Case ID: ohio-st_10/html/0263-01.html
Source: Caselaw Access Project
Author: {"author": "Peck, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Loomis, Campbell & Co. v. The Eagle Bank of Rochester.
    In May, 1855, Gr. & Co. executed to L., C. & Co. the following paper: “We have this day sold L., C. & Co. one thousand kegs (25 lbs. net) of good merchantable blasting-powder, at §2.30 per keg, delivered on board boat at Rochester. Their note at six months from shipment, payable in New York city. Half delivered now and balance in June. E. Gilbert & Co.” Same month G. & Co. shipped five hundred kegs and advised L., C. & Co., who forthwith returned a negotiable note for contract price of five hundred kegs, but the other five hundred kegs were never shipped. In August, 1855, the note was discounted by the bank for G. & Co., one of the discount committee being aware of the terms of the sale and of the fact that the last lot of five hundred kegs had not been shipped. The note was not paid, and suit was brought thereon by the *'bank against L., C. & Co., who set up, by way of counter-claim, damages for the non-delivery of the five hundred kegs of powder. Held—
    1. That the stipulations as to the two lots of powder are be treated as distinct and several agreements, and not as one entire contract.
    2. That a claim for damages for the non-delivery of the last lot can not be set up as a counter-claim to an action upon the note given for the first lot, brought by the indorser for value and before maturity, even though he had notice of the breach of the second contract at the time of his purchase.
    Error to the Superior Court of Cincinnati.
    On the 16th day of May, 1855, Loomis, Campbell & Co. executed to E. Gilbert & Co. tbe promissory note of wbicb tbe following is a copy:
    “$1,150. Cincinnati, JMEa-y 16,1855.
    “ Six months after date, we promise pay to the order of E. Gilbert & Co., of Rochester, N. Y., eleven hundred and fifty dollars, value received, payable at the O. L. I. & Trust Co. Bank, New York.
    (Signed,) “ Loomis, Campbell & Co.”
    Tbe note was discounted by tbe Eagle Bank of Rochester,.August 29,1855, for E. Gilbert & Co., who indorsed tbe note to tbe bank.
    At maturity, the note was protested for non-payment. On tbe 1st day of December, 1855, the bank brought an action in the Superior Court of Cincinnati, against Loomis, Campbell & Co., to recover tbe amount of tbe note and interest.
    Loomis, Campbell & Co. in their answer admit tbe making of tbe note upon which suit was brought, but set up against it a counterclaim, as follows: That on or about tbe 1st day of May, 1855, said E. Gilbert & Co., to whom said note was made payable, contracted to- sell and deliver to defendants below one thousand kegs of go'od merchantable blasting-powder, one-half to be delivered immediately, and tbe other half in Juno following. That tbe one-half was delivered as agreed, and the note given in part execution of-"the contract. That on the 2d of June, said *E. Gilbert & •Co. informed defendants below, that they could not, owing to an accident, deliver the balance of the powder for several weeks, and that •defendants below consented to the delay. But that subsequently, to wit, about the 19th of October, 1855, defendants below made demand of said E. Gilbert & Co. to deliver the balance of the powder, which they refused to do, to the damage of the defendants below in eight hundred and fifty dollars. The answer further alleges, that the bank received the note with a knowledge of this counterclaim.
    The bank reptlied, that they discounted the note in the ordinary-course of business, before the same was due, to wit, August 29, 1855, and that they had no knowledge of the matter set up in the -answer.
    The cause was tried to a jury, and the defendants below, to maintain the issue on their part, offered in evidence a paper which reads as follows:
    “ We have this day sold Loomis, Campbell & Co. one thousand kegs (25 lbs. net)- of good merchantable blasting-powder, at two 30-100 dollars per keg, delivered on board boat at Rochester. Their note at six months from shipment, payable in New York city. Half ■delivered now, and balance in June.
    (Signed,) “ E. Gilbert & Co.”
    The defendants below proved that the five hundred kegs that were to be delivered in June, were never delivered, but that Gilbert & Co. refused to deliver the same. The defendants below proved also, that the contract between them and Gilbert & Co. was made on behalf of the latter by John Crombie, a member of the firm of Gilbert & Co., and that said Crombie was also vice-president and member of the finance committee, or board of discount, of the Eagle Bank of Rochester, which discounted the note, and that he was, at the time, aware of the breach of the contract.
    The correspondence between Gilbert & Co. and the defendants *below; in regard to the powder, was put in evidence by the latter, and other evidence was offered by them in regard to the advance in the price of powder, etc., but a proper understanding of the decision of the case docs not require that this correspondence and evidence be stated.
    On the trial, the court below was requested by the defendants to give the jury sundry charges, some of which were refused and others-qualified. But as they relate to questions not reached .in the decision here, they are omitted.
    The verdict and judgment at special term of the Superior Court were in favor of the bank. This judgment was affirmed, on error, at the general term. To reverse such judgment of affirmance, the-present petition in error was filed.
    
      Gollins & Herron, for plaintiffs in error.
    
      Lord & Wright, for defendant in error.
   Peck, J.

The defendant in error brought suit in the court below,, upon a promissory note for eleven hundred and fifty dollars, given by plaintiffs in error to E. Gilbert & Co., in consideration of a shipment of five hundred kegs of blasting-powder, which note had been indorsed by the payees and discounted by the plaintiff below for value, and before maturity.

The defense relied on was a counter-claim for damages resulting to defendants, from a failure on the part of E. Gilbert & Co. to deliver another lot of five hundred kegs of powder, stipulated for, it. is said, in the same contract, and to be delivered at a subsequent period.

It is not pretended that the plaintiff below did not pay full value for the note upon its discount, in August, 1855, nor that they had any actual notice of the terms of the contract with Gilbert & Co., or of their failure to deliver *the other five hundred kegs in accordance with their contract; but it is claimed, on the authority of 2 Hill, 461, that the Bank of Rochester is chargeable with such, notice, it having been known to Crombie, a partner in the firm of Gilbert & Co., who was a member of the finance committee whicndiscountcd the note.

It is important to determine the character of the agreement for-.the sale and delivery of the one thousand kegs of powder, and whether it is to be regarded as one entire contract, or as two several contracts, expressed in the same instrument. If it is but one contract, and the plaintiff below was chargeable with notice of its terms, and the non-compliance of Gilbert & Co. with its stipulations, it might be incumbent upon us to scrutinize the charges asked and refused, and the qualifications which were annexed to the charges given ; but if, upon a fair construction, the stipulation as to the two lots of powder are several contracts, or if they became several by the subsequent treatment of the parties thereto, it would' be idle to inquire whether there was any error in the charge of the-court as to the circumstances which would authorize the defendants in said action to set up such a counter-claim against the assigneeof the note. The verdict was adverse to the counter-claim, and as in such case no recovery could have been had upon it against the-plaintiff below, the defendants were not, in law, damnified by the-charge, even if it was erroneous. The claim for damages in such case could not, in any just or proper sense, be said to arise out of the contract or transaction set forth in the petition as the foundation of the action, nor connected with the subject of the action-(Code of Civil Procedure, sec. 94), the note in suit having been given for a consideration fully paid, and the counter-claim arising' out of the breach of another contract, which- formed no part of the-consideration of the note.

The paper from which the entirety of the contract is deduced . reads as follows:

*“ We have this day sold Loomis, Campbell & Co. one thousand kegs (25 lbs. net) of good merchantable blasting-powder, at two 30-100 dollars per keg, delivered on board boat at Rochester. Their note at six months from shipment, payable in New York city. Half delivered now, and balance in June.

“ E. Gilbert & Co.”

This paper is not signed by Loomis, Campbell & Co., and is not the contract, but mere evidence of the contract. It is an admission by Gilbert & Co. that they had sold one thousand kegs of powder to plaintiffs in error at a specified rate per keg, five hundred of which were to be shipped presently, and five hundred in June following ; and if this were all, it might possibly have borne the construction claimed for it by the plaintiffs in error. The paper, however, does not stop here, but proceeds to state how and when the. payments are to be made, from which it appears that the vendees were to give their notes for each shipment as soon as it was made; and these notes, it seems, from the one in suit, were also to be negotiable. The mode of payment, then, was to be by negotiable-note, aud the time of payment immediately upon the shipment of each parcel. Can it be supposed to have been the intention of the parties to the agreement, that, after such negotiable note was given,, the maker was to retain a lien upon it for the performance of ther •other stipulations ? We think not. The agreement to ship both lots is written, it is true, upon the same paper, and, unitedly, the two lots make up the aggregate of one thousand kegs bargained .and sold; but, in all the essential elements of a contract, they are as distinct as if written upon separate slips of paper. It provides a different time for delivery and for payment, and a severable rate •of compensation for each lot. No part of the price of the first lot is to be retained, or in .any way made dependent upon the shipment of the second. On the shipment of the first, Gilbert & Co. •could demand full payment therefor, and, if refused, an action would have lain to recover *it. This view is, we think, fully sustained by the rules laid down in 2 Parsons on Con. 29,30, .and the authorities there cited.

The paper evidences two distinct contracts for the sale and shipment of two lots of powder; one deliverable in May, and the other in June. They were also, as appears from the testimony, to have been of different qualities—the one mixed and the other separated powder. This conclusion is also supported by the subsequent correspondence of both parties, in which they speak of the powder not delivered as “the other five hundred kegs,” and as “the other lot,” and fix a different time for its delivery. But-if this construction were more doubtful than it seems to us to be, the giving of a negotiable note for the first lot upon its shipment would, in and of itself, amount to a severance of the joint contract, and a waiver of all recourse upon the note in the hands of an assignee for value, for a non-performance of the remaining stipulations. Such must have been the understanding of both parties when such a note was given and received, and a person conusant of the entirety of the original agreement might purchase it, as was done by the plaintiff below, and thereby acquire an absolute right to the money it represents. The conclusion to which we have come relieves us from an examination into the errors assigned in relation to the charges given and refused, and the question as to the continuing liability of Gilbert & Co. to deliver the last lot of powder. Their liability, if it still exists, can not, nor can the damages resulting therefrom, •be made the subject of a counter-claim, in an action by the Rochester Bank upon the note which they purchased, as above stated.

Judgment affirmed.

Brinkerhore, C. J., and Scott, Sutliee, and Gholson, JJ., concurred.