Knapp v. . Simon , 1884 N.Y. LEXIS 491 ( 1884 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.]

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] In 1868 the plaintiff, being a grain broker, purchased of one Carlos Cobb, for and at the request of the defendants, the firm of C.A. Stern Co., a quantity of wheat for cash on delivery. The plaintiff did not disclose the names of his principals upon making such purchase. The grain was delivered and has never been paid for by the defendants.

The effect of a purchase of property by an agent who does not disclose the name of his principal at the time of such purchase is to render the agent personally liable to the vendor for the purchase-price.

The agent is under no legal or moral obligation to make such disclosure, and the only consequence of an omission, is to create a liability which he might escape by informing the vendor of the circumstance of his agency and the name of his principal.

The vendor may, however, upon discovering the name of the principal in the transaction, also hold him responsible for the price of the property bought, provided he has not in the meanwhile, in good faith, paid such price to the agent. He may, therefore, pursue either the agent or the principal, or both, until he recovers the contract price. (Cobb v. Knapp, 71 N.Y. 348. )

It appears in evidence in this case that Cobb did, in 1868, bring an action against the principals for the price of such wheat, but was induced soon after to discontinue it.

The debt to Cobb not having been paid, in 1873 he brought an action therefor against the plaintiff, which resulted in his obtaining a judgment for the balance of the price of the wheat remaining unpaid.

Knapp was there held liable upon the ground that by reason of the non-disclosure of the name of his principal he became personally liable for the purchase-price of the property bought, and it was further held that he was not discharged from such liability by reason of the action brought by Cobb against the defendants for the same cause of action. (Cobb v. Knapp,supra.)

The judgment thus recovered the plaintiff was compelled to pay, and he now seeks to recover back the money paid by him.

When a broker purchases or sells property without disclosing to the respective principals in the transaction the name of the party for whom he acts he becomes, on the one side, liable personally for the purchase-price of the property bought, and on the other is entitled to collect such price from the principal at whose instance the purchase was made.

The vendee in such a case can relieve himself from liability to the broker only by showing payment of the contract-price by him to the original vendor, or a release for a good or valuable consideration from the broker.

A cause of action having once accrued to the broker, and becoming vested in him, can be discharged only by payment or release. (Seymour v. Minturn, 17 Johns. 170.)

The evidence shows that about the time of this purchase the plaintiff brought an action against the defendants to recover upon a general balance of account, which included the purchase-price for the wheat in question. That suit never proceeded to judgment, but was settled by the parties, the claim now made being expressly excepted from the operation of such settlement, the defendants then agreeing as part consideration therefor to pay and discharge the liability to Cobb.

That action, therefore, did not change the original relations of the parties, except as they were affected by the express agreement of the defendants to assume and pay the Cobb claim, and it left the defendants still liable to the plaintiff in some form of action for the payment of the price of the wheat.

As already stated, Cobb about the same time, having discovered the name of the principals for whom the plaintiff acted in the purchase of the wheat, sued them to recover its price. This action never proceeded to judgment, but was procured to be discontinued by an arrangement made between Ulrich Simon, one of the defendants, and Cobb, whereby Cobb agreed to discontinue it and release Simon individually from the claim upon payment by him of one-third of the price of such wheat. This agreement was performed by Simon, and he paid to Cobb the amount agreed upon, and received from him a release of his individual liability in accordance with the provisions of the Joint Debtors Act. It is claimed by the defendant Simon that the plaintiff was present at the time of this agreement; knew its terms and conditions, and assented thereto. This fact, although controverted by the plaintiff herein, must, in the further consideration of the case, under the findings of the jury, be assumed by us to be true.

It is claimed by the defendant Simon that this fact, in some way, operates as a discharge to him from his liability to the plaintiff.

There was practically no conflict in the evidence, and it cannot be successfully disputed but that an agreement was made upon the settlement of the former action between the present parties whereby the defendants were to assume the payment of the debt owing to Cobb, and were to relieve the plaintiff from his liability therefor. This agreement was made upon a valid consideration, viz.: the discontinuance of the action and the release by the plaintiff to the defendants of a valid claim for a large amount, and it rendered the defendants liable to the plaintiff for any damages which he might incur by reason of their breach of the agreement.

It would seem, therefore, that the plaintiff has held two causes of action against the defendants, viz., one upon the original contract for the purchase-price of the wheat, and secondly, that arising out of a breach of defendants' undertaking to shield him from liability to Cobb on account of such purchase.

If the first cause of action was not merged in the agreement out of which the second arose, it would probably now be barred by the statute of limitations, without regard to the character in which the plaintiff acted in making the purchase, whether as principal or broker.

It would seem, therefore, when the case was submitted, that the evidence disclosed a good cause of action in favor of the plaintiff by reason of the failure of the defendants to relieve the plaintiff from his liability to Cobb, and entitled him to recover in this action upon proof that he had been compelled to pay Cobb for the balance due on the purchase-price of the wheat, unless Simon was discharged by reason of the circumstances attending the release given to him by Cobb.

It is true that the complaint in the case does not in terms set forth all of the facts necessary to support the second cause of action above referred to, but on the trial the evidence supporting it was admitted without objection and no question was at any time raised, as to the sufficiency of the complaint to sustain the cause of action proved.

Under the circumstances this court on appeal will consider the case upon the cause of action disclosed by the evidence, and disregard any objections to the sufficiency of the pleadings which were not made in the court below. (Southwick v. FirstNat. Bank, 84 N.Y. 420; Cowing v. Altman, 79 id. 167.)

It was also the duty of the court below, in the absence of objections to the sufficiency of the complaint, to give the plaintiff the benefit of any cause of action established by the evidence, and a refusal by it to direct the jury to find in accordance with the case made by such evidence would be error. (McGoldrick v. Willits, 52 N.Y. 612.)

Upon a former appeal in this case, reported in 86 N.Y. 311, this court reversed a judgment in favor of the defendants upon the ground that the court on the trial erred in assuming as matter of law that the presence of Knapp at the settlement of the action, brought by Cobb against the defendants, and his assent to the release then given by Cobb, to the defendant Simon, operated as a discharge of Simon from his liability to the plaintiff.

It was held upon the evidence as it there appeared that the fact of such assent was a controverted fact, and the court erred in taking the question from the jury against the objection of the plaintiff. The case does not assume to decide what would be the effect of an assent by the plaintiff to the execution of the release, in case such assent was established by the evidence.

It seems to have been retried upon the theory that that question had been decided by this court upon the former appeal, and no question seems to have been made on the retrial as to the legal effect of such an assent.

Inasmuch as the question was not raised upon the trial below and has not been argued here, we do not now feel called on to express an opinion upon the point. Aside from an exception to the admission of evidence, but one question is presented upon this appeal for our consideration, and that arises over the exception taken by the plaintiff to a portion of the charge.

The court by its instructions left to the jury but two questions for their consideration, and those as stated in its language were as follows: 1st. "If in this transaction the plaintiff acted as principal, and made a sale of this wheat to the defendants, the plaintiff cannot recover in the present action. If, on the other hand, he simply acted as broker in the transaction, then you have a further question to consider, and that is in respect to this release." 2d. "If the plaintiff was present or acquiesced in the agreement by which Mr. Simon was released, then the defendant is not liable."

No exception was taken by the plaintiff to the latter portion of the charge, but with respect to the first proposition stated an exception was properly taken. We do not see how the defendants' liability can be affected by the character in which the plaintiff acted in making the purchase of the wheat. He was, upon the evidence in the case, entitled to recover the amount he had been compelled to pay Cobb, unless the circumstances attending the release of Simon by Cobb operated as a discharge of Simon's liability to him. The defendants were always primarily liable for the purchase-price of the wheat between them and the plaintiff.

The facts in respect to the character in which Knapp acted, in the transaction in question, are practically undisputed. The defendants, knowing that he was a broker, applied to him to purchase the wheat for them as a broker. They paid him commissions as a broker, and knew and dealt with him in no other character. It is entirely immaterial that, for certain purposes, he may be regarded by certain parties as a principal in the transaction. He was, so far as the defendants are concerned, a person who had incurred a liability for their benefit, and from which it was their duty to relieve him. They were undoubtedly entitled to invoke the benefit of the statute of limitations as a bar to any cause of action which he might have against them, and this bar would inure to them in regard to any liability growing out of the original transaction, irrespective of the character in which the plaintiff acted at that time.

If he acted as a broker in the transaction, but contracted in his own name, assuming the responsibilities of a principal, his rights and liabilities would be the same, and no other than those which would have attended the transaction if his real character had been entirely undisclosed.

The statute of limitations would have been equally a bar to any action brought by him with respect to the original transaction, whether he had claimed as the vendor of the wheat, or as a broker entitled to enforce the contract of sale, as the trustee of an express trust. (Considerant v. Brisbane, 22 N.Y. 389.)

We think, therefore, when the court instructed the jury that the plaintiff's right to recover in this action depended upon the fact as to whether he acted as a principal, or as a broker, in respect to the purchase of the wheat, the charge was erroneous.

Having arrived at the conclusion that the judgment should be reversed for this reason we deem it unnecessary to discuss the other questions in the case.

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

All concur.

Judgment reversed.