to himself.
On the trial the defendants’ counsel offered to prove the meaning of the words “ shipping and commission business,” which was excluded by the court,'under'defendants’objection-. The court likewise excluded evidence offered by defendants’ counsel to show that the persons for whom plaintiff had transacted “ shipping business,” viz., selling bills of exchange for money to pay for supplies, were customers of the old firm. To this there was an exception. Defendant also gave evidence to show the damages sustained by them in consequence of such allóged violation of the agreement on the part of plaintiff.
At the close of the testimony defendants’ counsel, among other things, demanded permission to ■ submit to the jury the evidence as to his counterclaim, insisting there was evidence upon which the jury would be authorized to find damages, by' way of counterclaim, in defendants’ favor. The justice excluded the evidence from the jury, and directed a verdict for plaintiff for the full amount claimed, less a single item of four dollars and seventy-five cents; to all which defendants’ counsel
p. 561
excepted. From the judgment entered on the verdict defendants appealed.
Mr. E. C. Benedict for appellants.
The court erred in holding that the clause in the agreement “ stipulating that the plaintiff should not engage in the shipping business for five years,” was qualified by the clause which provided that he should not engage in that business with any of the customers of the firm of D. R. De Wolf & Co.
The plaintiff sold to the defendants his “ interest of the business now being carried on at No. 103 Broad street, New York, under the name, style, and firm of D. R. De Wolf & Co., as a shipping and commission business,” and he covenanted that he would not “ start, commence, or do any business of the same nature or hind in the city of New York for five years, but this was not to be understood as debarring him from doing business as a merchandise, ship, commercial, or insurance broker (except buying for and shipping to any of the customers of the present firm), or chartering vessels for others on his own account, or making advances for vessels or for any person, or furnishing vessels with outfit.”
This the court held to be an exception, including every kind and description of business done by the old firm, and that it only prohibited the plaintiff from doing a shipping business with the customers of the old firm.
The court erred in refusing to dismiss the complaint after the plaintiff had rested.
By the terms of the agreement, the plaintiff had agreed not to carry on any business of the same nature or kind as a shipping and commission business, in the city of New York, for five years.
It appeared in evidence by the sworn admission of the plaintiff that “ he has been and still is engaged in business as a shipping and commission merchant” ever since the malting of the agreement. This is a violation of his contract.
p. 562
A shipping and commission business is not what is reserved. Moreover, the court had no right to assume that the business done was within the limits of the reservation.
The party relying upon an exception or reservation must always prove himself within it. The presumption is against, him antecedent to proof (1 Duer on Ins., 161; Breasted v. The Farmers’ Loan & Trust Co., 6 N. Y., 405 ; Hoffman v. The Etna Ins. Co., 32 N. Y., 405 ).
The .court erred' in refusing to allow the defendants to show that the parties for whom this business was transacted were customers of D. R. De Wolf & Co., also in refusing to allow proof of the meaning of “ shipping and commission business.”
The court below held that the agreement only prohibited the plaintiff from engaging in the business of the old firm with any of its former customers.
Under this construction it was the right of the defendants to show that the parties for whom this business was transacted were customers of the late firm.
The court erred in refusing- to submit the ease to the jury to decide upon the question whether the plaintiff had violated his part of the contract.
If the court should hold that our claim for the violation is a recoupment, we were entitled to the verdict of the jury upon fhe amount of damages.
Mr. Erastus Cooke for respondent.
After the agreement went into effect, the plaintiff carried on no business, nor did he do any act which did not come within the reservation clauses in the agreement.
After delivery of the business, office, and furniture, on the first d'ay of May, 1867, the covenants were, from the nature of the case, independent, and each can be enforced without any regard to the others.
The plaintiff never bound himself not to sell bills of exchange, consequently the judge was right in ruling out the transactions with Irving & Co.
p. 563
There is no act relied on by the defendants as a violation of the contract, until after the delivery of the business to the defendants, and after they had entered into the enjoyment of it, under the contract.
If, then, the plaintiff broke his covenants, he may be liable for the breach, but it can form no defence to an action on an independent covenant.
When a person has received part of the consideration for which he entered into the agreement, it would be unjust that, because he has not had the whole, he should therefore be permitted to enjoy that part without either paying or doing any thing for it, and therefore the lem obliges him to perform the agreement on his part, a/nd leaves him to his remedy to recover damages for not receiving the whole consideration (Peffee v. Haight, 20 Barb., 430 , 440; Tompkins v. Elliott, 5 Wend. 498 ).

By the Court:

The covenants contained in the agreement in this case are mostly independent. The only covenant or thing, the performance of which on the part of the plaintiff can be construed into a condition precedent to his right to demand the money agreed to be paid by defendants, is the delivery of the books of the old firm, with the possession of the office and furniture, and transfer of the lease. This the plaintiff did, so far forth, at least, that it was accepted by defendants as a sufficient “delivery and relinquishment of the business aforesaid,” to induce defendants to enter upon the performance 'of the contract on their part, by paying the first instalment or down payment and entering upon the business. The lease, it appears, was a verbal one, and could be transferred without writing. The delivery of the written agreement was doubtless a sufficient transfer to defendants of such verbal lease as against the plaintiff, especially when accompanied with a delivery of the possession of the demised premises. The other covenants on both sides were executory and continuing, relating to subsequent business and subsequent acts to be done and forborne. They

p. 564
were in their nature independent of each other, and neither could be a condition precedent to the performance of the other. The defendants having thus elected to enter upon the performance of this agreement on their part, could not be permitted thereafter to rescind the contract by reason of any failure on the part of plaintiff to perform any independent agreement in the contract contained and on his part to be performed. For any such breach, defendants have their action at law for damages (Day v. N. Y. C. R.R. Co., 53 Barb. R., 250). The defendants cannot, therefore, set up as a flat hcor to this action any non performance, by the plaintiff, of all or any of the independent covenants ón his part to be performed. In that regard the ruling of the learned justice on the trial was correct.

: The defendants may, however, under the Code, allege and prove, by way of defence, and for a counterclaim (which is in the nature of a cross-action), the neglect or refusal of the plaintiff to perform any or all the covenants by him agreed to be performed and kept, and may offset such damages as they can prox^e resulting from such breach, against the plaintiff’s demand in the action, so as to defeat plaintiff’s recovery altogether, if the damages shown be sufficient toYalan.ce the amount of - plaintiff’s demand proved on Iris part. This defence the defendants have alleged and attempted to prove. And, in my opinion, the proof was of a character which should have been submitted to the jury, under proper instructions from the court. The agreement is very loosely and inartificially drawn. There arc exceptions, reservations, and explanations. Different words, not-precisely equivalent in their meaning, are used in different parts of the instrument, in respect to the same subject-matter, while in two or more instances" general words are used, which, in their broadest and largest sig-' nifieation, would include matters entirely beyond the scope and-purview of the contract, thus showing an intent to use suchxvords in some technical or restricted sense.

It is not surprising then, but quité probable,-that in the hurry of a trial, without time to hear argument or carefully examine, a judge should err in the construction of so uncertain an in

p. 565
strument. Indeed, there are certain provisions of the contract which seem to me incapable of a satisfactory interpretation without parol evidence in explanation.

The first covenant on the part of the plaintiff is “ to sell, relinquish, transfer, and deliver to defendants the good-will and interest of the business now being carried on at No. 103 Broad street, under the name, style, and firm of D. R. De Wolf & Co., as a shipping and commission business,” together with a lease of the office, furniture, books, papers, stationery, &c. “Also, the business of the vessels when in this port, in which the party of the first part now at the present time owns a share, in which he may be able or can control ” (excepting, &c.). Then follows this provision: “ The said party of the first part (plaintiff) agrees that from and after the 1st day of May next, he will not start, commence, or do any business of the same nature or hind, in the city of New York, during the term of five years next ensuing, commencing from the first day of May next. This is not to be understood as debarring him (plaintiff) from buying and selling, to any extent, nor from acting as broker in merchandise, ship or commercial broker (except buying for and shipping to any of the customers of the present firm), insurance broker, or chartering vessels for others, or on his own account, or making advances on or for vessels or for any person, or furnishing new vessels with outfits,” &c.

The first step in construing or interpreting the foregoing provisions is to determine in some way what particular business transactions (if any) the plaintiff had covenanted to abstain from “starting,” “commencing,” or “doing,” and whether there was any thing pertaining to a “ shipping and commission business,” or “business of the same nature or hind” other or different, or not included in those particular business transactions, which it was stipulated the plaintiff should not be “ debarred” from doing. In order to determine these questions with any degree of certainty, it is necessary to ascertain, either from the contract itself or evidence outside, the precise character, nature, and extent of the business which was “ then (now) being conducted and

p. 566
carried on at No. 103 Broad street, under the name, &c., of D. R. De Wolf & Co., as a shipping and commission business.” This cannot be satisfactorily ascertained from the contract itself, because the term “ shipping business,” in its broadest extent, may mean any and every ldnd of business relating to ships, and may include ship-building; while the - term “ commission business,” in its largest signification, may mean any and every kind of business, for the transaction of which a commission is paid, and include every vendible commodity. It is clear that the term “ business conducted, &c., at No. 103 Broad street, in the name of D. R.De Wolf & Co., as a shipping-and commission business,” was not intended to have the large and extended signification above indicated. It was necessary and proper, therefore, to show by evidence aliunde the contract, what was the precise business carried on by the firm of De Wolf & Co. at No. 103 Broad street, “as 'a shipping and commission business.” This the counsel for the defendants was prohibited by the court from doing, though lie offered and desired so to do. Such ruling, I am of opinion, was erroneous.

Again, the plaintiff, in and by the contract, sells to the defendants not only his interest in the business of the firm of De Wolf & Co., but also the “ good-will ” of such business. And I see nothing in any other clause of the contract modifying or qualifying this provision. - If the term “ good-will of the business ” is to have any signification whatever, it must be held to be, even in its most restrictive sense, an agreement on the part . of a vendor that, in respect to the “ business ” which he thus sells the “ good-will ” of, he will not attempt, by any direct act or' word o'f his, to injure of depreciate' such business while being Carried on by his vendee, or divert from it any custom or "patronage which would otherwise come to it in consequence of the reputation and “good-will” pertaining to it while conducted, by the vendor. On the trial, defendants gave uncontradicted , evidence to show that, in a number of instances, the plaintiff: had deliberately and persistently intercepted business and custom, which would otherwise come to defendants’ firm, and'

p. 567
which before pertained to the firm of De Wolf & Co., and diverted the same to himself, by representing to the customer that defendants were unable and had not the facility of doing such business on as favorable terms as the plaintiff. There was also evidence of pecuniary damages sustained by the defendants in consequence of such conduct. This evidence should have been submitted to the jury, and if found to be true, defendants were entitled to recover for such damage.

Again, without examining the evidence in detail, which is quite voluminous, it suffices to say there was evidence tending to show quite satisfactorily that plaintiff had assumed to, and did, against the objections of the defendants, transact all and every the commission business of and for a number of vessels in the port of New York, in which he (plaintiff) at the time of the making of the contract “ owned a share,” and which he was “ able to and could control,” thus wrongfully diverting to himself moneys, being proceeds of business which he had expressly sold to the defendants, and which was the consideration of their agreement to pay. There was also evidence that plaintiff had likewise, in a number of instances, “ bought for ” “ the customers of the present firm” (D. R. De Wolf & Co.), which he was expressly prohibited from doing, as well in the clause enumerating the particular transactions, which plaintiff is not “ debarred ” from doing, as in the preceding general prohibitory clause; and that plaintiff had received as profits of such business divers sums of money which justly belonged to the defendants. The jury should likewise have been permitted to take this evidence into consideration, and, if true, awarded to defendants such damages as they have sustained in consequence.

For these reasons the judgment should be reversed and a new trial ordered, costs to abide the event.