Case ID: ny-super-ct_20/html/0094-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court. Hoffman, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Albert G. Bagley, Plaintiff and Appellant v. Wm. Clarke and Jos. G. Gurney, Defendants and Respondents.
    1. Where, by a sealed contract between two persons, one is to serve the other in a specified business for a term of years, at a fixed sum per annum, and the laborer as part of the arrangement gives a bond with surety to the employer, conditioned for the performance by the laborer of the contract on bis part, and subsequently a verbal contract is made and acted upon between the employer and laborer, by which th„e latter is to receive compensation graduated by the amount of work he may perform, and this is done without the knowledge or consent of the surety, the latter is discharged.
    2. Where, after the contract has been made and the bond executed and delivered, the employer forms a partnership with third persons, and the laborer, by verbal agreement between him and the firm, contracts to serve the firm, and pursuant to such agreement does subsequently serve the firm for nearly two years, upon'a different agreement as to compensation, the sealed contract and bond are thereby abandoned and superseded, and no action will lie thereon for an alleged breach occurring after such a term of service under„tbe new arrangement.
    (Before Hoeeman, Pierrepont and Robertson, J. J.)
    Submitted June 16,
    decided June 30, 1860.
    Appeal by the plaintiff from a judgment against him, and from an order denying a motion made by him for a new trial. The action was commenced Nov. 30, 1848, and tried Jan. 19, 1859, before Mr. Justice Woodruff and. a jury.
    The complaint alleges the making of a written and sealed contract between the plaintiff and the defendant Clarke, dated Dec. 8, 1845, by which the latter agreed to render services for the former, as hereinafter stated, and sets forth a copy of the contract; and also alleges that the defendants, Clarke and Gurney, executed their penal bond to the plaintiff, also dated Dec. 8, 1845, conditioned as hereinafter stated, for the performance by Clarke of his new contract; sets forth a copy of the bond; alleges a breach of its condition, and prays judgment for $1,000.
    By the terms of the contract between Bagley and Clarke, of the date of December 8, 1845, Clarke covenanted to “ become servant unto” and to serve and continue with “ the said Albert G-. Bagley as his covenant servant or journeyman,” for three full years, and to do certain specified things and refrain from doing other specified things, “ in the business of gold pen making;” and Bagley, therein and thereby promised to pay Clarke for such services, “ for the first year of his said service, the sum or salary of $400 ;” and, for the second and third years, the yearly sum or salary of $500.
    The said bond, executed by Clarke and J. G-. Gurney, was conditioned that Clarke should perform the contract on his part, and that if he failed to do so, they would pay $1,000 as stipulated damages. This action is brought on that bond, to recover the $1,000; and the breach alleged is, that, in August, 1848, Clarke, without the consent and against the wishes of the plaintiff, refused to continue longer in his service, and took employment from and worked for the firm of G. and E. M. Smith.
    The answer alleges {inter alia) that, in May, 1856, the contract of December 8, 1845, “ was virtually abandoned and superseded by a new agreement ” between the plaintiff and Clarke, for an indefinite term, whereby Clarke was to serve, and the plaintiff was to allow, in lieu of the stipulated salary, $1.50 per 100 for all gold pens that Clarke should polish. Also, that, in 1846, the plaintiff associated with him Gerrit Smith and Edgar M. Smith, as partners, under the firm name of A. G. Bagley & Co., and, a few days thereafter, changed the compensation of Clarke to $1.25 per 100 pens polished by him for that firm ; and that, from December 1,1846, Clarke was required and directed by the plaintiff to work for that firm at that rate, instead of continuing in the plaintiff’s employment under the contract of December 8, 1845, and that all this was done without the knowledge or consent of Gurney, whereby he was discharged.
    That Clarke, under this direction and requirement of the plaintiff, served the said firm until August 10, 1848, when it was dissolved, by reason of difficulties between Bagley and the said G-. and E. M. Smith. Wherefore, the defendants insisted that neither of them was liable on the said bond.
    When the evidence was closed, the judge said it was proved “ that the original contract was, in fact, rescinded by a new and executed agreement, whereby the defendant was paid by the piece, both by the plaintiff and a new partnership of Smiths, instead of by yearly salary, as provided by the old •agreement,” and instructed the jury to find a verdict for the defendants, which, the’ jury, in pursuance thereof, did, find. The defendant excepted to this instruction.
    It was proved, without any attempt to contradict such testimony, that from December, 1845, to May, 1846, Clarke was paid at the rate of $8 per week. Clarke testified thus :
    “ About May, 1846, he (Bagley) offered to pay me, and I said I would take one dollar and a half for each hundred • pens I polished, and I was afterwards paid at that rate ; I was paid at that rate until December 1, 1846.”
    On the first of December, 1846, Bagley formed a copartnership with G-. and E. M. Smith, which, by its terms, was to continue until the first of January, 1851, but which was, in fact, dissolved on the 10th of August, 1848.
    By the articles of said copartnership, it was provided that Bagley “ should have the direction and control of the manufacturing part of the business of the said concern,” but they contained no provision giving to Bagley the power to employ workmen and fix their compensation, or which declared that the workmen then employed" by him should or might continue to work under their contracts, and that the firm would allow to Bagley the sums for their services which he, by his contracts with them, had agreed to pay.
    The defendant, Clarke, further testified thus :
    “When the partnership with the Smiths was formed, the workmen were called into the office, and Bagley told us that he had formed a partnership with the Smiths, ancj that we were to obey their orders as his own; a few days after this he changed my wages, and I was paid $1.25 for every hundred pens polished; he said that the Smiths were not willing to pay as much as he had been paying me, and offered to pay me, and I said I would take one dollar and twenty-five cents for each hundred pens I should polish ; from that time I worked at that rate till the firm was dissolved ; Bagley, in behalf of himself and partners, came to me and said, the Smiths were not willing to pay so much as he had been doing, for my work, and made an offer to pay me one dollar and twenty-five cents per hundred for all the finished fens turned into the office ; by the first agreement in May, 1846, I was to have $1.50 for one hundred pens, whether finished or not; in this way I would lose my work upon all the pens that were injured in making after passing out of my hands; this was a reduction of about one-third in my compensation; I said I supposed I should have to take it if he would give me no more, and I worked at that rate afterwards; Mr. Wood, the bookkeeper, paid me at this rate after he came.”
    
      William J. Wood testified thus :
    “ I was employed by A. G-. Bagley & Co., in the early part of the year 1848, and continued with them until the summer; I was not exactly their bookkeeper; I paid the men sometimes ; the firm of G. & E. M. Smith was formed in the month of August, 1848 ; Clarke was paid by the piece for the work, I think, $1.50 by the hundred pens, and not paid by the year, he did for A. G. Bagley & Co.; he was not paid by the year; I paid the men every Saturday night; paid Clarke by the piece; this was done for A. G. Bagley & Co.; the firm of A. G. Bagley & Co. was composed of A. G. Bagley, Edgar M. Smith and Gerrit Smith; I do not know when they commenced business.”
    
      Clarke, on his cross-examination, was asked this question : Q. How much did the $1.25 per hundred amount to per week, or did you receive, after your compensation had'been changed as you have stated ?
    (Objected to, as the amount of compensation received by the defendant would not alter the fact of the rescission of the contract, and discharge of the surety. Objection sustained by the court; to which ruling the plaintiff's counsel duly excepted.) (Fol. 81.)
    
      Luther H. Buel, a witness for plaintiff, testified that he worked for A. G. Bagley & Co. at the time of their dissolution; that he had worked for A. G. Bagley since 1845. He was asked : “Did you receive notice from Bagley (after the dissolution of A. G. Bagley & Co.,) to go on and w°orlc under your contract ?” This question was overruled, and the plaintiff excepted to the decision. He further said : “ I do not know that Clarke received notice personally; I worked in a different room from him.”
    Q. Was notice given in your room, that Bagley should expect all the men in that room to go on and work out their contracts ?
    This question was overruled on defendant’s objection, and the plaintiff excepted. (Fol. 101.)
    The defendant moved on a case, containing the evidence and exceptions, for a new trial, and the motion was denied. From the order denying it and from the judgment entered on the verdict, the plaintiff appealed to the general term.
    The appeal was argued February 24, 1860, at a general term, held before Bosworth, Ch. J. and Robertson, J., and they being unable to agree ordered, in May 1860, a re-argument. Bosworth, Ch. J., delivered a written opinion, which after stating the proceedings had and evidence given at the time, substantially as above set forth, concltided as follows, viz.:
    Bosworth, Ch. J. —The mere fact that Clarke was paid at the rate of $8 per week from December, 1845, to May, 1846, I should not regard, as of itself, at all material. It was compensating him at the rate of at least |400 per annum. It could hardly have been contemplated that he should receive no compensation under the contract of December 8, 1845, before a full year’s service had been performed.
    Neither should I regard payment at the rate of 12s. for evqry 100 pens polished, if manifestly done to secure Clarke a higher compensation and with no other intent, as a rescission of the sealed contract. But if done with a view to make a contract for service upon new terms; which, although in certain contingencies it might secure larger pay, might in others entitle him to only a reduced compensation, I should deem it a matter of graver import in its effect úpon the position and rights of the parties. But this is not all that was done. On the first of December, 1846, Bagley formed a partnership with the Messrs. Smith, which, unless sooner dissolved, was to continue until January, 1851.
    So far as the articles of copartnership furnish any evidence of what these partners agreed between themselves, they did not agree that Bagley might furnish and the firm should receive the labor for which Bagley had contracted with his covenant servants, and allow to him therefor the sum he had agreed to pay them.
    The presumption, from the uncontradicted testimony of Clarke, is otherwise. He testifies that “Bagley in behalf of himself and partners, came to me and said, the Smiths were not willing to pay as much as he had been doing for my work, and made an offer to pay me $1.25 per hundred for all the finished pens returned into the office; * * I said
    I supposed I should have to take it if he would give me no more, and I worked at that rate afterwards.” He so worked from the first of December, 1846, until the tenth of August, 1848, when the firm was dissolved by disagreement between its members.
    This evidence standing alone, and there is nothing to contradict it, or impair its force, is satisfactory proof of an agreement between Clarke and Bagley’s firm, by which the former was to work for the firm for the compensation thus agreed upon, and by which the firm agreed to pay him at that rate.
    After that agreement had been acted upon, and payment had been made by the firm, and accepted by Clarke under it, he would be precluded from sueing Bagley upon the contract to recover at the rate of $500 per annum, if the rate of compensation thus fixed should amount to less.'
    
      So too if there should be default in making payments for services rendered for the firm, and Clarke should sue the firm to recover therefor, they could not set up as a defense that his employer was Bagley alone, and that in such a suit his recovery must be limited to $500 per annum, although he would be entitled to more, if he was to be compensated at $1.25 per hundred, for all the finished pens turned into the office.
    The conclusion, therefore, seems to me unavoidable, upon the uncontradicted testimony, that from the 1st of December, 1846, to the 10th of August, 1848, Clarke was employed by, and worked for, the firm of A. G-. Bagley & Co., under a contract made with that firm, and at a rate of compensation agreed upon between him and that firm.
    As a necessary consequence, the contract of December 1, 1846, was rescinded and abandoned. While working under a different contract, for different persons, and at a different rate of compensation, and a contract too, to which Bagley was a party, he could not, at the same time, be performing the same services for Bagley alone, under the contract of December 8, 1845, and for the compensation therein specified.
    The two things cannot co-exist, and therefore there can be no question that the original contract .was superseded and abandoned.
    The firm might have expected that Clarke would be as faithful to them as he had covenanted to be to Smith. And there is no complaint that he was not, although, except by implication, he did not agree to be.
    Suppose Bagley, on the 1st of January, 1848, had started an independent business on his own account, and by the partnership articles was not precluded from doing so, could he have required Clarke to leave the firm’s employment (where his compensation might have amounted to $600 per annum,) and work for him only, under the original contract for $500 per annum ? I think this will not be pretended. Clarke might say to Bagley: “Tour firm, by special agreement, has employed me for over a year at an agreed rate of compensation, which pays me $600 per annum; when my obligation to work longer under that contract is at an end I am at liberty to go where I please, and accept employment upon such terms as I may see fit to contract.”
    In this view the evidence; offered to show what compensation Clarke realized under the contract to accept $1.25 for every one hundred pens polished, was rightly excluded.
    Up to the time when the firm was dissolved, he was at work for the firm on its employment and responsibility, and on its promise to pay.
    After it was dissolved he could not be compelled, under that contract, (and no other then existed,) to work for any one member, on his individual responsibility. (Hurlbut v. Post, 1 Bosw. 28-41.)
    The evidence offered, in respect to a notice, that Bagley would expect all the men to go on and work out their contracts, made before the firm of A. G. Bagley & Co., was formed, was properly rejected.
    I think there was no error in ordering a verdict in favor of the defendants, and that they should have judgment on the verdict.
    Under the re-argument ordered, the cause was submitted, on printed points, at a general term held June 16, 1860, before Justices Hoffman, Pierrepont and Robertson.
    
      Waldo Hutchins and John Slosson, for Appellants.
    I. The judge, by ruling that “the original contract was, in fact, rescinded by a new and executed agreement,” drew a conclusion from the evidence which the jury alone could be justified in drawing.
    If there could be no rescission in fact, without the concurrence of the parties, (a proposition self-evident,), all the evidence which bore on the question of the parties’ understanding on the subject, should have gone to the jury.
    The direction of the judge was equivalent to saying that the mere fact of the parties having agreed to vary the compensation was an estoppel upon their ever denying that the contract was rescinded, whatever may have been their intentions in making such change, and however contrary such a conclusion smight be to their real intentions ; in other words, that the existence of the fact of the change operated of itself, as matter of law, to work a rescission.
    This was clearly erroneous.
    II. If this was a rescission or abandonment of the ori-" ginal contract, it was so, and could be so only by the mutual consent of the parties, and that was a question solely for the jury. (2 Pars. Con. 190; Fitt v. Cassanet, 4 Man. & Gran. 898.)
    Neither party, at the time the new arrangement was made, claimed, or even suggested that the original agreement was to be superseded by it, in any of its provisions, except merely as to the amount, of compensation. Nor did they at any subsequent period, during the continuance of the term of service, 'make any such claim.
    This is not the case, in which one party had put it out of his power to perform his part of the agreement—each had it in his power to perform, to the letter, all he had stipulated to do, even after this modification of the agreement, if the other had required it; so that neither had, for any such reason, a right as against the other, to treat it as rescinded. (Dubois v. Del. & Hud. Can. Co., 4 Wend. 289.)
    Neither is it the case of a rescission under a stipulation reserved to the parties in the contract.
    Neither is it the case of two inconsistent agreements, in which, from the fact of inconsistency, a presumption is entertained that the parties intended to rescind.
    The new agreement for compensation is no more inconsistent with the original contract than it would have been if it had been simply an agreement to raise or diminish the yearly salary by the amount of one dollar or one cent.
    All the other provisions remain intact, and the same reason exists for retaining them as before. The work to be performed was the same, and nothing was said or agreed as to any change in the term of service. *
    ■ The necessity of secrecy on the part of Clarke, as to Bagley’s improvements, inventions, or discoveries, still continued, and it is almost absurd to suppose that either party imagined that this important covenant was abrogated by the change of compensation.
    So far from the new agreement being inconsistent, the .original agreement can hardly be said to have been modified.
    i
    The mode, and even the rate of payment, was never literally complied with, according to the orignal contract. That called for a yearly sum or salary of $400 the first year, and $500 for the other two, and yet he was paid from the first, weekly, at the rate of eight dollars a week, which would have been $416 for the first year.
    There is no case in which an executed parol agreement has been held to have abrogated a contract under seal, unless it was an agreement in terms or substance, to rescind, or so inconsistent with the original contract, as that a rescission might be presumed to have been in the contemplation of. the parties.
    Such were the cases of Latimore v. Harsen, 14 J. R. 330, and Dearborn v. Cross, 1 Cowen 48.
    And see these cases commented on in Mien v. Jaquish, 21 Wend. 628.
    
      a. Clarke did not change masters in working for the new firm. He was not employed by the new firm. He was still under Bagley’s orders, and Bagley’s directions to him to work for his new firm were no more than he had a right to give under his agreement with Clarke.
    ITT. To hold this agreement rescinded, would be to leave Bagley in a worse position than he was in when it was made, for he would have introduced a workman into the secrets of his art, without any guaranty against his disclosing them ;■ and this was considered by both parties as of such vital importance that it was expressly provided for in the original agreement. It is a rule that one party cannot rescind a contract, unless both can be left in the condition in which they were before the rescission. (2 Parson’s Con. 191—2; Hunt v. Silk, 5 East. 449 ; Martin v. McCormick, 4 Sandf. 366.)
    
      IV. If this was an agreement fully executed, it was so the moment the first one hundred pens were' polished and paid for, since it is not denied that Clarke left Bagley’s service before the three years had expired, and the modifi- ■ cation as to payment was wholly indefinite as to' time.
    The contract could not be abrogated in part. It was abrogated as to time of service, as well as everything else, if abrogated at all. It must have been fully executed at some time, and if time of service was abolished, then it was as fully executed when the first one hundred pens were paid for as at any other time.
    If there was any obligation to remain for three years, then the original contract was never abrogated at all, and the case is one of a mere parol executory agreement, and nothing is better settled than that such an agreement cannot rescind or abrogate a sealed executory contract. A covenant under seal cannot be discharged by a parol agreement before breach. (Suydam v. Jones, 10 Wend. 180 ; Delacroix v. Bulkley, 13 Id. 71; Allen v. Jaquish, 21 Id. 628; Nelson v. Sharp, 4 Hill, 584.)
    Will the court seriously hold that this agreement was fully executed when the first one hundred pens were polished and paid for, and that if Clarke had the next day revealed all the secrets, which he had by covenant bound himself not to do, Bagley would have had no redress ?
    V. The question should never have been taken from the jury.
    The real question was whether Clarke left Bagley’s service with his consent. The case was, in fact, tried principally on this theory, and this was a pure question of fact about which there was conflicting evidence.
    VI. No distinction was made by the judge between the two defendants, on the ground that one was principal and the other surety. Had different rules been applied to each the plaintiff would have the benefit of an exception.
    On this appeal they are both to be considered as standing, by the ruling of the court, on the same ground; and if the surety was not discharged by an actual rescission of the contract, he was discharged by nothing else.
    If, therefore, the judge erred on that question, there must be a new trial as to both.
    VII. The exceptions at fols. 81 and 101 are well taken.
    VIII. There should be a new trial, costs to abide the event.
    
      William R. Stafford, for Respondents.
    I. The only question at issue was, whether the parties by their acts had not rescinded the contract for service made by the defendant Clarke with the plaintiff. If by operation of law such was the case, or if in the opinion of the court a verdict for the plaintiff would be set aside as contrary to law and evidence, it was clearly the duty of the court to non-suit or direct a verdict for defendants. (Stuart v. Simpson, 1 Wend. 376; Rudd v. Davis, 3 Hill, 287.)
    II. Although there is no precise rule applying to a breach of contract which settles whether it has been abandoned or not, yet if the act of one party be such as necessarily to prevent the other from performing on his part according to the terms of the agreement, the contract will be considered as rescinded. (Dubois v. Del. & Hud. Canal Co., 4 Wend. 285.)
    And if performance of the condition of a bond be prevented by the omission of the obligee, the obligor is discharged. ( Whitney v. Spencer, 4 Cowen, 39.)
    The rule may now be considered well settled, that wherever the contract becomes incapable of being performed substantially as the parties intended, by the voluntary act of one of the parties, the other is not bound to proceed. (Kleine v. Catara, 2 Gallison, C. C. Rep. 61.)
    ITT. The mutual consent of the parties to, and their concurrence in the rescission claimed by defendants, is evidenced by acts as to which there is no dispute.
    The first witness called by the plaintiff, 'William J. Wood, testified, that the defendant Clarke, instead of working for plaintiff, worked for the firm of which plaintiff was a member, and at •piece-work, and was paid, 'not by the year, but at an entirely different rate, and in a different manner, by the firm, and not by plaintiff solely.
    This is substantiated by Clarke, by Gerrit Smith, and by B. P. Gurney, and is nowhexe denied.
    
    IY. Upon such a state of facts, created by the plaintiff himself, who, by twice altering the terms of compensation, ' and transferring the benefits and control of Clarke’s services to his copartnership, had deprived Clarke of all right of action against him under the agreement, and stripped it of all mutuality, the agreement itself was clearly merged in the parol, and executed subsequent arrangement of the parties. (Dearborn v. Cross, 7 Cowen, 47; Latimore v. Harsen, 14 John. 330; Allen v. Jaquish, 21 Wend. 628; Ballard v. Walker, 3 John. Cs. 60.)
    The agreement, therefore, being rescinded in part, was rescinded in toto. (Raymond v. Bearnard, 12 John. 274.)
    Y. The fact of the agreement being under seal can make no real difference. The new arrangement here was not a mere executory agreement, but was carried into effect and fully acted upon by the parties, and everything was done except the actual destruction of the writing itself. (De Peyster v. Pulver, 3 Barb. 284; Healy v. Utly, 1 Cowen, 345; Barnard v. Darling, 11 Wend. 27; and cases under point IV.)
    All the advantages of this new arrangement were with the plaintiff. By recognizing his alterations as to the compensation, extending his liability so as to embrace his firm, and accépting employment under them, (not as agents of plaintiff, but as principals,) we were deprived of any right of action under this agreement against Bagley, while, at the same time, exposed to actions by all of that firm. The estoppel must be mutual, and as the plaintiff was a party, he is equally bound. (Vide opinion'of Justice Bosworth.)
    The judgment should therefore be affirmed.
   By the Court. Hoffman, J.

—The question as to the surety on the bond, the defendant Gurney is perfectly clear. He covenanted to be responsible for the performance of a contract, which secured to his principal a fixed salary of four hundred dollars for the first three years, and five hundred dollars for the remaining two years, and bound him to serve the plaintiff and no one else. Without the sureties’ knowledge or consent this is changed into a contract, making the rate of compensation depend upon the quantity of work, rendering it wholly indefinite, making the term of service uncertain, and binding the principal to the commands of two other persons in connection with the plaintiff. Upon the settled law of principal and surety, this alteration discharged the latter. (Mc Williams v. Mason, 6 Duer, 276; The Northwestern R. R. Co. v. Whinray, 26 Eng. L. & Eq. 488, and cases cited,) is directly in point. And as to. Clarke, the principal in the bond, the plaintiff changed the agreement in most important particulars. He failed to perform his part of the contract. He gave new employers to the defendant. He varied the terms, and assented to the defendant’s laboring under such' new terms. At one time he relinquished all claim upon Clarke, telling him that he could not go on with the business; his means were locked up; that he could not give him work, and advised him to apply to the Smiths; that he must do the best he could for himself.

To hold this defendant liable for the liquidated damages on a penal bond, under such circumstances, would be unjust and unprecedented. (Parsons on Contracts, 190,191, note R and cases.)

1 The admission of evidence at the trial, which is the subject of some exceptions, was of testimony tending to show acts and declarations proving the fact of rescission or alteration ; not a variation of an existing agreement still executory, by means of parol evidence. None of the exceptions of the plaintiff can be sustained.

Judgment affirmed with costs.