Irving Trust Co. v. Park & Tilford Import Corp. , 294 N.Y.S. 822 ( 1937 )

Untermyer, J.

The judgment should be reversed and a new trial ordered on account of the dismissal by the court at the close of the case of the defendant’s fourth defense and second counterclaim. The defendant’s contentions in this respect are sustained by the testimony of its witnesses Miles and Burke and in part also by Distler, Oberle, Jones and Linthicum. From that testimony conflicting inferences might be drawn. From it the jury would have been justified in finding that the defendant was prevented from performing its contract with Hill, alleged assignor of Hunter Baltimore Rye, Inc., by conduct calculated to obstruct approval by the Orphans’ Court of Baltimore County, Maryland, of the sale of the trade-marks to the defendant (Patterson v. Meyerhofer, 204 N. Y. 96), in order to secure the trade-marks from the administrator of Catherine C. Lanahan for substantially less than the contract price. If so, then this interference has frustrated the sale of the trade-marks to the defendant, resulting in a direct loss to the defendant of $20,000, in addition to the stock and royalties which would have been received.

The error here consisted in dismissing the fourth defense and second counterclaim, to which exception was duly taken by the defendant. The error was not cured by the subsequent action of the parties in moving for a directed verdict, since after the coun-' terclaim was dismissed no issue of fact remained. The situation was the same as if the court had excluded all the defendant’s proof relating to the fourth defense and second counterclaim. Surely exceptions taken during the course of the trial to such rulings would have survived a joint motion for a directed verdict (See Civ. Prac. Act, § 583), especially when, on account of the exclusion of such evidence, no question of fact remained to be decided by the jury.

I do not agree that the facts alleged by the fourth defense and second counterclaim constitute mere amplification of the denial of plaintiff’s allegation of performance or that they could have been established under that denial. They are distinctly matters in confession and avoidance of the facts alleged in the complaint, including the allegation of due performance by the plaintiff. To establish a prima facie case it was only necessary for the plaintiff to prove, and it did only prove, the making of the contract, the payment thereunder of $10,000 to the defendant, the defendant’s failure to deliver the trade-marks to the plaintiff, and that the $10,000 had not been repaid. Since it was conceded that the defendant had not performed the contract by delivery of the trademarks, it was incumbent on it to allege and prove that performance was waived or prevented by the acts of the plaintiff. (Grant v. Pratt & Lambert, 87 App. Div. 490; Murray v. N. Y. Life Ins. Co., 85 N. Y. 236; Blunt v. Barrett, 124 id. 117; 13 C. J. p. 738; Civ. Prac. Act, § 242. Compare, also, Imperator Realty Co. v. Tull, 228 N. Y. 447.) Such a plea was clearly in confession and avoidance, depending upon circumstances which had occurred after the making of the contract, and could only be considered if set forth by affirmative defense or by counterclaim.

The effect of the bankruptcy of Hunter Baltimore Rye, Inc., upon the second counterclaim need not be considered, for that issue was not tendered by the plaintiff’s reply nor are we in a position to know whether the conditions on which such a defense would depend, such as notice of the proceedings ^to the defendant, existed here. In any event, the counterclaim would be available to the defendant as a setoff to the claim of the trustee. (Bankruptcy Act, § 68; U. S. Code, tit. 11, § 108.)

The judgment and order should be reversed and a new trial ordered, with costs to the appellant to abide the event.

Townley and Glennon, JJ., concur; Martin, P. J., and Dore, J., dissent and vote for affirmance.