Case Name: Harry Stella, Appellant, v. Bankers Commercial Corporation, Respondent
Court: New York Supreme Court, Appellate Term
Jurisdiction: New York
Decision Date: 1920-02
Citations: 110 Misc. 313
Docket Number: 
Parties: Harry Stella, Appellant, v. Bankers Commercial Corporation, Respondent.
Judges: 
Reporter: New York Miscellaneous Reports
Volume: 110
Pages: 313–320

Head Matter:
Harry Stella, Appellant, v. Bankers Commercial Corporation, Respondent.
(Supreme Court, Appellate Term, First Department,
February, 1920.)
Contracts — rescission ■— bill of sale — automobiles — negotiable instruments — when judgment directed for plaintiff.
On the date of the purchase by plaintiff of an automobile truck from a motor company paid for partly in cash and in part by a series of notes, a conditional bill of sale referring to said notes was executed between the parties. A few days later the truck was delivered and proved to be subject to some dissatisfaction. Three of the notes were paid at maturity, the first to the motor company and the other two to defendant to whom they had been indorsed. Plaintiff, unaware that the bill of sale had been assigned to defendant, had a conversation with the officers of the motor company, which resulted in a mutual rescission of the contract and the return of the truck by plaintiff to the motor company which shortly thereafter became insolvent, and all of its property including said truck was taken possession of by defendant. In an action to recover back from defendant the amount paid by plaintiff on account of the purchase price, defendant’s treasurer testified that two or three months before defendant took possession of the truck, he had received notice of its return to the motor company by plaintiff. Held, that defendant, having with knowledge of the rescission, before it had taken possession of the property of the motor company, including the truck in question, adopted the transaction as its own, was bound to return so much of the purchase price as it had received and to surrender the notes still outstanding, and that the judgment in favor of defendant will be reversed and judgment directed in favor of plaintiff.
Appeal by plaintiff from a judgment of the Municipal Court of the city of New York, borough of Manhattan, third district, in favor of defendant, after a trial by a judge without a jury.
Charles A. Ogren (Louis W. Severy, of counsel), for appellant.
Walter A. Hall (Grant C. Fox, of counsel), for respondent.

Opinion:
Bijur, J.
It appears that the plaintiff on or about November 23, 1916, bought from the Lincoln Motor Company, Inc. (hereinafter called Lincoln Company), an automobile truck for $1,594 paying $50 down, $450 shortly thereafter and giving fifteen notes of approximately $71 each to run over a period of time. An appropriate conditional bill of sale (referring to the notes) was on the same date executed between the parties. A few days later the truck was delivered and proved to be the subject of some dissatisfaction. 'The plaintiff paid three of said notes as they fell due, aggregating some $215, the first payment being made to the Lincoln Company and the other two to the defendant — to whom the notes had been indorsed. Thereafter and on March 19, 1917, plaintiff, unaware of the assignment of the conditional bill of sale to defendant, had a conversation with officers of the Lincoln Company which resulted in a mutual rescission of the contract of sale and the return of the truck by the plaintiff to the motor company. The Lincoln Company shortly thereafter became insolvent. Defendant, on July 23, 1917, took possession of all the property of that company, including the truck involved in the present action, which it found, among others, in the garage of the Lincoln Company. This action is brought to recover from the defendant the amount paid by the plaintiff on account of the purchase price of the truck.
The learned judge below was of opinion that the defendant being merely the assignee of the Lincoln Company was not bound, either on the theory of contract, or of quasi contract, to return the payments ' which were voluntarily made to it by the plaintiff, though such quasi contract made the Lincoln Motor Company liable for all the payments made whether to it or to the defendant on its account. ' '
The facts in this case not being in dispute, it was-tried almost exclusively on stipulation. Defendant's treasurer, however, in the course of some otherwise-unimportant evidence, testified that he ' ' had received notice that the plaintiff had turned the truck in to the. Lincoln Motor Company about May or June, 1917," some two or three months, it will be observed, before possession thereof was taken by the defendant.
As I view this transaction plaintiff having undertaken to rescind the sale without exacting the return either of the conditional bill of sale or of the notes given thereunder was, as matter of law, put upon notice that they had been negotiated. Assets Realization Co. v. Clark, 205 N. Y. 105. As to the defendant, therefore, the " ostensible rescission was totally ineffective.
"When, however, the fact of the rescission became known to the defendant, and it took possession of the truck which had been surrendered by plaintiff in pursuance thereof, it adopted the transaction to the extent of its interest as its own and became bound by such adoption to return so much of the purchase price as it had received and to surrender the notes still outstanding. See generally Conde v. Lee, 171 N. Y. 662; Town of Ansonia, v. Cooper, 64 Conn. 536, 541; Blood v. La Serena L. & W. Co., 113 Cal. 221; McArthur v. Times Printing Co., 48 Minn. 319; Schreyer v. Turner Flouring Co., 29 Ore. 1.
In my opinion, therefore, the judgment should be reversed, with $50 costs, and judgment directed in favor of plaintiff for $214.11, with appropriate costs in the court below.