Case Name: John F. Spaulding and Others, Appellants, v. American Wood Board Company, Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1898
Citations: 26 A.D. 237
Docket Number: 
Parties: John F. Spaulding and Others, Appellants, v. American Wood Board Company, Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 26
Pages: 237–241

Head Matter:
John F. Spaulding and Others, Appellants, v. American Wood Board Company, Respondent.
Construction of a compromise agreement of sale as to goods delivered to a factor.
In an action brought to enforce- a factor’s lien which the plaintiffs claimed to-have upon goods sent to them by the defendant, it appeared that a dispute-having arisen as to whether the goods had been sold to the plaintiffs outright or had been consigned to them as factors, the parties in compromise of the dispute entered into a written agreement, stating, “all stock you (the plaintiffs) now have and consider consigned to be settled for by note, and we (the defendant-)guarantee the price of §50.00 per ton. Further, we (the.defendant) agree to renew a portion not more than §1,500.00 of the §2.500.00 note already given us on account, and the June sales * * * to he settled for on a cash basis; and we agree to accept customers’ notes for. portion and cheque for balance in full to July 1st, 1893.’
Held, that the complaint was properly dismissed;
That the instrument operated as a transfer to the plaintiffs of the title to the-goods in question, and that whatever recourse they might have against the defendant would be upon the guaranty after they had sold the goods. -
Appeal by the plaintiffs, John F- Spaulding and others, from a-judgment of the Supreme Court in favor of the defendant, entered in the office of-the clerk of the county of New York on the- 17th day of June, 1896, upon the decision of the court rendered after a' trial at the New York Special Term dismissing the complaint upon the merits, with notice of an intention to bring up for review upon such appeal the decision and order entered in said clerk’s office on the 11th day of June, 1896, directing the entry of said judgment.
I. L. Bamberger, for the appellants.
Edmund Luis Mooney, for the respondent.

Opinion:
Patterson, J.:
This action, to enforce a factor's lien, was brought, apparently,, under section 1737 of the Code of Civil Procedure and the authority of Whitman v. Horton (46 N. Y. Super. Ct. 531; affd., 94 N. Y. 644). No point has been made of the right to maintain such a suit before demand of payment of the amount of the hen made upon the owner of the chattels against which the lien is sought to be enforced, and, therefore, we. do not pass upon.' that question. The plaintiffs were agents for the sale of goods manufactured by the defendant. They had two accounts on their books of their dealings with the defendant; one of goods consigned directly to them, to be ¡sold on commission, and another called the general account, which was of merchandise shipped and delivered by the defendant to customers secured by the plaintiffs, which merchandise did not pass-through or come into the hands of the plaintiffs, but upon which they were entitled to receive a commission, evidently for procuring the sales to be made. The complaint alleges that when this action •was begun the plaintiffs,had in their possession certain goods; upon which they claimed they had made advances to the defendant; that such goods were held under an express agreement that they, should be retained as security for such advances and for commissions, and on a further agreement that such goods would bring in the market the price of fifty dollars a ton, and, further, that the defendant guaranteed such goods would bring that price; that the substance of that guaranty was subsequently, and on or about July 11, 1893, embodied in a writing; that it was also agreed that, in the event of the failure.of the.defendant to pay such advances and commissions, it was the right of the plaintiffs tó sell the goods at public .auction or private sale, and to retain from the proceeds of sale the .amount due them. Other facts are alleged, tending to sustain, the right of the plaintiffs to foreclose the lien, and appropriate' relief is asked for. The answer admits the .possession by the plaintiffs "of ihé goods in question, but avers that such goods were sold to the plaintiffs and not consigned for sale; and sets up-as-an affirmative defense that, prior to the commencement of this action, an account was stated between the parties showing that the plaintiffs were indebted to the defendant in a certain sum of money, which has been fully paid, and that, there has been a settlement and discharge of all claims and demands alleged in .the complaint.
The real issue between the parties on these pleadings was the relation in which the plaintiffs stood to the merchandise upon which they claim a lien. Were the plaintiffs the purchasers of those goods or did they hold them as factors for sale on account "of the defendant? The solution of that issue of fact depends upon the construction to be given to the writing of July 11, 1893, which is referred to in the complaint as containing a guaranty given by the defend ant, but which the defendant contends embraced the whole agreement between it and the plaintiffs with reference to the particular goods, the subject of the action. That writing is to be construed in the light of the circumstances surrounding its execution, and of the testimony given by one of the plaintiffs as to the reason'and the occasion of the making of that paper. Mr. Spaulding testified that a dispute or misunderstanding had arisen as to whether the transactions referred to in that writing were sales made directly by the defendant to the plaintiffs, or whether the transactions were what were ordinarily understood to be consignments. The witness proceeded to state that the misunderstanding had arisen before the eleventh of July, and that for the purpose of settling that misunderstanding and bringing about a compromise of the differences then prevailing between the parties, he went to the factory of the defendant and there, as the result of a conference, the paper was executed, which was signed by both the plaintiffs and the defendant.
That paper recited that the " following agreement " was entered into by which the differences between the parties were adjusted, viz.: " All stock you (the plaintiffs) now have and consider consigned to be settled for by note, and we guarantee the price of $50.00 per ton: Further, we (the defendant) agree to renew a portion not more than $1,500.00 of the $2,500.00 note already given us on account, and the June sales, including invoice of June- 2d, to be settled for on a cash basis; and we agree to accept customers' notes for portion and cheque for balance in full to July 1st, 1893." The interpretation of that paper was for the court. It was an agreement of settlement of the matter in contest between the parties. That matter the witness Spaulding has stated. It was whether the sales were made directly to the plaintiffs or were consignments. It is perfectly apparent that the true construction of the paper is that the goods which the plaintiffs, considered consigned were to be settled for by-note, and the defendant was to guarantee that the goods when sold would bring the plaintiffs the price of fifty dollars a ton. We think the court below correctly construed the agreement. The contention on the part of the plaintiffs is that the writing is a mere recognition by the defendant of the plaintiffs' claim that the goods were consigned and that the guaranty was intended to protect the plaintiffs for the amount of the advances they had made to the extent of $1,500 of the. renewal of $2,500 given on account of the goods. But it is plain that this writing is evidence of a, complete settlement for those goods. The note of the plaintiffs was to be given for the goods, and the guaranty of the price was for the protection of the plaintiffs, necessarily in some different relation than that of mere factors, for in the relation of factors the guaranty would accomplish nothing more than what the law provided, namely, a liability of the defendant for any balance that might arise by a sale of the goods for. a less sum than the amount of the plaintiffs' advances upon the charges against them. The guaranty was appropriate to a sale by the defendant to the plaintiffs, so that no loss would arise by reason of their becoming the owners of. the goods, and the settlement and adjustment of the controversy upon the basis of the plaintiffs becoming such owners. The reference in the writing to the June invoice merely puts that on a cash basis, or what is regarded as equivalent to that, the acceptance of customers' notes for a portion and a check for the balance. We think, therefore, that the court below was right in its conclusion that the plaintiffs became the owners, by the settlement of July eleventh of the- goods, and that whatever recourse they might have against the defendant would be on the guaranty, after making the sale of "the goods.
It is claimed, however, that the correspondence between the parties shows a modification of the writing referred to, and that the dealings between them with reference to the goods indicate such modification, or at least are evidence of the construction which the parties themselves gave to the arrangement resulting in that writing. That the correspondence cannot control in the former aspect seems clear from the fact that the plaintiffs sue upon a contract made on or before July eleventh; the right to the lien is claimed to have arisen then and not from any subsequent arrangement. As to a practical construction having been made by the parties of the instrument of July eleventh, which would give it the meaning claimed by the plaintiffs, there is nothing in the plaintiffs' letter of August 1,1894, and the defendant's answer to it of August 4,1894, to justify that contention. Evidently, so far as the defendant is concerned, it only refused to sanction a sale which would 'render it liable upon its guaranty. The plaintiffs sought to reopen the ques tion of consignment and. that the defendant would not assent to. It said in its letter : " It is not necessary for us to restate our correspondence regarding the matter you insist upon disputing every, time your note matures." Properly viewed, the plaintiffs' letter indicated a desire on the part of the plaintiffs to get the defendant committed to an acknowledgment that the goods were held on consignment notwithstanding the settlement of July eleventh, and to accomplish that, to ask' permission to sell the goods at less than the fifty dollars mentioned in the guaranty. The defendant's refusal to permit that to be done does not affect the matter. The plaintiffs' right to sell was entirely independent of any permission of the defendant. They might have sold the goods for what they would bring in the market, and then have recovered the difference upon the guaranty.
The judgment of the court below was right and should be affirmed, with costs.
Van Brunt, P. J., Barrett, Rumsey and O'Brien, JJ.,. concurred.
Judgment affirmed, with costs.