Case Name: Morris H. Mann, Plaintiff, v. R. Simpson & Co., Inc., Defendant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1939-06-29
Citations: 257 A.D. 329
Docket Number: 
Parties: Morris H. Mann, Plaintiff, v. R. Simpson & Co., Inc., Defendant.
Judges: 
Reporter: Appellate Division Reports
Volume: 257
Pages: 329–335

Head Matter:
Morris H. Mann, Plaintiff, v. R. Simpson & Co., Inc., Defendant.
First Department,
June 29, 1939.
Daniel Levy, for the plaintiff.
Joseph J. Zeiger of counsel [Zeiger & Berliner, attoméys], for the defendant.

Opinion:
Martin, P. J.
The plaintiff is a dealer in jewelry and the defendant is a licensed pawnbroker. On November 18, 1937, the plaintiff delivered to one Alfred M. Gouldon a diamond ring for which the latter signed a memorandum reading as follows:
" The undermentioned goods are for your examination at your risk, against Loss, Fire, Burglary or Theft, and remain the property of M. H. Mann and are to be returned to him on demand. None of them are sold, nor does the title thereto pass until we shall be apprised of your selection, and have rendered a bill of a sale therefor.
1 Bound diamond Bing 5.63
For
$2100.-"
Gouldon pledged the ring with the defendant for $1,000. An action in replevin was instituted by the plaintiff in the City Court of the city of New York. The defendant answered, claiming a pawnbroker's lien. That action has been discontinued. However, in this submitted controversy there is to be determined the admissibility of testimony establishing custom in the jewelry trade under which the memorandee, despite the memorandum, could sell the ring to such customer or customers as he might find therefor, being obligated to either return the ring, if unsold, or the amount of money mentioned in the memorandum. .Paragraph 11 of the submission of controversy reads, in part, as follows:
" 11. It is and at all of the times mentioned herein was a general custom among jewelry dealers and in the jewelry trade in the City and State of New York, that jewelry delivered on memorandum and under memorandum, such as set forth in paragraph ' 8 ' herein, is delivered for the purpose of sale to such customer or customers as the deliveree may find and the deliveree has the right to sell such jewelry to such customer or customers, said deliveree being obligated to return the goods or the sum of money set forth in the memorandum. Such custom was at all of the -times mentioned herein known to the plaintiff and the said Alfred M. Gouldon and the delivery of said diamond ring by the plaintiff as aforesaid was made in accordance with and pursuant to such custom and for the purpose of this stipulation the defendant's answer may be regarded as alleging such facts. The parties stipulate that the facts contained in this paragraph are true, but plaintiff makes the contention that solely because of defendant's answer in the said City Court action, proof as to the said facts is incompetent under the Parol Evidence Bule and would be inadmissible by reason thereof as evidence on a trial under said pleadings in said action and the plaintiff therefore objects to such proof. In consequence plaintiff does not stipulate that these facts are to be considered in a decision of this case unless the Court determine that plaintiff's said, objection to such proof ,is untenable. Defendant contends that such proof is admissible, notwithstanding the Parol Evidence Buie, under the defendant's answer because of the provisions of Section 43, Personal Property Law."'
It is stipulated that if such testimony is admissible judgment is to be rendered for the defendant for $1,000, plus interest at the rate to which a pawnbroker is legally entitled. If the testimony is not admissible judgment is to be rendered for the plaintiff for the return of the ring or its value, with interest. There is, in reality, involved the rate of interest to which a pawnbroker is entitled when a factor pledges the property of his principal.
The plaintiff says that the defendant claims under the contract made between the plaintiff and Gouldon, which contract is not ambiguous, and, therefore, parol evidence of custom is inadmissible.
The defendant maintains that the allegation in its answer in the City Court action, claiming a pawnbroker's lien, is a mere conclusion of law which should be disregarded as surplusage, as the pleaded facts preceding the conclusion establish defendant's right to protection under the Factors' Act. It is argued that under the denials contained in the defendant's answer alone it was entitled to prove its protection under the Factors' Act and introduce the evidence of custom, despite the parol evidence rule, and it is further contended that plaintiff's argument that the allegation in the. answer relied on by plaintiff deprived it of the protection of the holding in Nelkin v. Provident Loan Society (265 N. Y. 393) overlooks the very language of the Factors' Act and misconstrues the Nelkin case.
Section 43 of the Personal Property Law (Factors' Act) reads as follows:
" 1. Every factor or other agent, entrusted with the possession of any merchandise for the purpose of sale, shall be deemed to be the true owner thereof, so far as to give validity to any contract made by such agent with any other person, for the sale or disposition of such merchandise, for any money advanced upon the faith thereof."
The Factors' Act creates rights where rights did not previously exist at common law. One dealing with a factor or agent who goes outside the scope of his specific authority obtains a qualified or limited title which would not have been acquired in the absence of the statute, and, where an innocent party has presumed to purchase or to lend money on the security of the merchandise, such innocent party may not retain the merchandise even though he bought or loaned on the security thereof. The most that may be claimed is the protection under the Factor's Act for the return of the sum with which the innocent party parted.
In Nelkin v. Provident Loan Society (supra) it is clear that the defendant there was held entitled to its lien because of the Factors' Act and not as a pawnbroker under the common law.. The decision awarded judgment to the defendant for the sum advanced, with interest at six per cent. The direction that the interest was to be computed at the rate of six per cent is significant and makes it clear that the hen given to the defendant was a hen under the Factors' Act, as otherwise the defendant would have been entitled to its hen plus interest at the rate to which a pawnbroker is lawfully entitled.
If the defendant is entitled to a hen because of the Factors' Act it is bound by the agreement which created its privy a factor and may not introduce parol evidence to vary that agreement. The factor himself could not introduce parol evidence, and the defendant, in privity to the factor, has no greater right than the factor himself.
If the defendant insists on a lien as a pawnbroker, any such hen would be the result of the common-law relationship of the parties and parol evidence may not be introduced with reference to the unambiguous agreement. (Green v. Wachs, 254 N. Y. 437.)
Judgment should be directed in favor of the plaintiff for the return of the ring or its value, $2,100, with interest, but without costs.
TownlEy and Callahan, JJ., concur; O'Malley and Cohn, JJ., dissent.