New York Bank Note Co. v. Hamilton Bank Note Engraving & Printing Co.

Patterson, J. (dissenting):

I do not agree with a majority of the court concerning the question of the assignability of the contract upon which this suit was brought. I think the true construction of that contract indicates that the relation established between' the Kidder Press Company and tlie New Jersey corporation, with reference to perfecting presses thereafter to be manufactured and sold by the Kidder Company, was that of principal and agent, and lienee that such relation was fiduciary and confidential. If that construction is correct, there can be no question that the contract was not assignable. (Rochester Lantern Co. v. The Stiles dk Parker Press Co., 135 N. Y. 209; Arkansas Smelting Co. v. Bielden Mining Co., 127 U. S. 379.) It is conceded that unless such confidential relation is established, in this State at least, the contract is assignable. (Devlin v. The Mayor, 63 N. Y. 8.)

. Entering upon a dissection of the provisions of the contract in suit, we find that all of its' terms were arranged with reference to the sale of one specific press bought by the New Jersey corporation, which press was to be used for the purpose of printing strip tickets. At the same time it was the avowed purpose of the contracting parties, to give to the New Jersey corporation the exclusive control of all perfecting presses to be manufactured by the Kidder Company in the future, so far as to prevent their use by third parties for the printing of strip tickets; or, in other words, that for the one particular purpose a monopoly of use was to- be secured to the New Jersey corporation. Nevertheless, it was within the intention of the parties fo the contract, and they so stipulated, that nothing in its terms was to limit the sale by the Kidder Company of perfecting presses, such as that purchased by the New Jersey corporation, for any purpose, except the printing of strip tickets as they were printed on the machine bought by the New Jersey corporation. As the contract expressly states, it is the pleasure of the bank note company (that is, the New Jersey company), as well as, presumably, the profit of the Kidder Company, that it shall make, sell, deliver and collect the money for as many pareases similar to the one ordered from the paress company, and shall enjoy all the emoluments of the utmost possible extension of the paress company’s business. by reason of the sale of printing paresses identical with those referred to in that contract: Therefore, by the exparess stimulation of the parties, there was to be no limitation of any kind upaon the Kiddbr Press Company’s selling all of its paresses except that which is subsequently parovided for in the agreement. It then became a matter of ■ consideration between the paarties how this liberty of sale was to be preserved to the Kidder Company, and at the same time the monopaoly of use for parinting strip, tickets be secured to the New Jersey corporation ; and thereupaon they devised a scheme which was declared to be the form in which transactions of sales by the Kidder Company to third paarties should be made. By reason of the adoption of that form of doing business the New Jersey corporation pant itself not only in the technical but in the actual attitude of, an agent for sales for the Kidder .Compaany, It was agreed and assented to by. both parties- that the. most feasible and propaer way to protect the interests of the bank note company, in and to the propaer control and ownership) acquired- in the Kidder perfecting press, was that then adopted.

It will be observed that, notwithstanding the form of expression,the New, Jersey corporation was not, according to this contract, to .acquire the real ownership) of the machines, but only the right to ■control their use.. That is what is meant by “ ownership),” referred to in- the provision of .the agreement now under consideration. The: pamper way referred to, according to the terms of the contract, “ is that whatever sales of this paress or paresses-are made by the Kidder Press Compaany” under the absolute authority which it-has received 'to sell to any one it pleases, “ shall be made to the New York Bank Note Company for the account of the party desiring to use the press' or paresses.” That is to say, the title nominally shall be pant in the New York Bank Note Company. - That company is then to execute a paerpaetual lease to the paurchaser “ for such money as the Kidder Press • Company shall nominate; but the New York Bank Note Compaany shall in nowise part with the title in and to the machine delivered, but shall retain its actual ownership of the press or presses under agreements permitting its use for all purposes except strip tickets.”

Now, what does that mean? There is no absolute ownership of the press or presses intended, but the New York Bank Note Company is to take a nominal title for the benefit of the Kidder Press Company and to execute leases. That is to say, all the sales made by the Kidder Company to third persons are to pass under the form of leases made by the New York Bank Note Company. For whom ? Certainly not- for the benefit of the bank note company, with reference to its obtaining rents or royalties for the use. They do not stipulate to pay one dollar for any machine, nor to acquire any interest for themselves except the right so to control sales as to prevent the use of the machines for strip tickets. The agreement then goes on to say that this. form of agreement “ it is agreed by the Kidder Press Company, shall be used in whatever sales are made of its Perfecting Presses.” Not one of them is sold to the New York Company. “ And the New York Bank Note Company shall deliver to the Kidder Press Company the full consideration it (the Press Company) may nominate, and the Bank Note Company shall have its own agreements with the purchaser in accordance with the above plan * * * .”

The whole scheme of this agreement, with reference to the parts that have been last adverted to, is that respecting sales made to third parties by the Kidder Press Company of perfecting presses, those sales shall pass through the New York Company as nominal owner, with the right to that company to make terms and conditions of a lease, and the only interest which the New York Bank Note Company can by any possibility have is the curtailment of use. of the machines. And yet, at the same time, the New York Company binds itself to make these lease's, to take a nominal ownership, and to return the consideration — that is to say, whatever consideration it may receive — to the Kidder Press Company. It cannot be said that this is a mere idle form and that the New York Bank Note Company would not receive any consideration or any moneys. That it was contemplated that it should do so is apparent from the fact that there is a specific obligation assumed to deliver to the Kidder Press Company “ the full consideration ” the Kidder Company “ may nominate ” for that press. It seems to me to be perfectly. clear that this is a contract of- agency, intended by the parties to be such, that is to say, in form such, and in substance such, and that, therefore, the contract was not assignable, because it involved the duties of agency.

Nor can it be said that, the effect of this construction is to be escaped because in the year 1889, in some of the preliminary negotiations connected with the making of the contract, and a year and more before the contract was signed, Mr. Kendall, the president of the New York Bank Note Company, stated to Mr. Kidder that the-New Jersey corporation would, in all likelihood, be dissolved, and-that the business of the company would be reorganized and carried on by a company to be incorporated in West Virginia. No such term is. included in the contract. All matters that were in contemplation between-the parties, as part of the arrangement,, were merged in the contract. Notice to Mr. Kidder of an intention to reorganize the company or to discontinue the New Jersey business, is not notice to the company, because it is perfectly apparent, upon the testimony of Mr. Kendall" himself, that Mr. Kidder had no authority to bind the Kidder Préss. Company by any agreement or understanding to the effect that a devolution of the business of the New Jersey corporation upon another corporation would be -recognized. Mr. Kendall, the president óf the New Jersey corporation, knew that Mr. Kidder had no right to assent to any such arrangement.- He also knew that Mr. Kidder had no right to make the contract of October twelfth, as an individual, or as an officer of the company, without the action of the corporation itself. He swears that he would not accept the contract of October twelfth, by delivery from Mr. Kidder alone. He insisted upon that contract being adopted and ratified by the board of directors of the Kidder Press Company at a formal meeting, before he would accept it or act. under it, or regard .his company or the Kidder Company as bound by it; and even when there was .presented to him a paper signed by every director of the Kidder Company assenting to the contract of October twelfth, he still insisted that there was no enforcible contract made between the parties, and thereupon a meeting was called and held of the Kidder Company directors- in Boston in December, 1889,-when by formal resolution the contract was adopted and ratified and made binding upon the Kidder Company; and not until' then did Mr. Kendall, as president of the New York Bank Note Company, regard the Kidder Company as hound. Therefore, there is nothing in the question of notification. . The notice amounted to nothing at all, and the parties must stand upon the terms of the contract as they are, without importing into them any suggestion that was made in a-casual conversation during the negotiations for the making of that, contract.

I think that under the true construction of this contract, it was-non-assignable, because it established the relation referred to, and . that there was nothing which binds or estops in any way the Kidder Company from insisting upon their defense that the contract was. non-assignable.

Rumsey, J., concurred.

Judgment modified as directed in opinion, and as modified affirmed, without costs.