Case ID: nys_79/html/0437-01.html
Source: Caselaw Access Project
Author: {"author": "SPRING, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

RHODES v. HINDS.
    (Supreme Court, Appellate Division, Fourth Department.
    January 6, 1903.)
    1. Logs and Lumber—Agreement to Saw—Lien.
    Where plaintiff agreed to saw defendant’s logs into lumber, pile the same in his yard, and load it on cars on defendant’s order, receiving 60> per cent, of his compensation when the lumber was manufactured, and the balance when loaded on the cars, plaintiff had no lien on the lumber for the 40 per cent, due him after it was manufactured and piled, awaiting shipment.
    2 Same—Destruction op Subject-Matter—Compensation.
    Plaintiff agreed to manufacture defendant’s logs into lumber, pile it tm his yards, and load it on cars and ship it on defendant’s order, receiving 60 per cent, of his compensation when the lumber was manufactured, and the balance when it was loaded and shipped. After the lumber was manufactured, and had been for some 10 days in plaintiff’s yard, awaiting shipment, it was burned through the fault of neither party. iHeZd, that plaintiff was entitled to recover the balance of his compensation.
    3. Corporations—Annual Statement—Verification.
    Under Stock Corporations Law, § 30 (Laws 1892, c. 688), providing that corporations shall file an annual statement of their assets and liabilities, verified by the secretary and treasurer, and that failure to file such statement shall render the directors individually liable for the debts of the corporation, a statement verified by the president and vice president is not sufficient to relieve the directors from liability.
    Appeal from trial term, Jefferson county.
    Action by James P. Rhodes against Frank A. Hinds. From a judgment for defendant, plaintiff appeals. Reversed.
    On the 24th day of November, 1893, the Star Lake Lumber Company, a corporation, entered into a written agreement with the plaintiff’ whereby the latter agreed to manufacture into lumber at his mill the logs which the said, company cut. upon its tract of timber in the vicinity of the mill, and delivered in the mill pond of the plaintiff. The plaintiff was to saw and pile the lumber in his yard, and was to be paid for the soft wood $2.12%. per thousand, and $3.25 for the hard wood. The lumber was to be loaded dn the cars by the plaintiff when directed by the company, and the stipulated’ prices were to-be ascertained by “board measure” for the lumber “cut, piled’, and loaded" on board cars. The quantities were to be “determined by the actual bills of sale or invoice for lumber sold, or lumber shipped by the first party’s order." Sixty per centum of the contract price for the work done was- to- be paid in-monthly payments, to enable the plaintiff to pay for doing said work; and, as the company “realizes on said lumber,” 30 per centum additional was to- be paid, and the remaining 10 per centum within 30 days from the completion- of the manufacture and shipment of the whole of the said logs. The plaintiff finished manufacturing and piling the lumber in October, 1894. Prior to tile 16th day of August, 1895, there had been shipped by the plaintiff, pursuant to the direction of the company, about 950,000 feet, when the balance (about 900,000 feet) was destroyed by fire without the fault of either party to- the agreement. The lumber company had paid in full for all the lumber shipped, and 60 per centum of that burned.
    Argued before ADAMS, P. J., and SPRING, WILLIAMS, HIS-COCK, and NASH, JJ. ’
    Elon R. Brown, for appellant.
    Watson M. Rogers, forx respondent.
   SPRING, J.

The lumber all the time belonged to- the lumber company, and was stored in the plaintiff’s yard for its- convenience;, but 'the possession was really that of "the lumber company, and the shipments were to be at its option, and 40 per centum of the contract price was to be deferred until after shipment. The question is whether the plaintiff is entitled to recover for the value of the labor actually expended in manufacturing and piling the lumber destroyed. It is clear that he has no lien on the lumber for the money unpaid, for it was to be turned over to the lumber company, and payment was to await the sales or delivery on board the cars, which is incompatible with the existence of a lien. Laundry Co. v. Hahlo, 105 N. Y. 234, 11 N. E. 500, 59 Am. Rep. 496. The crucial test is, in this class of cases, who was in default? The title to the logs was in the lumber company. The lumber manufactured therefrom was also owned by it. The company furnished the property which was to be enhanced in value by the labor of the plaintiff. If it failed to furnish the logs for any cause, it was in default. If there was a like failure as to the lumber, the plaintiff could not perform. Without the fault of the plaintiff, he is prevented from completing his contract. The facts that it is entire, and its completion was to precede payment, are not important, because the lumber company, upon whom the obligation rested, has failed to supply him the lumber to ship. It is urged that this is a harsh rule, as each party without any claim must lose. But the situation of the parties to the agreement is not alike. The owner may protect himself by insurance.' The plaintiff has no title and no lien, and hence has no insurable interest. The plaintiff cannot perform because the defendant does not possess the property essential to render performance possible.

The counsel for the respondent invokes the principle that, by the terms of the agreement, complete performance must be accomplished before appellant may exact the enforcement of his compensation, beyond the 60 per centum already paid, and, if he expected to be relieved from the stringency of his agreement, he should have protected himself against loss from the destruction of the property by fire by appropriate •clauses in the contract. The counsel relies upon Harmony v. Bingham, 12 N. Y. 99, 62 Am. Dec. 142; Tompkins v. Dudley, 25 N. Y. 272, 82 Am. Dec. 349; Herter v. Mullin, 159 N. Y. 28-43, 53 N. E. 700, 44 L. R. A. 703, 70 Am. St. Rep. 517; and kindred cases. In Tompkins v. Dudley, supra, the defendant contracted with the plaintiff, as trustee, to erect a schoolhouse for a specified sum; payment in part to be made as the work progressed. Before the building was ■completed, it was burned to the ground, and the plaintiff was allowed to recover the sums paid to the defendant upon the contract. It will be observed that the builder during the performance of his agreement had the schoolhouse in his possession, and completely under his dominion. He was able to insure his pay by a lien upon the property and to indemnify himself from loss by fire by insurance. In Harmony v. Bingham, supra, the defendants, who were common carriers, agreed, by a contract under seal, to transport merchandise "for the plaintiff from New York City to Independence, Mo., within 26 days, for a stipulated freight charge, and a certain deduction was to be had for each day’s overrunning of the time. The defendant did not get the goods to their destination within the 26 days, but declined to deliver the goods until the full freight was paid, which the plaintiff did under protest, and brought suit upon the covenant for the freight paid, as well as for damages for breach of the agreement,'and recovered. The defendants claimed they were prevented from delivering the goods because a canal along a portion of their route had become impassable by a freshet, although the proof showed the route by New Orleans was known to the defendants to be accessible. The court of appeals held that the covenants must control, and that the defendants were not excused from performance by the fact the canal was impassable. In these cases, as well as in others cited by the counsel for the respondent, the well-settled doctrine is reasserted, that, where a party has assumed a charge or burden, he is bound to perform, and inevitable or unforeseen accident is no excuse.

We think the present case is to be distinguished in principle from those cited, and others of cognate application. As has been already suggested, the company in this case not only owned the property and had it under its control, but it was to produce it for shipment. To be sure, the plaintiff undertook unqualifiedly to deliver this lumber, and to complete his agreement before payment in full became due; but this undertaking must be construed in the light of the fact that it was the lumber of the company, and, before plaintiff could perform, he must have the lumber to deliver. This principle is re-enforced by the fact that the lumber remained piled after it had been sold for about io days, and during this period the election of the time of delivery was with the company. The condition referred to, limiting necessarily the absolute undertaking of the plaintiff to ship the lumber, must have been within the contemplation of the parties when they made their agreement. Stewart v. Stone, 127 N. Y. 500, 507, 28 N. E. 595, 14 L. R. A. 215. This feature relieves the plaintiff from liability for failure to perform, and may also prevent him from recovering beyond the value of the labor which he put upon the company’s property before its destruction. The work he did was in the fulfillment of the agreement, and, as he is debarred from full performance by the default of the company, he may recover the actual value of his services in manufacturing and piling the lumber.

The authorities recognize the distinction adverted to. In Niblo v. Binsse, *40 N. Y. 476, which seems to be a leading case, the plaintiff’s assignor contracted to do certain plumbing in a house owned by the defendant’s testator, to be completed at a given date, and part of the compensation to be paid as the work progressed,—a certain sum upon its completion, and the balance when it was tested and proved adequate. During the performance of the work the building burned without the fault of either party, and the contractor was permitted to recover for the work performed. The recovery was upheld upon the ground that the owner was in default in not furnishing the building which was necessary to enable the contractor to carry out his agreement. In the same line are Whelan v. Clock Co., 97 N. Y. 293; Hayes v. Gross, 9 App. Div. 12, 40 N. Y. Supp. 1098; Dexter v. Norton, 47 N. Y. 62, 7 Am. Rep. 415; Butterfield v. Byron, 153 Mass. 517, 27 N. E. 667, 12 L. R. A. 571, 25 Am. St. Rep. 654; Haynes, Spencer & Co. v. Second Baptist Church, 88 Mo. 285, 57 Am. Rep. 413; Jones v. Judd, 4 N. Y. 412. The present case, it seems to us, is much stronger for the plaintiff than any of those enunciating the principle upon which liability attaches, for in each of them the contractor or laborer had a lien for his services or materials on the thing upon which they were wrought or attached. The doctrine in these cases does not conflict with the rule that one who agrees to perform before receiving compensation must comply with his undertaking, and, if he seeks to be protected against inevitable calamity, must so stipulate in his agreement. That provision presupposes the lumber company has at all times done on its part whatever is essential to enable the plaintiff to perform strictly and fully.

An action was commenced by the plaintiff against the Star Lumber Company to recover for the claim contained in the complaint in this action. During its pendency the company became insolvent, a receiver of its property was appointed, and the plaintiff was enjoined from prosecuting the action. Thereupon this action was commenced against the defendant, a director of said company, charging him with personal liability for said indebtedness by reason of the failure of said company to file its annual reports as prescribed by section 30, c. 6S8, Laws 1892, in the years 1895 and 1896, when said statute was in force. It appears that a report in each of the said years was filed in the office of the clerk of the county of Jefferson, which was the proper county; but the same was verified in 1895 by the defendant, as vice president of the said company, and in the following year by its president, but the secretary or treasurer of the said company did not join in such verification, a.s the statute required, nor was it filed in the office of the secretary of state in compliance with the statute. These omissions render the defendant individually liable for the debt of the plaintiff. Manhattan Co. v. Kaldenberg, 165 N. Y. 1, 58 N. E. 790. Our conclusion is that the judgment should be reversed and a new trial granted, with costs to the appellant to abide the event.

Judgment reversed and new trial granted, with costs to the appellant to atjide the event.

Judgment reversed and new trial granted, with costs to appellant to abide the event, on questions of law only; the facts having been examined, and no error found therein. All concur.