BURR v. AMERICAN SPIRAL SPRING BUTT CO.

BURR v. AMERICAN SPIRAL SPRING BUTT CO. N. Y. Court of Appeals; June, 1880. [Affirming 17 Hun, 188.] CONTRACT FOE ADVERTISING IN SUBSCRIPTION BOOKS.—RECITALS.— Evidence.—Delivery and Sale Through Agents.— Questions of Fact and Law.—Refusal to Produce Books. Under a contract to insert an advertisement in a book for a specified sum for each copy sold, a recital in the contract, describing the book as one which was to be sold by subscription by agents in every State and in Canada, does not bind the publisher to prove sales in every. State as a condition of recovering any compensation. The extent of sales of a publication may be proved, for the purpose of establishing a right to compensation measured by the extent of sales, by evidence of orders received through agents, delivery pursuant thereto, and payment of the price, without going into proof of the acts-of agents with the subscribers or purchasers. In the absence of evidence to the contrary such evidence is conclusive. Whether the facts which are substantially undisputed establish the performance of a contract, is a question of law. The refusal of a party who has contracted to pay a compensation in proportion to his business, to produce his books, on the trial of an action for such compensation, does not alone establish a fraudulent disposition of them with intent to defraud. A referee’s disregard of testimony which would authorize a recovery for some amount, will justify the granting of a new trial.. Appeal from an order of the general term of the supreme court, reversing, on questions of law, a judgment entered on the report of a referee, and granting a new trial. J. B. Burr and G. M. Hyde sued the American Spiral Spring Butt Company for the amount agreed to be paid for the insertion of an advertisement in a book pubilished by the plaintiffs. The contents of the agreement] appear in the opinion. ! The answer was that the signing of the contract was] induced by misrepresentations ; that plaintiffs had not performed their agreement by selling in all the States of the Union and Canada ; and that part of the alleged sales were fictitious. Mr. Burr, one of the plaintiffs, testified as to man- ‘ ner in which the subscription-book business was conducted, and, notwithstanding the defendant’s objection, was allowed to state the number of books that had been sold, that they had been sold through canvassing agents, that the agents were authorized, and that the books were sold in the regular course of business. The referee found that the plaintiff^ published, pursuant to their contract, but that they had not shown that the book had been sold in every State, &c., nor that the number alleged, or any number, had been sold through their authorized agents, and therefore found that such sales had not been made. The Supreme Court, at general term, held that the recital did not constitute a condition precedent, and ordered a new trial (reported in 17 Hun, 188). Prom this decision defendants appealed to this court. Benjamin Estes (Estes & Barnard, attorneys), for defendants, appellants. I. Plaintiff’s refusal to produce papers is a suspicious circumstance (Bleeker v. Johnson, 69 N. Y. 309). II. The contract required a sale through agents, not a sale to agents. It also required sales in every single State of the Union. III. The contract required that the books should be sold by subscription. The plaintiffs are concluded by having tried the case on that theory (Shaw v. Davis, 55 Barb. 389). The whole instrument must be considered (Goix v. Law, 1 Johns. Cas. 341; Ripley v. Larmouth, 56 Barb. 1; Moore v. Jackson, 4 Wend. 67; Jackson v. Blodget, 16 Johns. 172; Whallan v. Kauffman, 19 Id. 77; Ward v. Whitney, 8 N. Y. 446; Nounenbocker v. Hooper, 4 E. D. Smith, 401; Marvin v. Stone, 2 Cow. 806; 2 Blacks. Comm. 379; 2 Parsons on Contr. 5 ed. 505, 501, 503; 15 East, 541; 2 Kent Comm. 555; 2 Story on Contr. §§657, 658, a). The surrounding circumstances may be considered (Knapp v. Warner, 57 N. Y. 668; French v. Carhart, 1 Id. 102; Hasbrook v. Paddock, 1 Barb. 637; Bell v. Brewen, 1 How. U. S. 169; Wilson v. Troup, 2 Cow. 228; Springsteen v. Sampson, 32 N. Y. 707; Auburn City Bank v. Leonard, 40 Barb. 119; Whallan v. Kauffman, 19 Johns. 97; Chitty on Contr. 9 ed. 77; 2 Kent Comm. 555; 2 Blacks. Comm. 379; 2 Parsons on Contr. 5 ed. 505). The literal meaning must yield to the intention (Kelly v. Upton, 5 Duer, 340; Whallan v. Kauffman, 19 Johns. 103; Chitty on Contr. 9 ed. 81; Ford v. Beech, 11 Q. B. 852). Words of recital may be read as covenants when such is the intention of the parties (2 Parsons on Contr. 5 ed. 511; Cocks v. Barker, 49 N. Y. 107; Dutch Church v. Bradford, 8 Cow. 532; Chitty on Contr. 9 ed. 87; Booth v. Cleveland M. Co., 74 N. Y. 15; Frey v. Johnson, 22 How. Pr. 316; Roberts v. Roberts, 22 Wend. 140; Jackson v. Smart, 20 Johns. 85; Rogers v. Kneeland, 10 Wend. 218, 250; Barton v. McLean, 5 Hill, 256; Richards v. Edick, 17 Barb. 260; Chitty on Contr. 9 ed. 92). Earlier clauses prevail over subsequent, and particular words over general ones (Bell v. Bruen, 1 How. U. S. 449; Jackson v. Stevens, 16 Johns. 114; Elmendorf v. Lansing, 5 Cow. 470; Neudecker v. Kohlberg, 3 Daly, 407; Kellam v. McKinstry, 6 Hun, 381; affirming 69 N. Y. 264; Reynolds v. Com. F. Ins. Co., 47 Id. 597; Whallan v. Kauffman, 19 Johns. 103; Duke of Northumberland v. Erring, 5 T. R. 522; Doe v. Biggs, 2 Taunt. 109). The contract must be most strongly construed against the party making it (2 Parsons on Contr. 5 ed. 506; Gifford v. First Presb. Soc., 56 Barb. 114; Reynolds v. Com. F. Ins. Co., 47 N. Y. 597). It must be interpreted in the sense in which the plaintiff knew the defendant understood it (White v. Hoyt, 73 N. Y. 505; Hoffman v. Ætna Fire Ins. Co., 32 Id. 405; Potter v. Ont. & L. Mut. Ins. Co., 5 Hill, 149; Barlow v. Scott, 24 N. Y. 40; Phillips v. Gallant, 62 Id. 263; 2 Parsons on Contr. 5 ed. 499; Chitty on Contr. 9 ed. 85; 2 Story on Contr. § 664). III. Plaintiffs waived their right to sue for separate installments (if they ever had any) by waiting and endeavoring to prove complete performance (Beecher v. Conradt, 13 N. Y. 108; Cunningham v. Morrell, 10 Johns. 203). IV. There is no presumption that the books ever reached their destination (See v. Bernheimer, 38 Sup. Ct. J. & S. 40). V. The meaning of the words “sale by subscription” was a question of fact (2 Parsons on Contr. 5 ed. 493; White v. Hoyt, 73 N. Y. 505, 512), and the construction of the referee is final (Phillips v. Gallant, 62 N. Y. 264; Levy v. Burgess, 64 Id. 397). VI. Before plaintiffs can recover anything they must prove strict performance (McMillen v. Vanderlip 12 Johns. 166; Jennings v. Camp, 13 Id. 94; Lantry v. Parks, 8 Conn. 63; Glacius v. Black, 50 N. Y. 145; Neville v. Frost, 2 E. D. Smith, 62; Starr v. Liftchild, 40 Barb. 541; Sharp v. Johnson, 3 Lans. 520; Smith v. Brady, 17 N. Y. 173; Pike v. Butler, 4 Id. 360; Monell v. Burnes, 4 Denio, 121; Husted v. Craig, 36 N. Y. 221; White v. Hewitt, 1 E. D. Smith, 395; Hogg v. Storty, 2 Id. 192; McMullen v. Vanderlip, 2 Johns. 167; Nelson v. Plimpton F. P. E. Co., 55 N. Y. 480; Pres. Del. & N. Co. v. Pa. Canal Co., 50 Id. 250, 264). VII. . The referee was right in excluding evidence of the secret limitations of the authority of plaintiff’s agent (Hunter v. H. R. I. M. Co., 20 Barb. 493; Tucker v. Woolsey, 6 Lans. 482; Lossee v. Williams, 6 Id. 232; Lightbody v. N. A. Ins. Co., 23 Wend. 18; Tradesman’s Bank v. Astor, 11 Id. 87; Griswold v. Haven, 25 N. Y. 595; N. Y. & H. R. R. Co. v. Schuyler, 34 Id. 68; Bridenbecker v. Lowell, 32 Barb. 17; Doubleday v. Kress, 60 Id. 196; Edwards v. Shaffer, 49 Id. 291; Munn v. Com. Co., 15 Johns. 44; Sandford v. Handy, 23 Wend. 260; Bank of United States v. Davis, 2 Hill, 595; Burnet v. Judson, 21 N. Y. 595; Weed v. Panama R. R. Co., 17 Id. 369; Sharp v. Mayor, 40 Barb. 272; Jeffrey v. Bigelow, 13 Wend. 518; Anderson v. Coonley, 21 Id. 279; Wilson v. Troup, 2 Cow. 194; Standard Oil Co. v. Triumph Ins. Co. 3 Hun, 591; 1 Parsons on Contr. 5 ed. 44, 57). VIII. It was not error for the referee to reserve questions on the trial (Holden v. N. Y. & E. Bk., 72 N. Y. 287). 8. E. Church (Charles Whelp, attorney), for plaintiffs, respondents. I. It was not necessary to show the actual delivery of the books to the several subscribers. The contract must be construed with reference to the situation of the parties and the nature and methods of the' plaintiff’s husmees (Burr v. Compton, 116 Mass. 493; Sickles v. Mather, 20 Wend. 72; Bank of Monroe v. Culver, 2 Hill, 531). II. The referee’s construction would require the testimony of each 70,000 subscribers to prove a claim of 2 cents for each book and subscriber. III. Some books were shown to have been actually sold and delivered. See Stephens v. Howe, 34 Super. Ct. (J. & S.) 133, and cases cited in Abb. Trial Ev. 376. [MAJORITY — Church, Ch. J.] Church, Ch. J. The agreement between the parties provided for publishing, in a book to be called The Great Industries of the United States, an advertisement of the defendants’ business, at a compensation measured by the number of books sold. It recited that the plaintiffs were about to publish such a book, which would be sold by subscription through their authorized agents in every State in the Union and in Canada ; that in the work was to be inserted an article containing six pages of reading matter, setting forth the name, “biography” and business of the defendant, and then followed the agreement proper, as follows: “Bow, therefore, in consideration of said Burr & Co. so incorporating in said article, to the acceptance of said company, the name of said company, their ‘ biography,’&c., and publishing the same in the forthcoming edition of the said work, said company agree to pay to said Burr & Co., the sum of two cents for six pages of the said article for each and every copy of said work sold by said Burr & Co. Said Burr & Co. agree to furnish to said company their certificate, properly subscribed and certified to before a justice of the peace, if so required, as to the number of copies of said work actually sold and delivered to subscribers.” The plaintiffs proved their mode of publishing and selling books by subscription ; that agents were appointed in- the various States and in Canada, who canvassed for subscribers, and who then ordered the number of books required for delivery to subscribers and paid for them, and the books were shipped by express or freight directly to the agents who delivered the books to the subscribers, the plaintiffs having no personal connection with, nor knowledge of, the individual subscribers except through the agents. They gave evidence tending to prove, and sufficient, I think, to prove prima facie, that this book was published and sold in this way, and that they had actually delivered to their agents, and been paid for, the number for which they claimed tp charge the defendants, including the number delivered to editors and publishers-of newspapers, as compensation for advertising, &c. Except to a very limited extent there was no proof of actual delivery to individual subscribers. The learned referee found that the proof was not sufficient to show a compliance with the contract on the part of the plaintiffs; and I infer from the findings that he held that it was incumbent upon the plaintiffs to prove a sale by subscription through agents in every State in the Union, and in Canada, to entitle the plaintiffs to recover anything. This cannot be sustained. It appeared in evidence that- at the time the contract was made the plaintiffs had agents in every State and in Canada engaged for them in selling other books by subscription, and this recital must be regarded in the nature of a proposition as to the mode of doing the business. There is nothing in the contract importing an absolute agreement that the plaintiffs would sell the book in every State, and such a construction would be very unreasonable. The failure to sell in a single State would deprive the plaintiffs of all compensation, while the agreement is that the defendant is to pay, only for the number actually sold, at the rate of two cents a copy. Recitals in a contract are not strictly any part of the contract, but they may have a material influence in construing the instrument and determining the intent of the parties. There is no principle of construction which would justify a court in holding that the parties intended to make the right to recover any com-. pensation dependent upon selling the books in every State in the Union. If the compensation had been fixed at a gross sum it might have been claimed that the consideration implied a sale in all the specified places, but as the defendant limited his liability to a specified sum for each book sold,' the plaintiff was entitled to recover for the number proved to have been sold, in accordance with the contract, whether more or less. I infer also that the learned referee decided that the proof was insufficient, because it did not go far enough to establish an actual sale and delivery to the individual subscribers, which it is claimed is indispensable to a sale by subscription. This presents the most important question in the case. It will be observed that the obligatory part of the contract does not require the books to be sold by subscription in express terms; but it is claimed, and with considerable reason, that as the preamble recites that the books are to be sold by subscription, the agreement fixing the price at two cents for each copy sold should be construed as implying sold by subscription, and that this construction is confirmed, because the defendant presumably regarded this as the most effectual way of advertising its business. Assuming that the contract, fairly construed, required the books to be sold by subscription, it is insisted by the plaintiffs that the parties must be deemed to have contracted with reference to the mode of doing that business by the plaintiffs, and that the recitals, although requiring the books to be. sold by subscription, qualified such sales to the mode which the plaintiffs had adopted and were then practicing, and that the proof showed that the books were delivered to their agents in that mode, and were actually paid for. The contention of the plaintiff is sustained by Burr v. Crompton, and three other cases, reported in 116 Mass. 493. These cases were actions upon similar contracts, and in one or two of them upon contracts identical with the contract in the case at bar, for compensation for advertising in the same book, and the evidence was substantially the same as that given in this case. The court held it sufficient to entitle the plaintiff to recover. Devens, J., in delivering the opinion, said : “As, from the mode in which the business was to be conducted, according to the evidence of the plaintiffs, the defendants must have known that the publisher was not brought into immediate contact with the subscriber, and did not deliver the book to him personally, the books of account kept by the plaintiffs with such agents, and the recollection of witnesses as refreshed by them (which evidence was admitted by the auditor), were competent to prove a business conducted according to the usage of the trade, the transmission of the books in answer to orders on them by agents, and the payment therefor, which would justify a finding for the plaintiffs. Although this evidence fails to show directly that the books were delivered into the hands of the individual subscribers, it is the only evidence which is reasonable and practicable in ascertaining the liability of the defendants. As between them and the plaintiffs, it should be considered that there has been a sale and delivery of the books when the plaintiffs prove that they have done everything, to place them in the hands of individual subscribers, which the contract contemplated that the publisher should do.” It is urged that the form of the question in those cases and in this is different. There it was held that the evidence was sufficient to justify a verdict for the plaintiffs, while here it is required to hold that the referee erred in not finding that the proof was sufficient. If the case showed, that the referee decided, or might properly have done so, upon conflicting evidence, or upon the credibility of witnesses, we could not disturb the finding, as the general term reversed the judgment upon questions of law ; but the principal facts were substantially undisputed, and whether such facts were sufficient to establish a sale of books by subscription within the meaning of the contract is a question of law. The orders from agents, in pursuance of previous correspondence, and the shipping of the books to such agents and receiving payment therefor, showed the course of business. There was no evidence of bad faith. The counsel for defendants argued that the referee might have inferred bad faith. This is based upon the allegation that the plaintiffs would have realized a large profit upon the books from the compensation paid by the advertisers alone, and if none had been sold, and by the refusal of the plaintiffs to produce upon the trial certain books and papers. The answer to this is, that in the first place no such defense is set up in the answer, and the referee denied the application of the defendants to amend the answer in this respect. Again, it was not proved that the amount received from the advertisers would pay for the expense of publishing the books, and give a profit. One item only of expense was proved, and the referee refused to allow the cost of the work to be shown, nor was it shown how much was received from the advertisers. As to the production of books and papers the plaintiffs, in the first instance, offered many of their books and papers, including letters from agents, &c. These were objected to by the defendants, and in several cases rejected by the referee. Afterwards, the defendants called for various papers, which were not produced. How much of this should be imputed to a desire to suppress the truth, and how much to the tactics of the respective counsel at the trial, it is unnecessary to determine. It does not establish a fraudulent disposition of the books to deceive the defendants. But aside from this question, the decision of the general term, granting a new trial, must be affirmed on the ground that at all events the referee erred in finding that there was no proof that any books had been sold by subscription, even if an actual delivery to subscribers was necessary. Several of the witnesses speak of having knowledge of the delivery of some books, and one witness testified that he delivered personally one hundred and four books to actual subscribers. The answer admits substantially that some books were delivered to subscribers, but denies on information and belief that over five thousand were so sold and delivered. The plaintiffs were thererefore clearly entitled to a judgment for some amount, which would be sufficient to justify the reversal of the judgment, and a granting of a new trial. The order of the general term must be affirmed and judgment absolute ordered for the plaintiffs. All the judges concurred. Judgment accordingly.