Case Name: SAMUEL P. KNAPP, Appellant, v. ULRICH SIMON, Impleaded, &c., Respondent
Court: New York Superior Court
Jurisdiction: New York
Decision Date: 1880-06-18
Citations: 14 Jones & S. 225
Docket Number: 
Parties: SAMUEL P. KNAPP, Appellant, v. ULRICH SIMON, Impleaded, &c., Respondent.
Judges: 
Reporter: Reports of cases argued and determined in the Superior Court of the city of New York
Volume: 46
Pages: 225–232

Head Matter:
SAMUEL P. KNAPP, Appellant, v. ULRICH SIMON, Impleaded, &c., Respondent.
Agent—liability for failure to disclose principal—rights against principal.—Statute of limitations.
A broker employed by Ms principals to purchase for them, as such broker, from a specified person, a certain commodity, with no authority to purchase in his own name, and who, by reason of Ms failure to disclose his principals, is personally charged with and pays a judgment for the purchase-price thereof, has no rights against his principals, arising out of said transaction, except those gained upon principles of equity, giving him such claim as the vendor may have against said principals.
Consequently, a release of all claims arising out of said sale, given by the vendor to one of said principals (Act of 1838, for relief of partners and joint debtors), prior to the commencement of the vendor’s action against said broker, furnishes to the party so released a good defense to a subsequent action brought by the broker against his principals, to recover the amount paid by him as above stated.
Such action by the broker against Ms principals, should be brought within six years from the time the vendor’s claim accrued.—Speir, J.
Before Sedgwick and Speik, JJ.
Decided June 18, 1880.
Appeal by plaintiff from judgment entered on verdict directed by the court.
• The facts appear in the opinion.
D. M. Porter, for appellant, urged :
The plaintiff and defendants (because of the plaintiff’s failure to disclose tó Cobb who were his principals) were both liable to Cobb (Mason v. Cockcroft, 3 Duer, 366; Coleman v. Bank of Elmira, 53 N. Y. 394; Cobb v. Knapp, 71 Id. 348; Story on Agency, §§ 266, 267; Meeker v. Claghorn, 44 N. Y. 349). The superior court, in Cobb v. Knapp (10 J. & S. 99) held that payment of the $1,717.82 was properly credited, but that it did not affect Knapp’s liability. There is no proof that the plaintiff Knapp had any information of any alleged release, neither is it material whether he had or had not, because defendant Simon’s payment and paper only affected it to the extent of his liability, as Knapp was surety for the three members of the firm of C. A. Steen & Co. It cannot be disputed but that the recovery by Cobb against Knapp was against him upon a liability as principal; but the relation between the defendants in this action and Knapp, the plaintiff, was that the defendants were the principal debtors and Knapp was their surety, although a principal to Cobb. Again, the release expressly provides that it shall not release Donan and Steen, the other defendants herein ; and the statute under which the release was given (3 R. S. 5 ed. p. 66, § 28) provides that the other joint debtors shall not set up the discharge of one individual as a discharge of the others, unless it shall appear that all were intended to be discharged. Section 29 reads': “ Such compromise or composition of an individual of a firm with a creditor of such firm shall in nowise affect the right of the other copartners to call on the individual making such compromise, for his ratable portion of such co-partnership debt, the same as if this law had not been passed.” Consequently, inasmuch as Knapp, the plaintiff herein, has paid the debt owing by the other copartners, and was surety to the three, the release of the defendant Simon would be no bar under the statute, and, as to the plaintiff, is an act between third persons, and the plaintiff’s cause of action arose against the defendant Simon after the release was given (President, &c., of Mech. & Farm. Bk. v. Capron, 15 Johns. 467, note A). It must be here borne in mind, as has been said, that as between Cobb and the defendants, they were principal debtors to Cobb, and Knapp was also principal debtor to Cobb. The stipulation was no more obligatory than those in the case of Hnbbel v. Carpenter (1 Seld. 171), in which case the court says: “In such case the principal debtor, though no longer liable directly to the creditor, remains liable to refund to the surety the amount of the demand, in case it should be afterwards collected from him.” “ The surety will not be discharged by a release if the contract reserves all the rights of the creditor against the surety, for, in that case, the surety may pay immediately, and forthwith proceed against the principal, even though the creditor accept a composition” (Wagman v. Hoag, 14 Barb. 232). Under facts substantially similar to the facts in this case, the plaintiff was held entitled to recover back from the defendant the amount in an action for money paid, in Kearsley v. Cole (16 Mees. & Wels. 127). Judgment either ought to have been directed for the plaintiff or there was a conflict of testimony, and it was error in the court to refuse to submit the question to the jury as it did (Stone v. Flower, 47 N. Y. 566).
Vanderpoel, Green & Cuming, attorneys, and H. W. Bookstaver and A. J. Vanderpoel, of counsel, for respondent, urged :
I. The cause of action was barred by the statute of limitations. Section 380 of the Code provides : “ The following actions must be commenced within the following periods after the cause of action has accrued.” “§ 382. Within six years: 1. An action upon a contract, obligation or liability, express or implied, except a judgment or sealed instrument.” There can be no doubt but that the cause of action relied on in this case falls within this provision. Plaintiff’s right to recover in this action does not depend on the recovery of judgment in Cobb against Knapp, but upon the terms and conditions of the purchase and sale of the wheat made by Knapp on October 23, 1868. Ho new terms were made after that time. Cobb recovered of Knapp because, in making the purchase of him, he failed to state the fact that he was acting as a broker merely, and chose to deal with Cobb as principal. His position as principal was fixed by the agreement of October 23, 1868. This action was not commenced until April 1, 1878, nearly ten years after the cause of action accrued.
II. The release executed by Cobb to Simon was an absolute bar to any recovery by the plaintiff in this action against Simon. Chapter 257, Laws of 1838, section 1, provides: “ Whenever any copartnership firm shall be dissolved by mutual consent or otherwise, it shall and may be lawful for any one or more of the individuals who was or were embraced in such copartnership firm, to make a separate composition or compromise with any one or all of the creditors of such copartnership firm, and such composition or compromise shall be a full and effectual discharge to the debtor or debtors making the same, and to them only, of and from all and every liability to the creditor or creditors with whom the same is made or incurred, by reason of his or their connection with such copartnership firm.” The firm of C. A. Steen & Co. was dissolved in October, 1868. The release was executed October 30, 1869, a year after the dissolution. Simon paid for it his full ratable portion of the copartnership debt and interest. Even his partners, had they been compelled to pay the remainder, could not have called on him for more (L. 1838, c. 257, § 4). Cobb’s action against the plaintiff was not commenced before October 28, 1873. Had the plaintiff notified Simon of the pendency of Cobb’s action against him, or called on him to defend it, he would have had a perfect defense, as far as he was concerned, and there could have been no recovery for his portion of the debt. But Simon was not notified of that action, nor called on to defend it. The plaintiff was guilty of negligence in defending that action as he did, and in not calling on his alleged principals to defend it, and must bear the consequences; he cannot charge them to the defendant Simon. In Barmon v. Leithaur (1 Abb. Ct. App. Dec. 99), the court says : “ They (the defendants) cannot, be held responsible for a judgment procured against the plaintiff by default, or his negligence, without their knowledge or consent. The fact that,such a judgment was obtained would not of itself render the defendants liable if they were previously exonerated. In order to make them responsible, the defendants should have been notified of the commencement of the action, and have been permitted to defend it, had they chosen to do so.” In this case, one of the defendants had testified as a witness for the defendant in the original action, the plaintiff in the action in which the court pronounces the opinion above quoted.

Opinion:
By the Court.—Speir, J.
The action is brought by the plaintiff to recover, of the defendants, the value of certain wheat alleged to have been purchased of one Carlos Cobb for defendants, by plaintiff, as their broker, and for which Cobb had recovered certain judgments against plaintiff, and the costs of defending the action, on the alleged ground that he had failed to disclose to Cobb the defendants as his principals. The judgments were recovered against the plaintiff, although the defendants in this action were the principals in the transaction, and the plaintiff a mere broker and surety, under allegations and proof that plaintiff failed to disclose his, principals.
The answer sets up a number of defenses, among them a release executed by Cobb for a valuable consideration to the defendant Simon, whereby he was released from all demands arising out of the transaction set forth in the complaint. It also sets up the statute of limitations. The other defendants were not served, and are not in the action.
The case presents only questions of law to be determined by the court. At the close of the case, there were no questions of fact- to be considered by the jury. The non-payment of the price of the wheat was admitted by the defendant. Cobb recovered of Knapp because, in purchasing the wheat of him, he failed to state the fact that he was acting as a broker merely, and dealt with Cobb as principal. The plaintiff's right to recover here does not depend upon the recovery of judgment in Cobb against Knapp. It depends upon the terms and conditions of the purchase and sale of the wheat made by Knapp, the plaintiff, on October 23, 1868. This action was commenced on April 1, 1878, about ten years after the cause of action accrued. The case clearly comes within the statute. Besides, we are of the opinion that the release executed by Cobb to Simon was an absolute bar to any recovery by the plaintiff in this action against Simon.
Carlos Cobb had a suit pending against the defendants, C. A. Steen & Co., for this same wheat. The plaintiff, wishing to settle this suit, went with the defendant Simon to Cobb's office, where it was settled, and a release, under the act of 1838, for the relief of partners and joint debtors, was executed and delivered by Cobb to Simon, upon his paying thirty-three and one-third cents on the dollar, of Cobb's claim. The firm of C. A. Steen & Go. was dissolved in October; 1868. The release was executed a year after the dissolution, and for it Simon paid his full ratable portion of the partnership debt, and interest. The other defendants of the firm, who are not in this suit, do not appear to be in any way connected with the plaintiff's liability to Cobb, which entitles them to any consideration in determining the rights of the parties in this action. The liability was personal to the plaintiff ; the settle ment of Cobb's suit against C. A. Steen & Go. was procured at the instance of the plaintiff, and the release then executed to the defendant Simon is a bar to this action.
The judgment should be affirmed, with costs.