Case Name: William N. Johnston, Resp't, v. Spencer Trask et al., App'lts
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1889-10-08
Citations: 26 N.Y. St. Rep. 622
Docket Number: 
Parties: William N. Johnston, Resp’t, v. Spencer Trask et al., App’lts.
Judges: 
Reporter: New York State Reporter
Volume: 26
Pages: 622–626

Head Matter:
William N. Johnston, Resp’t, v. Spencer Trask et al., App’lts.
(Court of Appeals, Second Division,
Filed October 8, 1889.)
1. Broker — Promise to re-purchase bokds — When rot void under STATUTE OP FRAUDS.
The oral promise of the managing partner of a firm of stock brokers, made at the time of agreeing to purchase bonds for a customer in the market for the usual compensation, that in case he should thereafter become dissatisfied with the bonds they would, on demand, take them off his hands at what they cost him, is a single contract and not void under § 3 of the statute of frauds.
2. Same — Authority of partner to make such promise.
In addition to the busines i usually done by bankers and brokers, the defendants were accustomed to purchase and carry securities on margins for their customers. Held, that as no evidence was introduced by defendants showing that the partner did not make the promise, the court could not hold as a matter of law that the promise was so far beyond the scope of the business of the firm that plaintiff had no right to rely upon it.
3. Same — Laches.
That as the managing partner several times advised plaintiff not to part with the bonds, the plaintiff was not guilty of loches in waiting two years before returning the bonds and demanding the price paid.
Appeal from a judgment of the general term of the third department, entered on a verdict directed at circuit in favor of the;, plaintiff.
Since January, 1882, the defendants have been bankers and. brokers, doing business as partners under a firm name. On the trial of the issues the plaintiff testified that on the 18th of January, 1882, the managing partner of the firm, at its place of business, orally agreed with the plaintiff to purchase for him, if they could be bought in the market, income mortgage bonds of the Ohio Central Railroad of the par value of $10,000, “ and any time you want to get rid of them we will take them off your hands at what they cost you.” Later in the day the defendants reported to the plaintiff that they had purchased the bonds for $4,800, and that their commissions were $12.50, and thereupon the plaintiff paid $1,000 towards the purchase price. The bonds were retained by the defendants as security for the sums due from-the plaintiff to them until November 16, 1882, when the plaintiff paid the full purchase price for the bonds, commissions and interest, and took them into his possession. The market price of the bonds declined until April 28, 1884, when they were selling for about ten cents on a dollar. On this date the plaintiff tendered the bonds to the defendants, and demanded that they pay him $4,812.50, which they refused to do, and April 30, 1884, this action was brought, on- contract, to recover that sum. The defendants did not contradict the plaintiff’s evidence, which was corroborated by three witnesses ; but, at the close of his case, they moved for a nonsuit, on the grounds: (1) That the oral contract was void for not complying with the following section of the statute of frauds:
“ Sec. 3. Every contract for the sale of any goods, chattels, or things in action, for the price of fifty dollars or more, shall be void, unless,
1. A note or memorandum of such contract be made in writing, and be subscribed by the parties to be charged thereby; or,
2. Unless the buyer shall accept and receive part of such goods, or the evidences, or some of them, of such things in action; or,
3. Unless the buyer shall, at the time, pay some part of the purchase money.”
(2) That the evidence was insufficient to sustain the conclusion that the managing partner had authority to bind the firm by such a contract. (3) That the plaintiff did not tender the bonds and demand the re-payment of the price within a reasonable time, and thereby lost his right of action. The motion was denied, and the ■defendant not asking to have any question submitted to the jury, a verdict was directed in favor of the plaintiff for $4,800, with interest thereon from April 28, 1884. A judgment was entered •on the verdict, which was affirmed by the general term.
Horace E. Smith, for appl’ts; John M. Carroll, for resp’t.

Opinion:
Follett, Ch. J.
An oral contract by which a person sells his own chattels, or choses in action, for more than fifty dollars, payment and delivery being made, and agrees to take them back from, and repay the purchase price to the purchaser on demand, is an entire contract; and the promise to take back the property and repay the purchase price is not void by the third section of the "statute of frauds. Wooster v. Sage, 67 N. Y., 67; Fitzpatrick v. Woodruff, 96 id., 561; White v. Knapp, 47 Barb., 549; Williams v. Burgess, 10 Ad. & E., 499; Fay v. Wheeler, 44 Vt., 292; Dickinson v. Dickinson, 29 Conn., 600; 1 Benj. Sales (Corbin's Ed.), § 169.
Executed contracts of sale embracing a promise by vendors of chattels, that in case they do not suit the purchaser, or do not possess, certain specified qualities, the vendor will repay to the vendee the purchase price upon their return, have been frequently considered by the courts. Towers v. Bennett, 1 D. & E., 133; Thornton v. Wynn, 12 Wheat., 183, but no case has been cited holding that such a promise on the part of a vendor is an independent contract. When an agent, by an oral contract, sells and delivers the goods of a disclosed principal, his personal oral warranty of quality is not a contract independent of the contract of sale, but is a part of it, and one consideration is sufficient to support the sale and warranty.
The oral contract of the defendants, that. they would purchase for the plaintiff in the market, at market rates, the bonds for the usual compensation, and in case lie should thereafter become dissatisfied with the bonds that they would, on demand, take them off his hands at what they cost him, was a single contract. Under this contract, the bonds were purchased and held by the defendants until the purchase price and their commissions were paid, and then they delivered the bonds to the plaintiff. The promise of the defendants, that they would take the bonds off the plaintiff's hands at what they cost him, upon request, is not a contract for the sale of goods, chattels, or things in action, within the third section of the statute of frauds, but is a provision for the rescission of the entire contract, and is valid.
The learned counsel for the appellant in support of his contention, cites Hagar v. King, 38 Barb., 200. In that case a firm was indebted to the plaintiffs in the action for work performed in constructing part of a railroad. The defendant, who was one of the firm, asked the plaintiffs to take from the railroad corporation its bonds in payment of the debt, orally agreeing with the plaintiffs, for himself, that if they would so take the bonds, he, not the firm, would, within ten days, take the bonds from, and pay to the plaintiffs the amount of the firm's debt. The plaintiffs assented to the proposal. Afterwards they accepted from the corporation its due bill for the amount due them for their work, payable in the bonds of the corporation, and gave a receipt for all of their demands for work done on the road. The plaintiffs then endorsed the due bill, delivered it to the corporation and received the bonds. Within ten days the plaintiffs tendered the bonds to the defendant and demanded the amount for which they were taken in payment. It was held that the oral agreement embraced two contracts, one to accept the bonds in payment of the debt, and another, to purchase the bonds at a future day at a given price, and that the latter contract was within the third section of the statute of frauds, and void. That case is easily distinguishable from the one at bar. The defendant, in that case, as an individual was not indebted to the plaintiffs, and his individual contract to take back the bonds was held to be distinct from the contract by which the firm's debt was paid in the manner described.
Was the evidence sufficient to sustain the conclusion that the managing partner was authorized to make the contract in behalf of the firm ?
The defendants admitted in their answer that they were bankers and brokers, and that they entered into that part of the contract by which they agreed to purchase the bonds for the plaintiff, which, by their concession, was within the ordinary business of the firm. But they neither averred in their'answer, nor gave evidence tending to show that the promise to take back the bonds was beyond the scope of their business. There being no evidence which shows that the transaction was actually beyond the scope of the business of the firm, the question arises whether it was apparently beyond. the scope of its business. Union National Bank v. Underhill, 102 N. Y., 336; 2 N. Y. State Rep" 48. The case shows that, in addition to the business usually done by bankers and brokers, the defendants were accustomed to purchase and carry securities on margins for their customers. The undisputed evidence is that the managing partner did make the promise upon which the plaintiff recovered, thus asserting his authority to make it in the name, and in behalf of the firm. Ho evidence is found in the record which would justify the court in holding, as a matter of law, that the promise upon which the action was brought was so far beyond the scope of the business of the firm that the plaintiff had no right to rely upon it The evidence was sufficient to cast upon the defendants the burden of rebutting the presumption arising from the evidence and the pleadings, and they having failed to do this, no error was committed in refusing to nonsuit on the ground that the managing partner had no authority to bind the firm by this contract.
The third ground upon which a nonsuit was asked for is not supported by the evidence. The undisputed evidence is that the managing partner of the firm on several occasions advised the plaintiff not to part with the bonds, assured him that they were good and would ultimately advance in the mailcet. Under these circumstances the plaintiff was not guilty of loches in not earlier returning the bonds and demanding the price paid. Wooster v. Sage, supra.
The judgment should be affirmed, with costs.
All concur.
Affirming 40 Hun, 415.