Case Name: Ernst Thalmann and Others, Copartners under the Firm Name of Ladenburg, Thalmann & Company, Respondents, v. Ladd J. Lewis, Jr., and William J. Harris, Copartners under the Firm Name of The Lewis Knitting Company, Appellants
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1907-11-22
Citations: 121 A.D. 836
Docket Number: 
Parties: Ernst Thalmann and Others, Copartners under the Firm Name of Ladenburg, Thalmann & Company, Respondents, v. Ladd J. Lewis, Jr., and William J. Harris, Copartners under the Firm Name of The Lewis Knitting Company, Appellants.
Judges: 
Reporter: Appellate Division Reports
Volume: 121
Pages: 836–838

Head Matter:
Ernst Thalmann and Others, Copartners under the Firm Name of Ladenburg, Thalmann & Company, Respondents, v. Ladd J. Lewis, Jr., and William J. Harris, Copartners under the Firm Name of The Lewis Knitting Company, Appellants.
First Department,
November 22, 1907.
Sale with, notice of lien in fayor Of plaintiff — answer alleging payment — evidence — facts showing counterclaim against seller inadmissible.
When in an action to recover the value of goods sold by B. to the defendants, with notice that the plaintiff had a lien thereon and was entitled to receive the purchase price, the answer sets out no counterclaim, but alleges as a separate defense that prior to the action and prior to the bankruptcy of B. the defendants paid B. all sums due with the consent of the plaintiff, the defendants are not entitled, without amending the answer, to prove that they returned some of the goods to B. and had a counterclaim against B. founded on a nondelivery of a portion of the goods sold.
Ingraham, J', dissented.
Appeal by the defendants, Ladd J. Lewis, Jr., and another, copartners, etc., from a judgment of the Supreme Court in favor of the plaintiffs, entered in the office of the clerk of the county of New York on the 26th day of October, 1906, upon the verdict of a jury rendered by direction of the court, and also from an order entered in said clerk’s office on the 1st day of November, 1906, denying the said defendants’ motion for a new trial made upon the minutes.
Charles I. Taylor, Henry J. Hemmens with him on the brief, of counsel [Beardsley & Hemmens, attorneys], for the appellants.
J. Markham Marshall of counsel [Underwood, Van Vorst & Hoyt, attorneys], for the respondents.

Opinion:
Clarke, J.:
The complaint is substantially similar to the complaint in Thalmann v. Capron Knitting Co. (100 App. Div. 247; affd., 182 N. Y. 525), where it was held to. state a cause of action.
In the case of Thalmann v. Giles (116 App. Div. 437), upon a similar complaint, this court reversed a judgment entered upon a verdict directed by the court after a trial. It was there pointed out that in the Capron Knitting Co. case, which arose upon demurrer, all the facts pleaded were admitted and that those facts constituted a cause of action. In the Giles case the plaintiffs failed to prove all of the facts pleaded, among others, the terms of the agreement between the Brown' Company and the plaintiffs or that defendants knew of', the terms of that agreement of that plaintiffs had made loans and advances to said company. The complaint in the Giles case also failed to allege a lien, as did the complaint in the Capron Knitting Co. case, and as does the complaint in the case at bar.
The answer in the Giles case set up a counterclaim as against the Brown Company. It was upon that record that this court said: " Upon the proof here it seems to me there is at best a mere equitable assignment of a chose in action. Under such circumstances the defendants had a right to prove their counterclaim as against the Brown Company." It was also held that the plaintiffs had abandoned tiie theory of their complaint and relied upon a direct transaction between themselves and the defendants — a sale to the defendants by plaintiffs of goods,-and for those reasons the judgment was reversea.
In the case at bar the plaintiffs proved the terms of their agreement with the Brown, Company and also that they had made advances upon the faith of the bills and invoices offered in evidence ,at the trial.'
The answer did not allege a counterclaim-. It did .allege for a separate defense that "previous to the commencement of this action, and previous to the time when the James Freeman Brown Company went into bankruptcy, the said defendants paid- to said James Freeman Brown Company all sums of money owing'to it by the defendants herein, with the knowledge and consent of the plaintiffs herein, and that since said date the defendants herein have not been' indebted to the plaintiffs herein or to the said James Freeman Brown Company in any sum of money whatever."
The plaintiffs, having proved the sum of $2,595.54 as the amount due, the defendants attempted to prove, under their defense of payment, a return of certain goods to the Brown Company, a claim for damages for non-delivery under their contract with the Brown Company, and the sending of a check to the Brown Company for some $269,. claimed by them to be the difference between the-goods proved to have been received by them and sited for in this case, and the two claims against the Brown Company which they asserted. This check had never been presented for payment.
, This evidence was excluded by the learned court upon the ground that neither counterclaim nor offset had been pleaded and that the •proof offered was not evidence of payment. The.question was presented in various forms and upon a number of occasions upon the trial and no motion was made by the- defendants to withdraw a juror or to amend their answer. It must be held, therefore, that they elected to stand upon their answer. Under that answer, the evidence was properly excluded and their failure to allege a counterclaim or to move for .leave to amend, when the matter was sharply called to their attention upon the trial entirely differentiates this case from the Giles Case (supra).
It follows, therefore, that the judgment should be affirmed, with costs to the respondents.
Patterson, P. J., Scott and Lambert, JJ., concurred; Ingraham, J., dissented.
Judgment and order affirmed, with costs.