text:
    SAMUEL WELSH, et al., Appellants, v. JOHN HENRY GOSSLER, et al., Respondents.
    L Money had and deceived.
    1. Action of, when it does not lie.

      (a) Letter op credit ; non-performance of contract by
    PARTY TO WHOM IT IS ISSUED.
    1. S. W., on the application of a purchaser, gave to the vendor a letter of credit, authorizing him to draw on K., C. & Co., on his, S. W.’s, account, for the cost of certain sugars to be shipped to him, S. W., in May June, at a certain price. Bills of lading to be filled up to S. W.’s order. Advice of shipment to be accompanied by bill of lading, with an abstract of invoice indorsed thereon, on receipt of which documents the bills will be duly honored— the credit, if not used, to expire June 30, 1877.
    K., C. & Co., at the request of- the vendor, issued to D. K. P. & Co. a letter of credit, varying from above letter in three particulars. It authorized drafts at ninety days after sight; it did not limit the shipments to any particular months; it authorized drafts at any time before July 31.
    These variations were warranted by a telegram sent by S. W. at the vendor’s request.
    D. II. P. <& Co. drew three drafts.
    On the arrival of the sugar it was found that it was not shipped until July 6. Both S. W. and purchaser refused to accept it as a performance of' the contract, and S. W. telegraphed K., C. & Co. not to accept the drafts; but they replied they could not, under their letter, refuse. S. W. thereupon put K., C. & Co. in funds to pay the drafts, and that firm paid them. S. W. caused the sugar to be sold, and to the extent of the net proceeds reimbursed himself for the amounts paid by him on account of the drafts; and brought an action for money had and received, to recover the difference between such net proceeds and the amount paid by him to K., 0. & Co. on account of the drafts.
    Held,

      (a) Advance to vendor. That the transaction could . not be considered as an advance or loan to the vendor with sugar as collateral security.

      (5) Rescission necessary. On the theory that by reason of the shipment not having been made in May June, the drafts were not payable under the contract between S. W. and the vendor, by which they were authorized to be drawn, yet an action for money had and received could not be maintained without a total rescission of that contract.
    1. Rescission, what will not operate as.
    S. W. offered to deliver the sugar to the vendor on condition that the vendor would make him good for the amount of said drafts drawn on his account. This offer being declined, S. W. sold the sugar and applied the net proceeds to his reimbursement on his liability to K., C. & Co. on said drafts.
    Held,

      not a rescission of the contract between S. W. and the vendor.

      (e) Implied promise. The action under the facts of the case cannot be maintained on the theory of an implied promise by the vendor to S. W., either
    1. To use the credit only for purpose of the contract between the vendor and the purchaser;
    or
    2. That if the goods were not sufficient for the contract between the vendor and purchaser, they should be sufficient as security for all that S. W. advanced on the credit;
    or
    8. To pay any deficiency between the proceeds of a sale of the goods and the amount advanced on the credit.

    Before Speir and Freedman, JJ.

      Decided February 7, 1881.

      On May 8, 1877, the defendant sold to one Henry P. Finlay 600 hogsheads of St. Vincent sugars conditioned to be May—June shipment, for which the purchaser was to furnish a credit. The purchaser applied to the plaintiffs, who drew up a letter of credit and delivered the same to Finlay, the purchaser, who sent it to the defendants inclosed in his letter on the same day.
    The letter of credit was as follows:
    “Hew York, May 8, 1877.
    “Messrs. Schroeder, Welsh & Co. of London are hereby authorized to draw on Messrs: Kleinwort, Cohen & Co. of London for our account at ninety days sight, for cost of about six hundred hogsheads St. Vincent sugars, to be shipped to ns in May a°r June at twenty-seven shillings and three pence per hundred weight of one hundred and twelve pounds, less freight. Bills of lading to be filled up to our-order.
    “ The advice of shipment or shipments must be accompanied by bill of lading with an abstract of invoice indorsed thereon, on receipt of which documents in older the bills will be duly honored. Messrs. Schroeder, Welsh & Co. are also authorized to transfer this credit to their friends in St. Vincent. The drafts must he signed as drawn under credit Ho. 26, dated Hew York, May 8, 1877, and bill of lading and invoice, properly, certified by the United States consul, must be sent to S. & W. Welsh, Hew York.
    “This credit if not used to expire June 30, 1877.
    “S. &W. Welsh.”
    The defendants told the purchaser that they feared the letter of credit would not have time to be sent from. London to St. Vincent, because the shipment might be made very soon, and asked him to see if the plaintiffs would not consent, to send a telegraphic credit. The plaintiffs consented, and thereupon sent a telegram to Kleinwort, Cohen & Co., of which the following is a copy:
    “ New York, dated 8th May, 1877.
    “ Open credit favor Schroeder, Welsh, transferable St. Vincent friends, cost six hundred hogsheads sugar, ninety days. • Confirm.”
    Indorsed :
    “ New York, S. & W.'Welsh. Received 10 May, answered 10 May. Edward Cohen.”
    This telegraphic letter of credit differs in some respects from the written letter of credit, as it authorizes Schroeder, Welsh & Co. to use it after June 80, 1877, while the written letter was limited to the months of May or June.
    It appears that Mr. Finlay was notified of this tele- ■ graphic credit, and informed the defendants of it by letter on May 11, 1877.
    Pursuant to above telegram Kleinwort, Cohen & Co. issued at the request of Schroeder, Welsh & Co. the following letter of credit:
    “ Kleinwort, Cohen & Co.
    A No. 4504.

      Letter of Credit.

    “London, May 10, 1877.
    “We hereby authorize Messrs. D. K. Porter & Co., St, Vincent, to value' on us, at ninety days after sight, for account of Messrs. S. & W. Welsh, New York, by order of Messrs. Schroeder, Welsh of London, for any sums not exceeding sixteen thousand pounds sterling, against shipments of six hundred hogsheads sugar by sailing vessel to New York, at 26s. 6d. per cwt., cost and freight. Insurance in New York by Messrs. Glossier & Co. Bills of lading of .such shipments to be filled up to Messrs. S. & W. Welsh, New York, and invoice and bill of lading to be sent in duplicate to said Messrs. S. & W. Welsh.
    “All drafts against this credit to be drawn and negotiated before July 31,1877, and to contain the clause ‘ Against your letter of credit, A Ño. 4504, dated London, May 10, 1877,’ and the advice thereof to us in duplicate to be accompanied by bill of lading with abstract of invoice, which, if attached to the drafts, are to be delivered up to us against our acceptance.
    “And we hereby agree with the drawers, indorsers, and l>ona fule holders of bills drawn in compliance with, the terms of this credit, that the same shall be accepted on presentation, and paid at maturity.
    “ Klein wort, Cohen & Co.,
    Edward Cohen.”
    D. K. Porter & Co. drew three drafts, dated July 6, 1877, in conformity with the terms of the above letter of credit issued by Kleinwort, Cohen & Co.
    Before July 21 Finlay had notified plaintiff that he would decline to accept the sugars unless they were shipped prior to July 1, 1877.
    On July 21 the ship St. Vincent arrived at New York having on board 619 hogsheads 7 barrels of sugar, consigned to the plaintiffs. On its arrival they notified the defendants of the receipt from D. K. Porter, St. Vincent, of the invoice and bill of lading for the sugar, and that they knew of no sugar to come from those gentlemen to their consignment save the cargo of about 600 hogsheads' sold by defendants to H. P. Finlay, on or about May 8 last for shipment either in that month or in June last, and adding, as the documents of this cargo are dated July 6 present, they could not in Mr. Finlay’s absence agree to receive it, and they further declined to receive the sugars on the part of Mr. Finlay, and they further notified them that they should enter the said sugars and sell and dispose of the same to protect and cover said credits, and should look to them for any loss or deficiency arising upon such sale.
    The invoice and bill of lading arrived with the vessel. Between the 21st and 25th of July plaintiffs cabled to Kleinwort, Cohen & Co. to withhold accept - ■ anee, and received from them an answer by cable saying that under the credit as issued by them they could not do so.
    On July 25, 1877, plaintiff wrote to defendants the following letters:
    “New Yoke, July 25, ’77.
    “Messrs. Gossler & Co., Pearl Street.
    “ Dear Sirs,—Mr. H. P. Finlay having refused to accept and having forbidden us to accept on his account the cargo of 619 hogsheads 7 barrels sugars per Si. Vincent he alleging as the reason therefor that the said sugars were not shipped as required by his contract with yourselves, and we having issued or caused to be issued credits for the said sugars, which credits are enforceable against us, we now notify you that we shall enter said sugars and sell and dispose of the same to protect and cover said credits, and we shall look to you for any loss or deficiency arising .upon or out of such sale.
    '“ Very truly yours,
    “ Sam’l & Wit. Welsh.”
    And received the following answer:
    ■“Gossler & Co.,
    P. O. Box 916.
    “New York, July 28th, 1877.
    “ Messrs. S. & W. Welsh,
    Present.
    “ Dear Sirs,—We have your favor of the 25th instant.

      “ We recognize no responsibility in the matter, and can only leave you to take at your own risk and peril such action as you may be advised.
    “ Tours truly,
    “ GrOSSLER & Co.”
    About August 15, 1877, plaintiff caused the sugars to be sold at auction ; the sales netted $53,403.76.
    October 31, 1877, Kleinwort, Cohen & Go. paid the three drafts drawn on them as above, having been, on October 30, placed by plaintiffs in funds, to wit, $76,341.07.
    It appeared, from the testimony, that there was a decline in the sugar market which commenced some time in the Spring of that year. At the time the advances on the sugars were made, the value of the cargo, according to the market prices, would probably have covered the advances.
    This action is brought to recover the differences between the drafts drawn on and paid by Kleinwort, Cohen & Go., on account of the plaintiffs, and the net proceeds arising from the sale of the sugars as money had and received by defendants to and for the use of plaintiffs.
    The trial judge dismissed the complaint, giving the following opinion:
    “ Sedgwick, Ch. J.—The contract between the parties, I have found on the evidence to be, that, on condition of this letter of credit being given by the plaintiffs to the defendants, the defendants would consign to them (the plaintiffs), by bills of lading to be made to their order, a May and June shipment of about 600 hogsheads of sugar. The amount mentioned was sufficiently fulfilled, I think, by the 619 hogsheads, there being only an excess of a few barrels.
    “No doubt there was a separate contract between the plaintiffs and the defendants, in which Finlay took no part. It happened that it was coincident with a contract between the defendants and Finlay, by which the defendants were bound to deliver the same number of hogsheads, to be of the same shipment, and it may be that under that contract the plaintiffs might take possession, being the consignees legally or equitably of the Finlay contract. That might possibly be; but they did not take that position. They took their possession upon the separate contract that they had with the defendants, as I have described it.
    “I do not perceive (although they are not the same contract by any means) that the law in relation to the mode of performance and the rights of the various parties differs under these contracts. The contract which actually existed between the plaintiffs and defendants, and upon which the plaintiffs rely, was a contract which might be satisfied by a tender by the defendants of any goods under the contract, and an acceptance by the plaintiffs under the contract.
    “If there was such a tender under the contract, and if there were such an acceptance for the purposes of the law, the functions of that contract would be satisfied. As I find the evidence incontrovertibly to be, the defendants, in performance of their obligation under the contract, did tender through the bills of lading, &c., these 619 hogsheads, under that shipment in July, and they tendered it in performance of the contract.
    “Now, did the plaintiffs accept as a matter of fact?
    “By the well-known rules of law, they could not accept in part and reject in part. They must accept or they must reject. Under the most general principles, a party cannot take the benefit of one part of a trans: action and reject the rest. And there is a specific rule that is applicable here. When a tender is made, if it is to be accepted it must be accepted in the manner in which it is tendered by the party making the offer.

      “¡Now the plaintiffs took these goods ; used them in ■exactly the same manner that they would have used them if they were May—June shipment; subjected them to their own control, and used them beneficially for their purposes on their own account. It might have made possible a different case if the plaintiffs had used these goods for the account of the defendants, if they had sold them for the defendants and notified the defendants that the proceeds were at their control; that might be a little different.
    “But here they took the goods under this tender, used them for their own and applied them as a credit, claiming a difference for the deficiency.
    “There is no doubt on those facts that the plaintiffs have accepted the tender. They said they would not accept it, but a mere declaration cannot be put against 'the acts of the parties, resulting in the things that I hvae described. The declaration that they did not accept the goods was never accompanied at any time, either with a notification that the defendants might have these goods if they pleased, or that the plaintiffs meant to hold them for their account (the account of the defendants), or anything of that kind. There was no offer to return them, except the offer, as I understand it, contained in the deposition of Mr. John Welsh, Jr., who said there was an offer to return, provided the defendants would indemnify them against their advances. It is plain on the facts of the case that that was not any obligation that followed from the contract between the plaintiffs and defendants, as 1 have ■described it.
    “The substance of the contract was not that the plaintiffs should be indemnified. The substance of the contract did not refer to the kind or quality or value of the goods. So far as this case is concerned, it amounted simply to this: If you ship the goods on June 30, I take them; if you ship them on July 6, I will not take them.
    “Therefore, accompanying the offer to return with a condition, at least, which the contract did not contemplate, with which the defendants were not bound to comply, is tantamount to no offer to return them at all.
    “Then, if there be no offer to return them at all, coupled with the fact that the plaintiffs have actually subjected the goods, not only to their own control,, but to their interests, and although it remains that the plaintiffs said that they would not accept them, the result of these facts, in my judgment, is that the plaintiffs have taken a benefit under the contract, in performance of the contract, and that, therefore, that consideration to the plaintiffs did not so wholly fail that the plaintiffs are entitled to maintain an action for money had and received.
    “It results, as I have intimated, that the motion to dismiss the complaint should be granted.
    “If the plaintiffs rested simply upon the giving of the credit, and the credit was given as the consideration of a sale to Finlay, and the credit was given at Finlay’s request, and Finlay getting the sugar, there could be no presumption that the seller of the sugar would indemnify the parties who were paying them for the sugar against the value of the sugar.”
    Plaintiffs appeal from the judgment entered upon the dismissal.

      Edward Patterson, attorney, and of counsel, for appellants, urged:
    I. The learned judge erred in his construction of the relations existing between the plaintiffs and the defendants, and of the contract between them. The plaintiffs do not claim as upon a rescission of their contract with G-osslers, which was a very different thing from Finlay’s contract with dossier. The true interpretation of the transaction is, that the plaintiffs were to advance the money for the purposes of the purchase by Finlay from dossiers, and were to receive anything and everything for which the credit was used. As between plaintiffs and defendants, the whole contract was for security primarily. If, as between the dossiers and Finlay, the contract was performed, or Finlay accepted the shipment as sufficient, then the Welshs would have made the advances to him, and he would be liable. If, as between dossier and Finlay, the former failed to perform, then the advances were made to dossier on the security of the cargo, for the credit was used for something else than Finlay’s contract, but could only have been used on the giving of security. In any event and in either aspect of the case, the plaintiffs, advancing the money which paid for the goods, had a lien either (1) at common law, or (2) an equitable lien, or (3) by the agreement of the parties that security of the merchandise should be given if the money were used at all (Brooks v. Bryce & Rennie, 21 Wend. 13 ; Steinman v. Wilkins, 7 Watts & S. 466; 3 Parsons Cont. 235 ; Jarvis v. Rogers, 15 Mass. 389 ; Story Eq. Juris. § 1216). By the failure of dossier & Co. to perform the contract, Finlay 'was discharged from obligation to take the goods (Benjamin on Sales, 2 ed. 488; Russell v. Nicoll, 3 Wend. 112 ; Hoare v. Rennie, 5 H. & N. 19 ; 29 L. J. Ex. 73; Catlin v. Tobias, 26 N. Y. 217; Moses v. Banker, 2 Sweeny, 267; Rouse v. Lewis, 2 Keyes, 352). And there was such a failure to perform (Bowes v. Shand [House of Lords], 5 L. R. 28). Finlay, therefore, being out of the transaction, the case remained simply as an advance of moneys by the plaintiffs to dossier & Co. upon the security of dossier’s goods, which money dossiers have received ; for payment to their appointee or agent, is the same as payment to themselves (Hallmaier v. Brinkerhoff, 6 Cow. 90 ; Anderson v. Broad, 2 E. D. Smith, 530). The defendants meant the goods shipped to be security for the money drawn, for (1) they, by D. K. P. & Co., drew the money when they consigned the goods, and could not draw without giving the security ; and (2) they sent the bills of lading and all muniments of title to the plaintiffs. It is indisputable that the Welshs took and applied the security. It was of the essence of their contract with dossier that they should have it. The learned judge has disposed of the case under Pin-lay’s contract with dossiers, and not under the Welsh’s contract with dossiers. He says : “ The substance of the contract was not that the plaintiffs should be indemnified. The substance of the contract did not refer to the kind or quality or value of the goods. So far as this case is concerned, it amounts to this: If you ship the goods on the 30th June, I take them ; if you ship them on the 6th July, I will not take them.” That was distinctly and emphatically not Welsh’s contract; it was Finlay’s, and Finlay acted upon it, and would not take. The learned chief judge overlooked or ignored entirely the element in the case that the de¡fendants were bound not only to consign as security what was bought with the letter of credit, but to consign sugars that the plaintiffs could compel Finlay to take. He says that by accepting and applying the-sugars the plaintiffs got the same benefits they would have had had the shipment been May a”ra June; but this is obviously not so ; they could have held Finlay for the deficiency if the defendants had shipped as required by their contract. Our proposition is, on this branch of the case, that Finlay being discharged by the failure of the defendants to ship the goods on (or before) June 30, the subsequent transaction was between Welsh and the defendants, the latter standing in the position of consignors, to whom advances have been made, and who have shipped goods to secure the advances. Not only is the shipment security, but it constitutes a primary fund, from which the consignee must get reimbursement. These considerations and all the papers show that security was an essential and vital feature in plaintiff’s contract. If that is the true meaning of that part of the contract, then it follows that the plaintiffs were authorized to apply the security to the reimbursment of the.amount for which plaintiffs were liable to their bankers on the letter of credit, and their so doing was not an acceptance of performance of the full obligation of the defendants to them. The learned 'judge, although holding there were two contracts—one between Finlay and dossiers, and another between dossiers and the plaintiffs—fell into the error of compelling the plaintiffs in effect to stand or fall by Finlay’s contract. This suit is not on a rescission of .Finlay’s contract by the Welshs. The plaintiffs cannot be put in the place of purchasers. They never contracted to purchase. They were under no duty to rescind or affirm Finlay’s contract. They could not do it. There is no such thing in the case as a rescission by Welsh; none was necessary and none was attempted. This action is in affirmance positive and distinct of plaintiffs’ contract with defendants. It is to enforce a right growing out of that contract, viz.: the right to apply the security and hold dossiers' for the balance they received on the letter of credit, because the defendants did not send that merchandise which would have enabled plaintiffs to hold Finlay for such balance. • The learned judge was, therefore, in error in holding that it was the duty of the plaintiffs, if they wished to hold the defendants liable, to tender back unconditionally the sugars. 1st. Because it makes the plainñffs purchasers, or makes a new contract for them which they never assented to. 2d. Because the plaintiffs had the right, and were obliged to use the security first, before looking for the balance of advances. It is not questioned in any manner that as between buyer and seller, if the former wishes to rescind a contract of sale for non-performance of a condition, or for fraud, he must at once restore, or offer to restore, all that he has received, before he can sue for the money paid in advance. That doctrine is too clear for denial. But it has no place in this action. A" surrender of the security and tender back unconditionally of the sugars by the plaintiffs was not therefore required. If any tender were required, just such as Mr. John Welsh made sufficed. The party making a tender may annex to it any condition fairly within the meaning and intent of the parties, or so to be inferred under the circumstances (Wheelock v. Tanner, 39 N. Y. 48C). Nor is it necessary to tender back where an offset in an action would accomplish the purpose (Allerton v. Allerton, 50 N. Y. 670). But no tender was necessary further, from the facts that the defendants declined to have any responsibility in the matter, or to do anything. They washed their hands of the whole affair.
    II. The defendants are liable for the balance of the advances. They used the credit through their appointees for something else than Finlay’s contract. They were bound to use it so that the plaintiffs could hold Finlay for that balance, but they have deprived the plaintiffs of all right of recourse against Finlay. Neither the plaintiffs nor defendants could make Fin-lay take what he did not contract for. The case is then simply one where the defendants have received the plaintiff’s money to the extent of the balance of advances, which money, ex aequo et bono, they ought not to retain. The action for money had and received, growing out of the contract relation before referred to, is the appropriate remedy. It is not confined to rescissions of contracts, but lies wherever one person has another’s money, which in justice and good conscience he ought not to keep (Murphy v. Barron, 1 Har. & G. 258 ; Wiseman v. Lyman, 7 Mass. 288 ; Wright v. Butler, ’ 6 Wend. 290 ; Eddy v. Smith, 13 Id. 488; Guthrie v. Hyatt, 1 Harr. 447; Farmers’ Bank v. Brown, Id. 330; Terris v. Brown, 3 J. J. Marsh. 175; Tuttle v. Mayo, 7 Johns. 132 ; McNeilly v. Richardson, 4 Cow. 607; and numerous other American and. English cases).
    III. Whether or not the action would lie as a technical action for money had and received, the complaint should not have been dismissed for it, and" the proofs showed a perfect cause of action, established by undisputed testimony, entitling the plaintiffs to a verdict. Annexed to the agreement of the dossiers to give the plaintiffs the security of whatever was shipped against or on account of the credit, was the implied promise to use the credit only for the purpose of Finlay’s contract, and this action is maintainable, as one for a breach of that implied promise (Chitty on Cont. [Am. ed. of 1874], 548; Hogan v. Shea, 2 Esp. 522 ; Merryfield v. Wilson, 14 Tex. 225; McIntyre v. Belcher, 10 Jur. N. S. 239). There was also an implied promise that if the goods were not sufficient for Finlay’s contract, they should be sufficient as security for all that Welshs advanced on the credit. These implied promises spring out of the duty connected with the transaction, and arise in the absence of express ¡stipulations on the particular subject (Ogden v. Saunders, 13 Wheat. 341 ; Sceva v. True, 53 N. H. 627). There was also an implied promise of defendants, growing out of all the circumstances of the case, to pay the deficiency. When one holds as uni certain or capable of being reduced to certainty, which belongs in point of right and justice to another, the law will give the latter a remedy by implying a promise of payment on the part of the former (Byxbie v. Wood, 24 N. Y. 610; Gihon v. Stanton, 9 Id. 482, 483; Wilson v. Sergeant, 12 Ala. N. S. 778 ; Fleming v. Alter, 7 Serg. & R. 295 ; Baker v. Root, 4 McLean, 572 ; Johnson v. Evans, 8 Gill, 155 ; Hudson v. Robinson, 4 M. & S. 478 ; Pierce v. Crafts, 12 Johns. 90 ; Mason v. White, 17 Mass. 560; Hall v. Marston, Id. 575; Neilson v. Blight, 1 Johns. Cas. 205 ; Freman v. Jackson, 5 Pet. 597).
    IV. The remaining grounds of motion for nonsuit were untenable. As to the 1st: The suit is not on Fin-lay’s contract, but on a separate'contract, which the learned chief judge finds existed between the plaintiffs and defendants. As to the 2d: The whole transaction shows that the loan or advances were to be used for the purposes of Finlay’s contract, as an implied condition of the contract between plaintiffs and defendants, which the defendants have broken. As to the 3d: There is evidence of the invoices, bills of lading, &c., that the shipment was not made until July 6, 1877, and hence not in May and June, 1877 (Hill v. Syracuse, B. & N. Y. R. R., 73 N. Y. 351).

      Elliot & 8. Sidney Smith, attorneys, and 8. Sidney Smith, of counsel, for respondents, urged :

    First. The facts detailed in the evidence lead to one of two conclusions ; either (1) The relations between, plaintiffs and defendants were founded upon a contract existing between" them, or (2) The plaintiffs in the transactions enquired about acted as agents for Henry P. Finlay. In either case the nonsuit was proper. For convenience the authorities bearing on the two heads will be separately grouped.

      Second. Contract relation between parties. I. In case of a breach the plaintiffs would have their choice of two remedies: (1) To rescind and sue for money had and received. (2) To sue for damages. They chose to sue for money had and received, but they failed to rescind. They held on to the goods delivered under the contract, and while reaping the benefits of a performance sought likewise to acquire to themselves all the benefits which they would have derivéd from a lack of performance ; this was a fatal error.
    II. A party who seeks to rescind a contract must rescind in toto and place the opposite party in the position he was in before the contract was made. He cannot retain what he has received (e. g., notes) and proceed to make collections on them to indemnify himself (Wheaton v. Baker, 14 Barb. 594; Moyer v. Shoemaker, 5 Id. 319; Clark v. Baker, 5 Metc. 452-461 ; Stevens v. Hyde, 32 Barb. 171, 182. See also, Shields v. Pettie, 2 Sandf. 262, 268; affirmed, 4 N. Y. 122; Mansfield v. Trigg, 113 Mass. 354; Lindsay v. Ferguson, 3 Alb. L. J. 211; Peters v. Grooch, 4 Black. [Ind.] 515; Matteawan Co. v. Bentley, 13 Barb. 641, 644).
    III. If he has received a benefit from the contract it is too late for him to say that the other party has been remiss and to claim the benefits of a rescission (see authorities supra; Goelth v. White, 35. Barb. 76; Springer Dwyer, 58 Id. 189-193; afterwards reversed on another point, 50 N. Y. 19 ; Clarkson v. Cunningham, 4 Mass. 502 ; Sinclair v. Neill, 1 Hun, 80, 82 ; Farrell v. Corbett, 4 Hun, 128 ; Milner v. Tucker, 1 Carr. & P. 15; Kimball v. Cunningham, 4 Mass. 502; S. C., 3 Amer. Dec. 230 ; Clark v. Dickson, 1 El., Bl. & El. 148).
    IV. The plaintiffs, by refusing to give up the sugars without being indemified,—by afterwards entering, dealing with, and selling them,—accepted them, as in compliance with the terms of their contract, and they cannot now claim otherwise (Chapman v. Morton, 11 Mees. & W. 534; Cobb v. Hatfield, 46 N. Y. 533, 536, 537.; Street v. Blay, 2 Barn. & Adol. 456, 463; Cornwal v. Wilson, 1 Ves. Sen. 509; Masson v.
      Bovet, 1 Den. 69; Pomeroy v. Shaw, 2 Daly, 267; Benjamin on Sales, 1 Am. ed. 703 ; Horncastle v. Farran, 3 Barn. & Ald. 497 ; Campbell v. Fleming, 1 Ad. & El. 40 ; S. C., afterwards, 3 Nev. & Man. 834 ; Voorhees v. Earl, 2 Hill, 288 ; Hogan v. Weyer, 5 Id. 389 ; Van Epps v. Harrison, Id. 66; Ross v. Titterton, 6 Hun, 280 ; Dows v. Griswold, 4 Id. 550 ; Sprague v. Baker, 20 Wend. 61 ; McCrillis v. Carlton, 37 Vt. 139; Peters v. Gooch, 4 Black. [Ind.] 515; Downer v. Smith, 32 Vt. 1 ; Cobb v. Hatfield, 46 N. Y. 533, 536, 537).
    V. A party is to be judged by his acts, not by his words (Horncastle v. Farran, 3 Barn. & Ald. 497 ; Chapman v. Morton, 11 Mees. & W. 534-539; Cornwal v. Wilson, 1 Ves. Sen. 509).
    VI. To make a tender valid it must be made without the imposition of any condition, restriction or qualification whatever (Roosevelt v. Bull’s Head Bank, 45 Barb. 579 ; Wood v. Hitchcock, 20 Wend. 47 ; Cashman v. Martin, 50 How. Pr. 337; Hicksville & Cold Spring B. R. R. Co. v. L. I. R. R. Co., 48 Barb. 355). The rule allowing the indorser of a promissory note to demand its delivery when he makes tender of the amount is an exception to the general rule-(Wilder v. Seelye, 8 Barb. 408). The case of Wheelock v. Tanner (39 N. Y. 481), relied upon by plaintiffs below, is not applicable. That was a case of tender of performance of a contract—not an attempt to rescind— and such cases turn upon the special terms of the contracts sought to be enforced and are not authoritative in actions where a rescission is claimed.
    VII. Whether the offer to return, when made, was valid or not, the plaintiffs, by their subsequent action in selling the sugar, deprived themselves of all benefits thereunder. A tender must be kept good. If after it be made the party uses the property in his business the tender is not valid. (Stevens v. Hyde, 32 Barb. 171, 182; Roosevelt v. Bull’s Head Bank, 45 Barb. 579; see also authorities cited under point second, subdivision IV. supra).

    VIII. The plaintiffs in selling the cargo did not act as the agents ex necessitate of the defendants (Chapman v. Morton, 11 Mees. & W. 534,—a case “ on all fours” with that at bar ; Cornwall v. Wilson, 1 Ves. Sen. 509).
    IX. If the sugars did not come up to plaintiffs’ expectations, their remedy was an action for damages (McCrillis v. Carlton, 37 Vt. 139). But they sustained no damage, for even if the vessel had sailed ten days ■earlier than she did the loss would have been as great. As they could not prove any damage, therefore, they sued for money had and received. But an action for. money had and received will not lie where the contract has been partially executed; in such a casé the plaintiffs must resort to their action for damages (Stevens v. Cushing, 1N. H. 17; S. C., 8 Amer. Dec. 27; Peters v. Grooch, 4 Black. [Ind.] 515; 1 Chitty Pl. 16 Amer. ed. 367; 2 Chitty on Cont. 11 Am. ed. 923; Clarke v. Dickson, 1 El., Bl. & El. 148 ; 2 Parsons on Cont. 6 ed. 679, 680).
    X. No case can be found in the books, where, in an action to rescind a contract, the plaintiff has been allowed to recover without first giving up all benefits which he has received from the contract. He cannot ■credit the value or the proceeds of the goods and recover for the balance (See McCrillis v. Carlton, 37 Vt. 139 ; Wheaton v. Baker, 14 Barb. 594; Moyer v. Shoemaker, 5 Id. 319).

      TMrd. But there is no evidence of a breach •of any contract made by defendants with the plaintiffs :—there is nowhere any proof of a promise made to plaintiffs that defendants would only •draw against May—June shipments. On the contrary, if the plaintiffs and defendants entered into any contract it is evidenced by the issuance by Kleinwort, ■Cohen & Co., plaintiffs’ agents, of the' second letter of credit and its acceptance by defendants. This letter of credit is unrestricted as to the time of shipment, but limits its holders to drafts drawn prior to July 31. The drafts here drawn were all drawn July 6, and were therefore within the terms of the contract. There having been no breach of contract the nonsuit was right.

      Fourth. The plaintiffs agents for Finlay, I. If the advances were made as agents for Finlay then the defendants, when they received them, received them for account and to the use of Finlay, and Finlay was the proper person to bring this action.
    II. The plaintiffs cannot recover unless they show that the moneys received were received to their (the plaintiffs’) use (2 Chitty on Cont. 11 Amer. ed. 899 ; 1 Chitty Pl. 16 Amer. ed. 367 ; Supervisors of Dutchess v. Sisson, 24 Wend. 387; De Peyster v. Winter, 4 How. Pr. 449). Here, instead of showing this, the evidence shows that the money was received to Finlay’s use.
    III. The nonsuit was therefore proper.

       These points were raised by appellant’s counsel.
      The sustaining the dismissal of the complaint necessarily decided them adversely to the appellant. The opinion does not disclose whether such adverse decision was based on the ground that no such implied provisions arose out of the facts and circumstances of the case, or on the ground that an action for money had and received could not be maintained on them, or on both grounds.

   By the Court.—Speir, J.

We are of the opinion, from the evidence in the case, that the contract between the parties existed on condition that the letter of credit being given by the plaintiffs to the defendants, the defendants would consign to them by bills of lading made to their order a May or June shipment of about 600 hogsheads of sugar. We think there can be no question but that a contract existed between the defendants and Finlay by which the defendants were bound to deliver about the same number of hogsheads, to be of the same shipment, and that under that contract the plaintiffs, acting as agents for Finlay, had a right to take possession, being the consignees of the Finlay contract. The contract which the defendants had with Finlay was not only that they sold to him about 600 hogsheads of St. Vincent sugars, but also upon the condition that Finlay should furnish a credit for the price of the sugars. Upon the application by Finlay to the plaintiffs, that credit was furnished by them to the defendants on the condition that the defendants would consign to them by bills of lading the amount of sugar so purchased. The plaintiffs took possession of the sugars under this separate contract they had with the defendants, and it could be satisfied by a tender by the defendants under the contract and an acceptance by the plaintiffs under it. The defendants, therefore, in performance of their obligation under the contract, did tender, through the bill of lading, these sugars under the July shipment, and they tendered it in performance of the contract.

Ho offer to return the sugars was made, which was not qualified by the condition that the defendants should make plaintiffs good for the amount of their advances. The sugars were sold by the plaintiffs without the assent of the defendants on the 15th of August, and the sale was made “for account of Messrs. S. & W. Welsh.” The bill was rendered by them in their own names, and all the documents and acts attending the sale were prepared and performed by them in their own names ; and it appears that after the sale the plaintiffs rendered an account to Finlay, wherein they charged him with the advances which they had made on the sugars, and credited him with the net proceeds of the same.

The plaintiffs brought their suit for money had and received, but they failed to rescind. They continued to hold the goods delivered under the contract, and sought to acquire all the benefits which they would' have derived from a lack of performance. A party who seeks to rescind a contract must rescind altogether and place the opposite party in the position he was in before the contract was made. He must either accept or he must reject wholly. It is well settled that “ a party can never repudiate a contract after, by his own act, it has become out of his power to restore the parties to the original condition ” (Clark v. Dixon, El. Bl. & El. 148).

The plaintiffs took the goods under this tender in the same manner as if they had been under the May or June shipment, subjected them to their own control and applied them as a credit, claiming a difference for the deficiency.

It is true that the facts themselves show that the plaintiffs have accepted the tender, although they claim that they did not accept the goods : nevertheless they sold them without the assent of the defendants, and retained the proceeds.

The reasons given by the trial judge for granting the nonsuit are such as do not affect materially the exceptions taken on the trial. From an examination of those which were taken by the plaintiffs which have any bearing on the case, we find no reason for complaint.

The motion for a nonsuit was properly granted, and the judgment appealed from should be affirmed, with costs.

Freedman, J., concurred.


source: Caselaw Access Project

author: By the Court.—Freedman, J.

license: Public Domain

text:
    JOHN HONEGGER and HERMAN LAVATER, Respondents, v. HENRY WETTSTEIN, JOHN ULRICH OEHNINGER and HENRY MEYER, comprising the late firm of Wettstein, Oehninger & Co., and FEODORE MIERSON, as receiver of said firm, Appellants.
    I. JOINT DEBTORS.
    I. Instrument purporting to discharge one, not operating to
    DISCHARGE THE OTHERS.

      (a) An instrument not under seal, and for which no consideration is in fact given, in terms releasing one of several joint debtors, will not discharge the others, especially where the creditors executing it in express terms, reserved their rights against the others.
    II. BANKRUPTCY.
    1. Discharge, effect as to foreign creditors.
    Discussion as to.
    2. Discharge purporting, on its face, to discharge one member of a firm from his individual debts.
    Effect of. It will not discharge him from the firm liabilities so as to prevent a judgment enforceable against the partnership property, whatever may be its effect as barring recourse to his separate estate.

      Therefore, in an action against him and the other members of the firm upon a firm debt, a motion by him to dismiss on the ground of such a discharge, was properly denied.

    HI. PARTNERS.
    1. Actions against. 0

      (a) Not barred by judgment, in an action by one partner against the others, dissolving the partnership, appointing a receiver, and also a referee to, among other things, ascertain the firm creditors and the amounts due them, and .barring those who do not present claims after being notified in a specified manner, from participating in the partnership assets, and the proceedings thereunder.
    IV. RECEIVER OP PARTNERSHIP ASSETS APPOINTED BY THE JUDGMENT DISSOLVING THE FIRM, AND MAKING PROVISION FOR THE ASCERTAINMENT, BY A REFEREE, OF THE CREDITORS OF THE FIRM, AND THE AMOUNTS DUE THEM. 1. Intervening by him in action brought by a creditor against the firm.
    (a) Sights, when allowed to intervene.

      1. Defenses. Unless restricted by the order of intervenor,' he may set up as many defenses as he has reason to believe can be substantiated.

      Í. That they may inure to the benefit of the other dedefendants, though not pleaded by them, makes no. difference where the judgment, if obtained, would have the force and' effect of a final and conclusive adjudication as to the plaintiff’s right to share ins the firm’s assets in the receiver’s hands, and the assets are insufficient to satisfy all creditors in full.
    8. Appeal. Has a right to appeal from judgments entered against one or more of the firm, though no judgment is entered against him, the only ■ disposition of the defenses, interposed by him being by rulings made in the course of the trial.
    V. FRAUD ON THE GOVERNMENT.
    I. False invoices.

      (a) Defense to an action for the price of goods.

    1. Where seller and purchaser enter into a fraudulent agree- ' ment to defraud the government out of its proper duties by means of false invoices, an action cannot be maintained by the seller for the price of the goods.
    Before Speir and Freedman, JJ.

      Decided February 7, 1881.
    Appeal from judgment entered upon the verdict of a jury, rendered pursuant to the direction of the court.
    The defendants, Henry Wettstein, John Ulrich •Oehninger, and Albert Meyer, during the time mentioned in the complaint, were partners carrying on business in the city of Hew York, under the firm name of Wettstein, Oehninger & Co.; and the plaintiffs were partners doing business under the firm name of Honegger & Lavater, at Zurich, in the republic of Switzerland.-
    The plaintiffs sought to recover in this action 89,718 francs and 8 centimes, being balance claimed to be due on account of goods sold and consigned by plaintiffs to defendants’ firm.
    These goods so sold and consigned by plaintiffs were silk dress goods, manufactured in Switzerland, subject to an ad valorem duty, and were to be, and were, delivered by the plaintiffs to said firm of Wettstein, Oehninger & Co., at the city of New York.
    Subsequent to the purchases and consignments above mentioned, and prior to the commencement of this action, an action was commenced in the supreme court of this State, by said Henry Wettstein as plaintiff, against said John U. Oehninger and Albert Meyer, for a dissolution of the firm of Wettstein, Oehninger & Co., and settlement of its affairs ; and on May 1, 1876, judgment was duly entered in said action, dissolving said copartnership of Wettstein, Oehninger & Co.
    In and by said decree Feodore Mierson was appointed receiver of all the credits and property of said late firm, and he thereupon took upon himself the duties of such office and continued to act as such receiver.
    After the appointment of said receiver and before the commencement of this action, the plaintiffs commenced proceedings in the supreme court to recover from the receiver the case marked W O C No. 9, appearing in their bill of particulars, claiming the same to have been consigned and not sold.

    This matter was referred to Mr. Buggies as sole referee, and on July 23, 1878, he made his report adverse to the plaintiff’s claim and adjudging'that the same were not consigned goods, but that the receiver held the same as owner.
    This report was confirmed by an order dated July 25, 1878.
    The claim of the plaintiffs upon which they seek to recover in this action was originally filed with Mr. Buggies, the referee in the action brought to dissolve the firm of Wettstein, Oehninger & Co., and said referee was directed, in and by the decree therein, to ascertain the amount due the several creditors of said firm. To this amount so filed, the receiver filed objections, and the proceedings thereon are still pending and undetermined.

    The answer of the defendant, Wettstein, is in effect a general denial.
    The defendant, Albert Meyer, also interposed a general denial, and then set up his individual discharge in bankruptcy.
    The defendant, John Ulrich Oehninger, in his an-, swer admitted the claim of the plaintiffs, but pleaded a release as to himself.
    The receiver, having reason to believe that this action was commenced by the plaintiffs to avoid the defense interposed by him before the referee, and that, in consequence of the neglect of the defendants to set up all the defenses they had, there was danger that the plaintiffs might recover a judgment in this action to be used before the referee as a final adjudication, on petition duly applied to this court to be made a party defendant, and for leave to defend. His prayer was granted, and an order duly entered, of which the following are the material parts, viz. :

      “jIt is ordered, that Feodore Mierson, as receiver of the goods, chattels and credits of the firm of Wettstein, Oehninger & Co., be and he is, as such receiver, hereby made a party defendant in the action of John Honegger and another against Henry Wettstein and others, in the superior court of the city of New York, and that he have leave to appear and answer, and to defend the action, provided he so answer within twenty days from the 19th day of December, 1879, and the plaintiff’s proceedings in said action are heréby stayed therein to have him appear and answer within twenty days from said 19th day of December, 1879.
    1 ‘It is further ordered, that this order shall not affect the complaint of the plaintiffs, nor the answers and amended answers of the defendants, but the same shall stand as they are; neither shall it affect the depositions already taken in this action ; but the same may be read upon the trial of this action against the defendants, and each of them, and against the said Feodore Mierson, as such receiver, with like effect as though the same had been taken after the answer of the said Mierson, as such receiver, had been served; and this order is made upon such condition.
    “ It is further ordered, that issue shall be of the day of the amended answers of the defendants, Wettstein and Meyer, were served herein.”
    The receiver thereupon interposed an answer containing four separate and distinct defenses, viz. :
    1. A general denial.

      2. That all the goods in suit were, under the laws of the United States, chargeable■ with an ad valorem, duty upon importation ; that they were all shipped by the plaintiffs under and pursuant to a fraudulent agreement between the plaintiffs and the defendants to deceive and cheat the government of the United States out of its proper duties and revenues by means of false invoices, and that the plaintiffs and the defendants intentionally and in pursuance of said fraudulent agreement did so cheat and defraud the government of the United States by means of false invoices used as the basis for assessing and fixing the amount of the duties chargeable thereon ;
    3. The pendency of the proceedings before the referee for the same claim, and that they are undetermined ; and,

      4. The adjudication as to the goods marked WOO No. 9.
    Upon the trial plaintiffs’ counsel objected to the receiver introducing any evidence in the action, upon the grounds that under the pleadings he is not entitled to any judgment in the action, but that the plaintiffs are entitled to judgment against him ; also, that the receiver would only be entitled to relief, in any event,, even if his pleadings showed he was entitled to inter-' vene, to the extent of the assets in his hands.
    Plaintiffs’ counsel also objected to the witness on behalf of the other defendants, upon the ground that no such defense is set up in the answer as to them.
    The court held that such evidence should be excluded, and the defendants duly excepted.
    Defendant’s counsel asked leave to amend the answer in this case, on behalf of defendant Mierson, on the ground that there was an omission, through inadvertence and haste in drawing the answer, by introducing the following clause:
    “And this defendant is informed and believes that the said Honegger & Lavater are aided and abetted in their attempt to supersede the rights of your petitioner;, conferred as aforesaid, by one or more of the partners of the said late firm of Wettstein, Oehninger & Co.; and he has reason to believe, and does believe, that the said action in the superior court has been brought by collusion between the said Honegger & Lavater, and one or more of the said late firm of Wettstein, Oehninger & Co., for the purpose of obtaining a judgment which can be pleaded and proved before said referee-upon said contest.”

      The court allowed the amendment.
    Plaintiffs’ counsel renewed the motion to exclude the testimony previously offered, on the ground that the receiver is not entitled to make that defense under the pleadings. 2. That assuming the allegations of the pleadings are true, it does not entitle the receiver to intervene as a defendantin other words, he is not entitled to any relief in the action—no claim is made against him. 3. He cannot prevent a recovery against the three defendants, inasmuch as the plaintiffs are entitled to enforce the personal judgment which may be obtained against the other defendants, and it does not lie with the receiver to make a defense for them which they have not set up.
    The court excluded the evidence and noted an exception.
    ' Defendants’ counsel offered to contradict the invoice mentioned in the complaint, and bill of particulars made out by the plaintiffs of the goods or merchandise mentioned in the complaint, and in the evidence or deposition of Honegger.
    Objected to on the same grounds, and also upon the grounds that it is not competent. Excluded; exception.
    At the conclusion of the evidence on both sides, which largely went to the question of value, the court dismissed the complaint as against the defendant Oehninger, denied the motion of the defendant Meyer for. a dismissal as to him on the ground of his discharge in bankruptcy ; denied a similar motion of the defendants, Wettstein and Meyer, on the ground of fraud on the government, and the further ground that the release of Oehninger operated as a discharge of all the partners ; denied .the motion of the defendants, Wettstein and Meyer, and of- the receiver to be permitted to go to the jury upon the questions of fact involved in the case; and, on motion of the plaintiffs, directed a verdict in favor of the plaintiffs against the two defendants, Wettstein and Meyer, for the sum of $24,224.97, all of which rulings were duly excepted to.
    Judgment having been entered upon the verdict, the defendants, Wettstein and Meyer, and the receiver appealed.

      John A. Ballestier, for defendants Wettstein and Meyer.

      John Halloek Brake, for the receiver.

      B. M. Porter, for the plaintiffs.

       It does not seem a just conclusion, from the remarks respecting collusion between the plaintiffs and one or more of the members of the firm, that the court, either at special or general term, were of opinion that an order of intervener should not be allowed, unless collusion is shown between the plaintiffs and one or more of the members of the firm. It would seem that the mere neglect of the members of the firm to set up the proper defenses would, in a case where the interests of other creditors in the partnership assets would be affected by the judgment, be sufficient.

       This is not so laid down in terms in the opinion, but as the judgment was reversed solely on the ground of the rejection of all evidence offered to establish the fraudulent agreement, it would seem to follow that such agreement, if established, would be a complete defense; and on the retrial of the case it was so held by the trial judge. The reporters have therefore taken the liberty of reporting it in the head-note as having been so held by the general term.

   By the Court.—Freedman, J.

The appellants, Wettstein and Meyer, claim that they were discharged from the claim in suit by reason of the release of Oehninger, who was jointly liable with them, if they were liable at all. If this alleged release was either a separate composition or compromise by one of several partners or joint debtors within the meaning of the statute of 1838, it only discharged Oehninger, especially as the creditors who executed it, in express terms reserved their rights against the other members of the firm. If it was neither, if it is to be judged by the rule of the common law, it cannot operate as a release even as to Oehninger, because it bears no seal and no consideration was given for it in fact. The complaint as to Oehninger having been dismissed, and the plaintiffs not having appealed, it is sufficient to hold that his release is not available to Wettstein and Meyer as a bar.

The appellant, Meyer, next claims that he was entitled to a dismissal of the complaint as to himself by reason of the discharge in bankruptcy obtained by him after the dissolution of the firm. To this the plaintiffs reply that the discharge, even if it were otherwise available to Meyer against debts due by him as a member of the firm, can have no operative force against them, because they were and are residents and citizens of Switzerland. True, it has been repeatedly held that a discharge granted in one State under the insolvent laws of such State cannot affect creditors who are citizens or residents of another State of the Union. Such a discharge has been held, so far as citizens or residents of other States of the Union are concerned, to be in contravention of that provision of the Constitution of the United States which declares that no State shall pass a law impairing the obligation of contracts. (Soule v. Chase, 39 N. Y. 342 ; Pratt v. Chase, 44 Id. 597; Baldwin v. Hale, 1 Wall. 223.)

But whether the power of Congress is similarly restricted as against citizens or residents of foreign countries, is quite another question. The power to pass uniform laws on the subject of bankruptcies throughout the United States is expressly conferred upon Congress, and may be exercised to the exclusion of all regulations on the part of the several States. It is not limited by a saving clause in favor of foreign creditors. True, even an act of Congress can have no extra-territorial force, and whenever foreign tribunals are called upon to pass upon the effect, within their jurisdiction, of a discharge in bankruptcy under the statutes of the United States upon citizens or residents of their country, they may decide the question according to the law of their own land. But when the question is raised ■in any court of the United States or of one of the several States, and especially when the jurisdiction of any •such court is invoked by foreign creditors to enforce a debt which otherwise would be clearly barred, the determination, in the absence of all limitation by treaty •or by the Constitution, depends upon the intention of the law-making power of the United States as it may be gathered from the statute. That there is no limitation upon the power of Congress, except the requirement of uniformity in the law, and that consequently it is competent for Congress to act on the whole subject of bankruptcy in every other respect with a plenary discretion, has been repeatedly decided. I do not deem it necessary, however, to enter upon a discussion of the intent of the statute as to the particular point so far discussed, as there is another objection to the availability of the discharge in this action, which was also made below, and which must be sustained. The discharge upon its face purports to discharge Meyer only from his individual debts. As to the legal effect of such a discharge Judge Raparlo, in delivering the opinion of the court of appeals, in Poillon v. Lawrence (77 N. Y. 207), uses the following language, viz. :

“We have not deemed it necessary to pass upon the question whether the proceedings in this case were in proper form to bar debts due by Lawrence as a member of the firm of Lazarus & Wolff. Corey v. Perry (67 Maine, 140) holds that under such proceedings, giving no schedule of firm debts or assets, nor praying for a discharge from firm liabilities, the discharge when obtained will relieve the bankrupt only from his individual indebtedness, and not from partnership liability. This position seems to be sustained by numerous authorities (1 Bankr. Reg. 341; 22 Wall. 395; 3 3 Biss. 491 ; Hodgins v. Lane, 11 Nat. Bankr. Reg. 463; 15 Id. 417; 2 Ben. 96; 3 Id. 386 ; 6 Id. 20; 10 Nat. Bank. Reg. 331 ; 17 Id. 76). The assignee under such a proceeding acquires no title to the firm assets, and it would seem to follow that a discharge granted therein should not affect the firm debts. Whether it bars re- . course to the separate estate of the discharged partner, for a firm debt, does not seem to have been authoritatively determined.

While the question thus remains an open one, it seems best that this court should follow the clear weight of the authorities, by which it was held, that while a member of a late partnership may, upon his individual petition, be discharged from all his debts, partnership as well as individual, provided there are ’ no partnership assets to be administered, he cannot, in case of the existence of such assets, be discharged from the liabilities of the firm, unless the firm is declared bankrupt and the firm assets are brought into the bankruptcy court to be administered according to the provisions of the bankruptcy act. Under these decisions, and especially as the discharge of Meyer only purported to discharge him from his individual liabilities, the motion to dismiss as to him was properly denied.

The pendency of the proceedings before the referee under the .judgment of dissolution granted by the supreme court, cannot be deemed a bar to this action, because in those proceedings the plaintiffs can recover only their proportionate share in the partnership assets and they are left at liberty to otherwise pursue the individual partners.

The determination had as to the case marked W O 0 Mo. 9, is conclusive, as a former adjudication between the parties, as far as it goes ; but as it only went to the effect that the goods were sold and not consigned, and that consequently the title passed, the plaintiffs were left free to sue for the price.

The most important remaining question relates to-the defense of fraud upon the government interposed by the receiver. All evidence sought to be introduced by the receiver for that purpose, was excluded, mainly on the ground that no such defense had been set up by the other defendants and that consequently it did not concern the receiver. The alleged fraudulent invoices were admitted, but only on the question of the value of the goods sued for. In this the learned trial judge clearly erred. The receiver represented not merely the members of the late firm, but the assets of the firm and the bona fide creditors entitled to them, and he was bound to protect the assets against unjust or illegal claims. He had been duly made a party to-the record in this action with leave to defend in his representative capacity. The only-conditions imposed were that his coming in should not affect the complaint of the plaintiffs or the answers of the other defendants, nor the depositions already taken. He was not limited to any particular line of defense, and consequently had the right to set up as many as he had reason to believe could be substantiated. The question of collusion between the plaintiffs and one or more of the-members of the firm of Wettstein, Oehninger & Co. was not an issuable fact to be determined at the trial, and the amendment allowing such collusion to be averred which was made in the course of the trial, was wholly unnecessary and did not affect the rights which the receiver otherwise possessed. The question of collusion was disposed of by the proceeding which terminated in the order allowing the receiver to come in and defend without limitation, and as that order was not appealed from, he had a right to substantiate at the trial, if he could, every defense interposed, and to claim such, a verdict as his proof entitled him to. He did interpose as a distinct and separate defense that the-transactions out of which the suit arose were illegal and against good morals in their inception and carried on in violation 'of the law of the land, and he had a right to show it. if he could. Enough appears in the case to show that the defense was not altogether without any foundation in fact. That this defense may enure to the benefit of the other defendants, though not pleaded by them, can under the exceptional circumstances of this case make no difference, lor the object of the plaintiffs in this'action clearly is to obtain a judgment having the force and effect of a final and conclusive adjudication as to their right to share in the assets of the firm in the hands of the receiver together with the bona fide creditors. That such assets are insufficient to satisfy all creditors in full, is a conceded fact in the case. For the reasons stated the court below erred in excluding the evidence offered by the receiver for the purpose of substantiating the defense of fraud and in refusing to pass in any manner upon the issue raised by the interposition of that defense. For the same reasons the receiver could not be deprived of his right of appeal by the direction of a verdict against Wettstein and Meyer only. The facts that he is a party to the record, that he has an interest in the result, and that he feels aggrieved by the disposition made, give him a sufficient standing before the general term.

As the conclusions already reached necessarily call for a new trial, it is unnecessary to consider the remaining questions.

The judgment appealed from should be reversed and a new trial ordered as against the appellants, with costs to appellants to abide the event.

Spbie, J., concurred.