Not overruled or negatively treated on appealinfoCoverage
Appellate Division of the Supreme Court of New York, Second DepartmentJul 1, 1898
32 App. Div. 435 (N.Y. App. Div. 1898)
32 App. Div. 43553 N.Y.S. 149

July Term, 1898.

Edward B. Whitney [ Henry W. Goodrich with him on the brief], for the appellant. William N. Dykman, for the respondent.

This action was brought to recover damages for a breach of contract. The facts out of which the claim arises are briefly these: The testator, Edward B. Bartlett, was a member of the firms of E.B. Bartlett Co. and Peter Mallett Co., and was a stockholder in the Union Warehouse Company, of which last company Alexander D. Henderson, a son of the plaintiff, was secretary. Prior to the 1st day of May, 1893, the plaintiff had loaned to the firm of E.B. Bartlett Co. $25,000, through the agency of her son, for which she held the notes of the firm and certain stocks and bonds as collateral security for their payment. These notes were payable to the order of the son and were by him indorsed to the plaintiff, and he also delivered to her the collaterals. On May 1, 1892, E.B. Bartlett entered into a written agreement under seal with Alexander D. Henderson to sell to the latter 250 shares of the Union Warehouse Company stock at its par value of $100 each share. By the terms of this agreement Henderson was to take the stock and pay therefor the sum of $25,000. Bartlett agreed that at any time prior to May 1, 1894, on thirty days' notice in writing from Henderson, he would take back the stock at its par value, in which event he would pay interest upon the purchase price at the rate of six per cent per annum, and was to receive under such circumstances all dividends paid or accrued thereon. No money passed as the result of this agreement. While the contract was made with Henderson and he was a party to it, yet the real party in interest was the plaintiff, her claim being that this contract and the delivery of the stock thereunder were to take the place of the notes of E.B. Bartlett Co. and of the collateral security held by her. We think the evidence upon this point warranted the jury in finding that such was the transaction, and that this contract, together with the stock, was transferred and assigned by the son to the plaintiff, and that she held the same subject to the option clause contained therein.

The issue raised by the pleadings, as finally amended, and litigated upon the trial, was whether this agreement and the transaction were independent of the loan to E.B. Bartlett Co., or whether they were a mere substitution of security for such loan which in fact was continued, and, if so, was the notice given under the option clause of the contract one to treat the transaction as a loan instead of a sale of the stock? The plaintiff, therefore, attempted to show that in fact the notes of E.B. Bartlett Co., and the securities held for their payment, were surrendered and the debt represented thereby canceled. And plaintiff sought to establish that she relied upon the contract with E.B. Bartlett, that notice to Bartlett to take the stock had been given, and that failure upon his part to pay rendered him liable in damages. Bartlett died on May 24, 1894. In order to establish that notice of election to treat the agreement with E.B. Bartlett as a loan instead of a sale of the stock was given, evidence was introduced tending to establish that payment of interest was made from time to time at the rate of six per cent upon $25,000. After the time when under the option clause in the agreement notice should have been given to treat the transaction as a loan instead of a sale, the inference which plaintiff insists should be drawn from the fact of the continued payment of interest is that such payment was inconsistent with the sale of the stock, and such inference, we think, it was fair to draw. If the agreement had become absolute as a sale of stock, then no interest was due, for the reason that the $25,000 would then represent, not a loan, but the purchase price of the stock, in consequence of which no interest would become due, and plaintiff was only entitled to the stock and such dividends as had accrued thereon. The fact that interest had always been paid at the same period and in the same amounts is not inconsistent with the deduction which might reasonably be made after the time when the option clause was to take effect, by the continued payment of interest. All payment of interest prior to that time was concededly upon the assumption that the money advanced represented a loan. Such, however, could not be the fact after the time when plaintiff was to make her election whether she would treat the transaction as a sale or as a loan of money. If treated as a sale no interest would become due or be likely to be paid. If treated as a loan, then it was payable at the given rate upon that sum. By the terms of the agreement, notice of election to treat the transaction as a loan and not as a sale was to be given thirty days prior to May 1, 1894, while interest was paid on the 1st day of April, 1894, and on the first day of May following, and also on the following first day of June, the latter payment being after Bartlett's death. The last two payments, one of which was during the lifetime of Bartlett, could reasonably be treated by the plaintiff as a recognition of the fact that the option right had been exercised, and that election had been made to treat the transaction as a loan and not as a sale, for such payment was entirely inconsistent with a sale, as nothing would have been due thereunder. Bartlett must be presumed to have known of this payment, as the check was drawn by the firm and entered in the books, and he is presumed to know the contents of the firm's books ( Fairchild v. Fairchild, 64 N.Y. 471; Bates Part. § 975), and is, therefore, to be regarded — at least so the jury was authorized to find — as having knowledge that the transaction was to be treated as a loan and not as a sale. It was upon this theory alone that the court submitted the case to the jury, to find whether notice of election to treat the transaction as a loan had been given, and upon such submission the jury found in favor of the plaintiff. We are of opinion that the defendant cannot complain of this submission. It was upon a single fact alone, while as we view the evidence the court would have been warranted in submitting it upon a somewhat broader view. The defendant, upon cross-examination of the plaintiff, introduced in evidence the claim of the plaintiff against the firm of E.B. Bartlett Co. for this same debt, filed with the assignee of E.B. Bartlett Co. While the purpose of the introduction of this claim by the defendant was undoubtedly to show that the plaintiff always treated her demand as a loan to E.B. Bartlett Co., and that, therefore, her present attitude was entirely inconsistent with such claim, yet no such limitation was placed upon the evidence, nor was it restricted to any particular portion or for any particular purpose. It was, therefore, in evidence for all the purposes to which it might be legitimately applied. It is therein stated, after setting out the transaction, that plaintiff had elected to surrender the stock and treat the transaction as a loan, and had given notice of such fact. Thus was introduced a declaration of the plaintiff that she had given notice under the option clause in the contract, and thereby supplemented the inference which the court charged the jury might be drawn from the payment of the interest alone. In addition to this, plaintiff testified to the same fact upon her oral examination. It is quite true that the filing of a claim with the assignee of E.B. Bartlett Co. was inconsistent with the claim that the liability was alone that of E.B. Bartlett for damages arising out of the breach of his contract. While the plaintiff upon the trial of this action testified that she regarded the loan to E.B. Bartlett Co. as a continuing loan, and while in her action against such firm and the defendant, as executrix, and the assignee, she demanded judgment for the amount of such loan, yet all of these matters simply furnish contradictory evidence. They do not work an estoppel, and while proper for consideration by the jury, yet upon the other evidence in the case the jury became authorized to find that the ultimate transaction was a loan to E.B. Bartlett, for which he and his estate became liable.

We are, therefore, unable to agree with the contention of the learned counsel for the appellant that there was no evidence upon which to base the verdict. On the contrary, we think the evidence may well support the verdict which was rendered.

It is further claimed by the appellant that the institution of an action prior to the present one against the firm was a conclusive election of remedy, which barred the plaintiff's present action. It is the undoubted rule that where a party has a choice between two inconsistent remedies the commencement of an action is deemed a conclusive election between them. ( Deitz v. Field, 10 App. Div. 425, and cases cited.) We do not question this rule of law, but it has no application whatever to the present action. This case involved in no sense an election of remedy. On the contrary, it is an assertion upon the part of the plaintiff that different individuals are differently liable upon different instruments. The plaintiff has but one remedy, and has elected to use but one, although she has brought different actions. Her first action is based upon a claimed liability existing in her favor against the firm of E.B. Bartlett Co., its assignee and the representative of the deceased partner. This action seeks a recovery of damages against the representative of E.B. Bartlett for breach of his personal contract. The remedy in both cases is by action upon distinct and independent claims, resting upon distinct and separate grounds. It may well be that in the first action, if tried, the plaintiff might be defeated upon the ground that the cause of action upon which she bases her right to recover did not exist, by reason of the cancellation and surrender of the notes and the debt. Indeed, such is the defense averred in the answer to such action, as appears in the present record. It would be a singular condition which would thus establish a defense to such action by demonstrating that such liability had been transferred to E.B. Bartlett by virtue of his contract, whereby the indebtedness sued upon had been canceled, and then to say in an attempt to enforce liability against him by the plaintiff that she was precluded by having elected to sue the wrong person. No such rule of law is found in any adjudicated case, nor is it founded in reason. The fact that but one debt existed is entirely immaterial. The remedy which the plaintiff seeks is to fasten liability where liability exists, and mere mistake in selecting a wrong party has never been held to preclude a party from asserting liability against the person liable when he is discovered. The cases which the appellant relies upon are cases of fraud, where a party had the right to sue in tort or affirm the fraudulent contract and bring action for its breach, and they are all cases where the liability arises out of the same transaction, and the plaintiff is given different remedies to enforce the rights which thereby accrued. An election in such a case is conclusive. ( Conrow v. Little, 115 N.Y. 387; Terry v. Munger, 121 id. 161.) As already observed, such rule has no application to such a case as this, where the search is for the party liable, and the cause of action is created by independent transactions.

The plaintiff also insists that error was committed in permitting Alexander D. Henderson to testify to his surrender of the notes of E.B. Bartlett Co., together with the collateral securities, and his receiving the contract and the stock, which is the subject of this action. This ruling was error within the rule which excludes personal transactions had with a party deceased. ( Clift v. Moses, 112 N.Y. 426; Finton v. Egelston, 61 Hun, 246.) The error, however, was harmless. An examination of the record discloses that defendant by her answer admitted the making and execution of the contract which formed a part of plaintiff's complaint, and which is the contract for the breach of which damages are demanded. In addition to this the defendant, by introducing in evidence the claim of the plaintiff presented to the assignee of E.B. Bartlett Co., established the same facts. Indeed, the fact that such transaction was had was not an issue seriously litigated upon the trial. In no sense can it be said, therefore, that the defendant was prejudiced by such testimony.

The amendments which were allowed by the court upon the trial were clearly within its discretion.

So far as any exception to the charge is concerned, even if erroneous, we do not think any question was raised. An exception to a charge requires that the alleged erroneous portion be specifically pointed out, and the exception thereto taken, in order that the appellate tribunal may fairly see what the point sought to be presented is. This rule is so familiar as not to need the citation of authority. If the court seeks to give an exception to a party it must do it in language equally clear, and a mere statement by the court that "I understand counsel to except to my failure to charge all the requests not charged, and to all modifications of requests," does not present any question; nor does it relieve a party from pointing out with reasonable certainty the particular wherein the ruling or the charge is excepted to. The court, upon appeal, is practically unable to spell out the point thus sought to be raised. While the ruling of the court entitles the party to an exception, yet, where the language used by the court is so indefinite that it is not pointed out, the party must, in order to make the question available, point out the objectionable language, and interpose thereto the exception which has been allowed by the court, when the record is made up. ( Drake v. New York Iron Mine, 156 N.Y. 90. )

We do not think the court committed any error in its charge. Even though it be conceded that the agreement waiving notice could not be proved by parol, yet the defendant was not concluded thereby, and when she proved that such notice had been given and the plaintiff proved that it had been acted upon by the payment of interest, all that was essential to enable the jury to find an executed agreement was established.

We find no error in this case which calls for a reversal of the judgment. The judgment should, therefore, be affirmed, with costs.

All concurred, except GOODRICH, P.J., not sitting.

Judgment and order affirmed, with costs.