CHILDS et al. v. C. E. RILEY CO. (Supreme Court, Appellate Division, First Department. March 7, 1919.) 1. FRAUDS, STATUTE OF 116(6)-MEMORANDUM-BROKERS. One acting as a broker or middleman in the sale of goods can bind both parties under the statute of frauds by signing and delivering bought and sold notes to the several parties. 2. FRAUDS, STATUTE OF FLICTING EVIDENCE. 159-MEMORANDUM-AUTHORITY TO SIGN-CON In an action for failure to deliver goods, defense setting up statute of frauds, where the evidence was in conflict as to whether person who signed bought and sold notes was a broker authorized to sign for defendant or an agent of plaintiff, court erred in granting a motion to dismiss complaint. 3. PRINCIPAL AND AGENT 122(1)—RELATIONSHIP-EVIDENCE. An agent's authority cannot be established by his own statements. 4. PRINCIPAL AND AGENT 174-AUTHORITY OF AGENT. Where plaintiff, in action for failure to deliver cotton bought, showed that defendant retained sold notes for three days, and failed to make any point when controversy was fresh of lack of authority of the person accepting an order for the goods, court erred in dismissing the complaint at the close of plaintiff's case. 5. TRIAL 165-DISMISSAL OF COMPLAINT AT CLOSE OF PLAINTIFF's Case INFERENCES. On motion to dismiss complaint at close of plaintiff's case, latter is entitled to the most favorable consideration in drawing inferences from the proof. Page, J., dissenting. Appeal from Trial Term, New York County. Action by Harris Robbins Childs and others against the C. E. Riley Company. From a judgment of nonsuit, plaintiffs appeal. Reversed, and new trial ordered. Argued before CLARKE, P. J., and DOWLING, SMITH, PAGE, and SHEARN, JJ. William Henry Corbitt, of New York City, for appellants. Harris & Towne, of New York City (Paul R. Towne, of New York City, of counsel, and Edwin S. Lewis, of New York City, on the brief), for respondent. SHEARN, J. Plaintiffs are engaged in the export and import business in the city of New York. Defendant is a foreign corporation, having its principal place of business in Boston, but it maintains an office for the transaction of its business in New York City in charge of one Evans. The contracts were negotiated by one Hinck, a cotton goods broker in the city of New York. On Friday, August 11, 1916, Hinck called at the New York office of the defendant and informed Evans that the plaintiffs were in the market for 1,500 bales of certain cotton goods, if they could be purchased on certain unusual terms and credit, namely, 2 per cent. 10 days, 60 days extra, which means a credit of 70 days, with a credit of 2 per cent. if paid at that time. Evans said that the proposed terms would have to be submitted to the Boston For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes office of the defendant, and, after reaching an agreement on price and finding that the goods could be had at the mill with which the defendant dealt, submitted the offer to the defendant's Boston office. On Saturday morning, August 12th, Hinck twice telephoned to defendant's New York office and was informed by McCoy, defendant's salesman in the New York office, that defendant was waiting for a credit report and that Hinck would be informed as soon as an answer was received. On Monday morning, August 14th, Hinck telephoned again and was informed by McCoy that no reply had come. About noon of the same day, Hinck again telephoned, and McCoy said that the New York office had heard from the Boston office and he told Hinck "to send him up a sales note for these 1,500 bales." Hinck then told McCoy that he had another order for 1,200 bales of a different kind of cotton, and McCoy said "he would take it up." Later in the afternoon, Hinck telephoned McCoy, who stated "that the mill had accepted that order, and to be sure to send up his sales notes or contracts as quickly as possible." Later that same day, Hinck again telephoned McCoy for some information in regard to the name of the defendant's goods, and was asked by McCoy "to send up those sales notes as promptly as possible." Hinck told McCoy he would send them up the first thing the following morning. On that same day Hinck sent broker's bought notes to the plaintiffs and on the following morning, August 15th, Hinck sent to McCoy broker's sold notes, addressed to the defendant. All of the bought and sold notes were signed by the broker. On Friday, August 18th, Hinck was informed by McCoy that "they heard from the Boston house; that they would not accept the terms." In the afternoon of that day Hinck called up Evans from the plaintiffs' office, and was told that the defendant had "the right to change the terms any time they wanted to during the contract," and that, if the plaintiffs "did not agree to that, he could not accept the contract." Other conversations followed, at which the defendant maintained that it had a right to change the terms "at any time during the life of the contract," to which the plaintiffs would not agree, and the upshot of it was that the defendant refused to deliver, resulting in this suit. [1, 2] The defendant denied that any binding contracts had been made and pleaded the statute of frauds. If Hinck was not plaintiffs' purchasing agent, but was a broker or middleman, as is clearly inferable from the testimony, his signing and delivering the bought and sold notes, which were retained by the respective parties, constituted a sufficient memorandum to take the case out of the statute of frauds. Newberry v. Wall, 84 N. Y. 576. The learned trial justice was of the impression that this well-recognized authority and leading case no longer states the law, and that its authority has been impaired by Wilson v. Lewiston Mill Co., 150 N. Y. 314, 44 N. E. 959, 55 Am. St. Rep. 680. In this he was in error. In the Wilson Case the alleged contract was not negotiated by a broker, but by a salesman in the employ of the plaintiff who called upon the defendants, negotiated with them, and then wrote his firm, suggesting that his firm make an offer based on his conversations with the defendant. Such offer was made by the plaintiff to the defendant, but was never accepted, and it was of course held that the written offer of the plaintiff to the defendant based upon negotiations of plaintiff's salesman with defendant was not a sufficient writing to take the case out of the statute of frauds. In Strong v. Dodds, 47 Vt. 348, cited in the opinion in the Wilson Case and referred to by the learned trial justice, it was similarly held that one of the contracting parties cannot be the agent to make the memorandum, and that the agent of the plaintiff to sell goods cannot be regarded as the agent of the defendant in writing a letter ordering goods for the defendant. These cases obviously have no application to a case where the bought and sold notes are signed by one who is not the purchasing agent of one of the parties, but is engaged in the independent and well-recognized business of broker. The defendant contends that Hinck was in effect plaintiffs' purchasing agent; but, even if there was evidence that would warrant such a finding, unquestionably there was an abundance of evidence from which it might be inferred that Hinck was a mere middleman or broker, and upon a motion to dismiss the complaint the trial justice was required to give the plaintiffs the benefit of this inference. [3-5] Another feature of the case, however, presents a more serious question. It was, of course, necessary for the plaintiffs to prove that Hinck was authorized to sign the bought and sold notes as a broker for the defendant. Some of Hinck's dealings were with Evans, the general manager of defendant's New York office; but most of the negotiations were between Hinck and McCoy, who was a mere salesman connected with the New York office. There was no direct evidence that McCoy had authority to conclude the contracts and authorize Hinck to sign the bought and sold notes. There can be no claim of apparent authority, for Hinck knew that the contracts had to be approved by the defendant's main office in Boston. McCoy informed Hinck that the defendant's main office had accepted the contracts, and he directed Hinck to send the sold notes to the New York office, which Hinck did. But McCoy's authority cannot be established by his statements to Hinck. It appears, however, that Evans, the general manager of the New York office, knew that Hinck had sent the sold notes to his office on August 15th, and that, notwithstanding his knowledge of business and trade usages, Evans made no effort to return the notes and they were never returned by the defendant. Instead, Evans allowed three days to pass, and when called up on the afternoon of August 18th by Hinck, concerning McCoy's notification just given to Hinck that the Boston office would not accept the terms, Evans made no point about McCoy's authority, but merely said that the defendant had "the right to change the terms any time they wanted to during the contract," and that, if the plaintiffs "did not agree to that, he could not accept the contract." On August 21st Mr. Woodruff, of defendant's Boston office, came to New York and had a conference with one of the plaintiffs, Mr. Childs, at which conference Hinck, Evans, and McCoy were present. Childs testified: That he asked Evans, in the presence of Woodruff, "Why did you not return those notes the next day if they were not proper?" and that "Mr. Evans hesitated, and finally said that he was not bound to return those notes, and then I asked him if he did not think it would have been advisable to return those notes, because, if he had returned them that day, no harm would have been done. I could have gone out into the market and covered myself perfectly well. I asked him if he did not think it would have been advisable. He did not reply, but his principal, Mr. Woodruff, said it would have been advisable." Then Mr. Childs testified that he had a further conversation with Mr. Woodruff, in which the latter said that he would rely on the statute of frauds as against any trade custom that ever existed, but that after a long discussion Mr. Woodruff said that he would try to arrange the matter satisfactorily to all parties concerned. According to this testimony, Mr. Woodruff, who concededly represented the defendant, made no claim that McCoy was not authorized to conclude the negotiations with Hinck, and did not claim that he had not informed McCoy over the telephone that the Boston office accepted the contracts. Neither did Evans, the general manager of defendant's New York office, claim that McCoy acted without authority, nor did Evans assign any reason for retaining the sold notes. The retention of the sold notes worked an obvious disadvantage to the plaintiffs, for the defendant was in a position where it could hold the plaintiffs to the contract, yet, according to defendant's contention, the plaintiffs could not hold the defendant. I am of the opinion that the retention of these sold notes for three days, coupled with defendant's failure to make any point of McCoy's lack of authority when the controversy was fresh, called for evidence from the defendant to meet plaintiffs' evidence, from which McCoy's authority might be inferred upon the principle of ratification and also of estoppel. Concededly the evidence of McCoy's authority is not strong; but, even if it be called weak, it must be recollected that we are dealing with a dismissal of the complaint at the close of plaintiffs' case, on which plaintiffs are entitled to the most favorable consideration in drawing inferences from the proof. Uncontradicted and unexplained, I think this state of the proof warranted an inference of McCoy's authority to authorize the broker to sign the bought and sold notes, and that it was error to dispose of this issue as a matter of law. The judgment should be reversed, and a new trial ordered, with costs to appellants to abide the event. Order filed. CLARKE, P. J., and DOWLING and SMITH, JJ., concur. JOSEPH GORDON, Inc., v. MASSACHUSETTS BONDING & INS. CO. (Supreme Court, Appellate Division, First Department. March 7, 1919.) INSURANCE 388(5)-INDEMNITY INSURANCE ESTOPPEL. Where casualty insurance company, with full knowledge that employé of assured claimed damages as result of kick of a horse known to be vicious by assured, assumed entire control of defense, depriving assured of control, and virtually forbidding assured from making settlement, it is estopped from claiming that it was not liable under the policy, which provided that it should not be liable for injuries caused by horses known by assured to be vicious. Appeal from Trial Term, New York County. Action by Joseph Gordon, Incorporated, against the Massachusetts Bonding & Insurance Company. Judgment for defendant, and plaintiff appeals. Reversed, and new trial ordered. Argued before CLARKE, P. J., and LAUGHLIN, PAGE, SHEARN, and MERRELL, JJ. Melvin G. Palliser, of New York City (Lynn W. Thompson, of New York City, of counsel), for appellant. Rosenthal & Heermance, of New York City (Clayton J. Heermance, of New York City, of counsel, and Harold L. Klein, of New York City, on the brief), for respondent. MERRELL, J. The plaintiff is a domestic corporation engaged in the coal and trucking business. The defendant is a foreign corporation organized under the laws of the state of Massachusetts, and is engaged in the liability insurance business. On or about April 1, 1913, upon due consideration, the defendant issued a policy of insurance whereby it agreed to indemnify the plaintiff against loss from the liability imposed by law by reason of bodily injuries accidentally suffered by any person by means of horses or draft animals or vehicles belonging to the plaintiff. In carrying on its business the plaintiff employed several teams of horses and men to drive the same. On February 21, 1914, within the life of said policy, one Andrew Kelly, an employé of the plaintiff, suffered injuries, including a broken leg, as the result, as he claimed, from a kick of one of plaintiff's truck horses. On the same date the plaintiff corporation, the assured under said policy, by letter addressed to Mr. D. A. W. Weight, manager of the insurance department of Slawson & Hobbs, the brokers who had obtained said policy from the defendant company, gave notice that their said driver had been that morning injured while driving a coal cart and had received a broken leg, and asked the brokers to report such injury to the defendant company. Shortly thereafter the said brokers by letter reported such accident to the defendant company, and asked the defendant to give the matter prompt attention. The day following said notification from the insurance brokers the defendant insurance company acknowledged receipt thereof, and stated in writing that the case seemed to warrant personal investigation, which it would receive in the regular way, and For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes |