Court Opinion

ID: 3612383
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:56:09.784414+00
Date Added: 2024-06-11T14:24:37.826016
License: Public Domain

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The question presented for decision by the written agreement of the parties, as well as by their pleadings, is whether the defendant had the right, as against the plaintiff, "to deliver to the purchasers of said hemp, under the contracts aforesaid, other hemp than that received from Martin, Dyce  Co. or Martin, Turner  Co. from Manilla, to wit, hemp not received by the said ship Polynesian, but purchased by" the defendant "in the New York market at some time after the said bankruptcy of the said Martin, Turner  Co., and after the 1st of March, 1884; or whether, on the other hand, the said" plaintiff "was entitled to demand, asagainst the defendant, that the 4,000 bales of hemp received by the Polynesian from Manilla, aforesaid, should be delivered under and in fulfillment of the said contracts of sale and the proceeds thereof applied in satisfaction of their advances against such hemp?" The agreement further provided that in case the court should finally decide that the defendant "had the right, as against the" plaintiff, "to substitute such other hemp purchased by him in open market after the times aforesaid for the hemp received from Martin, Dyce  Co., as aforesaid, judgment shall be in his favor for the amount so deposited with the trust company, and in case the court shall finally decide that he had not such right of substitution, judgment shall be rendered in favor of the" defendant "for the amount so deposited."
The parties by thus defining the question and prescribing the remedy have confined discussion to narrow bounds. The rights of third persons, however apparent or important, are expressly excluded from consideration. We are asked to pass upon the right of the defendant, simply as against the plaintiff, to substitute other hemp in performance of the contracts; and, conversely, upon the right of the plaintiff, simply *Page 395 
as against the defendant, to demand that its hemp only should be used for that purpose. The agreement of the parties to thus limit judicial inquiry is binding upon the courts, as it is not unreasonable nor against good morals or public policy. "Parties by their stipulations may in many ways make the law for any legal proceeding for which they are parties, which not only binds them, but which the courts are bound to enforce." (Matter of Petitionof New York, L.  W.R.R. Co., 98 N.Y. 447, 453.) The defendant admits that his principals are entitled to the benefit of the sum which he seeks to recover in this action, but he claims the right to apply it upon their indebtedness to him, rather than to permit it to be applied by the plaintiff upon their indebtedness to it. He denies that the plaintiff had any interest in the contracts made by him, but claims that he had such an interest in them as would have enabled him to enforce them in his own name, and to account for the profits by offsetting the amount thereof against the sum owing him by his insolvent principals. The claim of the plaintiff seems to be that Martin, Turner  Co. had so appropriated the shipment of hemp to the contracts for the sale of hemp as to operate as an equitable assignment of the profits or of the fund in controversy. The ultimate question, therefore, is what interest, if any, had the plaintiff in said contracts at the time the stipulation was made? The plaintiff practically owned the hemp, as was held in an action between these parties in relation to a cargo of sugar shipped and received at about the same time and under similiar circumstances. (Cooper v. HongKong and Shanghai Banking Corporation, 107 N.Y. 282, 289.) But if not the unqualified owner, it was the pledgee, in actual possession, with absolute power to sell the hemp "at such times and in such manner" as it saw fit. It was its duty to apply the proceeds, less expenses, upon the five drafts and, it was its privilege to apply the remainder, if any, upon any other debt owing it by Martin, Dyce  Co. No interest in the contracts was ever assigned to it. There was no agreement in relation to them between plaintiff and the defendant *Page 396 
or his principals. It neither acted nor contracted on the strength thereof. It did not even know of their existence until its rights were as complete as they ever became. It accepted the hemp without notice of any intended application or appropriation by Martin, Dyce  Co. Its title, therefore, was free from the effect of said contracts, and it had the right to sell when and to whom it chose, without reference thereto. It is true that Martin, Dyce  Co. intended, when they shipped the hemp, to use it to fulfill the contracts made by the defendant, their agent, but they did not notify the plaintiff of their intention, nor do anything to carry it into effect from which they could not recede at pleasure.
On January 22, 1884, they requested the plaintiff to deliver the bills of lading to him in exchange for his trust receipt. They did not, however, even then notify the plaintiff of said contracts, or of their intended use of the hemp, or of their object in making said request. It was a naked request which they could cancel or withdraw at discretion, and with which the plaintiff could comply or not as it saw fit. It could bind neither party unless acted upon to the detriment of the other. The bills of lading, with a copy of the letter containing said request, were received by the plaintiff's agent at New York on February third, but no action was taken by him until March fifth, when he wrote to the defendant asking if the hemp had been sold. He made no offer to comply with said request, but simply asked for information. The defendant at once replied, stating that "the hemp ex `Polynesian' is sold at something like 4,000 pounds over its present value, the contracts being made in my name." Still no offer to comply with the request was made. March tenth defendant wrote the agent of the plaintiff rescinding his letter of the fifth instant, and stating that his relations with Martin, Dyce 
Co., who had in the meantime failed, demanded that he should treat the sales of hemp made in his name as for his own account. March eleventh plaintiff's agent wrote defendant saying that he considered that the sales applied "to the 4,000 bales of hemp per Polynesian," but making no tender of the bills of *Page 397 
lading nor any offer to comply with said request. When the hemp arrived on the eighteenth of March, plaintiff's agent asked defendant to take it and deliver it to his purchasers, but he declined, stating that he did not know the plaintiff in the matter. This is, substantially, all that was done by the plaintiff or its agent, or by the defendant or his principals, between the date of said request and March nineteenth, the date of the agreement which created the fund in question. It does not appear that the plaintiff relied upon the request in anyway, or that it did or omitted to do anything to change its position in consequence thereof.
We do not think that the plaintiff acquired any additional right by contract, estoppel or otherwise after it discounted the drafts and accepted a transfer of the bills of lading as collateral. Assuming that the contracts for the sale of hemp, although made in defendant's name, were the acts and property of his principals, still the plaintiff had no interest in them. It had entered into no contract, express or implied, with anyone in relation to them. The contracts could not be enforced either by or against it. If it refused to let its hemp be used to fulfill them, no one could lawfully complain, for they were not binding upon it, and it was under no obligation to anyone on account thereof. If the market-price of hemp had risen, the plaintiff could have sold when and where it chose in defiance of the defendant, his principals or purchasers. No part of the loss could have fallen upon it. How can it claim the benefits of a contract by which it is not bound? What claim had it upon the defendant? What privity was there between them? What right has it to the profits since it was not bound to stand the losses? If it could not enforce the contract in its own name, without reference to the defendant, how could it enforce them through him? If it could not compel the purchasers to accept, how could it compel the defendant to deliver?
The parties do not ask us to decide whether the defendant had the absolute right, as against everyone, to substitute hemp purchased by him in the open market, but simply whether he had that right as against the plaintiff. As we have already *Page 398 
seen, the plaintiff had no control over the contracts, so that the defendant could act independently and in disregard of its wishes deliver any hemp to his purchasers that would satisfy them. He did not agree with them to deliver the hemp on board of the Polynesian, or any specific hemp, but simply hemp shipped during October and November from Manilla. The contracts were not so connected with the hemp of the plaintiff as to become a part of it, at its election, because that particular hemp was not sold by the defendant, nor attempted so to be. If the contracts had been for hemp to arrive by the Polynesian, a different question would have been presented. The purchasers dealt exclusively with the defendant and knew no one else in the transaction. If he tendered them any hemp shipped during the time and from the place named in the contract, they were bound to receive it. The stipulation admits that he could have bought such hemp, and if he had done so the plaintiff could not have claimed the profits. As no right was created by the stipulation, except as to the remedy, which did not exist before, it cannot now claim the profits. We think that the defendant, as against the plaintiff, had the right of substitution as defined in the agreement between the parties, and that the plaintiff is not entitled to the fund in question. We do not pass upon the rights of the defendant as against his principals or their representatives. Their rights are not affected by this decision, as the judgment appealed from expressly declares that it "is without prejudice to any superior right of a creditor or assignee of Martin, Turner  Co. or Martin, Dyce  Company, if any such exist." We have examined the authorities cited upon either side, but while some of them throw light upon the subject none of them impress us as analogous.
As the agreement provided that the defendant should deduct his commissions, he had the right to do so. The learned referee found that the sum retained for this purpose was fairly earned. He reserved from the gross proceeds on this account no more than the plaintiff agreed that he might. What subsequently transpired between the defendant and his principals, *Page 399 
or their assignees upon the subject, is of no concern to the plaintiff.
The judgment should be affirmed, with costs.
All concur.
Judgment affirmed.