Knowlton v. Banigan

Headnote

Contract of sale of merchandise—comt/niction of—when made subject to vendee's approval as to quality.—Be-sale by vendors for account of vendee—notice of time and place not necessary.

Appeal from a judgment entered upon the report of the late ex-Judge Joseph S. Bosworth, as referee, in favor of the plaintiffs and against the defendant for $552.10, exclusive of costs and interest.

The action was to recover damages for non-performance of a contract of sale of certain rubber, brought by the plaintiffs, as vendors, against the defendant, as vendee. The complaint alleged a sale by the plaintiffs as copartners of certain rubber to the amount of $3,827.63, through a broker, under bought and sold notes ; that the rubber was duly tendered to the defendant who refused to take it; that, therefore, and on the first day of November, 1882, the plaintiffs delivered notice in writing to the defendant, that they should sell the rubber for his account as his agents and hold him responsible for the difference and for expenses ; that the rubber was of usual merchantable quality ; that they did so sell, and the deficiency and expenses were $552.10, for which they ask judgment. There are practically two questions of law involved, viz. : 1st. Did the defendant, under the contract, have the right to reject the goods,

whatever their quality ? 2d. Was the notice of re-sale due notice ? The referee wrote as follows :—“ This action is brought to recover damages caused by the non-performance (as it is alleged), by the defendant, of a contract, in the words and figures following, viz. : ‘New York, October 19th, 1882. Sold for account of Messrs. Knowlton & Go. To Mr. J. Banigan, Fifty bales rubber, if Guayl., 80c. per lb. ; if Guayl. and Esmeralda mixed, 82-J-c. per lb. ; if Esmeralda, 85c. per lb., cash; quality to be approved on dock. Ex. City of Para SS., now in port. Geo. G. Cowl, Broker.’ It is conceded that Cowl was authorized by each party to the contract, to make it. It is clear that the rubber contracted to be bought and sold was then on the steamship Para, in this port, It was tendered to the defendant, and on an examination of it on the 24th of October, the defendant refused to take it, or to pay for it. On the 2d of November the plaintiffs sold it, in the usual way, for account of the defendant, for $3,262.25. The plaintiffs claim to recover damages to the amount of $750. The rubber, at the contract price, would amount to $3,827.63. The defendant insists—First: That, by the terms and legal effect of this contract, the rubber was sold to, and bought by him, subject to the condition of his approving of it; that if he did not, in fact, approve of it, no matter how clear it may be on the evidence, that the quality of the rubber satisfied the terms of the contract, he was not bound to take it, or to pay for it. That the sufficiency of his reasons for not approving of it is not an open question; that his determination of it is final and conclusive upon the parties. I think that the words, ‘ quality to be approved on dock, ’ were inserted to designate the place where, and, substantially, the time within which, the rubber was to be examined by the defendant. It was tb be examined on the dock of the steamer named, and after it had been discharged from the steamship, and before the removal of it from the dock would be necessary. If the purchaser accepted the rubber, he would take charge of it and direct what should be done with it; if he

refused to take it, the plaintiffs would then take such action in reference thereto, as they might be advised. The defendant, of course, was not bound to accept of the rubber, if its quality did not satisfy the terms of the contract, even though nothing had been said in the contract about its quality. To determine that question, it was to be examined c on the. dock. ’ So the parties agreed. The question raised by the defendant’s first objection, is whether he was bound to take it even if the rubber was ‘ of the usual merchantable quality ’ of the class of goods described in this contract. I think that the agreement to sell and to purchase was absolute and not subject to any condition, except that the rubber should be of a quality which satisfied the terms of the contract. The cases cited by the defendant’s counsel do not conflict with this view of the meaning of the contract. ' In Gray v. Central E. R. Co. ( 11 Hun, 70 ), by the words of the contract, the corporation ‘ offer to buy the steamboat John Adams, . . . provided, upon trial, they are satisfied with the soundness of her machinery, boilers, etc.’ ... It was held in that case, that the terms of ‘ the agreement left it entirely for the defendants to determine whether or not' they were satisfied.’ I do not see how the court could have decided otherwise. On the part of the corporation it was an offer ‘ to buy ’ provided they are satisfied. It was left to the corporation, absolutely and unconditionally, to determine the question of soundness of the particulars specified. Its determination that it was-not satisfied, terminated the contract. Several cases, to the like effect, are cited in the opinion, and among others, Heron v. Davis ( 3 Bosw. 336 ). Although I do not find any report of this case in the reports of the court of appeals, I find a note made by me on the case in 3d Bosworth, that the judgment was affirmed by the court of appeals in October, 1862. The defendant also cited the recent decision of the .general term of the first department in O. T. & S. Russel v. Allerton (Daily Beg. Dec. 29, 1883). In that case the contract shows on its face, that the only use which the

defendant was to make of the steamship, was to ship live cattle. He wanted it for no other purpose. It was to be fitted up so as to have appropriate ventilation for such use of it. Whether such ventilation was provided or not, the defendant was to determine. In this case, there is nothing suggestive of the idea that the rubber was bought or sold with reference to any use to be made of it, to which any good rubber of the kind, described in the contract, was not adapted. There are numerous buyers of rubber in this city who buy extensively. In 1881 some eighteen million pounds of it were sold in the city of New York, and in 1882 some twenty-one million pounds. Presumptively, a sale of it could be made on almost any day at its market value. This rubber was re-sold on the 2d of November at its then market value. In the present case, the agreement to purchase is absolute, but the defendant was not bound to accept anything substantially different from the article which he had contracted to purchase. To determine whether the rubber tendered was such as he had agreed to buy and pay for, there must be an opportunity to inspect and determine that question. It was agreed that this examination and determination should be made on the dock. If found to be of the quality which the contract imports it to be, it was the defendant’s duty to take it and pay for it the contract price.

“ Second.—Did the quality of the rubber satisfy the terms of the contract ?

“ As to this question the plaintiff, by putting in evidence the original and amended answer of the defendant, has placed himself in the same predicament that another plaintiff did, by a like act, in Mott v. Consumers’ Ice Co. ( 13 N. Y. 543 ). These answers allege in effect that the rubber in question ‘was not of the kind, quality and value’ which the plaintiffs agreed to sell, but ‘was defective, and of a poor and inferior grade, quality and value, and wholly different from the rubber agreed • to be purchased by the defendant of the plaintiffs.’ If the other evidence establishes clearly that the rubber was

of good quality, much importance cannot in this case be attached to these allegations in the answers. The evidence shows clearly, as I think, that the defendant never saw the rubber or any part of it. Of course these allegations are not expressive of any opinion of the defendant, based on an examination of the rubber ; they are allegations which he was willing to assume the responsibility of making, and which he might possibly have intended to believe, although he had not any personal knowledge acquired by an inspection of the rubber. Unless more force is to be given to this part of the answers than would be given to his testimony as a witness, that the quality was such as these allegations in the answers assert that it was, with the further evidence that he never saw it, it would not improve the force of the other evidence as to its quality, to any appreciable extent. All of the evidence affecting the question convinces mee that the rubber was of a good quality. . . .” After a lengthy consideration of the evidence, the referee proceeds: “. . . The plaintiffs, therefore, were informed by the defendant himself, early November 1, 1882, that the rubber had been rejected, because, as the defendant construed the contract, the rubber was bought ■ subject to his approval of it, and that he was under no obligation to approve of it, whatever its quality may have been, unless he chose to do so, and that, in the exercise of this unconditional right, he rejected it. This letter does not suggest any wish on the part of the defendant to have any interview with the plaintiffs in respect to the rubber. He holds to the position taken on the 24th of October. He rejects the rubber absolutely and unconditionally. But the letter does show that if the plaintiffs ‘have anything to say to Mr. Banigan they can say it on Thursday of this week, ’ which would be November 2, 1882. On receiving this letter the plaintiffs acted promptly, and notified Mr. Banigan that day by telegram and also by letters, that the rubber would ‘ be sold at once, ’ and on his account. The telegram reads thus : ‘We shall sell the rubber which

has been the subject of correspondence, at once, unless advised to the contrary. We understand the market price is nominally seventy cents (70 cents).’ The defendant received this telegram on the first of November. It advised him that the market price of rubber was such, that on the re-sale of it, it could not be expected that over seventy cents could be got for it. It also advised him of the disposition of the plaintiffs to conform to his wishes in making a re-sale if he had any instructions or advice to •give. Two letters were also written the same day, both in the same terms. One addressed to the defendant at Providence, E. I., where he resided, and the other to him at his office, 80 Eeade street, in this city. The body of each letter was in these words, viz. : £ Dear Sir,—We have this day notified you, also by telegram, that we shall sell the rubber which was the subject of correspondence between us, and specified in our bill of sale of the 19th ult., at once and on your account. The rubber is constantly losing in weight, and is stored at an expense, and we judge it best to sell at once for you, and shall look to you for our loss in the transaction. ’ The defendant, by this letter of October 21, had notified the plaintiffs that he would be in this city on Thursday, November 2, and that the plaintiffs could then say to him anything they might wish to say. In answer to that the plaintiffs notify him on the same day, that they shall sell the rubber for his account £ at once, unless advised to the contrary. ’ This notified the defendant that if he had anything to say to the plaintiffs on this subject they would pay attention to it, and in effect, that if he wished the sale delayed, or none made at present, they would respect his wishes and conform to any reasonable instructions he might give. He made no communication to the plaintiffs, and did not call on them on the 2d of November. The rubber was sold on the second, in the usual way in which sales of rubber were made, and at the then market rate of such rubber, as this contract called for. The sale was not concluded until about 3 P. M., so that had Mr. Banigan chosen to have said any

thing to the plaintiffs in respect thereto, he had ample opportunity to do so. Mr. Banigan being in the city, and not having called on the plaintiffs or communicated with them, they commenced this action, by the service of a summons on him, on the third of November.” After further consideration of the evidence, the referee proceeds : “. . .- The rubber was re-sold, and in making such re-sale it was sold in the usual way in which rubber was sold; it was re-sold in good faith; reasonable efforts were made to obtain the best price that could be obtained, and it was sold at the then market price of such rubber, as is specified in the contract in question. The contract price was $3,827.63.

It was re-sold for . ...

The expenses attending the re-sale were

Net proceeds of re-sale The difference being ....

$3,362 25 49 02

$3,313 23 ■ $514 40

“The plaintiffs are entitled to recover with interest from November 2,1882, the day of re-sale (Pollen v. Le Boy, 30 N. Y. 549 ; Mason v. Decker, 72 lb. 595). In addition to the commission paid to the broker, who made the resale, for his services as such broker, the plaintiffs claimed a commission for themselves of 4 per cent., amounting to $134.49. I am not aware of any principle on which this claim can be sustained, and disallow it. There is no proof of any special service rendered by the plaintiffs personally, and of its value.”

The court at General Term said :—“ A consideration of this case satisfies us that the learned referee properly disposed of all the questions of fact and law. We see no good reason for disturbing the result reached by him. The referee has fortified his decision by an elaborate and carefully prepared opinion, which is entirely satisfactory to us, and we adopt it, as expressive of the justice and law of this case.”