Opinion
June Term, 1901.
Vernon Cole, for the appellant.
James C. De La Mare, for the respondents.
Three considerations might be inferred from the complaint for the execution of the contract therein set forth: (1) One dollar; (2) the transfer of plaintiffs' right, title and interest in the merchandise and proceeds, and (3) that implied from the seal. The seal and nominal consideration expressed merely raise a presumption and casts the burden upon the defendant of showing want of consideration. If the consideration were a compromise of a disputed claim with reference to the title of the property, that would be a good consideration, but the allegations of this pleading are insufficient for that purpose. ( Dolcher v. Fry, 37 Barb. 152; Seaman v. Seaman, 12 Wend. 381.) Plaintiffs, by pleading their agreement with the Silver Metal Company, recognize the fact that their contract with defendant related thereto and resulted therefrom. The agreement between plaintiffs and defendant recognizes the relation existing between plaintiffs and the Silver Metal Company by virtue of the agreement between them and the plaintiffs' right under that agreement to collect the purchase price of the material sold. The only consideration for defendant's promise was the original sale and delivery of the goods. The answer shows that plaintiffs neither had any title to or interest in the goods or lien thereon or right to the purchase price thereof. According to the allegations of the answer plaintiffs had no claim that was enforcible against this defendant at the time of the execution of the alleged agreement. Their claim against defendant was merely that of undisclosed principals or as equitable assignees of the account for the goods sold and delivered. The most that can be claimed for the contract between plaintiffs and the defendant is that it transferred plaintiffs' claim from the original account to a new promise quite like an account stated, based on the goods sold and delivered as the consideration.
In every sale of goods or other property, even though the contract be in writing, unless expressly stipulated otherwise, there is an implied warranty of title. The recovery of the goods from the purchaser by the true owner, in a judicial proceeding, constituted a failure of title and of consideration, which is a good defense in an action for the purchase price. ( Bordwell v. Collie, 45 N.Y. 494; Ledwich v. McKim, 53 id. 307; Flandrow v. Hammond, 148 id. 129; Carleton v. Lombard, Ayres Co., 149 id. 137, 146; McGiffin v. Baird, 62 id. 329.)
If plaintiffs be deemed creditors of the company and assignees of the account owing to it by defendant, they hold the claim subject to any defense that might be pleaded against their assignor. If they are to be considered principals and the company their agent or employee to manufacture and sell, manifestly they cannot claim the purchase price of property they never owned. The same is true if plaintiffs and the company were partners or joint owers. If the contract were susceptible of the construction that it was executed in settlement of a bona fide dispute between plaintiffs and defendant as to the right of the former to collect for the goods sold by the Silver Metal Company, the defendant would then be foreclosed from asserting any defense to the matters that were in dispute, but he would not be barred from interposing a defense of a failure of consideration based upon an implied warranty of title. According to the answer the purchase price of the goods was $775, and that was the total amount of the drafts drawn upon defendant by the Silver Metal Company to the order of plaintiffs. This is the same amount as that which defendant agreed to pay plaintiffs. The legitimate inference, therefore, to be drawn from the complaint is, that the contract was made for the purpose of having the defendant recognize the right of plaintiffs, instead of their assignor, to collect the purchase price of the goods. It is not to be presumed that defendant would have executed the contract, promising to pay the full value of the goods, if there was at that time any real controversy with reference to the title he acquired from the Silver Metal Company. The account for the goods sold, doubtless, passed to plaintiffs with the drafts by equitable assignment. ( Bates v. Salt Springs National Bank, 157 N.Y. 322; Lauer v. Dunn, 115 id. 405; Brill v. Tuttle, 81 id. 454.)
The defendant's contract recognized this, and he agreed to pay the account to plaintiffs, but it is evident that the sale and delivery of the goods was the consideration therefor. The answer shows that there was no debt to be assigned and that there was a failure of consideration. This will constitute a good defense if established on the trial. ( Wells v. Wells, 8 App. Div. 422; Flandrow v. Hammond, 148 N.Y. 129; Mayer v. Mayor, 63 id. 455; 1 Pars. Cont. 462.)
Probably defendant would not be permitted, without showing fraud or mistake, to prove that there was no consideration for the contract ( Fuller v. Artman, 69 Hun, 546), but although the answer is inartistically drawn in connection with alleging that there was no consideration, it also alleges the facts constituting a failure of consideration. On a motion for judgment on the pleading the answer should be construed liberally, and so construed it sufficiently sets up the defense of failure of consideration.
These views lead to a reversal of the judgment, and it becomes unnecessary to determine whether the allegations of the answer are sufficient to admit proof of fraud or mistake in the exeution of the contract.
Judgment reversed and new trial granted, with costs to appellant to abide the event.
INGRAHAM, McLAUGHLIN and HATCH, JJ., concurred; O'BRIEN, J., dissented.
Judgment reversed, new trial granted, costs to appellant to abide event.