National Ice Co. v. Preston

Headnote

Agreement between A. and B. to supply B. malt to be manufactured into beer for A. ’s benefit, A’, to be paid with moneys realized from sales of beer; agreement accompanied by chattel mortgage on B.'s property; does not constitute agency as to third parties, e. g., persons who supplied ice to B. for use in business.—When such agreement not fraudulent, though chattel mortgage be not fled.

Appeal from judgment discussing plaintiff’s complaint.

Action to recover the value of certain ice sold and delivered by plaintiff to one Newman. Defendant and Newman

had entered into a contract by which defendant supplied Newman with malt which he was to manufacture into beer and sell for defendant’s account and pay defendant from the moneys so realized for the materials furnished. Newman executed and delivered a chattel mortgage upon all his personal property to secure defendant. This mortgage was not filed until after plaintiff’s claim had accrued. Plaintiff claimed to recover herein against defendant as undisclosed principal, and as having conspired to cheat and defraud plaintiff.

The court at General Term said: “It is perfectly well settled by numerous decisions that a contract of the character set forth in the complaint and above mentioned, does not establish the relation of principal and agent, as to third parties, or entitle a creditor of the manufacturer to make any claim against the owner of the supplies (Mallory -y. Willis, 4 N. Y. 76 ; Foster v. Pettibone, 7 Id. 133 ; Wood v. Orser, 25 Id. 348).”

“If the complaint is viewed as stating a cause of action for fraud, the plaintiff has not succeeded in establishing a case. Fraud can never be presumed. It must be proven. There was no duty upon Newman to disclose his circumstances. If the plaintiff trusted him without inquiry it was at their own peril.

“Nor was there any obligation on the defendants part as to plaintiff to file his chattel mortgage. Our statutes fix his liability for such neglect, and he took the risk that they impose. The complaint alleges that there was a fraudulent purpose to give Newman a fictitious credit and in pursuance thereof he purposely did not file his mortgage. In preparing this pleading the learned counsel for plaintiff recognized that the failure to record was not the fraud, but the agreement out of which this failure sprung he claims was a fraud.

“ In this he is supported by authority, but the difficulty in his case is that he has failed to establish any such agreement.