text:
    Mesibov, Glinert & Levy, Inc., Appellant, v. Cohen Brothers Manufacturing Co., Inc., Respondent.
    Contract —• sale — Statute of Frauds — printed name in heading to order form not treated as signature where it plainly appears separate signature was required for acceptance — insufficiency of unsigned order form to satisfy Statute of Frauds —■ sufficiency of description of goods sold — memorandum expressing sense of agreement not condemned for failure to reproduce words.
    1. Assuming that a printed name in a heading to an order form will be treated as a signature if the setting of the occasion gives fair warrant for the inference that it was so intended or adopted, the imputation of such a meaning is not permissible where beneath the printed heading is the buyer’s order for the goods; beneath the order is a form wherein the seller accepts the order according to its terms and beneath this is the printed word “ accepted ” with a dotted line intended for the signature of the seller, the acceptor, but the name is not added. A memorandum so phrased leaves no basis for the inference, in the absence of other evidence of intention, that the printed heading was adopted as a recognition of the contract. It shows upon its face that the seller was unwilling to accredit the contract as its own without another signature, separate from the heading, to be placed as a token of validity in a space specially reserved, and this conclusion is reinforced where the name on the order blank was not that of the seller but of a partnership to which it had succeeded. Such a memorandum is, therefore, insufficient to satisfy the requirements of subdivision 1 of' section 85 of the Personal Property Law requiring that “ the contract ” or some note or memorandum “ thereof shall be signed by the party to be charged or his agent in that behalf.”
    (Argued May 16, 1927;
    decided May 31, 1927.)
    2. An objection, however, that the memorandum is inadequate in its description of the goods alleged to have been sold, which comes in varying widths and weights, because it does not state the widths and weights to be delivered, cannot be sustained where there is evidence that there are standard widths and weights which, by usage of the market, will be taken as intended when the writing is silent. The memorandum was for the use of merchants, and the meaning that the description would have conveyed to them, when they came to read what had been written in the light of the usage of their business, is the meaning to be ascribed to it when scrutinized by courts.
    3. An argument that the buyer in the talk leading up to the written memorandum had stated he wished to buy some more of the same quality of a cloth that had been supplied him before and that the memorandum is an incomplete statement of the true agreement in that it fails to identify the subject-matter of the new deliveries with that of the old, cannot be upheld where the goods previously supplied were of standard widths and weights. A memorandum expressing the sense of the preliminary agreement is not to be condemned as inadequate for a failure to reproduce the words, unless reproduction of the words was a condition of the bargain. (Berman Stores Co. v. Hirsh, 240 N. Y. 209, distinguished.)

      Mesibov, Glinert & Levy v. Cohen Brothers Mfg. Co., 218 App. Div. 142, affirmed.
    Appeal from a judgment, entered December 17, 1926, upon an order of the Appellate Division of the Supreme Court in the first judicial department, reversing a judgment in favor of plaintiff entered upon a verdict and directing a dismissal of the complaint.

      I. Maurice Wormser and I. Gainsburg for appellant.
    The memorandum which the Statute of Frauds requires, like any other memorandum, must be read in the light of reason. It is complete and sufficient for all purposes of trade between merchants. Its description of the merchandise as “ 2,000 lbs. raw trico cloth ” sufficiently identifies the merchandise, because there is ample proof of custom and usage upon the trial of this case which would supply the width and weight of the goods. (Doherty v. Hill, 144 Mass. 465; Gumbinsky Bros. Co. v. Smalley, 203 App. Div. 661; 235 N. Y. 619; Nicoll v. Pittsvein Coal Co:, 269 Fed. Rep. 968; Oswego Falls Pulp & Paper Co. v. Stecher Lithographic Co., 215 N. Y. 98; Burton v. Jennings, 185 Fed. Rep. 382; Shoyer v. Wright-Ginsberg Co., 240 N. Y. 223; De Veso v. Chandler, 210 App. Div. 684; Dana v. Fiedler, 12 N. Y. 40; Wright v. Weeks, 25 N. Y. 153; Flash v. Rossiter, 116 App. Div. 880; Marks v. Cowdin, 226 N. Y. 138.) The memorandum contained a sufficient signature. It thoroughly identified the seller. The evidence establishes beyond doubt that the defendant corporation, Cohen Bros. Manufacturing Company, adopted the name of the partnership of Cohen Brothers, its immediate predecessor and in which the same persons were interested, for all purposes of this transaction. (Cohen v. Wolgel, 107 Misc. Rep. 505; 191 App. Div. 883; Cohen v. Walker & Co., 192 N. Y. Supp. 228; Pearlberg v. Levisohn, 112 Misc. Rep. 95; Merritt v. Clason, 12 Johns. 102; James v. Patten, 6 N. Y. 9; Williston on Contracts, § 585.)

      Samuel Seabury, Nathan Friedman and George Trosk for respondent.
    Plaintiff claims that there was an express, independent, contemporaneous oral agreement governing the “ kind ” and “ quality ” of tricolette to be delivered to it under the writing upon which it sues. In these circumstances, ■ the omission of these descriptive terms could not be supplied by evidence of a custom which fixes them in cases where no agreement on the subject is made, because when there is an express agreement on a subject it must be embodied in the writing and extrinsic evidence thereof will not be received, even though the express agreement be to the same effect as the custom would have supplied if no agreement on the subject had been made. (Berman v. Hirsh, 240 N. Y. 209; Nicoll v. Pittsvein Coal Co., 269 Fed. Rep. 968.) The name of the defendant, “ Cohen Brothers Manufacturing Co., Inc.,”' does not appear on the memorandum upon which plaintiff sues. The only name which appears on it is the printed name “ Cohen Brothers ” at the top. Cohen Brothers was a partnership entirely independent of Cohen Brothers Manufacturing Co., Inc. Since the defendant’s name does not appear on the writing, it is insufficient, under the Statute of Frauds, to support an action against the defendant. (Berkley v. Third Avenue Ry. Co., 244 N. Y. 84; Galin Co. v. Newhouse, 110 Misc. Rep. 680.)
   Cardozo, Ch. J.

Plaintiff, wishing to purchase 2,000 pounds of tricolette, received from the defendant the following memorandum:

“ Acknowledged Date June 28, 1919
“ Cohen Brothers “ The Leading Sweater-House 16-18-20 West 32nd Street, New York
All contracts subject to strikes, accidents and other unavoidable causes
Sweaters, Fancy Knit Goods
Mills
Cleveland, Ohio Brooklyn, N. Y. Philadelphia, Pa.
All goods sold and shipped F. O. B. the Mills. Salesman
West New York, N. J.
Filled by Chg’d by
Date
Make for Mesibov, Glinert & Levy Ship to 104 W. 27th St.
No.: Style No.: Qúantity: Ck: Color:
When
Via N. Y. City 30 32 34 36 38 Terms Price 40 42 44 46 12 14 16 18 20 22 24 26 28 9.50
a lb
2000 lbs. Raw Trico Cloth Net
10 days
Delivery Sept and Oct.
No countermands accepted.
Notice.— We hereby agree to accept above order in detail as given and no changes can be made in same unless Cohen Bros, are notified within 10 days from date order is placed.
To facilitate matters this- order will be shipped As ready for express ’ unless otherwise specified on order. We do not prepay express charges and make no express charge allowance unless shipment of merchandise is routed contrary to written instructions on this order. No goods will be taken back, unless damaged. We ship no goods on consignment. Accepted.....................„

The memorandum was written on a printed order form. The name Cohen Bros, printed in the heading and in the body of the form is that of a partnership to whose business ' the defendant, Cohen Brothers Manufacturing Co., Inc., had recently succeeded. The plaintiff says that the memorandum was delivered by the defendant with intent to close a contract by the acceptance of an order. The defendant says that it was delivered without contractual intent, and as a memorandum of inquiries to be submitted to the mill. The question is whether the memorandum satisfies the requirements of the Statute of Frauds (Pers. Prop. Law, § 85; Consol. Laws,-ch. 41). Criticism is directed to two features of the writing. One is the signature. The other is the description. The two grounds of criticism will be considered in succession.

(1) “ The contract,” or “ some note or memorandum ” thereof, shall be “ signed by the party to be charged or his agent in that behalf ” (Pers. Prop. Law, § 85, subd. 1). There is no longer a requirement that the writing be “ subscribed ” (James v. Patten, 6 N. Y. 9). It may be signed at any place, at the top or in the body. A signature, however, there must be, and a name, written or printed, is not to be reckoned as a signature unless inserted or adopted with an intent, actual or apparent, to authenticate the writing (1 Williston, Sales, § 112; Anson, Contracts [Corbin’s ed.], p. 106; Benjamin on Sales [6th ed.], p. 308; Browne, Statute of Frauds, § 357). Whether such an intent is to be inferred will be at times a question of law and at others one of fact, according to the circumstances. Thus, a signature is adequate if the party to be charged writes the letters “ O.K.” in the margin or at the top and adds thereto his name either in full or by initials. A signature is adequate if a letter is written in the third person: “Mr. Stanley begs to inform [the plaintiffs] that he will take an early opportunity of settling their accounts ” (Lobb v. Stanley, 1844, 5 Q. B. [Ad. & Ellis N. S.] 574). The same result has been reached in other cases where intention was more dubious (Benjamin, supra, p. 306). The decisions are conflicting whether the name of a seller in the printed heading of a billhead or an order blank is a signing without more. Such a signing was held adequate in Cohen v. Wolgel (107 Misc. Rep. 505; 191 App. Div. 883); in Pearlberg v. Levisohn (112 Misc. Rep. 95), and in Drury v. Young (58 Md. 546), but inadequate in Lee v. Vaughan’s Seed Store (101 Ark. 68), and in Sutherland v. Munsey (119 Va. 791).

We assume for present purposes that a printed name in such a heading will be treated as a signature if the setting of the occasion gives fair warrant for the inference that it was so intended or adopted. The assumption does not carry us far toward the solution of our problem. The difficulty here is that the imputation of such a meaning to the parties now before us is overcome by tokens of intention too strong to be resisted. Beneath the printed heading is the buyer’s order for the goods. Beneath the order is a form wherein the seller accepts the order according to its terms. Beneath this is the printed word accepted ” with a dotted line intended for the signature of the seller, the acceptor. The name was never added.

A memorandum so phrased leaves no basis for the inference, in the absence at all events of other evidence of intention, that the printed heading was adopted as a recognition of the contract. The form shows upon its face that the seller was unwilling to accredit the contract as its own without another signature, separate from the heading, to be placed as a token of validity in a space specially reserved. Even in the English courts, where the rule, it seems, is laxer than with us (Williston, supra, § 112), a signature thus disowned would not satisfy the statute.. Thus, in Hubert v. Treherne (3 M. & G. 743) the names of the parties were written in the body of the document, but at the end were the words as witness our hands,” without other authentication. These words evidently shew that the names of the contracting parties were meant to be subscribed, and that it was not intended that the insertion of the names in the body of the instrument should operate by way of signature ” (per Tindal, C. J., at p. 754; cf. Hucklesby v. Hook, 82 L. T. 117, and cases there cited; Benjamin on Sales, supra). We may, indeed, infer from the delivery of the writing that the defendant intended to assume the obligation of a contract, whether the document was signed or unsigned. It might have intended as much if there had been no writing whatever. It may even have supposed that a writing was unnecessary. Something more must be found before the statutory requirements can be held to be obeyed. The defendant must have intended not merely to contract, but to sign. We see no mark of such a purpose.

.The conclusion thus reached is reinforced by other circumstances, if reinforcement be important. The name used in the order blank is not the defendant’s name at all. It is the name of a partnership to which the defendant has succeeded. We do not mean that this circumstance, standing alone, would be decisive. If the writing had been signed at the appropriate place, the inference might be permissible that the name had been adopted for the occasion as an informal or abbreviated description of the corporation, just as if the corporation had been designated by the use of its initials. The partnership was no longer in existence, and there is no pretense that the defendant’s officers wereo contracting in behalf of a firm that was extinct. Even so, the use of such a form puts a new strain upon the argument that the heading was adopted as equivalent to a signature. The inference must rather be that the blanks were made use of as a convenient scratch-pad, without thought that they contained a signature, .or that signature was necessary.

(2) We pass to a second objection to the note or memorandum. The one already considered is sufficient to sustain the judgment. The second, however, was chosen by the Appellate Division as the basis of its opinion, in misconception, we think, of the effect of our decisions. Our silence might tend to perpetuate the error.

The memorandum is said to be inadequate in its description of the goods that are to be the subject of the contract. Trico cloth, or more properly tricolette, comes in varying widths and weights. The memorandum does not state the widths and weights to be delivered. There might be force in this criticism if the omission were not supplied by the usage of the market. Evidence is in the record that there are standard widths and weights which will be taken to be those intended when the writing is silent as to the delivery of others. A witness for the defendant admits that this is true of widths, though he qualifies his earlier testimony by denying that it is true of weights. On the other hand, there are witnesses for the plaintiff who tell us that it is true of widths and weights alike. If this is so, the goods have been “ sufficiently described for reasonable identification ” (1 Williston, Sales, § 105-b, p. 198). The memorandum was for the use of merchants. The meaning that the description would have conveyed to them, when they came to read what had been written in the light of the usage of their business, is the meaning to be ascribed to it when scrutinized by courts (Gumbinsky Bros. Co. v. Smalley, 203 App. Div. 661; 235 N. Y. 619; Nicoll v. Pittsvein Coal Co., 269 Fed. Rep. 968). The statute does not abrogate the settled canons of construction that apply to contracts generally (Marks v. Cowdin, 226 N. Y. 138,144; Argus Co. v. Mayor, 55 N. Y. 495, 504; Williston, Sales, § 104, and cases there cited).

Stress is laid by the defendant upon a statement by the plaintiff’s agent in the talk that led up to the written memorandum. He said in entering the defendant’s office that he washed to buy some more of the same quality of tricolette that had been supplied to him before. The argument is made that the memorandum is an incomplete record of the true agreement between the parties in that it fails to identify the subject-matter of the new deliveries with the subject-matter of the old ones (1 Williston, Sales, § 104). We do not overlook the difference in this connection between a contract in writing, and a note or memorandum of a contract. The one is subject to the parol evidence rule; the other may be shown by parol to be inaccurate or incomplete (Williston, supra, § 100; Benjamin on Sales [6th ed.], pp. 264, 267, and cases there cited; Juilliard v. Trokie, 139 App. Div. 530, 533; 203 N. Y. 604; Mandel v. Guardian Holding Co., Inc., 200 App. Div. 767, 769, 770; 234 N. Y. 564). But the goods previously supplied were goods of standard widths and weights. The memorandum did not introduce a variance from the conditions of the order. It put in other words the same thought that would have been expressed if it had identified the new sales by reference to the old ones. A different question would be here if some particular form of expression had been bargained for in advance as an essential term of the agreement. Nothing in the situation justifies an inference that such a bargain was intended. What was said by the plaintiff’s agent was merely introductory and prehminary. Indeed, the defendant’s argument, if accepted, would lead to the conclusion that the memorandum would be inadequate though it had expressly enumerated the widths and weights to be delivered unless it joined to this a statement that widths and weights were to be identical with those supplied before. Neither reason nor authority constrains to such a ruling. A memorandum expressing the sense of the preliminary agreement is not to be condemned as inadequate for a failure to reproduce the words, unless reproduction of the words was a condition of the bargain. Nothing to the .contrary was held in Berman Stores Co. v. Hirsh (240 N. Y. 209). There the parties had agreed upon a determinate date for the delivery of goods. The memorandum was silent as to this branch of the agreement with the result that delivery might have been made within' the flexible and fluctuating limits of a reasonable time (cf. Williston, supra, § 104, p. 190). What was written was not fairly the equivalent of what was said. Here equivalence is made out by the usage of the business as soon as usage is established. Equivalence existing, the parties were not insistent that the expression should be in one form to the exclusion of another.

We conclude that the first objection to the writing must be upheld and the second overruled.

The judgment should be affirmed with costs.

Pound, Crane, Andrews, Lehman, Kellogg and O’Brien, JJ., concur.

Judgment affirmed, etc.


source: Caselaw Access Project

author: Cardozo, Ch. J.

license: Public Domain

text:
    Standard Rice Company, Inc., Appellant, v. A. Klipstein & Company, Respondent.
    (Argued May 17, 1927;
    decided May 31, 1927.)
    Contract — sale — rescission —• waiver of requirement in contract of sale f. a. s. for clean dock receipt by change of place of delivery to warehouse — vendor under no duty to furnish clean warehouse receipt instead — sufficiency of evidence that goods delivered measured up to designated weights.
    1. A provision in a contract for the purchase and sale of goods for export, to be delivered alongside a vessel, that vendor should furnish a clean dock receipt, which, in the usual course of business, would have been exchanged for a bill of lading upon the departure of the vessel, was waived where, at the purchaser’s request and for its own convenience solely, delivery at a warehouse was substituted for delivery at the side of a vessel. The vendor was under no duty to furnish a clean warehouse receipt on the theory that having been prevented by the vendee from furnishing the dock receipt it was obliged to furnish something as near like one as it could, and the failure to furnish such a receipt furnishes no basis for refusal to accept the goods.
    2. Nor was rescission justified by the fact that bags delivered were not shown to measure up to the designated weight, where minor discrepancies were to be adjusted by abatement from the price, and the installment delivered is shown to have approached with substantial accuracy the weights called for by the contract.

      Standard Rice Co. v. Klipstein & Co., 217 App. Div. 733, reversed.
    Appeal, by permission, from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered July 13, 1928, unanimously affirming a judgment in favor of defendant entered upon a dismissal of the complaint by the court at a Trial Term.

      Eli J. Blair for appellant.
    Title to the 1,000 bags delivered on the defendant’s shipping instructions had passed, so that an action for goods sold and delivered lies as to this cause of action. (Glass & Co. v. Misroch, 239 N. Y. 475; Berkshire Cotton Mfg. Co. v. Cohen, 236 N. Y. 364; Taylor v. Kurzrok, 214 App. Div. 308; Gumbinsky Bros. Co. v. Smalley, 203 App. Div. 661; 235 N. Y. 619; McCarthy v. Krebs Pigment & Chemical Co., 204 App. Div. 501; Wallace v. Blake, 128 N. Y. 676; Weed v. Spears, 193 N. Y. 289; Sorrentino v. Langlois, 144 App. Div. 271; Abt-Bernot, Inc., v. Holland-American Line, 211 N. Y. Supp. 736; Dean Co., Inc., v. Nippon Yusen Kaisha, 211 N. Y. Supp. 737; Smith v. Goldsborough, 179 App. Div. 769; Drucklieb v. Universal Tobacco Co., 106 App. Div. 470; Fanger v. Caspary, 87 App. Div. 417.) Plaintiff sufficiently proved the weights of the goods delivered. (Lowinson v. Newman, 201 App. Div. 266; Lamborn v. Blattner, 6 Fed. Rep. [2d] 435.)

      David Burr Lucky and John J. Schwartz for respondent.
    No title to the. 1,000 bags of rice flour passed to defendant, and action for price does not lie." (Coatsworth v. Lehigh Valley R. R. Co., 156 N. Y. 451; Oswego P. & P. Co. v. Stecher Lithographic Co., 146 App. Div. 241; Hargrave Mills v. Gordon, 137 App. Div. 695; 203 N. Y. 568; Alsens American Portland Cement Co. v. Degnan Contg. Co., 222 N. Y. 34; Littlejohn v. Shaw, 158 N. Y. 188; Hill v. Blake, 97 N. Y. 216; Maes & Co. v. Grace & Co., 239 N. Y. 519; Glass & Co. v. Misroch, 239 N. Y. 479; Dunham v. Townshend, 118 N. Y. 281; People v. Flack, 216 N. Y. 123; Matter of City of New York [Newport Ave.], 218 N. Y. 274.) Plaintiff breached the contract by its failure to procure and deliver a clean warehouse receipt for the 1,000 bags of rice flour; and it also breached the contract by its failure to have the actual gross weight of the 1,000 bags of rice flour taken and failure to deliver the evidence of actual gross weight; and defendant was justified in rescinding the contract. (Norrington v. Wright, 115 U. S. 188; Trainor Co. v. Amsinck & Co., 236 N. Y. 392; Wright v. Bank of Metropolis, 110 N. Y. 237; Electric Fireproofing Co. v. Smith, 113 App. Div. 615; Ferguson v. Chuck, 236 N. Y. 149;
      Helgar v. Warner’s Features, Inc., 222 N. Y. 449.) Plaintiff wholly failed to prove the actual gross weight of the 1,000 bags of rice flour, which weight was put in issue by the answer, and the price could not be computed, (Stern v. Gage Bros. & Co., 196 App. Div. 339; Klein v. Smith, 195 App. Div. 870.)
   Cardozo, Ch. J.

The action is by vendor against vendee for the price of goods delivered as an installment under a contract, and for damages for the repudiation of the contract as to deliveries to be made thereafter.

On July 19, 1920, plaintiff agreed to sell and defendant to buy 200 tons of rice flour, to be packed in 140 lb. export bags, f. a. s. (free alongside a vessel) in the port of New York, the price to be $6.08 per hundred pounds actual gross weight, less one pound per bag tare; a clean dock receipt to be furnished by the seller; 1,000 bags to be delivered at once, the balance by August 15, 1920.

Plaintiff was instructed by the defendant on July 20, 1920, to place the 1,000 bags alongside the steamship Anglo-Chilian, bound for Rotterdam, and then loading at Brooklyn. In accordance with these instructions, the bags were placed aboard a lighter, and carried to the ship. On arrival they were not discharged, but were kept on the lighter for five days. The delay was due to a controversy between the defendant and its foreign customer, who finally refused to buy. The bags had been intended for export, but upon the failure of the foreign contract they were reserved for the home market. The plaintiff was notified by the defendant on July 27, 1920, to transfer them to the warehouse of the Bush Terminal Company, and store them in the defendant's name. This the plaintiff did. In the meantime, the market price was steadily declining. The defendant tried to minimize its loss by a contract for the resale of a portion of the bags. Failing in this, it had recourse to new expedients. It gave notice to the plaintiff that it rejected the 1,000 bags and canceled “ the balance of the contract ” on the ground that the shipment was not according to contract.

Performance is said to have been defective in that the plaintiff failed to furnish the defendant with a clean warehouse receipt, i. e., a warehouse receipt certifying that the bags on storage at the terminal were without holes or other blemish. No duty to furnish such a receipt was laid upon the plaintiff by the terms of its engagement. The contract did provide that it should furnish a clean dock receipt, which, in the usual course of business, would have been exchanged for a bill of lading upon the departure of the vessel. The defendant concedes that c such a receipt became impracticable when export was abandoned. The condition was thereby waived. At the defendant’s request and for its own convenience solely, delivery at a warehouse was substituted for delivery at the side of a vessel in the harbor. We are now asked to hold that upon this change in the manner of performance, the plaintiff, though prevented by the defendant from furnishing a clean dock receipt, was under a duty to furnish something as nearly like one as it could. We think the condition as to a clean receipt did not survive cy pres, but had been extinguished altogether. The plaintiff was still bound to tender bags of rice in a deliverable state, i. e., in accordance with its contract (Glass & Co. v. Misroch, 239 N. Y. 475, 483). It was no longer bound to supply a certificate by some one else that it had lived up to its engagement. The bags were on land where the defendant could inspect them at its convenience. There had ceased to be that need for a certificate that may be thought to be present where merchandise is in transit, about to be transferred from a lighter to a steamship and carried far away. At all events, the requirement had been ended, whatever its utility. True, indeed, it is that the plaintiff gave notice thereafter to the defendant that it had placed the flour in the terminal, and would send “their receipt” later with a bill for towing and demurrage. In the usual course of business some receipt might be expected. The plaintiff promised to transmit it when received. It did not undertake to be bound by the recitals and notations. Indeed, the undertaking, if given, would have been a mere voluntary promise.

Performance is said to have been defective in this also, that the bags are not shown to have measured up to the designated weights. The plaintiff gave evidence as to weights, though less precise than might be wished for. There was testimony that the flour was packed in bags of the standard size for 140 pounds. There was testimony that the bags when delivered gave no sign of sifting or other loss of contents. There was testimony by a weigh-master at the mill that he had checked the work of the weighers under him by testing sample bags, and testimony by a weigher who had tested twenty-five bags and found the measure true. This evidence was hardly adequate to fix the precise amount due for the 1,000 bags delivered, except indeed the number tested. The bags were to be paid for at a stated rate per pound for actual weights, less the stipulated tare. Until actual weights were proved, the price could not be known. On the other hand, the evidence was adequate to prove that there was no such defect of weights as to justify the cancellation of the contract. Discrepancies minor in extent, not so many or great as to defeat the substantial purpose of the parties, were to be adjusted by abatement from the price. This is clear from the provision of the contract whereby the price is fixed at so much per pound as actual weights shall be determined. On another trial the plaintiff may be able to prove the weights more accurately by weighers at the warehouse, or in default of this may show by those familiar with the business the range of possible variation for bags which have the aspect of being full upon visual inspection. Even without this, however, a case of prima facie validity has been made out for the recovery of damages in respect of subsequent installments. The installment delivered is shown to have approached with sufficient accuracy the weights called for by the contract to put the defendant in the wrong in giving notice of rescission.

The judgment of the Appellate Division and that of the Trial Term should be reversed and a new trial granted, with costs to abide the event.

Pound, Crane, Andrews, Lehman, Kellogg and O’Brien, JJ., concur.

Judgment accordingly.


author: Pound, J.

text:
    Anne M. Campbell, Appellant, v. New York Evening Post, Inc., Respondent.
    Libel — evidence — statutory construction — privilege — statute providing defendant in action for libel may prove other recoveries by plaintiff, not retrospective — commencement of action by filing pleading a judicial proceeding and publication of fair report of contents of complaint privileged — whether publication is a full and fair report of proceedings or malicious and libelous questions for jury.
    1. Section 338-a of the Civil Practice Act, providing that in a civil action for libel defendant may prove that plaintiff has already had recoveries for the same libel against other newspapers, applies only to causes of action accruing subsequent to September 1, 1924. Such evidence was properly excluded, therefore, in. an action to recover for an alleged libel published in March, 1922.
    2. A plea of privilege under section 337 of the Civil Practice Act, providing that no civil or criminal action for libel may be maintained against the publisher of a newspaper for the publication “of a fair and true report of any judicial * * * proceedings ’’ without proof of malice, is properly upheld, in an action for libel alleged to consist in the publication in defendants’ newspaper of an article stating that an action had been commenced against plaintiff herein for fraud; and this, notwithstanding the case had not been brought before a court or judge. The filing of a pieading is a public and official act in the course of judicial proceedings and the publication of a fair and true report thereof is privileged.

      (Argued May 17, 1927;
    decided May 31, 1927.)
    3. If it, cannot, as matter of law be said that the publication complained of is a full and fair report of the proceedings to date or that the headlines of the article, which designate it as a swindle charge, read in connection therewith are not libelous, or that actual malice is not shown, the complaint should not be dismissed.

      Campbell v. New York Evening Post, 219 App. Div. 169, reversed.
    Appeal from a judgment, entered December 14, 1926, upon an order of the Appellate Division of the Supreme Court in the first judicial department, reversing a judgment in favor of plaintiff entered upon a verdict and directing a dismissal of the complaint.

      W. Davis Conrad for appellant.
    The court below erred in holding that the trial court should have admitted evidence of other recoveries alleged to have been secured by the plaintiff for the same libel. (Sackheim v. Pigueron, 215 N. Y. 652; Sanford v. Bennett, 24 N. Y. 20; Quinlan v. Welch, 141 N. Y. 158; Reinhardt v. Fritsche, 69 Hun, 565; People v. O’Brien, 111 N. Y. 60.) The court erred in holding that the mere service and filing of a summons and complaint and answer constitute a “judicial, legislative, or other public and official proceeding ” within the meaning of section 337 of the Civil Practice Act. (Cowley v. Pulsifer, 37 Mass. 392; Newfield v. Copperman, 47 How. Pr. 87; Williams v. New York Herald Co., 150 N. Y. Supp. 838; Stuart v. Press Pub. Co., 22 N. Y. Supp. 401.)

      David Paine for respondent.
    Evidence of other judgments obtained, or agreements for compensation in respect to libels of similar purport, was properly admissible, and its exclusion was error. (Matter of Davis, 149 N. Y. 539; Southwick v. Southwick, 49 N. Y. 510; Lazarus v. M. E. R. Co., 145 N. Y. 581; Peace v. Wilson, 186 N. Y. 403;
      Matter of Palmer, 40 N. Y. 561; Curtis v. Leavitt, 15 N. Y. 9; Southern Life Ins. Co. v. Packer, 17 N. Y. 51; Defendorf v. Defendorf, 42 App. Div. 166; Matter of Potter, 106 Misc. Rep. 113; Sackheim v. Pigueron, 215 N. Y. 62.) The Appellate Division correctly held that the article was qualifiedly privileged under section 337 of the Civil Practice Act. (Newfield v. Copperman, 47 How. Pr. 87; Williams v. New York Herald Co., 165 App. Div. 529; Colonial City Co. v. Kingston R. R. Co., 154 N. Y. 493; Cohens v. Virginia, 6 Wheat. 264; Perkins v. Mitchell, 31 Barb. 461; Stuart v. Press Pub. Co., 83 App. Div. 467; Ashcoft v. Hammond, 197 N. Y. 488; Bingham v. Gaynor, 141 App. Div. 301; 203 N. Y. 27; Hoey v. N. Y. Times, 138 App. Div. 149; Sherman v. International Publications, Inc., 214 App. Div. 437.)
   Pound, J.

The alleged libel consists in the publication of and concerning the plaintiff by the defendant of an article which, under headlines:

Healer and Inventor Face Swindle Charge.
Mrs. Elizabeth Nichols Says They Took $16,000 from Her Through Fraud,”

stated of plaintiff, widely known as a Christian Science practitioner, that she was named as a codefendant with one Canton, a prominent inventor of remarkable devices, in a suit filed in the Supreme Court by attorneys for Mrs. Elizabeth S. Nichols, a wealthy widow, to recover $9,000, alleged to have been invested by her in a company promoted by defendants, and a loan of $7,000, alleged to have been made by her to them, the investment and loan having been made by reason of a great and controlling mental influence which the plaintiff in this case obtained over her. The complaint herein alleges that these allegations of fraudulent practices on her part were false and defamatory and that plaintiff was damaged by the publication thereof by defendant.

The answer sets up the bringing of the action against plaintiff and Canton by Mrs. Nichols and the filing of a complaint therein in the office of the clerk of New York county containing the allegations set forth in the article and pleads as matter of defense that such article was a fair and true report of a judicial proceeding or other public and official proceeding published without malice and, therefore, privileged. Plaintiff had filed an answer to the fraud action. She had also when interviewed denied all the material allegations of the complaint as appeared in the article in the New York Times from which the article in suit was rewritten.

On the trial the trial justice excluded evidence that the plaintiff had already had recoveries for the same libel against other newspapers. The article was published in defendant’s newspaper on March 30, 1922. On September 1, 1924, section 338-a of the Civil Practice Act took effect. It reads as follows:

§ 338-a. Evidence in action for libel. At the trial of any civil action for libel, the defendant may prove, for consideration by the jury in fixing the amount of the verdict, that the plaintiff has already recovered damages, or has received, or agreed to receive, compensation in respect of a libel or libels of a similar purport or effect as the libel for which such action has been brought.”

The Appellate Division held that this was error. The question is whether the provision operated retrospectively so as to affect causes of action which had accrued before it went into effect.

In Isola v. Weber (147 N. Y. 329) it was held that the provision in the Constitution of 1894 which removed the $5,000 hmitation on the recovery in actions for injuries resulting in death was not to be construed retroactively. The court adopted the reasoning of Follett, J., in the case of O’Reilly v. Utah, etc., Co. (87 Hun, 406). The rule as stated by Follett, J., may be summarized as follows: A statute which imposes a greater liability on defendants and confers an additional benefit on plaintiffs in actions to recover damages for wrongs is not construed to have a retroactive effect in the absence of circumstances of its adoption establishing a contrary intent. The converse of the proposition is equally sound. (Sanford v. Bennett, 24 N. Y. 20.) In Sackheim v. Pigueron (215 N. Y. 62) the question was as to the effect of section 841-b of the Code of Civil Procedure, which provided: “ On the trial of any action to recover damages for causing death the contributory negligence of the person killed shall be a defense, to be pleaded and proven by the defendant.” Without citation of the Isold Case (supra) the court held that this statute should be construed retrospectively, because “ it did not affect the liability of the defendant for the injury caused by the death of the deceased, but was merely a rule as to the burden of proof to be applied upon the trial of the action.” The distinction is clear between a change of procedure which may add to the burdens of the party on the trial but leaves the rule of liability unchanged and a change in the rules of evidence which permits proof, theretofore inadmissible, in mitigation of damages and thereby tends to lessen the amount recoverable by the plaintiff. If the Legislature had designed to minimize the wrong done to a plaintiff by a, libelous publication in the past, it is reasonable to assume that it would have used apt words for that purpose. As nothing reveals such intention the amendment would, by the application of established rules of statutory construction, apply only to causes of action accruing subsequent to September 1, 1924.

The Appellate Division went further. It sustained, defendant’s plea of privilege in full under Civil Practice Act, section 337, and dismissed the complaint. The section reads as follows:

§ 337. Proof of malice in action for libel. An action, civil or criminal, cannot be maintained against a reporter, editor, publisher, or proprietor of a newspaper, for the publication therein of a fair and true report of any judicial, legislative or other public and official proceedings, without proving actual malice in making the report.
“ This section does not apply to a libel contained in the heading of the report; or in any other matter added by any person concerned in the publication; or in the report of any thing .said or done at the time and place of the public and official proceedings which was not a part thereof.”

Judicial proceedings have been repeatedly defined as proceedings before a court or judge. Numerous cases in England and in the States hold that the rule of privilege does not apply to pleadings which, though filed, have not yet received j udicial notice. (Stuart v. Press Pub. Co., 83 App. Div. 467; Williams v. New York Herald Co., 165 App. Div. 529; Lundin v. Post Pub. Co., 217 Mass. 213; Burdick’s Law of Torts [4th ed.], p. 391; Newell’s Slander & Libel [4th ed.], p. 412; 27 Columbia Law Review, p. 225, and cases cited.) The English Law of Libel Amendment Act, 1888, extends the privilege only to reports of proceedings publicly heard before any court exercising judicial authority.” It was seriously contended by Coolidge, Ch. J., that there should be a final decision before the publication of a report of the proceedings would be privileged, but in Kimber v. Press Association (1893) (1 Q. B. D. 65) the court came to the conclusion that the privilege existed if in the end there must be a final decision.

The English law plainly excludes from consideration pleadings filed but not acted on in open court. With us the question is whether they may be brought under the head of judicial, public or official proceedings. The privilege has been gradually extended to all matters which have been made the subject of judicial proceedings in any court of record or not of record and whether such proceedings may be preliminary or interlocutory or even ex parte. (Odgers on Libel & Slander [5th ed.], p. 308; Lundin v. Post Pub. Co., supra.) Arguments which met with no favor seventy or eighty years ago have prevailed with the courts in recent years. ( Usill v. Hales, 3 C. P. Div. 319.) The test which remains is said to be whether the pleading has come beijore a court or judge and been made the subject of judicial action. If it has not received the formal oversight of a court or judge as a basis for action, no matter how public or how effective in character as a part of a law suit it may be, it is urged that the privilege does not exist. The rule has not escaped criticism (Mich. Law Rev. Mar. 1926) and it has been ignored in Pennsylvania. (Mengel v. Reading Eagle Co., 241 Penn. St. 367.)

The incongruous result follows that a newspaper may freely, if .without actual malice, publish the contents of a complaint if it has been read and filed on an ex parte application for an injunction, an order of arrest, an attachment or an order of, publication, yet if the complaint has merely been filed as a public document in a public office, the newspaper which publishes its contents runs the risk of repeating a libel. Such incongruities are the inevitable result of the endeavor of the courts to mitigate by piecemeal the harshness of the old rules which protected only reports of trials in open court.

In New York writ process no longer exists. An action is begun by the service of a summons with or without a complaint. The summons is the mandate of the court (Civ. Prac. Act, § 218) and is subscribed, except when the party appears in person, by an attorney who is an officer of the court. The pleadings in an action in the Supreme Court may be filed in the office of the county clerk, who is the clerk of the court (Civ. Prac. Act, § 100), and when so filed they become public documents. A law suit from beginning to end is in the nature of a judicial proceeding. Civil Practice Act (§4) provides:

“ § 4. Action ’ defined. Actions are of two kinds, civil and criminal. The word action,’ when applied to judicial proceedings, signifies an ordinary prosecution in a court of justice by a party against another party for the enforcement or protection of a right, the redress or prevention of a wrong or the punishment of a public offense.”

To publish truly and without malice of one that an action has been brought against him for fraud, seduction, assault, breach of promise, divorce, et cetera, has become so common that the opportunity is seldom passed in silence except when forbearance or obscurity protects the victim. So general has this practice become that the public has learned that accusation is not proof and that such actions are at times brought in malice to result in failure. To say that the newspapers may freely publish the entire proceedings in a case from an ex parte application for an order of arrest or other remedial process under the protection of privilege, but may speak only at their own risk before the case actually comes before a court or judge in some form, is to make a distinction to which publishers give little heed.

Mr. Justice Holmes in Cowley v. Pulsifer (137 Mass. 392), after putting aside various rhetorical and politic reasons for the rule, says that it rests on “ the plain distinction between what takes place in open court, and that which is done out of court by one party alone.” But with us the act of one party institutes the action. The service of the summons begins the suit. A newspaper may publish of A that B has begun an action against him by the service of a summons. No reticence is demanded on that score. It may go further and state that the complaint has been filed in the county clerk’s office. To stop there and hold that the newspaper states the contents of the complaint at its peril is to revive a rule of privacy in relation to litigation that no longer has substance. To say that privilege protects the publication of the complaint when the summons is served by order of the court on a non-resident and does not protect the publication when the defendant is a resident is to state a distinction that has no basis in common sense. We are not bound to keep up such frivolous legal fictions. Judicial proceedings in New York include in common parlance all the proceedings in the action. We may as well disregard the overwhelming weight of authority elsewhere and start with a rule of our own, consistent with practical experience.

Questions of public policy should be considered. In this case it appears that the action against plaintiff was discontinued; that Mrs. Nichols thus got her alleged false and scurrilous charges before the public as news and then dropped her case. It is contended that such acts should not be deemed privileged so as to protect the publisher. The contention is too far reaching. Scandalous matter may come before the public in connection with law suits. Personal malice may thus be given a hearing. A complaint withdrawn may not be the vindication that a decision favorable to the accused would be. But complaints are withdrawn after applications have been made to the courts and suits have been dropped before verdicts. Consistency requires us to go forward or to go back. We cannot go back and exclude the publication of daily reports of trials before a final decision is reached. The present distinction is indefensible. Therefore, we proceed to a logical conclusion and uphold the claim of privilege on the ground that the filing of a pleading is a public and official act in the course of judicial proceedings.

The complaint should not have been dismissed. As matter of law it cannot be said that the publication complained of is a full and fair report of the proceedings to date or that the headlines of the article read in connection therewith are not libelous, or that actual malice may not be proved. Swindling has a criminal connotation. (Penal Law, § 1290.) Headlines are not privileged unless they are a fair index of the matter contained in a truthful report. (Lawyers Co-op. Pub. Co. v. West Pub. Co., 32 App. Div. 585, 590.) It is for the jury to say whether the publication fairly implies that defendant in the fraud action had been sued civilly and that she denied all the charges against her. (Rovira v. Boget, 240 N. Y. 314.) The privilege thus extended must be kept strictly within proper bounds (Sanford v. Bennett, supra), and not extended beyond the limits of the statute.

The judgments should be reversed and a new trial granted, with costs to abide the event.

Cardozo, Ch. J., Crane, Lehman, Kellogg and O’Brien, JJ., concur with Pound, J.; Andrews, J., concurs in result.

Judgment accordingly.


author: Crane, J.

text:
    Santi Amoroso, Respondent, v. The Sea Insurance Company, Ltd., Appellant.
    (Argued May 18, 1927;
    decided May 31, 1927.)
    Insurance (marine) — contract — warranty — damage to cargo from delay of vessel through arrest by civil authorities — no recovery where policy contains provision by assured warranting vessel free from arrest.
    Damage to the cargo of a vessel from delay in transportation by reason of detainment of the vessel by civil authorities after its collision with another cannot be recovered under a policy of marine insurance providing that the company shall be “ liable for decay, must or mold, etc., which may reasonably be supposed to have occurred in consequence of the * * * collision of the vessel or through delay resulting therefrom,” where it contains an additional clause whereby the assured warranted the ship free from “ arrest, restraint or detainment and the consequences thereof * * * by civil authority.”

      Amoroso v. Kca Insurance Co., 218 App. Div. 831, reversed.
    Appeal from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered December 29, 1928, affirming a judgment in favor of plaintiff entered upon a verdict.

      Theodore L. Bailey, William D. Stiger and Loring R. Lecraw for appellant.
    The damage to the lemons, if occasioned by the libel and arrest at Gibraltar, was by a cause expressly excepted in the policy. (Bradlie v. Maryland Insurance Co., 12 Pet. 378; The Coventina, 52 Fed. Rep. 156; 1 Arnould on Marine Insurance [9th ed.], §§ 843, 905; Powell v. Hyde, 5 E. & B. 607; Kleinwort v. Shepard, 1 E. & E. 447; Cory v. Burr, 9 Q. B. D. 463; Robinson Gold Mining Co. v. Alliance Ins. Co., [1904] App. Cas. 359; [1902] 2 K. B. 489; Miller v. Law Accident Ins. Co., [1903] 1 K. B. D. 712; [1902] 2 K. B. 694; Swinnerton v. Columbia Ins Co., 37 N. Y. 174; Ins. Co. v. Transportation Co., 12 Wall. [U. S.] 194; Boland’s, Ltd., v. London & Lancashire Fire, etc., Co., [1924] App. Cas. 836; Aktiebolaget, etc., Bank v. American Merchant Marine Ins. Co., 241 N. Y. 197.) If it be assumed, for- purposes of argument only, that the damage here was due to delay caused by seizure or arrest and resulting from the collision, nevertheless the marginal warranty clause, “ free from seizure, arrest, restraint or detainment and the consequences thereof or of any attempt thereat * * * by civil authority or by any person or persons whatsoever * * * ” is effective to exempt the defendant here from liability. (Stoomvaart Maatschappij Sophie H. v. Merchants’ Marine Insurance Company, Ltd., 89 L. J. K. B. 834; 122 L. T. 295, Aktiebologet, etc., Bank v. American Merchant Marine Ins. Co., 241 N. Y. 197; Shamrock Towing Co. v. American Ins. Co., 9 Fed. Rep. [2d] 57.) The damage, if occasioned as claimed by plaintiff, is not the proximate result of collision. (The Xantho, L. R. [12 App. Cas.] 503; Bird v. St. Paul F. & M. Ins. Co., 241 N. Y. 47; Queens Ins. Co. v. Globe & Rutgers Ins. Co., 263 U. S. 486; Leyland Steamship Co. v. Norwich Union Fire Ins. Society, Ltd., [1918] App. Cas. 350; Ins. Co. v. Transportation Co., 12 Wall. 194; St. John v. American Mutual Fire & Marine Ins. Co., 11 N. Y. 516; McAlister & Co., Inc., v. Western

      Assurance Co., 218 App. Div. 564; Brandyce & Co. v. U. S. Lloyds, Inc., 207 App. Div. 665; 239 N. Y. 573.)

      Eugene E. Kelly for respondent.
    The policy covers the loss. The collision at Gibraltar was the proximate cause of the ship being libeled and held; and such delay caused the decay and resulting loss. (Brandyce v. United States Lloyds, Inc., 207 App. Div. 665; Pink v. Fleming, L. R. 25 Q. B. Div. 396; Brown v. St. Nicholas Ins. Co., 61 N. Y. 332; Muller v. Globe, etc., Fire Ins. Co., 246 Fed. Rep. 759; 159 C. C. A. 61; Benedict on Admiralty [5th ed.], §§ 135, 226; Carrol Towing Co., Inc., v. Ætna Ins. Co., 203 App. Div. 430; Newtown Creek Towing Co. v. Ætna Ins. Co., 163 N. Y. 114; Lehigh & Wilkes-Barre Coal Co. v. Globe & Rutgers Fire Ins. Co., [1925] 2 Fed. Rep. 736; London Assurance v. Companhia De-Moagens DoBarrerio, 167 U. S. 149; Fiske v. Spring, 25 Hun, 367.) The printed “ warranty ” or exception clause, relied on by defendant, does not bar a recovery, because it does not include proceedings of a civil nature to enforce private rights. (38 Corpus Juris, 1064, 1104.)
   Crane, J.

In the month of December, 1922, the firm of Puccio & Sternheim shipped from Palermo, Italy, 2,040 boxes of lemons via the steamship Lancastrian, to the port of New York. On or about February 8, 1923, the bill of lading for said boxes of lemons was purchased by the plaintiff through bankers in New York city, and he thereupon procured from the Sea Insurance Company, Ltd., the defendant in this action, the policy of insurance upon which he has brought this action. At the time of the insurance the vessel and. its cargo were on the way to New York. The chronological order of the events from the time the lemons were delivered to the .steamship company until the vessel arrived at New York city is as follows: On December 22, 1922, the lemons were delivered to the steamship company at Palermo, for shipment on the Lancastrian. On. January 17, 1923, the Lancastrian sailed from Palermo, putting into Gibraltar three days later, January 20, for provisions and coal. On January 24 a sudden squall sprang up, and the Lancastrian drifted alongside the oil hulk Dragon. Either the ship dragged her anchor, or else the anchor broke. The Lancastrian waited until the wind died down, then steamed to another anchorage. Other than the tearing of the jigger mast shrouds, no damage was done to the Lancastrian. The Dragon, however, appears to have been damaged, for the next day, January 25, the Lancastrian was libeled for 5,000 pounds, later reduced to 2,000 pounds! A bailiff was put aboard the Lancastrian by the marshal of the Supreme Court of Gibraltar. On February 8 the insurance policy was taken out, as above stated. The vessel was released from arrest on February 16, but did not sail till the following week, February 23, arriving at New York March the 13th.

The average length of time for a fruit freighter to make the voyage from Palermo to New York is twenty days. The Lancastrian took about fifty-five days, without considering that the lemons were delivered to the steamship company on December 26. Fifty-five days make about eight weeks, and the average life of a lemon is from nine to ten weeks. The lemons on arrival in New York were found to be damaged by reason of delay in transportation, and it is for this damage that the plaintiff has brought this action on the insurance policy. The defendant has resisted payment upon the ground that the cause of the damage is not one of the risks insured against; that the cause of the delay does not come within the terms of, but within the exceptions of the policy.

The delay, says the plaintiff, which caused the damage to the lemons was due to the collision of the Lancastrian with the Dragon, whereas the defendant insists that the libel or arrest of the vessel was the cause, or a cause excepted from the policy. Although the defendant takes the position that the arrest was not the cause of the delay, yet it claims that, if the plaintiff is right and the arrest did cause the delay, then this arrest by civil authorities is one of the things specifically excepted from the risks insured against.

The policy being a marine insurance policy, is in the usual form with a rider covering special and additional risks. The Sea Insurance Company, Ltd., of Liverpool, makes insurance, lost or not lost, on merchandise shipped by the assured “ touching the adventures and perils * * * of the ¡seas, men-of-war, fires, enemies, pirates, rovers, assailing thieves, jettisons, letters of mart and countermart, reprisals, takings at sea, arrests, restraints' and detainments of all kings, princes or people, of what nation, condition or quality soever, barratry of the Master and Mariners, and all other perils, losses and misfortunes, that have or shall come to the hurt, detriment or damage of the said goods and merchandises, or any part thereof.” The rider attached to the policy also contains these words: “ This company shall also be liable for decay, must or mold, etc., which may reasonably be supposed to have occurred in consequence of the stranding, sinking, burning or collision of the vessel or through delay resulting therefrom.” Arrest or detainment by civil authority apparently is not within the risks touched by the policy.

The policy contains a number of exceptions or warranties upon the part of the assured. One of them reads as follows: “Warranted free of capture, seizure, arrest, restraint, or detainment, and the consequences thereof or of any attempt thereat and whether as an act of war or by civil authority or by any person or persons whatsoever, lawless or otherwise, piracy excepted.”

Having the incidents of the voyage of the Lancastrian and the terms of this policy of insurance, let us put the two together and see whether the defendant insured the plaintiff against the delay which caused the damage to his lemons.

The Lancastrian drifted into or bumped the oil hulk, Dragon. Neither the Lancastrian nor its cargo was damaged so as to cause any delay. The vessel could have proceeded on its way to New York at once, so far as the evidence in this case shows. No delay was caused by the collision, if we interpret the words of the rider according to the ejusdem generis rule. The rider says: liable for decay * * * supposed to have occurred iri consequence of the stranding, sinking, burning or collision of the vessel or through delay resulting therefrom; ” that is, delay resulting from stranding, sinking, burning or collision of the vessel, which to my mind indicates that the collision must have damaged the vessel so as to cause delay. Nothing happened to the vessel which prevented it from proceeding on its voyage; it was in as fit condition before as after collision. No such results as are caused by sinking, stranding, burning or collision stopped the vessel in its course. By reason of the damage to the Dragon, the vessel was arrested. Of course, the arrest was due to the collision, but the delay, to my mind, was caused by the arrest, and not by a collision, within the meaning of the rider. The arrese was a distinct intervening cause but for which the vesstl would not have been delayed one day. In Queen Ins. Co. v. Globe & Rutgers Fire Ins. Co. (263 U. S. 487) it was said in speaking of a policy of insurance on a cargo against war risks: On the other hand the common understanding is that in construing these policies we are not to take broad views but generally are to stop our inquiries with the cause nearest to the loss. This is a settled rule of construction, and, if it is understood, does not deserve much criticism, since theoretically at least the parties can shape their contract as they like.” (Bird v. St. Paul F. & M. Ins. Co., 224 N. Y. 47; Insurance Company v. Transportation Company, 12 Wall. [U. S.] 194.)

But whether this be so or not, we are all agreed that the delay from the arrest which the plaintiff says caused the damage to the lemons was specifically excepted from the policy. If it were not for this exception, it might be that the policy and the rider were broad enough to cover a delay caused by an arrest arising out of a collision even though the vessel and the cargo were in no way damaged. The exception, however, narrows this liability. The assurer warrants that the ship will be free from arrest, restraint or detainment and the consequences thereof by civil authority. Here was an arrest by a civil authority for a period of about three weeks which the plaintiff claims caused the lemons to mold and spoil. The cause of the damage is within the exception or warranty free clause, and not within the covering provisions. (Swinnerton v. Columbian Insurance Co., 37 N. Y. 174; Aktiebolaget M. Bank v. A. M. M. Ins. Co., 241 N. Y. 197; Insurance Co. v. Transportation Co., 12 Wall. [U. S.] 194; London & Lancashire Fire, etc., Co. v. Bolands, Ltd., L. R. [1924] App. Cas. 836; Powell v. Hyde, 5 E. & B. 607; Cory v. Burr, 9 Q. B. D. 463; affirmed, House of Lords, L. R. [1882] 8 App. Cas. 393; Robinson Gold Mining Co. v. Alliance Ins. Co., L. R. [1904] App. Cas. 359.)

There is also a serious question arising on the evidence whether the plaintiff proved that the delay as a fact was caused by the arrest. The ship was short of coal and provisions. Arrangements had to be made to get the money to pay for both. The coaling went on at intervals up to the time of sailk g, February 23, 1923. The' ship did not sail for a week after being released from arrest because the requisite amount of coal had not been bunkered. One hundred and eighty-five tons were put aboard thereafter. The delivery of the coal and provisions was not retarded by the libel but by the lack of funds. It took time to make satisfactory financial arrangements. Harold G. Towler, of the London Coal Company, testified: " On February 10, 1923, we were advised by the firm’s London office that sufficient funds had been deposited, with the firm's New York office to cover about 625 tons of coal. On February 15, 1923, the said firm was likewise advised that their New York office had received a further deposit which covered approximately 105 tons of coal. On February 21, 1923, the said firm received another advice that funds for a further 80 tons of coal (maldng a total of 810 tons) had been received,” The ship was released, as I have above stated, on February 16, 1923. This witness also stated that the libel did not cause the delay in furnishing the coal.

Whether there be any evidence, however, to sustain the finding of fact that the delay was caused by the arrest and collision, and not by the lack of eoal and supplies, we need not determine, as we agree that the delay, if caused by the arrest, came within the warranty free clause referred to, making it a risk assumed by the assured and not by the defendant.

The judgment of the Appellate Division and that of the Trial Term should, therefore, be reversed and the complaint dismissed, with costs in all courts.

Cardozo, Ch. J., Pound, Andrews, Lehman, Kellogg and O’Brien, JJ., concur.

Judgment accordingly.


author: Andrews, J.

text:
    In the Matter of Walter G. Buxton et al., Respondents, v. Arlington H. Mallery, Appellant.
    (Argued May 19, 1927;
    decided May 31, 1927.)
    Arbitration — contract — dispute relative to performance of contract within provision thereof providing for arbitration — ■ order directing arbitration of all disputes referred to in petition too broad where one did not arise under original contract.
    1. An action to enforce provisions of a contract which defendants claim have been waived is a dispute in relation to the performance of the contract within the meaning of a provision therein that “ should disputes arise in relation to any of the provisions of this contract,” the same shall be submitted to arbitration, and a motion directing that arbitration proceed is properly granted.
    2. The order, however, is too broad, in directing arbitration as to all matters in controversy between the parties set forth in the petition, where it clearly appears therefrom that under an oral modification of the agreement the parties are bound to enter into a new contract relative to a new invention. A dispute in relation thereto is clearly not one arising under the provisions of the original contract.

      Matter of Buxton v. Mallery, 219 App. Div. 810, modified.
    Appeal from an order of the Appellate Division of the Supreme Court in the first judicial department, entered March 11, 1927, which reversed an order of Special Term denying a motion for an order directing appellant herein to proceed to arbitration and granted said motion.

      James E. Finegan for appellant.
    There was no general agreement between the parties for arbitration of all disputes which might arise between them. (Webster v. Van Allen, 217 App. Div. 219; Matter of Kelly, 240 N. Y. 74; Matter of Amalgamated Assn., 196 App. Div. 206; Dodds v. Hakes, 114 N. Y. 260; Locke v. Filley, 14 Hun, 139; Matter of General Silk Importing Co., Inc., 200 App. Div. 786.) The disputes between the petitioners and the respondent as alleged in the petition, do not come within any of the provisions of the written contract between the parties hereto. (Young v. Crescent Development Co., 240 N. Y. 244.)

      M. A. Willment for respondents.
    The Appellate Division properly directed arbitration of all the disputes mentioned in the petition. (Matter of Hosiery Manufacturers Corp. v. Goldston, 238 N. Y. 22; Young v. Crescent Development Co., 240 N. Y. 244; Matter of Priore v. Schermerhorn, 237 N. Y. 16; Matter of Menger & Co. v. Propper S. H. Mills, 239 N. Y. 199; Matter of Kelly, 240 N. Y. 74.) The arbitration clause covers the disputes between the parties. (Holman v. Taylor, 31 Cal. 338.)
   Andrews, J.

The petitioners and the respondents on June 2, 1924, entered into a somewhat elaborate contract. Mr. Mallery was an inventor and held patents covering a gas producer which burned the lighter and more expensive grades of oil. Buxton and Fisher wished to manufacture machines covered by this patent and lease them to customers. So they obtained a proper license from Mallery and in return agreed to pay him a percentage of the sums received from those renting the producers, a monthly royalty, an annual salary, and $50,500 in installments, and to give him also stock in a corporation to be organized. The contract so made contained many other provisions and among them a clause in regard to arbitration. Should disputes arise,” this clause provides, “ in relation to any of the provisions of this contract, the same shall be submitted to the arbitration of three competent and disinterested persons * * * and the decision of the arbitrators shall be binding and conclusive upon the respective parties hereto.”

Disputes do seem to have arisen and in May, 1926, an action was begun by Mallery against Buxton and Fisher. In this action the plaintiff alleging that he has duly performed all the conditions of the contract claims that the defendants have neglected to keep the agreements made by them. He says that they have not manufactured, installed and leased the gas producers as in the contract provided. They have not made the various payments to him which they should have made. They have not manufactured and leased during the first year of the contract the number of machines which they had agreed to manufacture and lease, and by reason of these various defaults he claims he has been damaged to the extent of more than $74,000. The defendants have appeared in the action but have served no answer. Their claim is that these various provisions which are said to have been violated have been severally waived by the plaintiff and they ask that these disputes be submitted to arbitrators as in the contract provided.

Mr. Mallery opposed the application made by them and succeeded at Special Term. The Appellate Division, however, has granted the motion. That court is clearly right. Mr. Mallery sued to enforce performance of the contract in question. The other parties thereto say that those particular provisions have been waived as they might have said that they had not been broken or that the various sums claimed had been paid. This would seem to be a dispute in relation to the performance of the contract.

The order of reversal, however, is too broad in one respect. It states that arbitration should proceed as to all the matters in "controversy between the petitioners and the respondents set forth in the petition. In the petition it is stated that it was agreed some time after the execution of the original contract that it should be modified so that it should refer to gas producers burning crude oil. Such an invention was to be made by Mr. Mallery. It has been done and under the oral agreement of modification he and the petitioners are bound to enter into a new contract with reference to the promotion of the perfected invention. That, clearly, is not a dispute arising under the provisions of the original contract.

The order of the Appellate Division should be modified directing that arbitration proceed as to all matters in controversy between the appellant and the respondents set forth in the petition under the headings from (a) to (h) inclusive, and as so modified should be affirmed, with costs to the respondents.

Cardozo, Ch. J., Pound, Crane, Lehman, Kellogg and O’Brien, JJ., concur.

Ordered accordingly.


text:
    The Eastern Exchange Bank, Appellant, v. Fidelity and Deposit Company of Maryland, Respondent.
    (Argued May 20, 1927;
    decided May 31, 1927.)
    Insurance — -banks and banking — policy insuring bank against loss from forgery of signature of depositor —• no recovery for loss arising from forgery by depositor of signature of third person.
    A bank cannot recover, under a policy insuring it against loss through forgery- of the signature of a depositor, for a loss arising from the forgery by one of its depositors of the name of a third person on checks drawn to the order of the latter and the deposit of such checks by its depositor to his account in the bank from which he later withdrew the proceeds. The fact that its depositor, in opening his account, had assumed a fictitious name, that of the third person whose name he subsequently forged on the deposited checks, did not alter his identity and the rightful owner of the cheeks did not become a depositor of the bank within the meaning of the policy, by force of the conversion of his checks under color of forged indorsements.

      Eastern Exchange Bank v. Fidelity <fc Deposit Co., 218 App. Div. 818, affirmed.
    Appeal from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered December 11, 1928, affirming a judgment in favor of defendant entered upon a verdict directed by the court.

      Knowlton Durham, for appellant.
    The account which was opened by the forger in the name of John Hogan with checks belonging to and intended for John Hogan was the account of John Hogan, who became the bank’s depositor. (Palm v. Watt, 7 Hun, 317; Graves v. American Exchange Bank, 17 N. Y. 205; Van Alen v. American Nat. Bank, 52 N. Y. 1; Viets v. Union Nat. Bank, 101 N. Y. 563; Walsh v. Nat. Broadway Bank, 11 Misc. Rep. 249; Kimball v. Norton, 59 N. H. 1; Murphy v. Pacific Bank, 62 Pac. Rep. 1059; Catlin v. Savings Bank, 7 Conn. 487.)

      Thomas E. White and Albert E. Hart for respondent.
    The man who personally went to the appellant bank, opened the account, signed the specimen signature cards, and who by physical appearance and handwriting became known to the bank, was its depositor within the meaning of the insurance policy. (H. R. & C. Co., Inc., v. Smith, 212 App. Div. 173; Matter of Snook, 2 Hilt. 566; Smith v. United States Casualty Co., 197 N. Y. 420; Gray v. Black, 267 S. W. Rep. 291; Allen v. German Amer. Ins. Co., 123 N. Y. 6; Van Vechten v. Amer. Eagle Fire Ins. Co., 239 N. Y. 303; Kean v. Nat. Surety Co., 241 N. Y. 252.) Each check deposited in the account being indorsed and each check drawn against the account being signed “ John Hogan ” by the hand of Palmer, the depositor of the bank, there was no forgery of the signature of a depositor, either under insuring clause “ A ” or insuring clause “ E ” of the policy. (Smith v. United States Casualty Co., 197 N. Y. 420; H. R. & C. Co., Inc., v. Smith, 212 App. Div. 173.)
   Cardozo, Ch. J.

Defendant, a surety company, issued its policy of insurance to plaintiff, a bank, whereby it agreed to indemnify plaintiff against direct loss, not exceeding $5,000, which might be sustained through the payment by the insured bank after the date hereof.

“A. Of any check * * * drawn upon the insured bank * * * upon which there shall have been forged, as the drawer, maker or acceptor thereof, the signature of a depositor * * * and /or

“ Through the cashing by the Insured Bank, after the date hereof, or through the extension, by the Insured Bank, after the date hereof, of credit upon the faith,

“ E. Of any check or draft drawn upon any bank, which shall bear the forged signature of any depositor of the Insured Bank as endorser.”

One Harry Palmer opened a deposit account with the plaintiff under the name of John Hogan. In some way he had obtained possession of checks drawn by the Western Union Telegraph Company to the order of one John Hogan, a person other than himself. These checks he deposited with the plaintiff from time to time, and later drew out the proceeds. Plaintiff was compelled thereafter to refund the amount of the checks to the true owner. It now sues the defendant surety company for indemnity in accordance with the bond.

Indemnity is due if Palmer in signing the name John Hogan to the checks forged the signature of a depositor. Plainly he did not. The signature of the depositor was genuine. It was the very signature that Palmer, alias Hogan, had written on the signature card, and that the bank had agreed to honor. What was forged was the signature of some one not the depositor.

The plaintiff in opening the account had no thought of contracting with any one except the man who stood before it. The fact that for the purpose' of becoming a depositor, he assumed a fictitious name, did not alter his identity (Phelps v. McQuade, 220 N. Y. 232; Strang v. Westchester Co. Nat. Bank, 235 N. Y. 68, 70, 71). John Hogan, the rightful owner of the checks, did not become a depositor in the bank within the meaning of this bond by force of the conversion of his checks under color of a forged indorsement. The purpose of the bond was to protect the insured, not against forgeries by a depositor of the name of some one else, but against forgeries by some one else of the name of a depositor.

The judgment should be affirmed with costs.

Pound, Crane, Andrews, Lehman, Kellogg and O’Brien, JJ., concur.

Judgment affirmed, etc.