Case ID: ny-super-ct_59/html/0354-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court.—McAdam, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

JOHN BERENBERG GOSSLER, et al., Respondents v. JACOB H. LAU, et al., Appellants.
    
      Demurrer to counter-claim in answer on the ground that it does not state facts sufficient to constitute a cause of action.
    
    The facts in the case fully appear in the opinion, of the court.
    On the review Held, construing all the allegations of the answer as favorably to the defendants as the rules permit, the answer merely shows that the plaintiffs should not have advanced their money on the draft without first obtaining clean bills of lading without any qualification whatsoever. The plaintiffs were not the shippers of the goods; did not obtain the bills of lading from the carrier, but from Braun and Bloem, the parties from whom the defendants received the goods. The plaintiffs were not the agents of the defendants in the sense that imposed upon them the duty of seeing to the manner of shipment of the goods, or to the phraseology of the bills of lading, or if communicating to the defendants the mode of shipment or contents of the bills of lading. All these, and such like things, were matter of concern between Braun and Bloem on the one hand and the defendants on the other. There being no duty, and consequently no breach, the defendants could not have svrffiered any damage from any act or omission of the plaintiffs in the premises, and hence the counter-claim alleged no cause of action against them. For these reasons, without considering the other objections raised and urged to the answer, on the ground that it contains conclusions instead of facts, the demurrer was properly sustained.
    Before Sedgwick, Ch. J., Freedman and McAdam, JJ.
    
      Decided May 4, 1891.
    
      Appeal from interlocutory judgment entered on order sustaining the demurrer interposed by the plaintiffs to the counter-claim set up by the defendants.
    
      Wing, Shoudy & Putman, attorneys, and J. A. Shoudy of counsel, for appellants, argued:—
    I. It was proper pleading to refer to the allegations, admissions and denials of the preceding first defence without restating them. By reference thereto those allegations became part of the second defence, by adoption, as really as if they had been again set forth in words. Xenia Bank v. Lee, 2 Bosw. 695; Williams v. Richmond, 9 How. 522; Hammond v. Earl, 58 Ib. 437.
    II. The facts alleged in the second defence of the answer contain a good cause of action. The substance of the allegation is : (a) That by the agreément between the plaintiffs and the defendants the plaintiffs undertook to accept the drafts drawn by Braun & Bloem for the purchase price of blasting caps bought from them by the defendants and shipped from Hamburg to New York when such drafts were accompanied by a clean and ordinary bill of lading showing such shipment, (b) The plaintiffs well knew that Braun & Bloem had no right to receive a qualified bill of lading, and that plaintiffs had no right to accept a draft accompanied by a bill of lading stating that the goods were shipped on deck at shippers’ risk. (c) That defendants purchased of Braun & Bloein the forty cases of blasting caps referred to in the complaint at a price which would have realized them a profit of $2,108.64 if properly shipped; that a bill of lading was accepted therefor which provided that the same should be carried on deck at shippers’ risk and plaintiffs, with full knowledge of the facts, wrongfully accept the draft drawn accompanied by such bill of lading. (d) That defendants, in pursuance of their contract and without knowledge of the peculiar manner in which the shipment had been made, procured insurance under their open policy as for-an ordinary shipment, (e) That plaintiffs, knowing all the facts, carelessly and negligently omitted to notify the defendants of the manner of shipment so that defendants could have procured insurance which would have covered the loss. (/) That the goods were wholly lost at sea, and having been shipped at defendants’ risk the policy did not attach and defendants lost the benefit of the insurance ; lost the goods, and lost their profits thereon. The difference between an ordinary clean bill of lading and one qualified by the provision that the goods are to be carried on deck is very wide and is well recognized. The “ ordinary ‘ clean ’ bill of lading, that is to say, a bill of lading which is silent as to the place of stowage, imports a contract that the goods are to be stowed under deck ” and parol evidence is inadmissible to show that they were to be stowed on deck. The Delaware, 14 Wallace, 579. To the same effect. Creery v. Holley, 14 Wend. 26. A bill of lading which not only states that the merchandise is shipped on deck but also that it is at shipper’s risk, practically does away with the liability of the carrier. The acceptance by the plaintiffs of a draft drawn by Braun & Bloem accompanied by such a bill of lading Avas clearly in violation of the defendants’ rights. The plaintiffs had no right under the agreement, as alleged, to accept anything other than the usual, and ordinary bill of lading. They had no right to exempt the carrier from liability at the expense of the defendants. For the purposes of the acceptance of the bill of lading and the bill of exchange the. plaintiffs were the agents of the defendants and bound to protect the rights of their principals. Having accepted this qualified and peculiar bill of lading for and on behalf of the defendants, the plaintiffs were bound to promptly notify the defendants of the manner of shipment, so that the defendants could have by a special application for insurance and by paying the increased premium, have insured their interest in the merchandise and saved themselves from loss. The plaintiffs must be presumed to have known that, any ordinary insurance would not cover merchandise thus shipped.
    III. On the argument in the court below, it was suggested that inasmuch as the acceptance of the bill of lading was not authorized, that therefore the merchandise was not the property of the defendants, and they had no claim for loss of profits. While there is an air of plausibility in this suggestion, it is essentially unsound. In the first place, the plaintiffs have no right to take any such position. They cannot say, “ You are hot harmed, because by our unauthorized act we did not bind you, and therefore you are not the purchasers of the merchandise, and not entitled to the profits.” They assumed to act as agents for the defendants, and they are estopped from alleging their want of authority; and, in the second place, the suggestion ignores the fact that plaintiffs had already purchased the property of Braun & Bloem, as is in the answer alleged, and they were therefore entitled to the benefit of that purchase, and anything which deprived them of their profits was an actionable claim on their behalf.
    IV. There is no ground for the contention that the counter-claim does not arise out of the contract or transaction set forth in the complaint, or that it is not upon contract. It clearly grows out of the same matters which are the subject of the action as set forth in the complaint and out of nothing else. It is also upon contract for a breach of plaintiffs’ contract obligation.
    
      Hinrichs & Rudolph, attorneys, and F. W. Hinrichs of counsel, for respondents, argued :—
    
      I. The alleged counter-claim does not state facts sufficient to constitute a cause of action. The complaint sets forth—in brief—that plaintiffs, John Berenberg Gossler & Co. of Hamburg, and Schulz & Ruckgaber, of New York, for their common advantage are engaged in business. In February last they opened a credit for defendants, J. H. Lau & Co. of New York, to be availed of by Braun & Bloem, of Dusseldorf, Germany. Braun & Bloem are manufacturers of blasting caps, and sell goods to defendants. These are paid for by plaintiffs’ accepting and paying the manufacturers’ drafts accompanied by invoices and bills of lading. Defendants agreed to provide, previous to the maturity of said drafts, sufficient funds to meet the same, with a commission of one per cent. Furthermore, all goods shipped, and the proceeds thereof, the bills of lading and the marine insurance (which defendants expressly agreed to secure), were pledged with plaintiffs as collateral security, with power to dispose of them at their discretion. The defendants finally expressly guaranteed that any bills of lading and invoices accompanying drafts would be genuine and that they would represent actual shipments. Braun & Bloem made a shipment, drew a draft for some marks—13,000—which was accompanied by an invoice of blasting caps and a bill of lading, and plaintiffs paid the draft. The caps were in fact shipped but lost at sea. Defendants refused to cover plaintiffs for the draft paid. A tender of the shipping documents and a demand were made before action begun.
    II. The main defence is (putting it in its strongest light for defendants) that the bill of lading purported to show that the goods were shipped on deck, and that the insurance company by reason of the “form” of the bill of lading “ claimed ” that it was not liable to pay the loss. Defendants being met with this “claim” of the insurance company, refuse to pay plaintiffs for their advances. Defendants also claim that according to the “true intent and meaning” of the agreement with plaintiffs, plaintiffs were not authorized to pay any drafts accompanied by bills of lading qualified in any way. The answer does not show that the goods were in fact shipped on deck, or allege that the insurance company is not liable to pay for them if so shipped, or set forth facts showing such non-liability, or allege that it was plaintiff’s duty to attend to the shipment of the goods and see to it that they were not shipped on deck, or that, if they were shipped on deck, the loss was due to that fact. It does claim that plaintiffs were negligent in receiving a bill of lading which was not regular or “ usual,” whatever that may mean. The answer does not, except by inference, allege that the insurance company, by reason of the goods being shipped on deck, “claims” that it is not liable. The whole trouble seems to be that the bill of lading “ states ” that the goods were on deck.
    III. The answer also sets up an alleged counterclaim, and asks for damages amounting to $2,108.64 and interest. These damages are for the amount of alleged profits which defendants claim that they would have earned on the sale of the goods had they not been lost, or if lost, that they would have received from the insurance company in addition to the cost of the goods. A most extraordinary claim. There is nothing to show that an insurance company would insure speculative profits, amounting to two-thirds of the original cost, or for any amount. There is no allegation' any where, except thus inferentially, that the goods were, in fact, shipped on deck. The allegations of the counter-claim then continue that plaintiffs wrongfully accepted a draft drawn upon them accompanied by such qualified bill of lading, and negligently omitted to notify defendants of the manner in which said goods were shipped. It is,not alleged that plaintiffs agreed so to notify defendants, and no facts are shown raising a presumption of a duty to do so. Defendants then claim that had they been so notified they might have had the value of the goods and their prospective profits covered by insurance on deck at shippers’ risk.
    IV. Under the contract the ■ value of the goods, if received from the company, would clearly have gone to plaintiffs to cover them for their advances. Furthermore, defendants cannot recover the value upon any theory, as they have failed to pay for them, nor can they for a like reason recover the difference between the market and the contract prices. The defendants are, therefore, driven to build a counterclaim ■ on alleged “ profits.” These are purely speculative. The allegation of the answer is “ that if the goods had arrived in the port of New York and (sic) in due course the defendants would have realized thereon a large profit in the sale thereof, to wit: about the sum of $2,108.64 and interest from June 23, 1890.”
    V. Even if the allegations of the counter-claim are not defective in the above specified particulars, defendants cannot recover for prospective and speculative “ profits.” And this is all that they seek to recover. Such “ profits ” were not within the contemplation of the parties even if the plaintiffs are at fault and debarred from recovering for their advances. If plaintiffs had been directly guilty of the loss of the goods by a negligent act (a much stronger case than that presented here), only the value of the goods could ordinarily be recovered. There was nothing to prevent defendants’ going into the market to buy .other goods as soon as they heard of the loss. This they- did not do. Had they been able to buy the goods at the same price as contracted for, no damage would have "resulted. “ The damages for which a party may recover for a breach of contract are such as ordinarily and naturally flow from the non performance. They must be proximate and certain, or capable of certain ascertainment, and not remote, speculative or contingent.. It is presumed that the parties contemplate the usual and natural consequences of a breach when the contract is made ; and if the contract is made with reference to special circumstances, fixing or affecting the amount of damages, such special circumstances are regarded within the contemplation of the parties, and damages may be assessed accordingly.” Booth v. Spuyten D. R. M. Co., 60 N. Y. 492.
   By the Court.—McAdam, J.

The complaint sets forth that plaintiffs John Berenberg Gossler & Co., of Hamburg and Schulz & Ruckgaber of New York, for their common advantage, are engaged in business. That in February, 1890, they opened a credit for defendants, J. H. Lau & Co., of New York, to be availed of by Braun & Bloem, of Dusseldorf, Germany. Braun & Bloem are manufacturers of blasting caps, and sell goods to defendants. These are paid for by plaintiffs’ accepting and paying the manufacturers’ drafts accompanied by invoices and bills of lading. Defendants agreed to provide, previous to the maturity of said drafts, sufficient funds to meet the same, with a commission of one per cent.

Furthermore, all goods shipped, and the proceeds thereof, the bills of lading and the marine insurance (which defendants expressly agreed to secure) were pledged with plaintiffs as collateral security, with power to dispose of them at their discretion.

The defendants finally expressly guaranteed that any bills of lading and invoices accompanying drafts would be genuine and that they would represent actual shipments.

Braun & Bloem made a shipment, drew a draft for some marks—13,000—which was accompanied by an invoice of blasting caps and a bill of lading, and plaintiffs paid the draft. The caps were in fact shipped but lost at sea. Defendants refused to reimburse plaintiffs for the draft paid. A tender of the shipping documents and a demand were made before action begun.

The counter-claim pleaded, aided by the previous allegations of the answer to which it refers, alleges in substance : (1) That the drafts or bills to be drawn in pursuance of the credit were to be accompanied by the usual bill of lading showing the shipment of such merchandise to the amount drawn upon such credits. (2) That, according to the tenor and true intent and meaning of the agreement, the plaintiffs were not required to, and were not authorized to, accept any draft or bill of exchange on account of the defendants, or under said credit, except such bills as should be accompanied by an invoice and the usual and ordinary bill of lading, showing the shipment of the merchandise for the purchase price of which the bill of exchange was given, in the usual and ordinary manner, and without any qualification as to the mode of shipment, and without any limit of the usual liability of carriers -under bills of lading. (3) That, for several years prior to the opening of the credit referred to, the defendants had received numerous similar credits which had been used for the purchase of blasting caps from Braun & Bloem, which had been invariably shipped to defendants by a clean and unqualified bill of lading, which, in every case, accompanied the drafts which were accepted in pursuance of said letter of credit, and plaintiffs well knew that Braun & Bloem had no right or authority to receive for any shipment of blasting caps, any bill of lading stating the shipment to be made on deck or at shippers’ risk. (4) That on the 10th of April. 1890, defendants purchased of Braun & Bloem 40 cases of blasting caps to be shipped from Hamburg to the port of New York, for the price of 13,300 marks. (5) That Braun & Bloem, wrongfully and in violation of their duty, received and accepted for the same, a bill of lading, which stated, in substance, that the caps were to be carried on deck at shippers’ risk; whereas they should have been shipped under an ordinary clean and unqualified bill of lading; but that Braun & Bloem drew the bill of exchange referred to in the complaint, and attached thereto the said qualified bill of lading so received by them. (6) That plaintiffs carelessly and negligently, and contrary to the' true intent and meaning of their agreement, and in violation of their duty, accepted the said bill of exchange with the said qualified bill of lading attached thereto without lawful right or authority so to do. (7) That insurance upon said blasting caps was duly applied for by the defendants, and the same was written as a risk under their open policy, according to their agreement with plaintiffs. (8) That the insurance company which issued the policy now claims that, by reason of the manner in which the same was shipped, the policy did not attach, and that no liability was incurred by the insurance company, and, on that ground, refuses payment under the policy. That defendants had no knowledge or notice prior to the loss of the caps that the same were shipped on deck or in any other than the usual way and by the usual bill of lading. (9) That plaintiffs wrongfully accepted said bill of lading and bill of exchange and carelessly and negligently omitted to notify the defendants of the manner in which the goods were shipped, so that the defendants might have had the value thereof and their profits in the purchase of the same covered by insurance upon the goods as on deck at shippers’ risk. (10) That if the goods had arrived in the port of New York in due course the defendants would have realized thereon a large profit, to wit, §2,108.64. (11) That by reason of the manner in which they were shipped the insurance has been lost, and the defendants have lost their said profits. (12) The defendants demand judgment for the dismissal of the complaint and for the above mentioned sum against the plaintiffs.

The demurrer was upon three grounds: 1st, That the counter-claim does not state facts sufficient to constitute a cause of action. 2d. That it is not a counterclaim of the character mentioned in section 501 of the Code of Civil Procedure, in that it is not a cause of action arising out of the contract or transaction set forth in the complaint, as the foundation of plaintiffs’ claim, or connected with the subject of the action. 3d. That the counter-claim is not of the character specified in said section 501, in that it does not appear to be an action on contract other than that set forth in the complaint and existing at the commencement of the action.

The demurrer was sustained at special term. The appeal is from the interlocutory judgment entered thereon.

Construing all the allegations of the answer as favorably to the defendants as the rules permit, the answer merely shows that the plaintiffs should not have advanced their money on the draft without first obtaining clean bills of lading, without any qualification whatever. The plaintiffs were not the shippers of the goods, did not obtain the bills of lading from the carrier, but from Braun & Bloem, from whom the defendants received the goods. The plaintiffs were not the agents of the defendants, in the sense that imposed on them the duty of seeing to the manner of shipment of the goods or to the phraseology of the bills of lading, or of communicating to the defendants the mode of shipment or contents of said bills of lading.

All these and such like things were matter of concern between Braun & Bloem, on the one hand, and the defendants on the other. There being no duty, and consequently no breach, the defendants could not have suffered any damage from any act or omission of the plaintiffs in the premises, and hence the counter-claim alleged no cause of action against them. For these reasons, and without considering the.other objections urged to the defendants’ answer on the ground that it contains conclusions instead of facts, the demurrer was properly sustained, and the interlocutory judgment entered thereon in favor of the plaintiffs must be affirmed, with costs.

Sedgwick, Ch. J., and Freedman, J., concurred.