Case Name: Standard Wagon Co., Resp'ts, v. Henry E. Nichols, as Assignee of McCully & Co. et al., App'lt
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1886-07
Citations: 4 N.Y. St. Rep. 170
Docket Number: 
Parties: Standard Wagon Co., Resp’ts, v. Henry E. Nichols, as Assignee of McCully & Co. et al., App’lt.
Judges: 
Reporter: New York State Reporter
Volume: 4
Pages: 170–174

Head Matter:
Standard Wagon Co., Resp’ts, v. Henry E. Nichols, as Assignee of McCully & Co. et al., App’lt.
(Supreme Court, General Term, Fourth Department,
Filed July, 1886.)
1. Contract of sale—Conversations of agents as to terms—When not in contravention of terms of written contract admissible in EVIDENCE.
P. McC. and E. McC., copartners, doing business under the firm name of McC. & Co., in January, 1884, ordered of the plaintiff, by written order, certain carriages. By the order they agreed to pay freight and hold the goods on consignment, storing them safely free of expense to the plaintiff, and to-sell on its account on the sale, remitting cash at the prices specified, and if all the vehicles were not sold on or before November 15, 1884, to purchase any of them remaining on hand at that time, giving their acceptance for the same at ninety days from that date. In February, May and June, 1884, other articles were consigned to McC. & Co. A bill accompanying the May consignment, saying that the goods were consigned to be paid for as sold, and goods on hand November 1, 1884, to be purchased by cash, and that of June was accompanied by a bill, in substantially the same language. In November, 1884, McC. & Co. made a general assignment for the benefit of creditors to the defendant, H. M,, who, qualified as assignee, and entered upon his duties as such, receiving assets of the firm. Held, that conversations between the agents of the parties prior to the orders given as to the arrangement entered into in consigning the property to the defendants, and not varying any written contract between the parties, were admissible.
2. Same—Check—Receipt of—Does not operate to transfer owner' SHIP OF GOODS ON SALE UNTIL PAYMENT.
On November 10, 1884, McC. & Co. had sold goods not theretofore settled for, amounting to $218.97; to meet which sum, the plaintiff’s received from McC. & Co. a check which was dishonored upon presentment, and has never been paid. Held, that the delivering of the check, and giving a receipt therefor, was not an extinguishment of the original relation of the parties, and was not intended to, and could not operate as such until its payment. That the moneys arising from the sale cf goods and represented by this check were received by McC. & Co. for goods belonging to the plaintiff, improperly mingled with their assets and retained by them to the making of their assignment, and that to that extent the assets that passed to the hands of the assignee were augmented by moneys rightfully belonging to the plaintiff, and that the assets in the hands of the assignee were impressed to that extent with a trust in favor of the plaintiff. Follett, J., dissenting.
S. Same—Payment by note in pursuance of terms of contract operates TO TRANSFER OWNERSHIP OF GOODS ON SALE ALTHOUGH NOTE IS DISHONORED.
On the same occasion it was ascertained that there remained unsold goods to the amount of $153.76, and for that sum the plaintiff received defendant’s note, which was also dishonored at maturity. Held, that the giving of the note in pursuance of the arrangement between the parties operated as a transfer of the property to McC & Co.
H. E. Nichols in person, and I. M. Dada, for app’lt Persis McCully; George W. Bradner, for resp’ts.

Opinion:
Hardin, P. J.
Wesley McCully, the husband of Persis McCully, and the father of Edward McCully, was shown by the evidence tq be the agent of McCully & Co., having general charge and the management of their business, and had the principal transactions with the plaintiff with respect to the property in question. The fact that he was not a member of the firm was not known to the plaintiffs at the time they dealt with the firm.
Compton Ferguson was called as a witness for the plaintiff, and said that he was agent for the plaintiff at and prior to the date of the order of January 25, 1884, and also said that he had a conversation with Wesley McCully "about the property to be shipped to him." The conversation was before this order of January 25, 1884, was made concerning the consignment of goods to McCully & Co. to be sold, ana he was asked to state the conversation. That question was objected to by the defendants as incompetent and improper, such conversation having been merged, in the written contract. The objection was overruled and the defendants excepted. The witness answered: " Plaintiff was to let him have these goods on consignment; he was to handle these goods on commission; that he would order from time to time as he sold out; he would order to take the place of the goods sold; this is the substance of the agreement with him previous to the "writing out this order for the .goods; he was to handle the Standard Wagon Company's goods on consignment and he was to order other goods as he sold out; 1 never had any other or different contract with him except that one; subsequent to this conversation I sent him goods from time to time as he ordered them, and I think he sometimes telegraphed for goods; he was riot limited as to price at which he was to sell; they were billed to him at a certain price; I supposed. Wesley McCuliy was a member of the firm. • I knew no one else in the business as a member of the firm" We are of the opinion that no error was committed in receiving the evidence:
First. So far as the consignment of January twenty-fifth was concerned, it was proper to show that after the plaintiff received that order the goods were furnished to McCuliy & Co. While that order indicates the arrangement under which the property was received, and could not be contradicted by oral evidence, still it was admissible to show that after the reception of that order the property was shipped to McCully & Co. The bill of February 21, 1884, stated that the goods were consigned to be paid for as sold. So, too, the bill of goods of May nineteenth stated: " Consigned to be paid for as sold." The same is true of the bill of June 9, 1884. We think the evidence was competent to show that the property was delivered to McCully & Co. under the arrangement entered into stated by the witness, and that the oral evidence did not tend to contradict or vary any written contract existing between the parties with respect to the goods.
Second. It appears by the evidence that on the 10th of November, 1884, the agent of the plaintiff was at Fulton, and ascertained the state of affairs between the plaintiff and the firm of McCully & Co. At that time it appeared that McCully & Co. had sold goods not theretofore settled for, amounting to $218.97. To meet that sum the plaintiffs received from McCully & Co. a check for $218.97. The check when presen led was not paid. It never has been paid. The delivering of that check and giving a receipt therefor was no extinguishment of the original relation of the parties, was not intended and could not operate as such until .the check was paid. Schemerhorn v. Loines, 7 Johns., 312. On the same occasion it was ascertained that there remained unsold goods to the amount of $153.76. For that sum the plaintiff received a note dated November 1st, at three months, for $153.76, and subsequently, in September, rendered a statement that they had received such a note. The note was not paid at maturity, and was held by the plaintiff at the time of the commencement of this action.
We are of the opinion that inasmuch as the referee found, as a matter of fact, that the plaintiff did not rely on any false or fraudulent representations of any member of said firm of McCully & Co., or of any managing agent of said firm in selling the said goods to said firm, that it must be assumed that the goods, which were represented by the note of $153.76, were purchased in pursuance of the arrangement between the parties that goods that remained unsold in November should be purchased by McCully & Co. and settled for by the giving of a note, and that the giving of the note, in pursuance of the arrangement, indicated by the evidence between the parties, operated to transfer the goods to McCully & Co. for the note given on the occasion of the adjustment.
In the absence of any finding of fraud, we think it but fair to assume that that was a purchase of the goods settled for by the note, and that McCully & Co. became the owner of the goods, and the plaintiff the owner of the note upon the consummation of the settlement in November, 1884. We are also of the opinion that the moneys arising from the sale of the goods, which are represented by the amount included in the check of $218.87, were received for the goods belonging to the plaintiff, and that McCully & Co. improperly" mingled them with the assets and retained them down to the time of making the assignment, and that to that extent the assets that passed to the hands of the assignee are swollen by moneys that rightfully belong to the plaintiff, and when the assignee received such assets the moneys to the extent of $218.97 were impressed with the trust in favor of the plaintiff. Those moneys were received by the firm of McCully & Co. in a fiduciary relation, and the mixing them with other funds by the 'firm ought not to deprive the plaintiffs of a charge upon the mixed funds.
In note to Hooley v. Gieve (9 Abb. N. C., 42, 43), it is said, viz.: "Where any person holding money in a fiduciary relation, mixes it with his own, the person for whom he holds it has a charge upon the mixed fund." Defendant Nichols is not a bona fide purchaser or holder of the funds in which the plaintiff, as cestui que trust, was interested. Hooley v. Gieve, 9 Abb. N. C., 29; S. C. 9 Daly, 104. So far as the referee's report applies to the $218.97, we think Ms conclusions are correct and should be sustained. If these views prevail, the judgment may be modified accordingly.
Judgment reversed and new trial granted, with costs to abide the event, unless the plaintiff shall stipulate to reduce the damages to $218.97 and interest thereon from the 10th day of November, 1884, to the date of the referee's report, August 8, 1885, in which case the judgment so modified is-affirmed, without costs to either party of tMs appeal.
Boakdman, J., concurs.