Case ID: nys_36/html/0846-01.html
Source: Caselaw Access Project
Author: {"author": "VAN BRUNT, P. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

HOLLINS et al. v. HUBBARD et al.
    (Supreme Court, General Term, First Department.
    December 18, 1895.)
    1. Contracts—Consideration.
    Where a bank which received a draft against cotton held by the drawer’s consignee, who had made advances thereon, and an order on the consignee for a bill of lading for the cotton, sent the order to the consignee, who, not knowing of the draft, wrote the bank that he would send the bill of lading at a future day, the fact that the bank then paid the draft did not constitute the consignee’s letter a contract to deliver the cotton founded on a valuable consideration.
    3. Estoppel—Statements Made in Ignorance oe Facts.
    In an action for breach of a contract to deliver cotton, it appeared that while defendants were in possession of the cotton which had been consigned to them by G., and on which they had made advances, G. made a draft on plaintiff against part of the cotton, and sent plaintiff an order addressed to defendants, requesting them to “take out B/L by steam to L. for * * * 150 B/Gotton, and deliver same to” plaintiff; “have the B/L taken out in our name to order of some clerk, and indorsed in blank.” The order was sent to defendants, who, not knowing of the draft, wrote plaintiff: “150 B/C referred to for account of G. cannot.be shipped till next week, when we will deliver to you B/L * * * as requested.” Plaintiff then paid the draft, and immediately afterwards G. failed. The order on defendants was not in the usual form of delivery orders in - use among merchants. Held, that defendants were not estopped to question plaintiff’s right to the cotton.
    Action by Harry B. Hollins and others against Samuel T. Hubbard, Jr., and others, to recover damages for breach of contract. A verdict was directed in favor of plaintiffs, and defendants move for a new trial on exceptions ordered to be heard at general term in the first instance.
    Granted.
    Argued before VAN BRUNT, P. J., and PARKER and PATTERSON, JJ.
    
      Wm. D. Guthrie, for the motion.
    Jullen T. Davies, opposed.
   VAN BRUNT, P. J.

On the 27th of June, 1891, the defendants, ■commission merchants in the city, of New York, had in their possession upward of 30C bales of cotton which had been consigned to them by Charles Green’s Son & Co., of Savannah, Ga., and which were held by them subject to a lien for advances made to Green’s Son & Co. The plaintiffs were at this time engaged in business as bankers in the city of New York. On the day above mentioned there was presented to the plaintiffs a bill of exchange for $10,000, drawn by Green’s Son & Co. against 200 bales of.cotton. The plaintiffs on the same day received from Green’s Son & Co. a letter, dated June 25, 1891, advising of the draft, as follows:

“Savannah, 25 June, 1891.
“Messrs. H. B. Hollins & Co., New York—Dear Sirs: We beg to advise our draft on you, favor the National Bank of Savannah, $10,000, against 200 B/C . for Liverpool as per documents enclose, viz.: 50 B/C herewith, and B/L & certificate of insurance for 150 B/C, to be delivered to you by Messrs. Hubbard, Price & Co., as per order herewith.
“Yours, truly, [Signed] Charles Green’s Son & Co.”

The accompanying order was as follows:

“Savannah, 25th June, 1891.
“Messrs. Hubbard, Price & Co., New York—Dear Sirs: Confirming our telegram of to-day,, you will kindly take out B/L by steam to Liverpool for 3 A M 25, J A L 25, A M G 25, T O M 25, H O X 25, H O N 25,-150 B/Cotton,— and deliver same to Messrs. H. B. Hollins & Co., N. Y. Please have the B/L taken out in our name to order of some clerk and indorsed in blank. Also, please get insurance certificate from United States Lloyds (50 Wall street), and deliver same to Messrs. Hollins/ The remaining cotton you have of ours, we shall keep in N. Y.
“Yours, truly, [Signed] Charles Green’s Son & Co.”

Upon receipt of these papers the plaintiffs sent the order to the defendants by a messenger boy, but did not send, or disclose the purport of, the letter above referred to. They subsequently received from the defendants an acknowledgment as follows:

“Cotton Exchange Building, New York, June 27, 189.1.
“Messrs. H. B. Hollins & Co., Present—Dear Sirs: 150 B/C referred to for account of Messrs. Charles Green’s Son & Co., cannot be shipped till next week, when we will deliver to you B/L and certf. of ins. as requested.
“Yours, truly. [Signed] Hubbard, Price & Co., D. A. W.”

Upon the receipt of this letter from the defendants, the plaintiffs paid the draft for $10,000, and immediately thereafter Green’s Son A Co. failed. At the time of the writing of the letter above mentioned from the defendants to the plaintiffs, the defendants had no knowledge or information that the plaintiffs intended paying any draft of Green’s Son & Co. upon them. It appears from the evidence that the letter from Green’s Son A Go. to the defendants is not the usual form of delivery order in use among merchants. The defendants, having refused to deliver the 150 bales of cotton without being reimbursed for the advances made by them to Green’s Son & Co. thereon, the plaintiffs commenced this action for damages for a breach of the contract 10 deliver the same. Upon the trial of the action, these facts being established, the court directed a verdict for the plaintiffs, and ordered the exceptions to bé heard in the first instance at the general term.

The plaintiffs claim to recover in this action upon three grounds: First, that there was established an agreement upon the part of the defendant to deliver, founded upon a valuable consideration; second, that, even if the defendants had a lien upon the cotton, it was waived; and, third, because the defendants are estopped from questioning the plaintiffs’ right to the cotton in question.

It is difficult to understand how a consideration can be imported into a contract without the knowledge of the contracting party who is to be bound because of the existence of such consideration. It seems to be essential to the existence of a valid contract that each party should be cognizant of all its terms and features, and that where one party is ignorant of that which is a necessary constituent of the alleged contract, there is no basis upon which an agreement can be founded, because a party cannot agree "in respect to a thing of which he is absolutely ignorant. It would seem, therefore, that the defendants, being ignorant of the fact that the plaintiffs intended to make advances upon the strength of the defendants’ promise to ship the cotton in question, such intention upon the part of the plaintiffs cannot be read into the agreement between the parties to this action to furnish a consideration.

As to the second ground, namely, the waiver of lien, it seems sufficient to say that if the defendants had contracted to deliver, or had estopped themselves from setting up their lien, of course the existence of such lien would be no defensq.

The only other question which it is necessary to consider is, were the defendants estopped from questioning the plaintiffs’ right to the cotton in question? If they had known of the action that the plaintiffs were about to take upon the strength of their communication,, there can be no doubt but that they could not be heard now to question the right of the plaintiffs to claim damages for the nonfulfillment of the promise contained in the letter. But it is urged upon the part of thé plaintiffs that their ignorance is no justification; that the promise to deliver was absolute and the plaintiffs had a right to-act thereon. In support of this proposition the plaintiffs cite the-cases of Woodley v. Coventry, 2 Hurl. & C. 164, and Knights v. Wiffen, L. R. 5 Q. B. 660.

The case of Woodley v. Coventry was as follows: The defendant was a dealer in corn and flour, and sold to one Clarke certain.barrels, of flour, but payment was not made for the same. Clarke then applied to the plaintiffs for a loan upon the security of its flour, and. gave them the following order:

“Jack’s Coffee House, Mark Lane, August 25, 1862.
“Mr. M. Coventry: Deliver to Messrs. Woodley & Meadows 180 brls. flour,. Columbia Mills; 218 brls. flour, Diamond Mills. Joseph Clarke.”

The plaintiffs, before making the loan, sent the order to the defendant’s warehouse by a clerk, who made a full inquiry there whether it was or not in order, and received an oral answer, Wes,” and he thereupon left the order at the warehouse, where it was accepted. The plaintiff then made the loan to Clarke requested by the latter. Thereafter Clarke became insolvent, and the defendants refused to deliver the flour, updn the ground that plaintiffs stood in no better position than Clarke, and must first pay the purchase moneys owing by the latter. The court held that the defendant’s position was untenable, and that the plaintiffs were entitled to recover. Pollock, C. B., in his opinion says:

“The real question was whether the .defendants had so conducted themselves that the plaintiffs had a right to say, ‘We call upon you to deliver to us the flour which you say you hold in our behalf.’ The question whether the property passed, as between vendor and vendee, never arose. The only question was whether the defendants had acknowledged that they held the flour in behalf of the plaintiff's; for, if so, according to law and justice they were bound to deliver it, or pay the damages.”

The case of Knights v. Wiffen was as follows: The defendant Wiffen was a produce merchant, and had a large quantity of barley in sacks in his granary, adjoining Stanstead station. He sold 80 quarters of this barley to one Maris, without specifying any particular portion. Maris did not pay for the barley, however. While the barley remained in defendant’s granary, Maris sold to the plaintiff 60 of the 80 quarters purchased by him, and the plaintiff paid Maris for the same, receiving from him the following delivery order:

“The Station Master, Stanstead—Sir: Deliver to Mr. T. Knights 60 quarters of barley to my order. R. W. Maris, Jr.
“June 27, 1868.”

This order was sent by the plaintiff to the station master, who showed it to the defendant, and the latter said:

“AH right. When you get the fonvarding note I will put the barley on the line.”

Subsequently Maris became insolvent, and the defendant refused to deliver the barley, on the ground that he had a lien thereon as unpaid vendor. The court held that the plaintiff was entitled to judgment, and Mellor, J., in his opinion, said:

“Lord Bllenborough states, in Stonard v. Dunkin, 2 Camp. 344: ‘Whatever the rule may be between buyer and seller, it is clear the defendants cannot say to the plaintiff, “The malt is not yours,” after acknowledging to hold it to his account.’ By so doing they attorned to him, and I should entirely over-set the security of mercantile dealings were 1 now to suffer them to contest the title.”

Lush, J., concurring in the decision, said:

“The defendant, by what he said to the station master, assented to the transfer, and induced the plaintiff to believe that he would hold the barley to his order. By so doing he altered the position of the plaintiff towards Maris. The plaintiff might, on a refusal by the defendant to hold for him, have applied to Maris, and he was deprived of the information which would have caused him to have done so. The defendant is therefore precluded from denying what he said.”

It will be seen that in these cases a delivery order was given and accepted, and the acceptor thereby acknowledged that he had the goods in question, and that an appropriation had been made of the proper amount, and placed in the possession or under the control of the purchaser; and this was a statement of existing facts upon which the plaintiff relied and acted. The case at bar is entirely barren of these features. The letter from G-reen’s Son & Co. to the defendants was not a delivery order in the usual form in use among merchants, and the reply of the defendants to the plaintiffs upon the receipt of that order was not a representation that any appropriation had been made of the proper amount and placed under the control of the plaintiffs; but it was a mere statement that they wrould at some future time give the plaintiffs the evidence that such appropriation had been made and the property placed under the control of the purchaser.

An examination of the case of Anderson v. Read, 106 N. Y. 333, 13 N. E. 292, shows that it is necessary that this element should exist in order that an estoppel should arise. The distinction between that case and the case of Knights v. Wiffen, supra, has been pointed out, and it consisted in the fact that in Knights v. Wiffen by the acceptance of the delivery order, acknowledgment of possession, and appropriation and change of ownership were represented. In the case of Anderson v. Read the facts seem to be substantially as follows: The defendants’ firm had entered into a written contract with the firm of Rasin & Co. for the purchase and sale of 1,000 tons of ammoniated superphosphates. The contract signed by the defendants recited, among other things, “We have to-day sold to Messrs. R. W. L. Rasin & Co., of Baltimore, Maryland, 1,000 tons,” etc. Rasin & Co. had previously contracted to sell to one De Leon a larger amount of the same general kind of fertilizer, and he agreed to accept the goods purchased of defendants to apply upon his contract. The defendants, with knowledge that Rasin & Co. had made such a contract with De Leon, and desired the goods to make delivery under that contract, accepted an order drawn on and presented to them by Rasin & Co., requiring them to deliver the goods to De Leon, and agreed to so deliver them. De Leon paid Rasin & Co. for the 1,000 tons, partly in his own notes, which were not paid, and partly by acceptances of third parties, which were paid. Rasin & Co. gave their notes to the defendants, and soon after stopped payment, and failed without paying the notes. The defendants refused to deliver the goods to De Leon unless they were paid, offering to surrender the notes received by them. The action was brought by De Leon’s assignee to recover damages for this refusal. The court of appeals sustained the right of the defendants- to refuse delivery on the ground that the acceptance .of the order of Rasin & Co. in favor of De Leon did not vest any right of property in him, but simply amounted to an assignment to him of the rights of Rasin & Co., under the contract, and that, as they had the right to refuse to deliver to Rasin & Co., without payment,. after that firm became insolvent, they had the same right as against De Leon, and were not estopped from asserting their vendor’s lien. The following language in the opinion of the court in that case seems to be applicable to the case at bar:

“If the latter [De Leon] desired accurate information from the vendors, in order to bind them as to the meaning, in this instance, of language which is susceptible of different meanings, he should have asked them, and if the defendants then made any false representation or were guilty of acts which were equivalent thereto, they might thereafter be estopped from showing the truth as against one who, on the faith of such representations or acts, had altered his position to his detriment, if the truth should be proved. Here is no such case. When the order is produced by Basin and accepted by defendants, the implication that accompanies it on these facts is that defendants will deliver to De Leon under the same circumstances which they would deliver to Basin & Co., and if circumstances should arise prior to the delivery which would absolve the defendants from their obligation to deliver to Basin & Co., by reason of their insolvency, the same right would remain with defendants when a delivery should be demanded by De Leon. * * * This case is quite as strong for the defendant as that of Farmeloe v. Bain, 1 C. P. Div. 445. In that case defendants sold 100 tons of zinc to B. & Co., and gave them an order, in which defendants undertook to deliver to their order, indorsed thereon, 25 tons, etc., ‘off your contract of this date,’ and signed it. Upon the faith of this document the plaintiffs bought of B. & Co., and paid for, 50 tons of zinc, and B. & Co. having failed without having paid the defendants, they refused to deliver the zinc to the plaintiffs. The jury found that the defendants, in signing the order, intended the same as a representation to all persons to whom it should be shown that the goods therein mentioned were the property of B. & Co. The court, however, held that this document, thus signed by defendants, was not a known document among merchants, and was to be looked at as any other instrument in writing,, and as thus looked at it contained no representation of any fact, and the plaintiffs had no right to rely upon it as such a representation, and consequently could not claim an estoppel. In the documents before the court in this case, there are no representations of any fact which the defendants now seek to deny. They simply claim the right to refuse to deliver to an insolvent vendee or his assignee goods which they had contracted to sell and deliver to one whom they supposed solvent when the contract was made. They deny no fact stated in their writings, and they take no new or different position, and claim no other or further right than they have at all times had.”

Applying the principles enunciated in this cajse and the cases therein cited, it would seem that, in order to create an estoppel, there must be a representation of an existing fact, and not a promise in respect to some future act. It follows, therefore, that, there being no contract and no estoppel, no right to recover exists in the plaintiffs.

The exceptions should be sustained, and- a new trial granted, with costs of this application to the defendants to abide the event. All concur.