Opinion
June 3, 1927.
Appeal from Supreme Court of New York County.
Thomas Gregory of counsel [ William E. Vogel with him on the brief], for the appellants.
Clifton P. Williamson of counsel [ Edward W. Bourne with him on the brief; Alexander Green, attorneys], for the respondent.
The questions presented by this appeal are whether there is an ambiguity in a term of a contract so as to present an issue of fact, whether an action may be brought for the purchase price or only for the damages suffered, and whether the action is barred by the Statute of Frauds.
The plaintiff brought three actions against the defendants to recover the purchase price of three lots of tea. These were consolidated and tried as one action. In the first action the plaintiff alleged that plaintiff's assignor "agreed to deliver to the defendants at New York 900 half chests of Government Standard Congou tea from the steamship `Bellerophron' within a reasonable time after the arrival of the said steamship at New York, and the defendants agreed to accept the same and to pay therefor the sum of seventeen cents per pound within thirty days after the delivery or a tender of delivery thereof." In the second action a similar agreement was alleged covering 700 half chests of Government Standard Congou tea from the steamship Perseus. The third action alleges a similar agreement covering 800 half chests of Government Standard Congou tea from the steamship Karonga. In each action it was alleged that the plaintiff was ready and willing to deliver the tea within a reasonable time after the arrival of the respective steamers, and duly tendered the same. At the trial the complaints were amended so as to state that by the contracts sued on the plaintiff sold and agreed to deliver the tea in question, and did deliver the same.
The defendants in their answers, besides putting in issue the material allegations of the complaint, as separate defenses pleaded, first, the Statute of Frauds; second, to the effect that the teas tendered did not conform to the requirements of the contract, and as a partial defense alleged that the plaintiffs resold the teas without exercising reasonable care and judgment, resulting in the obtaining of a less price than the fair market value of the tea.
Considering first the question whether there was an ambiguity in the contracts as to the kind of tea agreed upon. The contracts provided for the delivery of "Government Standard Congou tea." Upon the trial it appeared that samples of tea, as representative of the tea to be delivered, had been submitted to the defendants and that the defendants had refused to accept the tea upon the ground that the samples were not equal in physical appearance and in quality to certain samples of tea known as "Government Standard Congou." These government samples are prepared annually by a board of seven tea experts, appointed by the Secretary of Agriculture under a Federal statute colloquially known as the "Tea Act," being entitled "An act to prevent the importation of impure and unwholesome tea" (29 U.S. Stat. at Large, 605; U.S. Comp. St. 1916, p. 9581). This board annually submits to the Secretary of Agriculture "standard samples of tea," as required by section 2 of the said "Tea Act." Section 3 provides that the Secretary of Agriculture, upon the recommendation of said board, shall fix and establish "* * * uniform standards of purity, quality, and fitness for consumption of all kinds of teas imported into the United States, and shall procure and deposit in the Custom Houses of the ports of New York, Chicago, San Francisco, and such other ports as he may determine, duplicate samples of such standards; that said Secretary shall procure a sufficient number of other duplicate samples of such standards to supply the importers and dealers in tea at all ports desiring the same at cost."
These samples are put up in sealed half pound tins, and by way of example (as appears from exhibit submitted) stamped:
"U.S. Government Standard Congou No. 2 1923 — 1924"
Apart from these standard samples, the Department of Agriculture issues a set of regulations prescribed for the direction and guidance of the tea examiners in admitting tea to the country. Regulation No. 28 thereof provides: "Should a tea prove on examination to be inferior to the standard in any one of the requisites — namely, quality, quality of infused leaf, or purity — it would justly be rejected, notwithstanding the fact that it may be superior to the standards in some of the qualifications. No consideration shall be given to the appearance or so-called style of the dry leaf."
Upon this record, apparently what took place was that the teas which were submitted to the defendants by the plaintiff were teas which were passed by the government inspectors, but which did not conform to the United States Government Standard in appearance or so-called style of the dry leaf and, in consequence, were worth about four cents a pound less than tea which conformed to the United States Government Standard Congou samples. The learned trial justice directed a verdict for the plaintiff, thus holding that if the tea was admitted to the country, it satisfied the requirements of the contract within the meaning of the term "Government Standard." In other words, that in passing the tea examiners it must thereby have conformed to a standard set up by the government and so come within the wording of the contract. It would seem, however, that the test is not mere admittance to the country, but a conformation to the Government Standard samples. As noted, the Federal statute specifically provides for the establishment by the Secretary of Agriculture of standard samples and the furnishing of the same to the importers and dealers in tea at all ports desiring the same. This obviously is the Government Standard and is so specifically named in the statute. As against this, the passing of a shipment of tea by any one of a number of government inspectors shows merely that the tea conforms to the requirements of the admission of tea to the country, but not necessarily to the standard samples prepared annually by the board of tea experts. The object of the regulations for the admission of tea into the United States is solely to protect the public against unwholesome or impure tea and has, therefore, no concern with its value commercially. Consequently, appearance and style are entirely excluded. On the other hand, the parties to this cause are vitally interested in commercial value, as the tea is purchased for resale. Style and appearance are, therefore, of primary importance to them. If all the parties intended by providing in their agreements for the sale and delivery of "Government Standard Congou" tea, was admittance into the country, then such provision was superfluous, for unless the plaintiff could bring the tea into the country it could not make delivery ex-warehouse, New York. Under the well-known principle that all the terms of a contract should be construed and are assumed to have some purpose and meaning attributed to them, the term "Government Standard Congou tea" must be construed as relating to the government standard samples set up annually by the board of tea experts. Furthermore, the "Tea Act" provides for appeals from the conclusions of the tea examiners only by the Collector of Customs, importers or consignees. As defendants were neither importers nor consignees, it is not reasonable to assume that they would bind themselves to pay a fixed price for any tea that might gain admission into the country without recourse against the propriety of such admission. A contract should not receive an unreasonable construction. As was said by Judge CRANE in Fleischman v. Furgueson ( 223 N.Y. 235, 241): "It is a well-established canon of interpretation that in seeking for the intent of the parties the fact that a construction contended for would make the contract unreasonable may be properly taken into consideration. A court will endeavor to give the construction most equitable to both parties instead of the construction which will give one of them an unfair and unreasonable advantage over the other."
There at least was an ambiguity in the alleged contract which required a submission to the jury. Many witnesses were called by each side on the issue as to what the parties to this agreement meant, and what was the usage and custom in the tea trade, by the term "Government Standard." The facts were in dispute, and hence what the parties meant by the use of this ambiguous term in the contract presented a question for the jury under all the evidence. ( U.S. Rubber Co. v. Silverstein, 229 N.Y. 168.) If there had been no dispute as to the facts, the interpretation of the written instrument would have been for the court. It was, therefore, error to direct a verdict in favor of the plaintiff, and this error would have required the granting of a new trial were it not for two fundamental objections which bar the maintenance of this action.
First, the facts show that the plaintiff may not sue for the purchase price. As before noted, the actions were brought for the purchase price of the tea, upon the theory that title to the goods had passed to the defendants. In this connection the essential facts are not in dispute. The plaintiff relies upon a written memorandum of sale of the tea involved in the first cause of action "To arrive" at a price "Ex Warehouse." The complaint alleges that the tea was to be delivered to the defendants at New York within a reasonable time after arrival. While the sales memorandum was unsigned and hence did not constitute an enforcible contract, yet the plaintiff assumes that its terms apply to all the causes of action. We, therefore, have an unenforcible contract of sale of certain tea "to arrive New York." Before the arrival of the tea n New York, the defendants notified the plaintiff that they would not accept any tea. Under these circumstances there was no transfer of title, and hence the action for the price cannot be maintained. Prior to the enactment of the Sales Act a seller who tendered goods to a buyer in conformity with the contract of sale might, if the buyer wrongfully rejected the goods, in a cause such as the one at bar, maintain an action for the price, notwithstanding there had been no transfer of title. Under the provisions of the Sales Act, however, in order to maintain an action for the price, there must have been a transfer of title in the property. (Pers. Prop. Law, § 144, as added by Laws of 1911, chap. 571.) Whether there was such a transfer depends upon the intention of the parties, and such intention, in the absence of express provision or controlling circumstances, is to be determined from certain rules prescribed by the statute. (Pers. Prop. Law, § 100, as added by Laws of 1911, chap. 571; Glass Co. v. Misroch, 239 N.Y. 475. ) By rule 5 of section 100 it is provided that "If the contract to sell requires the seller to deliver the goods to the buyer, or at a particular place, or to pay the freight or cost of transportation to the buyer, or to a particular place, the property does not pass until the goods have been delivered to the buyer or reached the place agreed upon."
In the case at bar the contract, as noted, required the seller to deliver the goods at New York and the tea was sold at a price ex warehouse New York, the seller paying all freight and other incidental expenses up to such a time as the tea was released. Under the aforesaid principle, therefore, title to the tea would not pass to the defendants before the arrival of the tea in New York. Since the tea was rejected prior to its arrival and the plaintiff notified that no teas would be accepted by the defendants, it is clear that the property in the goods did not pass to defendants, and hence plaintiff cannot maintain an action for the price.
The plaintiff urges, however, that there was a transfer of title to the tea under the provision of rule 4 of section 100 Pers. Prop. of the Personal Property Law, upon the theory that there had been an appropriation of the tea to the contract with the assent of the defendants. In the first place, plaintiff's complaint alleged an actual delivery of the tea in accordance with the terms of the contract. When it appeared upon the trial that the plaintiff intended to rely upon a constructive delivery under the statute, the defendants pleaded surprise. Nevertheless the learned trial court directed a verdict upon the theory that there had been a constructive delivery by appropriation. This was a fatal variance between the pleading and the proof, and the judgment so obtained cannot be sustained. As was said by LAUGHLIN, J., writing for a unanimous court in Bready v. Wechsler Co., Inc. ( 200 App. Div. 78, 81; affd., 235 N.Y. 539): "In Robison Co., Inc., v. Kram, No. 1 ( 195 App. Div. 873) we held that where a recovery is sought on the theory that the title has passed to the buyer, not by actual delivery but by the goods having been appropriated to the contract under subdivision 1 of rule 4 of section 100, the facts showing that under the statute the property in the goods passed to the buyer, should be alleged to the end that the defendant may be apprised of the plaintiff's claim in that regard. That decision is controlling here and requires a reversal."
Moreover, even if proof of a passing of property in the goods by appropriation under the statute were available to the plaintiff, the plaintiff failed to establish an essential element thereof, namely, the consent of the defendants, and also failed to show that it was the intention of the parties that notwithstanding by the alleged contracts the goods were sold to arrive at New York, title in the goods passed to the defendants prior to such arrival. Upon the contrary, everything points to the conclusion that the intention of the parties was in accordance with the presumption prescribed by rule 5 of section 101, namely, that title continued in the plaintiff until the goods arrived at New York and were released.
An additional and compelling reason for the reversal of this judgment is that the proof sustains the defense of the Statute of Frauds. Section 85 Pers. Prop. of the Personal Property Law (as added by Laws of 1911, chap. 571) reads as follows: "A contract to sell or a sale of any goods or choses in action of the value of fifty dollars or upwards shall not be enforceable by action unless the buyer shall accept part of the goods or choses in action so contracted to be sold or sold, and actually receive the same, or give something in earnest to bind the contract, or in part payment, or unless some note or memorandum in writing of the contract or sale be signed by the party to be charged or his agent in that behalf." No part of the purchase price was paid by the defendants and the evidence shows that no part of the goods was received and accepted. It was necessary, therefore, for the plaintiff to establish some note or memorandum in writing of the contract signed by the defendants. To this end the plaintiff relies upon a sales slip alleged to cover the tea involved in the first cause of action in conjunction with certain letters passing between the parties. In connection with the first cause of action only was there a sales slip. This sales slip was not signed by either of the defendants. It reads as follows:
"CARTER, MACY CO., INC. 106 108 Water Street 8/8 1923 Sale No. 140 142 Pearl Street New York Sold to G.T. Matthews Terms 3/30 "Ship via All Tare Net Wt. "Index No. Pkgs Kind Mark No. Price Cargo No. Each Each "900 Congou 17 "To arrive Ex Warehouse
"MEMORANDUM "Remarks No Brokerage Sale made by Bollman "Sale approved by"
Thereafter the following correspondence took place between the parties:
" Oct. 15th, 1923.
"G.T. MATTHEWS Co., "105 Water Street, N.Y. City.
"DEAR MR. MATTHEWS. —
"We are giving you as per the attached list particulars on the 900 H/Cs Congous which you purchased from us to arrive at 17c. 3% 30 days. These teas are to arrive on the SS Bellerophron due about Nov. 15th, and we shall send you samples as soon as we receive same. Yours truly, "CARTER MACY CO., INC. "SALES DEPARTMENT." "NEW YORK, Nov. 28, 1923. "Messrs. CARTER, MACY Co., "New York City.
"GENTLEMEN. — Upon examination of the samples submitted of 900 H/c lot, Ex. Bellerophron and of 1,500 H/c Ex. Karonga and Perseus, Congou tea, we find them all so poor and inferior that we cannot accept delivery.
"Very truly yours, "G.T. MATTHEWS CO. "GTM/HBR per G.T. MATTHEWS" " November 28th, 1923.
"Messrs. GEO. T. MATTHEWS Co., "105 Water Street "New York, N Y
"GENTLEMEN. — We beg to acknowledge receipt of your favor of November 28th, in which you state that upon examination of sample submitted of the two lots of Congou Teas, namely 900 H/c Ex. S/S Bellerophron and 1,500 H/c Ex. S/S Karonga and S/S Perseus, you find they are too poor to accept delivery.
"These teas were sold to you as Government Standard Congous and we believe in accordance with the custom of the tea trade as far as Carter, Macy Company is concerned, if these teas are released by the United States Government Inspector, they are your property and not ours. As you know, these teas have not yet been released and we will keep you notified as to the progress the inspector is making against these shipments.
"Yours truly, "CARTER, MACY COMPANY, INC. "BOLLMAN "WB/MMD. Sales Department."
" December 7th, 1923. "Messrs. G.T. MATTHEWS Co., "105 Water Street, "New York, N Y
"GENTLEMEN. — We beg to hand you herewith delivery order and invoice covering 900 H/C of United States Government Standard Congou, Ex. S/S Bellerophron, which are now spot and ready for delivery. We are handing you this delivery order in execution of contract sold you for 900 H/C United States Government Standard Congous at 17c.
"Yours truly, "CARTER, MACY COMPANY, INC. "BOLLMAN "WB/MMD Sales Department."
" Dec. 8th, 1923.
"CARTER, MACY CO., "City.
"GENTLEMEN. — For reasons as stated to you in our letter of the 28th November, we herewith return your delivery order and invoice covering these teas.
"Yours very truly, "G.T. MATTHEWS COMPANY, "GTMJR/L G.T. MATTHEWS, JR."
"NEW YORK, December 12, 1923.
"GEO. T. MATTHEWS COMPANY, "105 Water Street, "New York City. "Att. Mr. Matthews, Senior.
"DEAR MR. MATTHEWS. — Referring to our sale of Congou teas to you, I am advised that the proper friendly procedure to take in a matter of this kind is to let it go before the Board of Arbitration of the Tea Association of America, and I, therefore, request your approval of this step.
"Yours very truly, "CARTER, MACY COMPANY, INC., "AND/AMS A.N. DAROWIN, President."
"NEW YORK, December 12th, 1923.
"CARTER, MACY COMPANY, INC., "New York.
"GENTLEMEN. — Replying to your letter of this date, we do not like to decline an offer to arbitrate a business difference, but frankly we find it difficult to see that this matter warrants an arbitration.
"We were entitled to teas equal to the Government Standard and we think you must agree that we did not receive same.
"Very truly yours, "GEORGE T. MATTHEWS COMPANY, "GTMJR/L G.T. MATTHEWS."
It is upon the foregoing correspondence, supplemented by the unsigned sales slip, that the plaintiff relies to establish a "note or memorandum in writing of the contract * * * signed by the party to be charged." In none of the letters signed by the defendants, however, is there any admission of all the essential terms of the contracts alleged by the plaintiff; nor is there any direct reference to the sales slip covering the tea for the price of which the plaintiff sues in the first cause of action. There is, therefore, no basis for contending that the defendants, even by reference, over their signature have conceded or recognized the existence of contracts containing all the terms alleged by the plaintiff, even as to the first cause of action. Much less is there any basis for such a contention in respect to the second and third causes of action, in which there were no written sales slips whatsoever. There undoubtedly is some basis for urging that the evidence shows the defendants assumed there was some agreement to purchase some tea. This, however, is not sufficient. In order to satisfy the requirements of the statute, the writings signed by the defendants must, by direct statement or by reference to other writings, comprise all the essential terms of the contract. None of such terms may be supplied by oral evidence or by writings not signed by the defendants and not referred to by the defendants over their signatures as containing such terms. As was said by DOWLING, J. (now presiding justice), in Talcott, Inc., v. Greenstein ( 210 App. Div. 633): "It is proper to indicate here that in our opinion all the writings taken together do not constitute a written, enforcible contract. The written memorandum of September ninth, the basis of plaintiff's claim, which was not signed by defendants, requires some writing signed by defendants accepting its terms, by reference or direct statement, to make it valid. * * * The defendants' letter of October twenty-sixth said the goods would not be accepted, as the order had already been canceled. * * * These writings do not admit, accept or confirm any contract whatever." Also in Evans v. Pelta ( 146 App. Div. 749), MILLER, J., writing for the court, said: "At most, the letters contain an admission that the defendants had ordered certain goods without disclosing the kind, quantity or purchase price. The letters contain no reference either to the memorandum made by the salesman at the time of receiving the order or to the invoice mailed by the plaintiffs on May sixth. While it is quite true that the evidence necessary to satisfy the statute need not all be comprised in a single writing, it still is equally true that verbal evidence cannot be resorted to in order to supply any of the essential terms of the contract which the writing or writings relied upon omit." And in Poel v. Brunswick-Balke-Collender Co. ( 216 N.Y. 310), Judge SEABURY said: "In order to satisfy the requirements of the Statute of Frauds the written note or memorandum must include all the terms of the completed contract which the parties made. It is not sufficient that the note or memorandum may express the terms of a contract. It is essential that it shall completely evidence the contract which the parties made." The plaintiff thus failed to prove a note or memorandum in writing of the contracts signed by the defendants.
The plaintiff urges, however, that the defense of the statute was overcome by proof that the defendants received and retained samples of the tea. These samples, however, were submitted to the defendants not as a partial delivery on account of the alleged contracts, but merely by way of affording the defendants an opportunity to determine whether they would accept delivery of tea subsequently to be tendered. The defendants advised the plaintiff that delivery would not be accepted. The samples were thus submitted for a special purpose only, and not as a partial delivery of the goods sold. Title cannot in any such manner be forced upon an unwilling purchaser. As was said by Judge CARDOZO in Glass Co. v. Misroch ( 239 N.Y. 475): "Delivery to be operative as a transfer of the property must be assented to by the buyer (Williston, Sales [2d ed.], § 472; cf. § 280, p. 592). The seller may not force the goods upon a buyer unwilling to receive them."
It is further urged by the plaintiff that the defendants are estopped from denying liability for the purchase price of the tea by reason of having claimed in their answers a setoff for the amount of the resale, upon the ground that this claim is inconsistent with the defendants' contention that the property in the goods had not passed to them. It is well settled, however, that a defendant may set up inconsistent defenses in an answer, and rely upon whichever of such defenses he may be able to establish. ( Societa Italiana v. Sulzer, 138 N.Y. 468; Civ. Prac. Act, § 262.) In the case at bar, therefore, the defendants were entitled to deny the passing of title in the goods as a matter of law, and without prejudice to this denial, to claim the proceeds of a resale by the plaintiff in the event the question of the passing of title were determined adversely to them.
It follows that the judgment and order appealed from should be reversed, with costs, and the complaint dismissed, with costs.
DOWLING, P.J., McAVOY, MARTIN and O'MALLEY, JJ., concur.
Judgment and order reversed, with costs, and the complaint dismissed, with costs.