Joseph W. Corlies & Co. v. Estes

| Vt. | Feb 15, 1859

Barrett, J.

Davis & Rider entered into a special contract in writing with the plaintiffs to manufacture certain cotton to be furnished by the plaintiffs into cloth, and return the cloth to the plaintiffs, upon certain specified terms. The defendant became a third party to said contract, and therein undertook for the faithful performance by Davis & Rider of their undertaking in said contract.

This action is brought by the plaintiffs against the defendant upon his guaranty of said performance by Davis & Rider, setting forth breaches of the contract by them,

It is not questioned that the defendant is bound by his contract of guaranty to make good the performance of the contract of Davis & Rider, according to its terms and legal effect,

The cause was referred by rule of court, upon the special agreement of the parties, and the facts are before the court upon the report of the referees. The county court, pro forma, rendered judgment for the defendant. It is for this court to determine the correlative rights and liabilities of the parties upon the case as it is now before us.

By the terms of the contract Davis & Rider were to manufacture the cotton furnished by the plaintiffs into cloth, and deliver the cloth to the plaintiffs at their store in the city of New York; up to the time of which delivery the cotton and the cloth were to be the absolute property of the plaintiffs, subject to the claim of Davis & Rider of two and a quarter cents per yard for the manufacture thereof, and for the payment of transportation of the cotton from, and the cloth to, the city of New York. A large quantity of cotton was furnished by the plaintiffs, and made into cloth by Davis & Rider. But the case shows that a portion of the cloths made out of that cotton was not sent to the plaintiffs, but was retained aDd disposed of, and the pay received, by said Davis & Rider without the consent of the plaintiffs. The retention and disposal of this cloth is the ground of the claim for damage which the plaintiffs make in this suit.

There is no doubt that this was a breach of the contract for which the defendant would be liable to the plaintiffs on his guaranty ; nor is there any doubt that, at least, they would be entitled to recover as damage, the price and expense of procuring the cotton which went into the cloth thus withheld and converted by Davis & Rider, with the interest upon that outlay.

But the plaintiffs insist that they are entitled to recover beyond that.

I. They claim that inasmuch as under the contract they were, on the receipt of thé cloths at their store, to become commission merchants in respect to the cloths, and thereby to realize the emoluments of the business in that character, they are entitled to claim and recover the customary commission of five per cent, for the sale and guaranty of the cloths thus withheld and converted.

We think, for very obvious reasons, that this claim can. not be maintained. In the first place, this commission is in the nature; of compensation for the care, skill, labor and risk in making the sale with guaranty. Yet, by the very hypothesis, the care, skill, labor and risk were never exercised, performed and incurred.

In the next place, non constat, if the cloths had been all sent forward as per contract, the plaintiffs would have sold them, so as to be entitled to the customary commission. They might have been burned or otherwise destroyed or injured, so as to have prevented a sale. It is in this view that the matter of their being entitled to, and having lost the emoluments of the business, is too remote and contingent to entitle it to be the basis of a recovery of damage.

II. The plaintiffs claim to be allowed to recover for the balance of advances of the two and a quarter cents per yard on cloths over and above the cloths actually received by them. If the advances were made under the contract upon a fair interpretation of its terms and legal effect, then this claim is well founded, for it appears that a pretty large balance in this behalf exists.

It seems to us, upon an attentive consideration of the contract in this respect, that the plaintiffs were not bound to make any advances for the manufacture, except upon the cloths forwarded to and received by them, agreeably to the provisions of the contract. This being so, if they volunteered to make advances in anticipation of receiving the cloths, it was not in performance of the contract on their part, but was matter of grace to Davis & Eider, outside of the scope of the contract, and in reliance upon them personally.

By the terms of the contract, upon the cloths being received by the plaintiffs, they were to be charged over to, and to become the property of Davis & Eider, to remain with their avails in the hands of the plaintiffs, as security for all sums of money, or liabilities of any kind, incurred by the plaintiffs on account of Davis & Eider.

It is only fair and in accordance with well understood principles, to presume that the defendant entered into his contract of guarantee in view of all the terms and provisions of the contract, and that he was becoming liable to the plaintiffs, only in respect to such rights as they might have in virtue of a strict performance of their duties under the specific provisions of the contract, and of the failure of Davis & Eider to perform their correlative duties to the plaintiffs under the like provisions of the contract. Now it is quite obvious that if advances had been made only according to the terms of the contract, the plaintiffs would have had constantly in hand, not only full security, but the very means of realizing a reimbursement of the advances thus made.

We think it will hardly do to hold that the plaintiffs may go beyond their duty under the contract, and then compel a guarantor to indemnify them for acts of voluntary grace extended to the primary party. The delicacy and sensitiveness of the law in respect to persons sustaining the relations of the defendant in this suit, have become proverbial in judicial administration, and in the books.

The justness of this view, in its application to this case, is strongly enforced by the acts of the plaintiffs, which seem to subject this claim to the suspicion of being an afterthought at variance not only with the terms and effect of the contract, but also with the plaintiffs’ understanding of the contract.

The letter of the plaintiffs of July 28, 1855, with the enclosed statement of account with Davis & Eider, can be regarded in no other light than a notice to the defendant of the character and extent of their claim against him upon his guaranty, and a demand on him for the payment of that claim.

It carries full evidence on its face when taken in connection with the contract, that it was not intended as a mere proposal for a settlement by pacific compromise of a disputed claim, but was intended as a statement and notice of the full claim that the plaintiffs regarded themselves as having under the contract. In this statement and notice there is no item predicated on the balance of advances, which is now urged as a legitimate claim against the defendant.

The defendant makes a point, that if the plaintiffs claim to be allowed interest on the money paid for the cotton, then the one and a half per cent provided for in the contract, renders the contract usurious and void under the laws of New York.

It is to be noticed that the report negates the idea of any corrupt intention. It is also to be noticed that this contract, being made and to be performed in the State of New York, is to be construed and administered with, reference to the laws of that State. It would seem, indeed, on the face of the transaction, that this reservation of one and a half per cent additional to the legitimate interest to which the plaintiffs are entitled upon the money advanced, partakes of the character of usury. Yet it must be borne in mind that in the State of New York, under the laws of that State, such a contract is not regarded by the courts of that State as usurious. We think this must be decisive against the objection urged.

The plaintiffs also claim to recover for the non-delivery of cloth manufactured by Snow & Estes, as the successors of Davis & Eider, out of cotton forwarded to Davis & Eider under the contract in question.

This is resisted on the ground that it was an arrangement which the plaintiffs entered into outside the contract. We think, however, upon the facts found, that it was in effect but an arrangement for a continued performance of the contract by Davis & Eider. The cotton had already been forwarded, before the plaintiffs had any knowledge or notice that Davis & Eider had ceased business. It had been forwarded agreeably to the terms of the contract, at the request of Davis & Eider, and they were under obligation by the contract to procure its manufacture. It was matter of indifference to the plaintiffs who should do the manual work of making the cloth. There was no need for Davis & Eider to obtain the consent of the plaintiffs in this respect. The right of the plaintiffs would have been fully answered by the delivery of the cloths [made out of the cotton forwarded. The report shows that the work was done by Snow & Estes for Davis & Eider, and with the knowledge of the defendant. Davis & Eider thus recognizing their duty to procure the cotton to be manufactured, and undertaking to procure it to be done, left them and their guarantor under the same obligation to return to the plaintiffs the cloth made by Snow & Estes, as if it had been made by Davis & Eider themselves. It could make no difference with this obligation, whether they or their employees had made and withheld and converted the cloths.

Under the views thus presented, it results that the plaintiffs are entitled to recover the money paid and the commission of one and a half per cent, as stipulated in the contract, for the purchase of the cotton that was furnished and forwarded to, and not returned in cloth by Davis & Rider, including what was worked up by Snow & Estes, with the interest accruing thereupon. This result is the same as it would be if the computation were to be based upon the cloth, in the mode of estimating its value provided in the contract, viz: the cost of the cotton, including commission, and the two and a quarter per cent for the manufacture of it into cloth.

It is obvious that the purpose of the plaintiffs in making the contract was, that they should be reimbursed for the cotton, and enjoy the emoluments of the sale of the cloths as commission merchants. Those emoluments, as to the cloths not returned, being too contingent and uncertain to predicate a computation of their amount, or of the damages resulting from their loss, are excluded; and thus, of course, the plaintiffs’ damages are to be measured by the cost of the cotton and the stipulated commission for the purchase of it.

The cloths that were forwarded to and received by the plaintiffs, reimbursed and satisfied to them the costs, charges and commissions to which the plaintiffs were entitled under the contract, in respect to the cotton out of which said cloths were made, as well as for the advance of two and a quarter cents per yard, authorized by the contract for their manufacture and transportation.

The judgment is reversed, and judgment rendered for the plaintiff for $-, to be ascertained from the report, in conformity with the opinion above given.