William B. Fenn, Appellant, v. Louis Dryfoos and Others, Respondents

William B. Fenn, Appellant, v. Louis Dryfoos and Others, Respondents. Executory contract of sale—what constitutes a breach thereof by the vendee—orders for goods must be given in good faith — the question of good faith is one for the jury. In an action to "recover moneys deposited by the plaintiff’s assignor under a contract made on March 19,1900, by which the plaintiff’s assignor agreed to purchase of the defendants “Four Thousand (4,000) skirts, or Five Thousand (5,000)yds. of Black silk, and Two Thousand Five hundred (2,500) colored skirts, ordered this day-, on or before Sept, first, 1900,” it appeared that on May 28, 1900, after a portion of the skirts had been shipped, the plaintiff’s assignor wrote to the - defendants the following letter: “ Therefore, do not make me any skirts until further orders. Cancel the entire order, as I will be obliged to send you a 60 day note for balance due you when invoices are due.” The defendants replied declining to release the plaintiff’s assignor from the contract and wrote several letters.requesting him to send shipping directions, the last letter being Written July 12, 1900. August thirtieth the plaintiff’s assignor wrote to the defendants requesting them to ship the entire balance of skirts, which amounted to 3,740 skirts of various colors and sizes, on or before September 1, 1900. The defendants replied stating that they could not accept such shipping directions and never shipped the skirts. The court directed a verdict in favor of the defendants. Meld, thát the contract contemplated that the plaintiff’s assignor would order from time to time within the specified period a fair proportion, of the quantity . that he was to take; That the defendants would have been justified'in treating the letter of the plaintiff’s assignor of May twenty-eighth as a breach of the'contract, but that, as they did not do so, the plaintiff’s assignor was entitled to perform his contract; That if the order given by the plaintiff’s assignor on August thirtieth was given in good faith, the defendants were bound to fill it within a reasonable time, but that if it was not given in good faith, and was resorted to as a device to place the defendants in default, they were justified in refusing to comply therewith; That the question whether the order was given in bad faith was a question for the jury and that it was error for the court to direct a verdict in favor of the defendants. Laughlin, J., dissented. Appeal by the plaintiff, William B. Fenn, from a- judgment of the Supreme Court in favor of the defendants, entered in the office of the clerk of the county of New York on the 1st day of May, 1901, upon the verdict of a jury rendered by direction of the court, and also from an order entered in said clerk’s office on the 13th day of Hay, 1901, denying the plaintiff’s motion for. a new trial made upon the minutes. The plaintiff was the assignee under a written instrument duly executed of all claims and demands of whatever nature Russell Uhl had against the defendants. The latter agreed with Uhl to furnish him with certain silk and silk skirts pursuant to the terms of- the following written contract: “ Memorándum of agreement made this nineteenth day of March, 1900, between L. Dryfoos & Oo., Rew York City, parties of the first part, and Russell Uhl, Wilkes-Barre, Pa., party of the second part. “ In consideration of One Thousand Dollars ($1,000) lawful money, paid to the parties of the first part January 8th, the parties of the first part agree to accept an additional order from the party of the second part for two thousand five hundred (2,500) silk skirts at $4.85 Ret Cash. The quantities of colors are to be divided into the following assortments: One thousand two hundred (1,200) Violets, Eight Hundred (800) Blues, and Five Hundred (500) Reds. “ One thousand five hundred (1,500) Black silk skirts, at $4.60 Ret, or Five Thousand' (5,000) yds. 36 in. Black silk at $1.06 per yd. “ This skirt is to be finished with stiffening, no Velvet finish, and made with two ruffles; quality of silk same as samples of silk delivered. “ The One Thousand Dollars ($1,000) paid by the party of the second part to the parties of the first part on January 8th, as a deposit on order placed on that date, is to be held as a deposit from the party of the second part as a guarantee of good faith that the party of the second part will take up these Four Thousand (4,000) skirts, or Five Thousand (5,000) yds. of Black silk, and Two Thousand Five hundred (2,500) colored skirts, ordered this day, on or before Sept, first, 1900. “ It is especially stipulated that the payment of One Thousand Dollars. ($1,000) is not to be credited-on any payment of the party of the second part to the parties of the first part till the completion of this order, and the One Thousand Dollars ($1,000) cannot be applied upon any other payment except on the last shipment of this order. “ It is furthermore expressly stipulated that this order and the orders taken Jan. 8th and Jan. 31st are to be paid for within five days after shipment. ■ The clause in the contract of January 8 th,' permitting the One Thousand Dollars deposit to be applied upon the last shipments of "that order, is hereby void and canceled. “ The price quoted and accepted is for this lot of Four Thousand (4,000) skirts only, and the price cannot be guaranteed for any future orders. “ The delivery of this order is to commence on or .about May first, 1900, and the delivery is subject to labor strikes, accident by fire, or other unavoidable casualities. “ Signed this nineteenth day of March, 1900.. “ Parties of the first part, ‘ “ L. DEYFOOS & CO. WO. F. WILLIAMS. “ Party of the second part, “BUSSELL UHL.” . Oh April 28, 1900* Uhl wrote 'the defendants : “ We have decided to have all our skirts made 53 in. in hip measure. Ship May 5th, via L. Y.’B. B. Freight.” Then follows an order for 306 skirts of different colors, “ And duplicate the order and ship May 12th, also via Freight.” „ On May 28, 1900, Uhl wrote: “ Your several favors containing invoices and statement received. These with what skirts I have bn hand.will last me 60 to 90 days unless trade improves. The demand grows less every day, Therefore do not make me any skirts.until further orders.. Cancel tlie entire order, as I will be obliged to send you a 60 day note for balance due you when invoices are due. Hoping this will meet with your sanction, I am “ Yrs. very respt., “BUSSELL UHL.” ' To this letter the defendants promptly replied that they would not release said Uhl from the contract, but would hold him thereto, further adding: “We are willing to assist you as far as we are able to do so without detriment to ourselves. While it is not our custom to accept notes in payment of bills, we will this time make an exception, in order to accommodate you, and take your 60 day note provided you add interest at the rate of per annum.” No further order for skirts being sent by Uhl, on June 20,1900, defendants wrote to him the following: “We feel obliged to ask you to take some of the goods we .have on order for you, as the manufacturer is continually delivering goods to us and we cannot afford to be paying out our money week after week without any return, and we must, therefore, ask you to use at least four or five hundred skirts during the month of July.” No reply was received-to this letter, and on July tenth defendants again wrote Uhl, urging him to send them directions for the shipment of skirts. To this letter Uhl made reply under date of July eleventh: “In reply to yours of the 10th inst. I beg again to notify you that I canceled that order before you had received or made a single skirt. Therefore I shall expect you to return to me the $1,000 left with you, or I shall be obliged to refuse payment of note maturing next month.” On July twelfth defendants replied to the last-mentioned letter, saying in substance that they should hold Uhl to his', contract with them, and refused to accept his construction of the matter, and asked him to send shipping directions. No answer or shipping directions were received after the sending of these letters until the thirtieth of August, when defendants received from Uhl the following letter: “ Gentlemen.— According to the agreement made the nineteenth day of March, 1900, between L. Dryfoos and Co., of New York City, parties of the first part, and Russell Uhl, of Wilkes-Barre, Pa., party of the second part, you are hereby authorized and requested to complete the agreement of March 19th, 1900, by shipping by freight via L. V. R. R., on or before Sept. 1st, 1900, 1,000 Yiolet skirts, length 42 inches. 200 “ 66 66 44 66 600 Blue 66 66 •42 66 Y6 “ u 66 44 66 425 Red 66 66 42 66 61 “ a 66 44 66 1,200 Black u 66 42 66 1Y8 “ 66 66 44 66 Hip measure to be made same as last shipment, 52 to 53 inches, and all skirts to be exactly like sample, both in quality and workmanship. “Yours truly, “RUSSELL UHL.” This order was for the entire balance of skirts. To this letter defendants immediately replied: ■ “We are in receipt of your favor of the 29th inst., and in reply beg to say that w¿ cannot accept the shipping instructions stated therein, because you are not justified in any way to' give them. “ Yours truly, “ L. DRYFOOS & CO.” Defendants never shipped the skirts in question. The' plaintiff, as assignee of Russell Uhl, brought an action to recover the $1,000 deposited by his assignor pursuant to the contract. Harmon 8. Graves, for the appellant. Dean Emery, for the respondents. [MAJORITY — Hatch, J.:] Hatch, J.: It is fairly evident that the parties by their contract intended that the skirts should be manufactured in readiness for delivery as Uhl 'should,' from time to time, require in his business; that, as he needed them, the defendant should ship the same upon his order. A fair construction of the contract shows that the parties understood that the skirts or cloth should be shipped upon the order of Uhl in quantities specified therein, and .that- the whole .amount for which the contract provided should be ordered or taken by Uhl on or before the 1st day of September, 1900. It was evidently not within the contemplation of the parties that the skirts and cloth should be the subject of a single order or should be furnished all at one time. The skirts were to be manufactured by the defendants, and Uhl was to give directions as to shipments in quantity and time as liis business required, limited only by the time when the whole amount contracted for should be taken. It became the duty, therefore, of Uhl to order from time to time within the specified period a fair proportion of the quantity lie ■was to take, and it was the duty, of the defendants to fill such orders. So far as the record discloses, the defendants were at all times ready to fulfill the terms-oi their contract. When, under date of May twenty-eighth^ Uhl wrote that he canceled the whole order, and stated his inability to |>ay for the goods already received in accordance with the terms of the contract, it amounted to a breach of the same, and upon the receipt of such letter, the defendants would have been justified in treating the contract as at an end and bringing action thereon to recover damages for a breach. A like result also flowed from the letter of Uhl, under date of July eleventh, wherein he reiterated that he had canceled his order and expected a return of the $1,000 which he had deposited. The defendants refused, however, to recognize, as was their right, a cancellation of the contract, but insisted that the same should be fulfilled in accordance with its terms. This insistance upon their part left it open for Uhl, in accordance with the defendants’ request, to fulfill the contract. In this respect he was required to act in good faith and give his orders pursuant to the terms of the contract. He could not suddenly call upon the defendants to deliver the whole quantity of skirts or cloth practically upon demand, and his cancellation of the order so far modified the contract of the parties that the defendants became entitled to a reasonable time to fulfill any order which Uhl should give. In view of the fact that he had given notice that he did not intend to carry out the same the defendants were not required to continue the manufacture and keep on hand goods when Uhl had given notice that he would not take them. But as the defendants insisted that the goods should be taken Uhl was placed in a position to purge himself of his breach and fulfill liis contract. It is claimed that he did so by his order under date of August thirtieth. By this order he demanded that 3,740 skirts of various colors be furnished to him within two days, including the date of the order. It is manifest, in view of the terms of the contract and the prior dealings, that the defendants could not fulfill that order, and it. seems equally clear that Uhl knew that defendants could not make compliance therewith. They had the right, however, to make fulfillment- and also to have a reasonable time within which to do it, and if given in good faith were bound so to do. They also had the right to regard the order as a mere method resorted to by Uhl to place them in default, given in bad faith and for no other purpose, and in consequence refuse to make compliance with its terms. If the order was not given in good faith, but was resorted to as a device to place the defendants in default, it constituted a breach of the contract in effect the same as though there had been an absolute . refusal to fulfill its terms. The acts of Uhl tend strongly to show that this was his sole intention. The question, however, is, does this fact appear so clearly as to present, alone a question of law, and, therefore, one to be disposed of by the court? Under the decision in McDonald v. Met. St. Ry. Co. (167 N. Y. 66) we think that this became a question for the jury, and that the direction of a verdict was error. - If there was a breach of the contract the plaintiff was not entitled to recover,, but if there was no breach, the defendants could not retain the money, and refuse fulfillment upon their part.. We reluctantly reach the conclusion that the court was not. authorized to determine the question as one of law. The judgment and order should, therefore, be reversed, and a new -trial granted, with costs to appellant to abide the event. Tan Brunt, P. J., and Patterson, J., concurred; Ingraham, J., concurred in result; Laughlin, J., dissented. Judgment and order reversed, new trial ordered, costs to appel-. laiit to abide event.