Case Name: John T. Smith versus John J. Spies
Court: New York Superior Court
Jurisdiction: New York
Decision Date: 1829-10
Citations: 2 Hall 477
Docket Number: 
Parties: John T. Smith versus John J. Spies.
Judges: 
Reporter: Reports of cases argued and determined in the Superior Court of the city of New York
Volume: 2
Pages: 477–481

Head Matter:
John T. Smith versus John J. Spies.
The defendant agreed, by parol, with the plaintiff, that if he could purchase and deliver to him the notes of the New-Jersey Manufacturing and Banking Co., and pay a certain sum for discounting them, that he (the defendant) would take of the plaintiff all the notes of that Co. which he should so purchase, and pay him the amount thereof, deducting the discount The plaintiff under this agreement, purchased such notes from time to time, which were taken by the defendant on the stipulated terms, until finally an amount, which the plaintiff had on hand, being offered to the defendant, he neglected to pay for the same, and on that day the bank failed.
An action' being brought for a breach of this contract, it was help, that the case presented a sufficient consideration for the agreement, and that the plaintiff had a right to recover, under it, the amount of all such notes as he had received in the regular course of his business, and in which he had a complete right of property, at the time the bank stopped payment.
Assumpsit on a special contract. The declaration set forth that, in consideration that the plaintiff would purchase, procure, and deliver to the defendant the promissory notes of the New-Jersey Manufacturing and Banking Company, to such an amount as the plaintiff might be" able to purchase or procure, to be discounted by the defendant for the plaintiff, and also in consideration that the plaintiff had agreed to allow the defendant a certain sum of money for discount upon said notes, at the rate of one eighth per cent, upon the amount procured and delivered, the defendant undertook and promised to receive and discount all such notes, of the said company, as should be purchased or procured by the plaintiff, and to pay him the full amount thereof in current money, deducting therefrom said discount.
It appeared in evidence, at the trial, that the defendant, (who was a money broker,) in the month of September, 1828, agreed, by parol, with the plaintiff, (who was also a broker,) to give him, in exchange for such, of the notes of said company, as he should receive in the regular course of his business, notes of other banks, current in the city of New-Yorlc,—deducting therefrom one eighth of one per cent, on the amount exchanged, as a remuneration to the defendant for his trouble in carrying the notes received to the New- Jersey Company for exchange or redemption. Under this agrcemeat, the plaintiff, from time to time, collected the notes of said company, and they were exchanged for him by the defendant, according to the stipulated terms.
On the 14th of March, 1829, the N. J. Manufacturing and Banking Company failed, and on that day the plaintiff carried to the defendant 1,599 dollars in the notes of the company, and demanded that he should redeem or exchange them. Of this sum, 83 dollars had been received by the plaintiff in the regular course of his business; 289 had been taken by him as collateral security for 200, loaned to one Patton, and the balance had been sent to the office of the plaintiff, by other brokers, on the morning of the failure of the company, that it might be exchanged by the defendant. It appeared that the plaintiff, while his arrangement with the defendant was in progress, had been in the habit of receiving the notes of said company from other brokers, for'the purpose of exchanging them at the office of the defendant; but it was understood by the brokers, that the notes in question were to be returned to them if the defendant declined to exchange them.
Upon these facts, the defendant moved for a nonsuit: first, because the declaration was not supported by the proof; secondly, because the contract was void, for want of consideration and mutuality; and thirdly, because it was within the statute of frauds,—whether it was considered as an agreement for the sale of goods, or as a contract to guaranty the solvency of the bank. In this last case, it should have been in writing.
His honor, Judge Oakley, (before whom the cause was tried,) refused to nonsuit the plaintiff and proposed to reserve the questions of law, for the consideration of the court upon a case. This being assented to by the parties, he recommended the jury to find a verdict in favor of the plaintiff for the sums received by him in the regular course of his business, and for the amount loaned to Patton, excluding therefrom the sums received by the plaintiff from the other brokers, on the morning of the failure of the Company.
The jury returned a verdict for 283 dollars in favor of the plaintiff including the $200 loaned to Patten.
A case having been made by the defendant, Mr. H. Ketcham, in his behalf, now contended,
that the plaintiff was not entitled to judgment. He insisted that there was a variance between the contract declared on, and the contract proved. [8 Cowen’s R. 35. 7 Ib. 263. 18 J. R. 451.]
II. That there was no consideration, to support a promise, on the part of the defendant, to take from the plaintiff the bills of the company, and the defendant could only be held liable, under the contract, to pay for those bills at the stipulated rate, which he actually took. [Cooke v. Oxley, 3 T. R. 653. Burnet v. Bisco, 4 John. R. 235.]
III. That the contract proved, was not made in contemplation of the future insolvency of the company; it was not an undertaking, on the part of the defendant, to guaranty the solvency of that institution ; but the small compensation of one shilling for the exchange of 100 dollars, was to be allowed him by the plaintiff, for his trouble and the expense of getting the bills of the company exchanged at Hoboken, where the bank was situated. [Com. Dig. title Agreement, (C.) 1 T. R. 701. 2 Mau. and Sel. 363. 10 John. R. 412.]
IV. If, however, the contract was to be regarded as a contract to guaranty the goodness of the paper, or the solvency of the company, it was void, (he contended,) under the eleventh section of the statute of frauds, the same not being in writing. [Saund. 211, note 2.] If, however, it was to be considered as one for the sale of goods, wares, and merchandise, then, he contended, that it was void under the 15th section of the statute of frauds, not being in writing. That if the contract was a legal one, still, that the plaintiff was not entitled to recover under it the 200 dollars of Patton’s money. [6 Cowen's Rep. 346.]
Mr. S. A. Foote, contra, for the plaintiff, insisted,
that the declaration was substantially supported by the proof, and that there was no variance which eould form the ground of a nonsuit.
II. That the contract was a valid one, the bills having been taken by the plaintiff upon the faith of the agreement. That the contract was an original one. The plaintiff was not to take the notes to the bank, but the defendant was to -receive them at his counter;—and there was to be no communication between the makers of the notes and the plaintiff. The defendant agreed to redeem them, in consideration of a promise, on the plaintiff’s part, that be would collect them, present them to the defendant, and allow him a discount for the exchange. The contract having been executed, it is not obnoxious to the objection arising from a want of mutuality, and the plaintiff is entitled, at all events, to judgment for 83 dollars.

Opinion:
Oakley, J.
The action in this case, is on a special contract, whereby the defendant agreed, that if the plaintiff would purchase and deliver to him the notes of the New-Jersey Manufacturing & Banking Company, and would pay him a certain sum for discounting said notes, that he, the defendant, would take of the plaintiff all such notes as he should so purchase, and pay him the amount thereof, deducting the discount. The plaintiff, under this agreement, purchased the said notes from time to time, and they were taken by the defendant on the stipulated terms, until finally, an amount which the plaintiff had on hand, being offered to the defendant, he did not pay for the same ; and on the same day the Bank failed.
The evidence in the case, and particularly that of the defendant's witness, substantially supported the declaration.
1. The first objection, on the part of the defendant, to the plaintiffs recovery, is, that there is no consideration for the agreement on which the action is founded. This objection ought regularly to have been presented on a motion in arrest of judgment. The agreement is set forth in the declaration, and if the consideration there stated, is not sufficient to support the defendant's promise, he might have demurred.
I thinly however, that the objection is not well taken. The agreement, on the part of the defendant, was'to receive the notes if the plaintiff would purchase and deliver them, and pay a certain sum by way of discount, on them. The plaintiff acted under this agreement, and purchased the notes in question, on the faith of it, and the risk assumed, and the expenditure of money made by him in the purchase of the notes, constituted a good consideration for the defendant's engagement.
2. It is contended, in the second place, that the defendant was not bound to guaranty the solvency of the bank, and that the bank having failed, he could not be required to take the bills. The terms of the agreement were very explicit, to take all the notes that the plaintiff should purchase ; and I should consider, that by its fair construction, the notes were to be purchased at the risk of the defendant. But be that as it may, the notes in question, were presented to the defendant, before the failure of the bank, and there is no evidence to show that at the time of the purchase of them by the plaintiff, he had any reason to suppose that such failure was about to take place. There was then a complete breach of the agreement, on the part of the defendant, before the bank stopped.
3. The plaintiff has no right to recover, under this agreement, the amount of any notes, except such as he had purchased in the course of his business, and in which he had a complete right of property. Among the bills presented by him to the defendant, was a certain sum, pledged to him by one Patten, as security for a loan. The property in these still remains in Patten, and the plaintiff cannot be permitted to recover in this action for his benefit. That sum must therefore be deducted from the verdict.
Judgment for the plaintiff for 83 dollars.
[A. Dey, Att'y for the plff. J. Wyckoff, Att'y for the deft.]