author: Robertson Ch. J.

text:
    Henry G. Ward, plaintiff and appellant, vs. James C. Jewett, et. al. defendants and respondents.
    1. Where, hy the terms of an agreement between the parties to the action, no other act is required to be performed by one of them, (the plaintiff,) than the payment of money, a clause therein, binding either party to pay to the other, in case of a failure to perform any of his covenants, a specified sum as liquidated damages, being only capable of being construed as a penalty, as to that one, cannot be construed differently as to the others.
    2. Although, in an action for a breach of such agreement, an adherence by the plaintiff’s counsel to an untenable point of law made in his opening, viz. that the plaintiff is entitled to the sum fixed as liquidated damages, might justify a dismissal of the complaint, its abandonment immediately after being made, accompanied by an offer to prove the damages, which were specially stated in the complaint, and an application for leave to amend the demand for relief, will entitle him, upon proper evidence, to recover such damages.
    (Before Robertson, Ch. J., and Barbour and Garvin, JJ.)
    Heard January 18, 1867;
    decided April 1, 1867.
    This was an action to recover damages for a breach hy. the defendants of their covenants contained in a sealed agreement to build, furnish, and with certain exceptions fit for use, " three steamers according to a plan and specifications alleged in such agreement to be thereto annexed. The only act to be done by the plaintiff, according to such agreement, was the payment of the price of such vessels in installments at certain stages of the work, as it advanced. A clause in such instrument bound either party to pay to the other, in case of a failure to perform any part of his covenants therein contained, a certain sum ($20,000) as liquidated damages. •
    Such agreement, and breaches of the covenants therein contained by the defendants, are set forth in the complaint, and judgment therein demanded for the sum so fixed as liquidated damages. The answer set up as a defense, that no plan or specification for building such vessels was ever annexed to such original agreement or made, and alleged the abandonment mutually of such agreement, and the substitution of a modified one in its stead, which altered the character of such vessels, fixed no time for their completion, and only required the employment of due diligence therefor. Such answer averred a failure by the plaintiff to require the articles necessary to complete the equipment of such vessels, also to do various acts, and furnish various articles necessary to enable the defendants to complete the contract on their part, and to pay the sum agreeed upon by him to be paid as the price of such vessels. It also claimed a set-off for work done, materials furnished, and money paid at the plaintiff’s request, and took issue upon the other facts stated in the complaint. The plaintiff controverted the facts upon which such set-off was claimed in the answer, by a reply.
    On the trial the plaintiff’s counsel opened his case to the jury, and claimed the sum mentioned in the agreement in question as liquidated damages. The counsel for the, defendant thereupon moved, upon the pleadings and such opening, to dismiss the complaint. The plaintiff’s counsel then stated he was prepared to prove the damages specially stated in his complaint, and applied for leave to amend its demand for relief in that respect, which was refused. The court then dismissed the complaint; to which decision the plaintiff’s counsel excepted, which exception was ordered to be heard in the first instance at the general term. Upon which order the case was heard..

      0. Lawton, for the appellant.
    1. The ground of dismissal does not appear, and no reason is given in the case ; we must, therefore, look into the pleadings, and if, upon the case they present, an action can he maintained, a new trial must be granted. The defendants’ counsel did not pretend any surprise, nor suggest that they had been misled; they did not even oppose the motion to amend.
    II. The complaint is upon a contract for the construction' of three steam screw propellers, averring breaches, and specially setting forth the damages amounting to $45,447.19 ; but as the damages for non-performance were settled, fixed and liqui-, dated by the parties in the' contract at $20,000, judgment for that sum only was claimed.
    III. The defendants take issue upon that portion of the contract which states the modelling of the vessels and the specifications for building, &c. They deny that the damages were in fact fixed or liquidated, and claim that the words of the contract must be regarded merely as a penalty. They deny that the plaintiff had performed his part of the contract. They aver that the contract was waived by the parties, and a new agreement had between them, which they set forth ; that the time for completion had been extended. They admit that the vessels were not completed until long after the 1st day of March, 1863, but do not aver that they were ever completed. They admit the payment of $68,000, (about $10,000 more than ever became due by the terms of the contract,) and wind up with two counter-claims, amounting to $23,000 ; and thus the whole controversy between the parties is set forth in the pleadings, and fully placed before the court.
    IV. The contract was duly executed and delivered under the hands and seals of the parties, and no fraud is alleged or pretended; and in it they have fixed, settled and liquidated the damages at $20,000, and they are bound by it. The words are plain and their meaning unmistakable, and the court will not alter it or make a new contract for them.
    1. The damages were settled, fixed and liquidated by the contract; the damages were uncertain and difficult to be ascertained. (Clement v. Cash, 21 N. Y. Rep. 256, 258, 259. Westcott v. Thomson, 18 id. 363, 367. Norton v. Woodruff, 2 id. 153, 16, 469. Cotheal v. Talmage, 5 Seld. 551.)
    2. If not, then the court should have ruled, as claimed in the answer, “ that the words were to be regarded merely as a penalty,” and allowed the trial to proceed, leaving the parties to their remedy, by motion, if harm should result to either ; this would have been fair, just and legal. It was just such decisions as this, that certain sections of the Code were adopted to prevent. (Code, §§ 169,170,173,174.)
    3. Although it does not in either view of the case seem to require an amendment for the trial of the case, yet, regarding the case as the court did, the amendment ought to have been allowed.
    V. The complaint sets forth a cause of action, and there is no rule, practice or law by which the plaintiff can be turned out of court, without being allowed the attempt, at least, to prove it. The prayer is always for such judgment as the plaintiff supposes himself entitled to, but the recovery is upon the cause of action. (Code, § 142, subd. 3.) As to what a cause of action is, see Meyer v. Van Collem, (28 Barb. 231.)
    YI. The summons is no part of the trial record; in this case, it was not before the court, and no point was made upon it, and none can be raised here for the first time. If wrong, the only remedy is by motion at the special term.
    VII. The complaint was improperly and arbitrarily dismissed, and a trial should be allowed, with costs to abide the event.

      Ban Marvin, for the respondents.
    I. The court decided rightly in dismissing the complaint. The plaintiff was not, upon the allegations of the complaint, entitled to the relief he demanded. The sum of $20,000 in the last clause of the contract was a penalty. The words cc liquidated damages ” do not determine the question. The intent of the parties is to be gathered from a consideration of the whole contract and all its stipulations. Staples v. Parker, 41 Barb. 648. Hosmer v. True, 19 id. 106.) Where, as in the present cases, there are covenants for the performance of several things of various degrees of importance, and a large sum is stated at the end to be paid upon breach of the contract, it is a penalty. Where the sum stated is in some instances too large and in others too small a compensation, it is to be regarded as a penalty. (Esmond v. Van Benschoten, 12 Barb. 366, and cases there cited. Astley v. Weldon, 2 B. & P. 346. Kemble v. Farren, 6 Bing. 141. Sedgwick on Damages, 421. Niver v. Rossman, 18 Barb. 50.)
    II. This rule prevails in all cases where the actual damages are capable of being liquidated and computed or fairly estimated, as they are in the present case, where the damages claimed are all for moneys paid, for not furnishing specific articles of equipment of well known values and for not completing the vessels in time. The allegation of the loss of a sale by the non-completion of the vessels is not a ground of damages.
    III. In order to hold that the sum named in the contract is liquidated damages and not a penalty, these things most concur. 1. It must be held to be so in favor of each party as against the other. 2. Also, in respect to every distinct covenant and stipulation. 3. If it is a penalty as regards any one stipulation or either party, it must be so held as respects the whole contract. (Staples v. Parker, 41 Barb. 648. Hosmer v. True, 19 id. 106.) Eow all the stipulations on the part of the plaintiff are for the payment of various sums of money at different times, some more- and some less than $20,000. But no damages for the mere non-payment of money can ever exceed the legal interest. (Gray v. Crosby, 18 John. 219-226. Sedgwick on Damages, p. 400.) As to the covenants on the plaintiff’s part, there the sum fixed is a mere penalty. And if so as to the plaintiff’s covenants, it must be equally so as to the defendants’ covenants, else there can be no mutuality in the contract.
    IV. The sum of $20,000, if regarded as liquidated damages at all, can only be claimed upon a total, and not upon a partial failure to perform. The complaint states a case of partial performance by the defendants. (Reynolds v. Brady, 37 Eng. Law and Eq. 123.)
    Y. The plaintiff was not entitled to the relief asked for in his complaint, and in the opening of his counsel, and he did not ask to be allowed to establish or prove any other case entitling him to relief. The only request made by his counsel was to be allowed to amend the prayer of his complaint, so as to allow him to prove the actual damages, and when his request was denied, although he stated that he was prepared to prove the actual damages, yet he did not offer or ask leave to do so. (Bishop v. Houghton, 1 E. D. Smith, 566. Reubens v. Joel, 3 Kern. 488. Towle v. Jones, 19 Abb. 449.)
    YI. The decision of the court denying the plaintiffs motion to amend cannot be reviewed on appeal, nor is it the subject of an exception. (Gould v. Rumsey, 21 How. 97. McQueen v. Babcock, 13 Abb. 268.) And if it could, the amendment asked for would not" have benefited the plaintiff, as it would not have permitted the introduction of any evidence, except what was already admissible.
    The admission and exclusion of evidence does not depend upon the prayer of the complaint, but upon the allegations and statements therein.
   By the Court,

Robertson Ch. J.

The complaint in this case was dismissed on the trial, undoubtedly, on the ground that it showed no right to recover the liquidated damages claimed by the plaintiffs’ counsel in his opening. In this the court would probably have been right, if the complaint showed no other cause of action. By the terms of the agreement set out in such complaint, no other act was required to be performed by the plaintiff but the payment of money. So that the clause as to liquidated damages, as to him, could only be construed as a penalty. (Bagley v. Peddie, 16 N. Y. Rep. 469. Beale v. Hayes, 5 Sandf. 640. Lampman v. Cochran, 16 N. Y. Rep. 275.) And could not be construed differently as to the defendants. (See Lampman v. Cochran, ubi sup.)

But the complaint did show a good cause of action in the agreement therein set forth and its breach, and even averred special damages thereby. The fault committed by the plaintiffs’ counsel in his opening, of claiming liquidated damages only, was forthwith repaired, by stating his ability to prove the special damages, and asking leave to amend the demand of relief in his complaint for that purpose, if necessary, the moment it was brought to his attention by the motion of the counsel for the defendants. He had as yet no opportunity of offering any evidence, so that if the dismissal was not sustained by an inherent vice in the complaint, it was erroneous. If the opening of the plaintiffs’ counsel, in stating an untenable point of law, to wit, that he was entitled to the sum fixed as liquidated damages, could be relied on, in case he adhered to it, to sustain such dismissal, its abandonment as soon as made relieves the case of that difficulty.

The prayer for relief becomes of course wholly immaterial after the defendant has answered ; the plaintiff being entitled to any which the case made in his complaint warrants. (Code, § 275.) The dismissal of the complaint was therefore erroneous, and there must be a new trial,


source: Caselaw Access Project

author: Robertson, Ch. J. Jones, J. Barbour, J. (dissenting.)

license: Public Domain

text:
    Gustavus Bunge et al. plaintiffs, vs. Gerhard H. Koop et al. defendants.
    1. The payment and acceptance of a less sum in satisfaction of a greater one due does not discharge the debt, even when made under a parol agreement by the creditor to accept such sum in satisfaction, if the debtor would procure the loan of it from his friends, and they lent it to him on the faith of such agreement. Barbour, J. dissented.
    2. A party, against whom a verdict is peremptorily directed to be found, is entitled to the construction of the evidence most favorable for him; and in determining the propriety of the'direction, evidence in conflict with that in his favor, may be disregarded.
    3. It would not be a “ furtherance of justice,” under the 172d section of the Code of Procedure, to disturb' a verdict perfectly proper upon the pleadings as they stand, in order to sustain a new defense, of which the plaintiff had no notice either before or at the trial, until after the evidence .on both sides had closed. An amendment to warrant it would be a substantial change of'the defense.
    4. A notification by the sellers of bills of exchange, through the broker by whom the sale was effected, to the buyers, a day or two before the time they were bound to. deliver them, that they could not complete their contract, and their subsequent ratification of that notice, by admitting their inability to the buyers, accompanied by a notice from the latter, that they would he obliged to buy other exchange and there would he a loss, amount to a waiver not only of any demand of the hills of exchange on the day fixed for their delivery, sufficient to entitle the plaintiffs to rescind the contract, hut also of a tender of the price, so as to make the right of action-of the plaintiffs complete.
    6, Such a notification, ratification and notice would also operate as a determination of any .election the sellers might have to deliver before a day specified, so as to make the contract performable at once and avoid any risk from a future rise in the price of exchange.
    6. The buyer’s right of action being thus complete, and the rate of damages determinable by the price of the exchange in question upon the day such notice was given, no subsequent agreement to pay or payment of, a less sum would discharge the whole claim.
    7. Where there is no specific request to a judge to leave any particular question of fact to a jury, and he gives a general direction to find a verdict for either party, to which only a general exception is taken, the only questions, on a review of his decision, are, Whether the uncontroverted facts called for a decision in favor of the party against whom such verdict was directed 7 and Ought the verdict to he set aside as against evidence 1 If they are to he answered in the negative, the decision of the judge must he affirmed. Per Jokes, J.
    (Before Robebtsok, Oh. J., and Bxbbous and Jones, JJ.)
    Heard June 6, 1866;
    decided December 31, 1866.
    ' This was an action to recover damages for the non-delivery by the defendants of- certain bills of exchange sold by them to the plaintiffs. After alleging the co-partnership of the plaintiffs and of the defendants, the complaint set out a sale by the latter to the former of the bills of exchange in question, deliverable at the option of the seller, on or before a specified day, (July 31, 1864,) which happened to be a Sunday. It averred the readiness of the plaintiffs to receive such bills, hut that the defendants notified them of their inability to perform their contract. It then stated the value of such hills on the Saturday next before, and Monday next after, the day specified ip their contract, and the whole amount of the difference between such value and the price mentioned ' in such contract, ($6400.) It further alleged the payment of a certain sum on account thereof, and demanded the balance. The answer alleged, by way of defense, that on or about the 30th doy of ¡July, 1864, the plaintiffs “demanded from the defendants said sum of $6400, which sum they were wholly unable to pay,” and that thereupon the plaintiffs agreed with the defendants as follows, to wit: that if the latter “ should,, and did induce their friends to raise and loan to. said defendants the sum of $3500, and would pay the same to the plaintiffs, the latter would settle and compromise their alleged demand against the defendants for and upon receiving said sum of $3500, to be raised as aforesaid, and would leave it entirely to the defendants’ honor, whether they should at any time thereafter pay said plaintiffs any further sum or amount;” .upon which the defendants borrowed from their friends the sum of $3500, and paid the same to the plaintiffs, “with the understanding that the plaintiffs would receive the same as satisfaction of said claim,’’ leaving it entirely to the honor of the defendants to pay when they should be able so to do, such additional sum, as with the sum so paid, would amount to three fourths of the plaintiffs’ alleged claim. It also alleged that “ such agreement on behalf of the plaintiffs, formed the inducement * * * for the friends of the defendants to loan and advance ” such sum of $8500. The answer also averred that only a memorandum in writing, signed by third parties, to wit, Brockelman, Unger & Co. (in the form of a notice directed to the defendants,) of a sale of exchange for them to the plaintiffs, approved in writing by the lattér, was delivered to the defendants, and it denied that such memorandum is a valid agreement. It controverted all other allegations of the complaint.
    On the trial the plaintiffs proved a memorandum in the form of a notice, signed by the brokers who negotiated the sale, (Brockelman, Unger & Co.) directed to the plaintiffs, of a purchase on their account from the defendants of the bills of exchange in question, (60,000 Louis d’or thalers,) payable at a certain date, (sixty days,) drawn on Bremen, at a certain price, ($1.30 per thaler,) deliverable at the seller’s option, on or before the 31st of July, 1864, having on it the word “ accepted,” underwritten, which was subscribed by the defendants.
    Upon the examination, on the trial, of one of such firm of brokers, (Mr. Klu'gg,) he testified that one of the defendants (Orapel) “ told him he thought he could not respond to the contract.” The witness then “ formally notified the plaintiffs.” There was some discussion between him and such defendant who should go to see the' plaintiffs, and finally he went for such defendant." One of the plaintiffs (De Neufville) testified (without contradiction) that he, having first heard from such broker on the subject on the 29th-of July, 1864, went to the defendant Koop, and said to him, “I am informed you are not able to fulfill your contract; I want to know if such information is correct.” The defendant (Koop) replied, that “he was Unfortunate in business; that exchange was so high they could not deliver the exchange; gold being so high, for the present, he was unable to fulfill his obligations.” Such plaintiff further testified that he then said to the defendant (Koop,) “we were obliged to buy the exchange in; we wanted it, and there would be a loss.” He then asked the defendant “what he proposed to do. ” He said he would see his friends, and try his utmost to pay the plaintiffs “ some money on account, and” they “must wait till.he should be in'a position to páy ” them “ in full.” Such plaintiff also testified that he thought he told such defendant that in order “ to establish the deficiency,” he (the plaintiff) “ should ask a broker to buy the exchange in;” to which such defendant replied, the plaintiffs “ would have to buy, it, and that nothing further was said, at. that time.” The same plaintiff had another interview with the same defendant, on the same day, and “ asked him if he could pay seventy-five per cent.” In answer to which, such defendant said, “he would try; but at present he could not see his way clear; he had seen some friends, and had succeeded so far as to be able to pay $3500, which he would pay ” the plaintiffs the next day. Such defendant asked the plaintiff “to wait until his situation would be changed, when he would pay them “ in full.” On his cross-examination, the same plaintiff (De Neufville) admitted that he said to the defendant Koop, “ Give us $3500 and then we will leave it to your honor and ability hereafter to pay us enough to make it seventy-five per cent; ” and such defendant said “he would make it up, not only to seventy-five per cent, but in full, if he was able.” But he also testified “ there was no definite settlement about it.” The agreement was that the $3500 should be sent next day. That was all he (the defendant) 'could pay, and the balance was to depend upon ,when he got able, or “ his friends stepped forward.”
    The defendants paid the $3500 on Saturday (the 30th July,) ánd on Monday following (August 1) the plaintiffs bought the same amount of the same kind of exchange for $1.94, per thaler, making a difference of $6400 above the price fixed by the contract in question. The price of such exchange on the 28th, 29th and 30th of July, was the same as on the 1st of August. On the 31st of August' the plaintiffs wrote to the defendants demanding such difference, and the latter answered next day, stating that “ according to the understanding had with the plaintiff De Neufville,” on the previous Friday, (29th,) they “ were to use their best endeavors to make up seventy-five per cent ” of their claim, and to pay $3500 in cash, which they did. They added that it was impossible for them to do more, but they sincerely trusted that they “ should be enabled before a long while to pay” the balance, and hoped the plaintiffs perceived in this a real desire to do “them justice.” Other facts and evidence appear in the opinion of the court. The court directed a verdict in favor of the plaintiffs. Exceptions to be heard in the first instance at a general term.

      E: A. Doolittle, for the appellants, defendants.
    I. The court erred in refusing to dismiss the plaintiffs’ complaint. (Fickett v. Brice, 22 How Pr. 194, 316.)
    II. The court erred in directing a verdict for the plaintiffs.

      1. The defendants proved the allegations of the answer, to wit: (1st.) The inability of the defendants to furnish the exchange, or to respond in damages, and the plaintiffs’ knowledge of it. (2d.) Negotiations for a settlement,' the plaintiffs urging the defendants to raise money through their friends to compromise, and the latter agreeing to do so, upon condition the former would accept $3500 cash in settlement of their claim, and leave it to the honor and future ability of the defendants to pay a further sum sufficient to make seventy-five cents on the dollar, which proposition the plaintiffs accepted. (3d.) The determination of the amount of the claim upon which the agreement should be based, by the plaintiffs purchasing in the exchange, which was not done till after the settlement, viz. on the 1st August. (4th.) The acceptance by the plaintiffs of this proposition before the defendants had raised the money. (5th.) The disclosure of the terms of the compromise to Unkart and Koop, the parties who advanced the $3000, on condition that it should be received in settlement ($3000 being paid in the checks of the parties making the advance.) (6th.) The making of the agreement before the first contract had expired, or a right of action had accrued under the contract declared on, and before the amount of damages had been fixed or agreed upon. ■ (7th.) Performance by the defendants of the contract on their part.
    2. This was a good defense to the action, as an accord and satisfaction; most clearly it amounted to an extension of the time for the payment of any further sum.-
    3. If it is claimed that there was any conflict of evidence, then the court erred in refusing to submit the questions of fact to the jury, so long as there was any competent evidence tending to prove the material allegations of the answer. The court could properly order a verdict for the plaintiff only on the ground that the answer, as matter of law, did not constitute a defense; in other words, the court having refused to submit the questions of fact to the jury, this court must treat this case precisely as if the jury had found each and every of those questions, upon which there was any competent evidence, in favor of the defendants. (Taylor v. Allen, 36 Barb, 294. Sackett v. Spencer, 29 id. 180. Bridgeport City Bank v. Umpire Stone Dressing Co., 19 How. 51. 30 Barb. 421. Bernhard v. Brunner, 4 Bosw. 528.)
    IH. This was clearly a compromise and settlement of a doubtful inchoate right of action, and should be enforced. The law considers any thing a sufficient consideration which arrests or terminates litigation. (Pars. Mer. Law, 27, 28. 2 id. on Cont. 5th ed. 618. 1 id. 438. Seaman v. Seaman, 12 Wend. 381. Russell v. Cook, 3 Hill, 504.)
    IV. It is good as an accord and satisfaction.
    1. The rule that a less sum than the amount of the claim is not good as an accord and satisfaction, applies only where the sum is fixed and determined, and is at the time actually due. (5 Barn. & Ald. 117. 3 Mees. & Welsb. 651. 21 Verm. R. 223, 4 Gibb. 406. 4 Denio, 166. 12 Metc. 551. 2 Pars. on Cont. 129, 618.)
    2. The defendants proved a new agreement in settlement of, and which took the place of the old, and there was a good and sufficient consideration to uphold that agreement. The plaintiffs received a distinct benefit, which otherwise they would not .have received, viz. $3500 in cash. They received it on the 30th, when the contract did not expire till the 31st, or that being Sunday, till the 1st of August. (2 Metc. 283. 18 Pick. 414. 3 Hawks, 580.) .
    3. An indorsement by Unkart & Koop of the defendants’ notes for any portion of the claim, would have been a good consideration, and payment in their checks was equally so. (14 Wend. 116. 21 id. 450.)
    4. The defendants had a right to leave the plaintiffs to their action, and to litigate that action. They also had a right to prefer to have an unadjusted and possibly doubtful claim. A mere right of action held against them by’ the plaintiffs, rather than become debtors to their friends for a confidential debt, is of itself a good consideration.

      5. If the consideration was either a benefit to the plaintiffs, or trouble or injury to the defendants, sustained or incurred at the plaintiffs’ request, it is good. (Nerot v. Wallace, 3 T. R. 17. Willants v. Vauchel, 4 East, 131. Willatts v. Kennedy, 8 Bing. 5. 3 John. 100. 8 Bing. 638. 2 Pet. 182.)
    6. The accord and satisfaction in this case is another agreement between the parties substituted for, and in satisfaction of the contract to deliver the exchange. This contract being carried out, is by its terms an accord and satisfaction and extinguishment of the contract declared on. (2 Pars. on Cont. 5th ed. 681. Howe v. Mackay, 5 Pick. 44. Kellogg v. Richards, 14 Wend. 116. Eccleston v. Ogden, 34 Barb. 444. 21 Wend. 450.)
    7. A party holding a claim may agree to take a new promise of the other in satisfaction. If a stranger pay from his own money or give his own note for a part, &c. in consideration of a discharge of the whole, such discharge is good. (Babcock v.Dill, 43 Barb. 577.) In this case there wad' more: there was $3000 paid by friends in cash, in consideration of the alleged agreement, and $500 by the defendants; and this, too, before the right of action had accrued. (2 Pars. 681. Babcock v. Hawkins, 23 Verm. R. 561. 2 Barn. & Ald. 328. 2 Metc. 283. Goodnow v. Smith, 18 Pick. 414. 20 John. 76. Brooks v. White, 2 Metc. 283. 4 Barn. & Ald. 506. Tuttle v. Tuttle, 12 Metc. 551. 11 East, 590.)
    8. It is not necesssary that the accord and satisfaction shall go so far as to extinguish the original claim. If there be a new agreement resting upon a sufficient consideration to suspend the original claim, until the happening of a specified event, an action cannot be maintained on that claim in the meantime. (2 Pars, on Cont. 685. 2 Barn. & Ald. 328.) If -the contract, as alleged in the answer, had been reduced to writing and subscribed by the parties, it would have been a defense, to this action. As an executed parol contract, it is just as binding.
    ■ V. The court erred in excluding the evidence offered to show the reason of the loan to the defendants. It is proved that the terms of the settlement were disclosed to the witnesses ; and it was competent to prove by them the consideration, which induced them to advance the money.
    VI. It is immaterial, so far as this motion is concerned, whether the conditional promise to pay a further sum in the event of their ability so to do, would or would not give the plaintiffs a right of action; it does not arise under the pleadings. The court erred in refusing to submit the questions of fact to the jury as requested, and in directing the jury to find a verdict for the plaintiffs. In no event were the plaintiffs entitled to recover more than seventy-five per cent.

      0. Forster, for the plaintiffs, respondents.
    1. The exceptions taken by the defendants in the course of the trial, as well the exception to the denial of their motion to dismiss the complaint, as the exceptions to the refusal to submit their requests, and to the direction of a verdict for the plaintiffs, bring up two questions to be considered on this argument, viz: 1st. Did the evidence show any defense under the answer? 2d. Was there proof of any agreement, binding upon the plaintiffs, to accept the $3500 in satisfaction of the debt of $6400, or of any consideration for such alleged agreement ?
    II. There is no evidence that the parties made any such contract or agreement as alleged in the answer or suggested •in the requests.
    ITT. The testimony does not show an accord; on the contrary, the admissions of the defendants hereinafter referred to, dispose of the pretense of such an one. The parol testimony as to the conversations of' July 28 and 29, was not competent to prove such agreement for an accord; those negotiations were merged in the subsequent payment of the $3500, for which no receipt was taken, and in the written agreement between the parties, expressed by the letters of August 1, and the defendants’ reply of August 2.

      VI. The alleged, agreement was without consideration; the payment of $3500, which the defendants were already bound to pay, was but the part payment of the money which it was the duty of the defendants to pay in full, and formed no consideration for any agreement or promise not to sue for the balance. (Higby v. N. Y. and Harlein R. R. Co., 3 Bosw. 497, 504. Cole v. Sackett, 1 Hill, 517. Muldon v. Whitlock, 1 Cowen, 306. Hawley v. Foote, 19 Wend. 516.) The fact that Mr. Hoop borrowed of his friends $3000 of the money paid, and that the payment was made partly in their checks, does not change the rule of law that a part payment. is no consideration for a verbal agreement to extend the time of payment of the balance of the debt. (Olcott v. Rathbone, 5 Wend. 490, 493. Gibson v. Renne, 19 id. 389.)
    V. There was no satisfaction; the alleged accord was never executed.
    1. The plaintiffs did not- give any receipt or acknowledgment, nor did the defendants ask one, but the defendants paid and the plaintiffs received the $3500 on account, and notified the defendants on the next business day they had so credited it on account, and claimed the balance, which the defendants promised to pay. (The Brooklyn Bank v. DeGrauw, 23 Wend. 343 Hawley v. Foote, 19 id. 517.)
    2. The doctrine of all the cases is that it is incumbent on the defendants, who plead an accord and satisfaction, to show, conclusively that there was such a satisfaction, and that the plaintiffs expressly accepted it as such at the time. (Olcott v. Rathbone, 5 Wend. 492.)
    3. This requisite is wholly wanting here; for not only was no .receipt or release asked for or obtained, but Hoop’s testimony as to the interviews admits that the $3500 was only a payment on account.
    VI. The express promise made by the defendants, in writing, August 2, 1864, to pay the balance of the claim, was founded on a good and sufiicient consideration, and is dearly obligatory upon them.
    1. The plaintiffs’ letter of August 1,1864, claimed that the $3500 was a payment on account, and a balance of $2900 in their favor, for which, they say, we await your check, without delay.” The defendants, by their answer of August 2, admit the claim, and that the payment of $3500 was on account. They say therein, “ we sincerely trust that we shall be enabled, before a long while, to pay you the balance, and hope you perceive in this promise our real desire to do you justice.” We are not left to the imperfect memory of witnesses. Here, in writings signed by the parties at the time, is their agreement for the payment of the $3500 on account, and the express promise of the defendants to pay the balance before a long while.

    2. If the parol testimony as to the conversations between the defendants and De Neufville, a day or two previous, tended to vary or contradict these writings, it would not be competent for such purpose; all such prior conversations are merged in the writings. But these conversations do not have any such contradictory tendency; on the contrary, they show that the defendants themselves did not think the $3500 was paid in settlement. They asked -for no receipt. They both admitted their further liability, as appears from their own statements, referred to in the third point. (Carter v. Hamilton, 11 Barb. 149. Mumford v. McPherson, 1 John 417.)
    YH. The defendants’ exceptions are not well taken, and should, therefore, be overruled; and the plaintiffs should' have judgment upon the verdict, with costs.
   Robertson, Ch. J.

Of course, on a peremptory direction to a jury to find a verdict for either party, the other party is entitled to the benefit of whatever construction such jury would be entitled to give to any part of the evidence most favorable to the latter, and conflicting evidence may be disregarded. The plaintiffs, also, were not entitled to recover in this action on any promise by the defendants to pay three-fourths of their claim, when the latter were able to do so, because no such ability was proved. The real and insuperable difficulty of the defendants, in this case, is, that the only defense set up in the answer, beyond the denial of the making and validity of the original contract, is not good in point of law. Such defense consists of the making and supposed part performance of a new undertaking on the part of the defendants to. procure their friends to lend them, $3500, which, when lent* they would pay to the plaintiffs in satisfaction of their claim, and the actual performance of such undertaking by procuring such loan, paying such sum to the plaintiffs, and their acceptance of the same in full satisfaction of théir claim. The additional fact of its being left to the honor of the defendants to pay the residue of three fourths of the claim of' the plaintiffs when able, may be disregarded, as not creating any legal obligation, and, therefore, entirely immaterial. Indeed much stress is laid, as will be seen hereafter, in a defense now brought forward, but not set up in the pleadings, upon the fact that a promise, legally binding, to pay such residue formed part of such compromise. The sole part of such compromise, which was incumbent on .the defendants to perform, consisted of procuring the loan and paying the money to the plaintiffs.

The note of'a third party for a particular sum, given and received in satisfaction, may discharge a debt, for a larger amount, [Le Page v. McCrea, 1 Wend. 167,) and the actual payment, by a third party, of a certain sum of money directly to the creditor of another person, and similarly received by him, may produce the same effect; although that may be doubted in a case where the debtor promises to repay such sum, thus virtually borrowing it, and making the third party merely his agent to discharge such debt. But I cannot see how, when the agreement is made with the debtor alone, the fact of the mode in which the debtor is to obtain the money, which he is pay to his creditor, can do away with the inefficiency of any payment by such debtor of a smaller sum, in extinguishing a debt for a larger one. (Harrison v. Close, 2 John. 448. Seymour v. Minturn, 17 id. 169. Dederick v. Leman, 9 id. 333.) After the money is borrowed, it ceases to be the property of the lenders, and it is converted into or exchanged for a mere debt of the borrower to them. He was not their agent, in paying it to his creditor, and the lenders retained no power to enforce, as they had no interest in enforcing, such payment. The creditor could not, upon the loan, sue such debtor for money had and received for his use. The mode of obtaining the money became, therefore, immaterial, and the only defense, therefore, which does not consist of a denial of the plaintiffs original claim, becomes entirely unavailing.

But it is proposed to construct, out of the evidence in the action; an entirely new and different defense, not set up in the answer, and, as I think will appear, not urged on the trial. Upon what principle the right to do this is claimed, has not been suggested. Ho application has been made to conform the answer to the proof, (Code, § 173,) even if such defense could be found in the evidence, and there would be several obstacles to granting =such a privilege. It would not be a “ furtherance of justice,” under the 173d section of the Code, to disturb a verdict, perfectly proper upon the pleadings as they stand, to let in a new defense, of which the plaintiffs had no notice, before or on the trial, at least until after the evidence was closed. Besides, such an amendment would “ substantially change the defense.” This new defense is, that before the time for the performance of the original contract had expired, and before the damages for its non-performance had been determined or adjusted, the plaintiffs agreed to accept |3500, and a promise by'the defendants to pay, when they were able, as much more as would make up three fourths of such damages, when ascertained, in lieu of the original contract and any claim thereon.

The first difficulty in the way of such a defense, if it were fairly pleaded, would be that the right of the plaintiffs to damages, as well as the mode of ascertaining them, was fully settled by the parties before any agreement for a compromise was made, and without reference to any specific compromise. The defendant Koop swore, in the answer in this case, that on or about the 30th day of July, 1864, the day the contract became due by its terms, the plaintiffs claimed the sum of $6400, and the defendants agreed to pay $3500, and such additional sum as, with that, should make three-fourths (or $4800) of “ the plaintiffs alleged claim;” and that the plaintiffs accepted such sum, “in settlement and compromise of their said claim, and demand as aforesaid.” The sum of $3500 was actually paid on that 13th day of July. The plaintiffs did not buy the like amount of exchange until two days afterward, (August 1.) So that, according to the answer, when the offer of compromise was made, two things must have been well understood between the parties; first, that the rate of damages was fixed; and, secondly, that three-fourths of them exceeded $3500.

It is a mistake to suppose that the original contract could legally have been performed by the defendants, according to its terms, after the 31st day of July. The option of performing it on the 31st of July, being Sunday, was illegal and void. The privilege of performing on Monday, when a period fixed in a contract for performing would otherwise end on Sunday, rests entirely upon the presumption of law that the parties did not intend to include a day on which it was unlawful to perform it. (Salter v. Burt, 20 Wend. 205.) But when parties limit the performance, by mentioning a specific day, which is a Sunday, and which they are bound to know to be so, no such presumption can be indulged. The day could not have been more precisely fixed, if the word “ Sunday ” had been prefixed to the 31st of July.

"Without regard to the day for performing the contract, however, the evidence shows, without contradiction, at least enough to constitute a legal waiver by the defendants of any tender of the price or demand of performance by the plaintiffs, necessary to enable them to rescind the contract or maintain an action for its non-performance. .A day of two "before the 30th of July, the broker who made the contract (Klugg) was informed by the defendant Grapel that they could not deliver the bills of exchange in question. He was “kind of positive,” as the witness stated. After some discussion as to who should tell the plaintiffs, such broker finally notified them for the defendants. This the plaintiff De Ueufville testifies was done on the 29th of July. Such date is, ho.wever, immaterial; but he after-, ward saw the defendant Koop, and asked him “whether the information he had received of their inability to fulfill their contract, was true?” The latter replied that it was, for the present. Such plaintiff then said he “would be obliged to buy the exchange in, and there would le a loss.” Such defendant then, in answer to a question as to what he meant" to do, proposed to see his friends, and try his utmost to pay some money on account, and requested the plaintiffs to wait until the defendants should be in a position to pay them in full. In that conversation the plaintiff De Ueufville (as he thought) told the defendant, “ that to establish the deficiency, he should ask a broker to buy the exchange in;” to which the defendant assented. Uothing further (as De Ueufville testified) was said at that time. The testimony of the defendant Koop does not materially alter sueh statement, except as to the date of the interview, which he fixes on the 28th (instead of the 29th) of July. He said that after an expression by such plaintiff of his astonishment that such defendant was not able to meet the contract, and an explanation by the latter off the reason, the latter said: “If I can give you 50 per cent on the dollar, I will endeavor to obtain it from my friends;” and they separated, after a short time, with the understanding that such plaintiff should repeat the conversation to his partner, and let the defendant know next day what they would do. This last testimony corroborates the fact of the notice, on the part of the defendants, of their intention not to fulfill the contract, and does not controvert the fact that the price of the day was to determine the damages. It was assumed, by both parties, that even three-fourths of them would exceed $3500, and that the 50 per cent would be about that sum. This was hot only a waiver of a demand of the exchange, sufficient to enable the plaintiffs to rescind the contract, (Terwilliger v. Knapp, 2 E. D. Smith, 86,) but of a tender of the price sufficient to make the plaintiffs’ right of action complete. (Vaupell v. Woodward, 2 Sandf. Ch. 143.) It may even be looked upon as the determination of the option of the defendants, under the contract, sufficient to make the contract performable on that day, in order to avoid af risk of a higher rise in price, and greater damages, by further delay. But no terms of compromise were agreed upon or approached at that interview. The defendant Koop made a conditional promise to pay a certain sum, and the plaintiff made a promise to make a proposal at the next interview. I am at a loss to understand what obstacle remained, after the occurrences at that interview, to prevent the plaintiffs from forthwith commencing an action, in case they thought proper, to recover damages according to the prices of that day. The defendant did not propose to pay any sum, merely in liquidation of the amount of damages, but merely to pay one half the understood ' amount, which both parties seem to have conceded was about $7000. ETor did he claim that the plaintiffs must wait until the 1st of August. Evidently neither party desired to run any risk by longer delay. This view of what occurred at that interview will be found materially strengthened by what took place at the next one, which evidently related to what was settled at such former one, and by the subsequent correspondence between the parties.

If the right óf action was then complete, and the rate of damages determinable by the price of the day, no payment of, or agreement to pay what was conceded to be a less sum than the full amount, could operate as a discharge of the claim of the plaintiffs. The compromise (whatever it was) was the work of the next interview, and a separate transaction. It was avowedly, as claimed by the defendant, a payment of a less sum than what was conceded to be due, and not the payment of a gross sum in satisfaction of uncertain and unliquidated damages; and it was also conceded to be, and paid as being, less than three fourths of the real damages, whatever they were. All that passed between the parties, whether at such first interview or afterward, including every proposal made by the parties, tended to show that every remark and offer were made in reference to a conceded right and fixed sum.

At the second interview between the plaintiff De ¡Neufville and the defendant Koop, which took place, as both admit, on the 29th of July, the reply of the latter to a question of the former, whether the defendants “ could pay sev.enty-five per cent,” was that he would “try to pay in full;” and his only reply to a more specific proposition by the plaintiff to pay $3500, and have it left to the honor and ability of the defendants afterward “ to make it up to seventy-five per cent,” was that “ he would make it up, not only to seventy-five per cent, but in full, if he was able.” The defendant Koop testified- that he said, at such interview, to the plaintiff, “Iwill fay you $3500 if you will release your claim, and if I am able hereafter I will make it up to seventy-five per cent on the whole amountand that the plaintiff'merely replied: “Very well, do so; and see, next week, if you cannot do something better.” These two statements contain, substantially, all that passed at such conversation relative to a compromise, which was given in evidence. The $3500 was then paid next day. ¡Neither of the parts of such conversation, as detailed by either party, . contain any definite proposal by either definitively accepted by the other, but the statements of both show that $3500 was spoken of as less than three fourths, and about one half, of the supposed damages. I cannot find in the oral testimony of what occurred a,t this conversation, evidence of a clear, complete, definite proposal, made and accepted, to pay $3500 in- cash, and to undertake to pay enough more to make it up to seventy-five per cent when the defendants should be able, in satisfaction of all their liability, whatever it might be, on the original agreement. Such being the ease, the subsequent correspondence of the parties may be appealed to, in order to fix it with more certainty. The letter of the defendants, of the 2d of August, in answer to one written by the plaintiffs the day previous, demanding the unpaid residue of their claim, makes the understanding different from any yet alluded to. It was, “ to use their best endeavors to make up seventy-five per cent of” that claim, and to pay at once $3500 in cash. They state in it the impossibility of doing more, but trust in their ability, before long, to pay the' balance. This, certainly, is not the language of those who have just made a complete compromise of the original claim, by paying a certain sum in cash, and substituting a new promise to pay enough in addition, so as to make three fourths of the whole amount, instead of their liability, on the original undertaking, but is rather an appeal to pity. “ Using their best endeavors ” is not equivalent to paying if they should be able. The defendants would be bound to show, in the former case, that they had made exertions to procure the money,"but had failed. In the latter case the plaintiffs would be bound to show ability to pay.

Of course there can be no doubt that, while the original contract continued to be performable at a future day, and the advantages or losses to arise from. its. performance therefore necessarily remained uncertain, an agreement by either party to receive a certain sum, either with or without a contingent promise to pay more, as a consideration for the rescission of such contract, or even a mutual one to rescind it gratuitously, would discharge the obligation of the original contract. But the unsurmountable difficulty in the present case is, that the sum actually paid was so paid as part of a larger sum admitted to. be due, and so admitted by being accompanied by a promise to pay enough more to make up an aliquot part of some sum, even three fourths of which was avowedly greater than the sum so paid, which, therefore, must have been previously determined by the parties.

I do not see that the actual purchase by the plaintiffs of exchange, on the 1st of August, affects this question. They .were entitled to recover the difference between the contract and market price on the day when the contract was performable, which, from the evidence, and the law applicable to it, I have inferred was about the time of the first interview between the plaintiff De Neufville and the defendant Koop, and any purchases were only important as fixing the market price.

It is also somewhat remarkable, and not a slight difficulty, that the new defense, not set up in the pleadings, which it is now proposed to construct out of the evidence, was not insisted upon at the trial. It formed none of the grounds on which a motion to dismiss the complaint was made. One of those grounds is, “that before the expiration of the time for the performance of the original contract, the parties met and agreed upon the amount of damages, and the manner in which those damages should be paid and settled.” A tolerably strong admission that the parties liquidated the damages before agreeing, on a compromise, to pay less than the whole in satisfaction. The legal propositions which the defendants’ counsel requested the court to give to the jury, all assume that the plaintiffs had a fixed and certain demand, which was compromised. The fifth request to charge, which covered, substantially, the same ground as that before mentioned in regard to a dismissal of the complaint, assumed that “ the parties agreed among themselves upon the measure of damages, for the defendants failure to fulfill their contract, and the manner in which that difference should be compromised and settled. Indeed the whole case appears by the pleadings, evidence, points taken on the trial, and argument before us, to have been put upon the ground, either that borrowing the money from friends, or the promise to pay the deficiency of seventy-five per cent conditionally, made the payment of a less sum a good satisfaction of a greater sum due. It is a very grave question how far this court, on exceptions only, can spell out a defense from the evidence, not set up in the pleadings or urged at the trial, even if it were tenable.

I am, therefore, in favor of overruling the exceptions,' and affirming the judgment.

Jones, J.

The defense set up in the answer is what is technically known as an accord and satisfaction; that is, it alleges that the plaintiffs, in consideration that the defendants would borrow from their friends $3500, agreed to accept said sum of $3500 in satisfaction of a demand of $6400; that the defendants did borrow said sum of $3500, and paid the same to the plaintiffs in satisfaction of said sum of $6400, and the plaintiffs received the same in satisfaction thereof. There is no allegation that the said sum of $6400 was not justly due and owing at the time of the agreement. The mere calling it an alleged demand is not an averment that it was not justly due and owing.

The allegation that it was to be left entirely to the honor of the defendants to pay an additional sum, does not affect the character of the pleading. It only shows that the theory of the plea was that the payment and receipt of a less sum in satisfaction of a greater one, when it is a part of the arrangement that such less sum should he borrowed, in consequence of the debtors’ inability to pay it himself, constitutes a bar to an action brought to recover the difference between the sum paid and the debt on which it was paid. This is essentially a plea of accord and satisfaction.

To entitle the defendants to a verdict, they must show that the agreement alleged in the answer was in fact made, and that it constitutes in law a good defense. They cannot, without amending their pleading, succeed upon proof of an agreement different from that relied on in the answer, although such agreement would he a good defense.

There is not sufficient evidence in this case to warrant, a jury in finding that there; was, in fact, such an agreement made as is alleged in the answer. If, then, the judge had been specifically requested to leave that question of fact to the jury, he would have been bound to refuse the request.

When a judge directs a verdict, and there is no specific request to leave any particular facts to the jury, and only a general exception to his direction to the jury, then only two matters can be inquired into, on a review of his decision : 1. Do the uncontroverted facts call for a decision in favor of the party against whom he directed a verdict ? 2. Would a verdict of the jury in favor of the party in whose favor the judge directed the verdict be set aside as against the evidence ? If both these queries be answered in the negative, the decision of the judge must be affirmed. This results from the doctrine laid down in Clark v. The Mayor, &c. (24 How. Pr. cited from p. 336;) Winchell v. Hicks, (18 N. Y. Rep. cited from p. 565;) The Marine Bank v. Clements, (31 id. 33.)

In the case at bar (although there are requests which will be mentioned hereafter) there is no specific request to the judge to leave to the jury to determine as a question of fact whether the agreement set up in the answer was made or not. There is, however, a general exception tó his directing a verdict for the plaintiffs.

Upon examining the evidence, I do not find any uncontroverted facts which call for a decision in favor of the defendants, on this point. On the contrary, I find evidence which would clearly sustain a verdict finding that no such agreement as is alleged in the answer was made. Consequently this verdict cannot be set aside either on the ground that such an agreement was made, or that there was sufficient evidence to require the submission of that matter to the jury.

There is evidence tending to establish that either one of' two agreements was made: 1st. That the plaintiffs, in consideration of the defendants’ borrowing $3500 from their friends, and paying it to the plaintiffs on account of the sum of $6400 admitted to be due, agreed to give the defendants time to pay the balance. 2d. That before any breach of the contract sued on, and before any thing was due thereon, the parties made, and for a sufficient consideration substituted, a new agreement in place of the contract sued on.

The first of these agreements, I think, would constitute no defense. (Brooklyn Bank v. DeGrauw, 23 Wend. 342.) The second, I am inclined to think, would, but it is not necessary to decide the point.

The difficulty in the' way of the defendants is that they have not pleaded either one of these two agreements. Consequently they cannot ask for a verdict on the strength of either of them. In this view, the refusal of the judge to charge as requested was perfectly correct. All of those requests were based on the assumption of there being sufficient-evidence to establish one or the other of these two agreements; and they were requests desiring the judge to charge the jury that if they found either one of these two agreements to have been made, they should find for the defendants. As neither of these agreements was set up in the answer, or embraced in the issue to be tried, I think the judge properly refused to charge the requests.

The exceptions taken to the exclusion of evidence are not well taken. The evidence offered was either incompetent, or was asking the witness to reiterate testimony already given by him.

There is one ' ground for the motion for a nonsuit which should be noticed, (the others are covered by the above views;) that is, a part of the second ground: “ That the defendants had until the end of July 31, 1864, in which to perform, and the plaintiffs must prove a demand, and offer to pay on the last day.” The complaint allegés that the defendants had expressed their inability to perform, and the plaintiffs’ evidence sustains the allegation. This was sufficient to waive a demand, and offer to pay by the plain- ' tiffs. (Crist v. Armour, 34 Barb, cited from pp. 386, 387.)

For these reasons, I think the plaintiffs should have judgment on the verdict, with costs.

Barbour, J. (dissenting.)

This is a motion for judgment upon a verdict in favor of the plaintiffs, rendered at a jury term by direction of the presiding justice, the exceptions taken on the trial to be heard first at general term.

The action was brought to recover the difference (less $3500) between the contract price and the market value of 10,000 Louis d’or thalers exchange on Bremen, which the defendants had, in May, 1864, contracted with the plaintiffs to sell and deliver to them, at 130, on or before the 31st of July then next, at seller’s option.

Upon the trial,- there was sufficient evidence, if credited by the jury,, to establish the following facts:

On the 28th or 29th of July, one of the plaintiffs, Mr. De Neufville, called upon Mr. Koop, one of the defendants, and was informed by him that his firm was unable to perform its obligations or to deliver the exchange for the present, because of the high price of gold; and it was thereupon agreed, between the parties, that the defendants would pay to the plaintiffs $3500, and that, in consideration thereof, the latter would release their claim under the contract, and that if the defendants should thereafter be able to do so, they would undertake, as a matter of honor, to pay to the plaintiffs such further amount as, with the $3500, should be equal to seventy-five per cent of the entire difference between the contract price and the market value of the exchange; such difference to be' ascertained by the purchase in market of like exchange. It was also understood between the parties that the $3500 was to be borrowed by the defendants from their friends, for the purpose of such arrangement. On the 30th of July, being Saturday, the defendants, having obtained the checks of their friends, to be so applied, sent the $3500, including $3000 in such checks, to the plaintiffs. On the 31st, the plaintiffs purchased the 10,000 thalers exchange, in the market, at 194, making a deficiency, in all, of $6400; and, on the same day, advised the defendants, by letter, of that fact, and demanded payment of that amount, less the $3500. There was no allegation in the complaint that the plaintiffs ever demanded the exchange, or that the defendants were able to pay the balance of the seventy-five per cent; but the plaintiffs rely, solely, upon the original contract and its nonperformance ; claiming that the arrangement for the payment and receipt of a less sum than the actual difference was, at best, but an attempted accord and satisfaction, which was inoperative and void for want of consideration, and that, therefore, the $3500 must be regarded as a payment, fro tanto merely, upon their claim for the entire , difference.

The defendants were not bound to deliver the exchange until Monday, the 1st of August; inasmuch as the contract was one of the class upon which days of grace are allowed. (Salter v. Burt, 20 Wend. 205.) The fact that they informed the plaintiffs, on the 28th or 29th of July, that' they were then unable to deliver it, and were, for the present, unable to. perform their obligations, did not accelerate the day of performance, nor impair their legal right to deliver it on Monday, in case exchange should fall in value, or if, for any other reason, they should see fit to hand it over. For, that was a mere naked statement, without consideration or mutuality; and, therefore, in no manner affected the original contract, or impaired the obligation of the defendants to deliver, or of the plaintiffs to receive and pay for the exchange, on or before the 1st of August. When the compromise agreement was made, therefore, the plaintiffs held a contract for the delivery of bills of exchange at a future time, which might or might not be performed by the defendants. If gold should fall below 130 before Monday the 1st of August, the exchange would be delivered; or, if not delivered, no damage, probably, would accrue to the plaintiffs. So long as that contingency existed, the value of the contract to the plaintiffs, must, of course, have been purely speculative—a mere matter of opinion; and I see no reason why they could not, without violating any rule applicable to a case of accord and satisfaction, orally release whatever claim they might have, in consideration of the present payment of any sum agreed upon, and the conditional promise of the defendants to pay a further amount upon the happening of a future event or contingency, in ease a purchase of 'similar exchange in the market should determine that any further sum would be due to the plaintiffs.

But the parties went beyond that in this case; the agreement being, that the defendants would pay to the plaintiffs $3500, if—that is, upon condition—the latter would release their claim; and that, if able thereafter, they would make it up to seventy-five per cent. It was the payment of the $3500, alone therefore, that entitled the defendants to a release; and that money having been paid, all claims of the plaintiffs under the original contract are thereby fully satisfied and discharged. It follows, that the direction of the learned justice to find a verdict for the plaintiffs was erroneous, and that such verdict should be set aside, and a new trial had.

. In the view I have taken of the case, it is unnecessary to consider the further questions presented by the counsel for the defendants, upon the argument.

Judgment affirmed.


author: Monell, J. Robertson, Ch. J.

text:
    William Loeschigk et al. plaintiffs and appellants, vs. Amos F. Hatfield et al. defendants and respondents.
    1. Whatever may be the effect of a voluntary conveyance as regards creditors of the grantor at the time the conveyance was made, it is not void as to subsequent creditors, unless made with an actual intent to defraud them. Mere want of consideration is not of itself sufficient evidence of such fraudulent intent.
    2. The burden of proving actual fraud in a conveyance by a debtor always rests with the assailing creditor.
    3. An admission by defendants that at the time certain conveyances were made to them by a debtor, three years prior to his contracting the debt to the plaintiff, such grantor was largely indebted is not proof of actual fraud in such conveyances, where no evidence is offered or given to show that such indebtedness exceeded his ability at that time to pay, or that it was subsisting when the debt to the plaintiffs was contracted.
    4. The transfers by a debtor of property to creditors in payment, or towards payment of an existing debt, without any allegation or proof of the excess of value of the goods transferred beyond the debt due, or of any inadequacy of consideration, or the realization by such creditors of any thing from such assigned property beyond the amount of their debt and liability it was intended to satisfy, will be regarded as conveyances to purchasers for a valuable consideration, and as such within the exception contained in section 5, of title 3, chapter 8 of part 2, of the Revised Statutes.
    5. The death of a partner invests his survivor with the exclusive right of possession and management of the whole partnership property and business, for the • purpose of settling and closing it up. He becomes trustee for all concerned in the partnership; for the representatives of his deceased partner; and for the creditors of the firm; and having the right to collect and dispose of the property, he has the power, for that'.purpose, of assigning any chose in action or property belonging to the estate, in payment of a debt.
    6. He has power to make a preferential transfer of the partnership property to a particular creditor; and the title acquired by such favored creditor cannot, in the absence of actual fraud, be disturbed by the other creditors of the firm. '
    7. Creditors of a firm cannot reach the property of a deceased ■ partner in the hands of his surviving partner, without having some one before the court entitled to represent the estate of the deceased. JPer Robertson, Ch. J.

    8. Nor can such creditors proceed to set aside transfers of the deceased partner’s interest in the partnership property, as fraudulent, without having some representative of it before the court as a party, and the occurrence of some delay or collusion on the part of such representative; and even then they can only ■have such interest administered as assets in the due course of administration, to pay all his debts. Per Robertson, Ch. J.
    (Before Robertson, Ch. J., and Barbour and Monekl, JJ.)
    Heard April —, 1867;
    decided-, 1867.

      Appeal from a judgment of dismissal.
    The plaintiffs, judgment creditors of Addison Brothers, (composed of Joseph and Samuel D. Addison,) brought this action to set aside certain conveyances and transfers of property, made by Samuel D. Addison, as being fraudulent and void as to creditors.
    The complaint alleged the recovery of two judgments against Samuel D. Addison, as survivor of Addison Brothers, in June and July, 1861, upon an indebtedness accruing prior to July, 1860. That the credit was obtained upon the representation 'of said Addison, that the firm had a capital of $45,000, and a considerable expectancy upon the death of their mother. That prior to such representation Samuel D. had conveyed his interest in his father’s estate to his father-in-law, the defendant Hatfield, for the purported consideration of $13,000, but that the consideration was, in fact, only $10, and that said Hatfield conveyed the same to Rachel A. Addison, the wife of Samuel D. That at the time of such conveyance, as the plaintiffs were informed and believed, said Samuel D. was indebted in the sum of $80,000, and that said Addison Brothers from that time •continued to be largely indebted (at no time less than $80,000) until their failure in February, 1861. That in June, 1860, Addison and wife conveyed real estate in Warren street, Brooklyn, to Jacob Campbell, Jr. purporting to be for the consideration of $6000, and in November, 1860, they conveyed other real estate in Warren street, for the expressed consideration of $4000. That said Addison was living in a. house valued at $16,000, in Wyckoff street, Brooklyn, which he alleges belongs to his wife, and which the plaintiffs allege was conveyed to said wife by James James Campbell, Jr. in exchange for lots in Warren street, and that the conveyance was made with intent to defraud the creditors of said Samuel D. by putting, the same in the name of his wife.
    That in February, 1861, said Samuel D. as survivor of ' the firm, transferred goods and merchandise of the firm, invoiced at $65,000, to the defendants, Hatfield & Marshall, and shortly afterwards assigned to them certain choses in action of the firm in the hands of the Pacific Bank as collateral security, the surplus over the indebtedness- being upwards of $16,000.
    The complaint alleged the several conveyances and transfers to be fraudulent and void. That in February, 1861, said Addison assigned to said Hatfield three assignments of leases of premises known as 40 Murray street, New York, expiring May 1st, 1864, at a rent of $5000 per annum, which were rented to other persons at $6500, the value of which leases was. $1875. That Hatfield paid no value, and that the assignments were fraudulent and void.
    The plaintiffs demanded that the several conveyances be set aside; that a receiver be appointed to dispose of the property, and pay the plaintiffs’ judgments.
    The several answers of the defendants denied all fraud.
    The action was tried by Justice Monceibe, without a jury, who found' as facts, the recovery of the plaintiffs’ judgments ; the death of Joseph Addison in February, 1861, and of Samuel D. after the commencement of this action; and that Rachel A. his wife, was appointed administratrix of his estate. He further found that said Samuel D. conveyed to Hatfield, who thereupon conveyed to the wife of Samuel. That such conveyances were voluntary and were executed for the purpose of conveying the said real estate to said Rachel, but were made in good faith, and without any intent to hinder, delay or defraud creditors, and were valid as against the plaintiffs. He further found that after the death of Joseph Addison, Samuel, as the survivor, by bill of sale, sold -and transferred to Hatfield & Marshall the stock of goods and merchandise of Addison Brothers. That said Samuel also transferred the several leases of premises in Murray street to said Hatfield, which leases Hatfield subsequently transferred to Collins, in consideration of $1350, paid by Collins to him. That said Samuel D. as such survivor, transferred to Hatfield & Marshall certain choses in action, then held by the Pacific Bank, as collateral security, as security or indemnity against certain actions of replevin brought against Hatfield & Marshall, to recover portions of the goods transferred to them, as above stated.
    The justice found that all the .foregoing conveyances, assignments, sales and transfers were made in good faith, and without any intent to hinder or delay any of the creditors of Addison Brothers, and of said Samuel D. Addison.
    The justice dismissed the complaint as to all the defendants, with costs, and the plaintiffs appealed.

      William Watson, for the appellants.

      A. JR. JDyett, for the respondents.
   Monell, J.

The conveyances to Rachel A. Addison, although voluntary, having been made prior to the debts »contracted to the plaintiffs, were valid as to them.

Whatever may be the effect of a voluntary conveyance, as regards creditors existing at the time the conveyance was made, it is not void as to subsequent creditors, unless made with an actual fraudulent intent. The want of consideration is not of'itself sufficient evidence of such fraudulent intent. The burden of proving actual fraud always rests with the creditor. In this case, no. evidence of such actual fraud was offered or given, unless it is. claimed that the admission of the defendants, that at the time the conveyances were made, which was three years prior to the contracting of the plaintiffs’ debt, Samuel D. Addison, the husband and grantor of Rachel A. was in debt to the amount of $75,000 dollars, was spme evidence of such actual fraud. But no proof was offered or given to show that such debts exceeded his ability to pay, or that they existed when the debt to the plaintiffs was contracted; both of which, it seems to me, it was necessary to show to taint the transaction with actual fraud. The finding, therefore, that the deed to Mrs. Addison was valid, was correct, and cannot be disturbed.

The transfers to Hatfield & Marshall are attacked upon two grounds : First. The want of power in Samuel D. as the surviving member of the firm to make the transfer; and, second, that they tended to hinder and delay creditors.

The last objection is easily disposed of. Hatfield and Marshall were creditors of Addison Brothers, and the transfer of the goods to them was in payment, or towards payment, of an existing debt. They were, therefore, purchasers for, as appears, a good and sufficient consideration. It is not alleged, nor was it proved, that the goods transferred were of greater value than the debt due. On the contrary, the answers allege that they were not sufficient to satisfy the debt. The assignments of the leases, and the transfer of the residuum of the collaterals held by the Pacific Bank were for further security and indemnity. ■ No inadequacy of consideration was proven; nor was there any evidence that either of the defendants realized any thing from the assigned property, beyond the amount of the debt and liability it was intended to satisfy. It seems to me, therefore, that the defendants Hatfield & Marshall must be regarded as purchasers for a valuable consideration, and as brought within the exception contained in section 5, of title 3, chapter 8, of part 2, of the Revised Statutes.

The remaining question deserves a somewhat more extended examination.

The transfers to Hatfield & Marshall were made by a surviving member of the firm, and it is claimed that inasmuch as the death of one of the partners worked a dissolution of the partnership, the functions and powers of the survivor ceased, except for the purpose of paying debts and settling the business of the firm, and, therefore, that such survivor had no power to incur-any new obligation, or contract any new debt-in the name of the partnership, or give any preference in the payment of debts.

The death of Joseph Addison invested his survivor with the exclusive right of possession and management of the whole partnership property and business for the purpose of settling and closing it np. He became trustee for all concerned in the partnership; for the representative of his deceased partner; for the creditors of the firm, and for himself. (Case v. Abeel, 1 Paige, Ch. 393.) And having the right to collect and dispose of the property, he had the power, for that purpose, of assigning any chose in action or property belonging to the estate. (Parsons on Part. 441. Pinckney v. Wallace, 1 Abb. Pr. 82.) He was primarily liable for the debts of the firm, and could hold possession or- dispose of the property to satisfy such debts; and the representatives of his deceased partner could neither claim nor take any portion of it, until after a settlement of the entire liabilities of the firm. These general principles are elementary and well established.

But it is insisted that the power of a survivor is not sufficient to authorize the giving of a preference to one creditor over another.

It may be a question whether creditors at large have any such equity as entitles them to object to a transfer made in good faith, of a portion of partnership property, to a creditor, in satisfaction of his precedent debt. It is clear, I think, that the representatives of the deceased partner could not object, and creditors have no equities except such as arise from the equities of the partners themselves or their representatives. Before dissolution, one partner can, even without the consent of the other, apply the partnership funds to the payment of one creditor in preference to another. And this power extends beyond the pei’iod of the partnership, and exists after dissolution, if exercised in good faith; for such act is in discharge of the duty of the partners to wind up the whole partnership concerns, and to divide the surplus among them, after all the debts are paid. (Goertner v. Trustees of Canajoharie, (2 Barb. 625, 628.) The only restriction upozi this general power is, that before dissolution, one partner cannot, without the consent of his copartner’, appoint a trustee for the partnership, by a general assignment of the partnership effects for the benefit of creditors and giving preferences. (Havens v. Hussey, 5 Paige, 30. Kemp v. Carnley, 3 Duer, 1.) But I have not found a case where, either before or after dissolution, the power to pay one creditor in preference to another has been denied. In Fox v. Hanbury, (Cowp. 445,) Lord Mansfield held that even after an act of bankruptcy committed by one partner, an assignment, bona fide, of partnership effects, by the solvent partner to a creditor of the firm, in payment of his debt, was binding on the firm. And in Milliken v. Loring, (37 Maine R. 408,) the same doctrine is applied to an assignment by one partner to a creditor after dissolution. Numerous cases uphold the power, as well after as before dissolution. (Egbert v. Woods, 3 Paige, 517. Mills v. Argall, 6 id. 577. Fisher v. Murray, 1 E. D. Smith, 341. Hitchcock v. St. John, 1 Hoff. Ch. 511.) In the last case cited, V. C. Hoffman says: “ A direct payment of money, or a transfer of property to an acknowledged creditor, is an admitted and a necessary power during the existence of the partnership. We probably are compelled lóy the authorities to go so far as to say, that it is a necessary surviving power after a dissolution, whatever way that is effected.” To the same effect is Darling v. March, (22 Maine R. 184.).

In Egberts v. Wood, (supra,) an assignment was made by one of two surviving partners, of all the.,debts, choses in action and securities of the copartnership, upon trust to pay certain preferred creditors, and the chancellor held this language : “ The legal interest in all the assigned property was in the surviving partners, and at law they alone were chargeable with all the debts of the firm. They had, therefore, the right, without the consent or concurrence of the representatives of Lusk, to appropriate this property for the payment of the debts of the firm, in such manner, and by giving such preferences as they might think proper. The decedent has no interest in the question as to what debts shall be paid first, in case the partnership effects are insufficient to pay the whole. And the legal title being vested in the survivor, he alone has the right, at law, to determine that question.” The assignment in that case was of choses in action only, but the rule applies as well to assignments of other personal property. (Pars. on Part. 441. Roys v. Vilas, 18 Wis. R. 169.)

It is not necessary to stretch the power of a surviving partner to sustain the transfers made in this case. The assignment of the goods in. store and merchandise of the firm, was in payment of a preexisting debt due to Hatfield & Marshall; and the transfers of the leases, and of the collaterals held by the Pacific Bank, were intended, in part, to secure these defendants against a possible loss for which the firm would have been liable. The right to the property was involved in the suits brought by creditors, and the vendors were bound to protect the title.

It will be sure, therefore, that the consideration was am- ' pie to sustain the transfers, and there is no proof of any fraudulent intent, anywhere, to invalidate them.

It is a question solely of power in a surviving member of a partnership to make a preferential transfer of the partnership property to a favorite creditor, and I think I have abundantly shown, by numerous cases, that the power exists.

The fraudulent representations alleged to have been made by the debtors, and which induced the credit, do not seem to be urged as a reason for setting aside the conveyances or transfers. Whatever effect such representations might have had upon the contract of purchase, it is not necessary to notice. It is quite clear that they would not invalidate the title of Hatfield & Marshall.

It is probable that upon the former trial there was evidence (not furnished on the second trial) which authorized the somewhat severe comments of one of the learned justices who sat upon the hearing of the first appeal, (19 Abb. 169,) on the fraud in fact, which he supposed was established against the defendants. Upon the last trial no evidence whatever was given of any fraud in fact, the plaintiffs having relied solely upon a fraud in law, which they claim appears upon the face of the papers. That question: I have disposed of. But I think the learned justice misapprehended the nature of the transfer of the goods and merchandise to Hatfield & Marshall; as he assumed that it was not a sale, but an assignment as security for their debt. The assignment was not given in evidence, and the plaintiffs offered no proof of its contents. Each of the defendants says in his answer, it was a sale, intended to secure to Hatfield & Marshall an indebtedness of Addison Brothers, to them. The distinction, therefore, between a sale to a creditor and a transfer as security merely, if it was of any importance, cannot be taken to the prejudice of Hatfield & Marshall in this case. But whether a sale, or a transfer as security for existing indebtedness, the survivor had the power to convey the ehoses in action and property, and the title acquired by Hatfield h Marshall, cannot, in the absence of actual fraud, be disturbed by creditors of Addison Brothers.

For these reasons, I think the complaint was properly dismissed, and that the judgment should, therefore, be affirmed, with costs.

Barbotjr, J. concurred.

Robertson, Ch. J.

This action could easily be disposed of if it were simply a pursuit by the plaintiffs, as judgment creditors of Samuel D. Addison, as then sole debtor, of his separate property, into the hands of fraudulent grantees of his. The disposition of it would then turn entirely on the question of fraudulent intent, as matter of fact, in making the transfers assailed in this action, since there is no claim that they are void for fraud on their face. It has some of the features of such an action, because it is upon a judgment against Samuel D. Addison alone, and if the legal ownership of tire partnership effects survived to him, so that he could dispose of them as he thought proper, unchecked by any trust or duty towards the estate or representatives of his deceased partner or creditors of the firm, they, would he virtually his property, capable of being reached by his individual judgment creditors. In such case his settlement upon his wife' of property, when largely indebted, and not having means beyond what would enable him to pay his debts, sufficient to warrant the amount of such settled property; his subsequent carrying on business with money borrowed from his father-in-law, (Hatfield,) and shifting his indebtedness from one creditor to1 another; his false representations to the plaintiffs of his ability to pay them; his subsequent transfer of most of his goods to his father-in-law, and, in fact, of all his available assets, for the security of the latter; if proved to be the connecting links of one design, might be taken as evidence of an intent to defraud.

There are in this case some defects, however, in the evidence offered to prove some of those facts, and in the connection of others, which interfere with' such a conclusion; such as the lapse of time between the settlement on the wife and the incurring of the debt to the plaintiffs, the want of proof of his inability to pay his debts at the date of the former, or of his indebtedness to others at the time of contracting his indebtedness to the plaintiffs. Nor was his final insolvency traced to such transfers. For which reasons, probably, the learned justice, at special term, found against any fraudulent intent, as matter of fact, in such conveyances, with which finding there is no good ground for any interference.

But the plaintiffs introduce into this action a new element, which they claim gives them more rights than if Samuel D. Addison had been their sole debtor, and the partnership assets absolutely his property. They allege their debt to be a partnership debt of his, jointly with Joseph Addison, and that the transfers of the partnership assets of the firm of Addison Brothers to the defendants Hatfield & Marshall, by Samuel D. Addison, as surviving partner, were illegal, because he had no power so to transfer them, at least for the purposes for which they were transferred, and that, being unauthorized, such transfers were made thereby a fraud upon the ¿state, representatives or creditors of Joseph Addison.

This action, however, is not merely an equitable one against the estate of Joseph Addison, as a deceased contractor, jointly with his brother, to enforce a claim, which the plaintiffs have failed to collect at law against the surviving partner. If it had been intended as such, it would have been ineffectual without the presence of some one to represent" such estate. But overlooking any succession to Joseph Addison’s estate, it seeks to reach what is claimed to have been his property, in the hands of his surviving partner. This cannot be done without having some one before the court entitled to represent his estate. Hor could the plaintiffs proceed to set aside transfers of Joseph Addison’s interest as fraudulent, in any event, without having some representative of it before the court, as a party, and .the occurrence of some delay or collusion on the part of such representative; and even then they could only have such interest administered as assets, in the due course of administration, to pay all his debts. (Bate v. Graham, adm’r, 11 N. Y. Ref. 237.) In that case the plaintiffs have no preference, as they have no judgment against Joseph Addison. Even, therefore, if the ownership of neither the choses in action, nor of the goods and chattels of the firm of Addison Brothers survived to Samuel D. Addison, on the death of Joseph, hut the former took only an undivided moiety thereof, there is no one in the action against whom a judgment can be rendered as to the interest of Joseph. It is not a mere defect of parties, hut a failure of title on the part of the plaintiffs, who oan only claim through such administrator, as plaintiff or defendant.

As to the interest of Samuel Addison in the partnership assets, he clearly had a right to use that for any lawful purpose, and his attempt also to transfer his brother’s interest, if be had any, does not affect the transfer of his own, any more than if it had been a stranger’s, who was tenant in common with him; and the plaintiffs cannot reach that interest unless the transfer of his remaining interest in the goods and the Pacific Bank securities, was void for fraud.

I do not perceive, thérefore, that it becomes important in this case whether the ownership of the partnership assets of Addison. Brothers survived to Samuel D. Addison, or he became entitled to only a moiety thereof. In neither case were the plaintiffs entitled to any relief in this action, unless by proof of fraud, other than the mere attempt to transfer the whole of such assets to the defendants Hatfield & Marshall. There is no evidence before us assailing the validity of the debt to them, or of the assignment of goods to them, in payment of part. The surviving partner had a right to have secured their claim by a mortgage, or pledge of all the goods, until the plaintiffs acquired some right to interfere, by a lien at law or in equity. No more injury was done to the plaintiffs by the course pursued, than would have been‘by such mortgage. Samuel Addison conveyed certain goods, in satisfaction of an equal amount of debt. If the consideration for the release failed, by the failure of their title, of course the debt revived, or some equivalent liability was incurred, which he had a right to secure by mortgage of the Pacific Bank securities.

I therefore concur in thinking that the judgment should be affirmed, with costs.