George Young, Respondent, v. Horace K. Thurber et al., Appellants

George Young, Respondent, v. Horace K. Thurber et al., Appellants. H., who was the consignee and agent of a manufacturing corporation for the sale of its manufactures, under an agreement by which he was to make advances to the company on goods consigned, and reimburse himself out of proceeds of sales, sold certain of the goods to defendant in his own name, upon which he had made advances to more than their value. In an action to recover the purchase-price, defendants sought to set. off an account against the company, which had become insolvent, for goods sold by them to it. Held, that defendants were not entitled to the" set-off. After defendants had sold to the corporation a portion of the goods for which the set-off was claimed they requested H. to consent that the purchases of the company be -charged to his account ; this he refused, but stated that when defendants’ account should fall due, he would accept the company’s draft for the amount. Held, that this could not be construed as an agreement to allow the set-off; that it was simply a voluntary promise to accept, and if enforceable on the ground that goods were delivered on the faith of it, could be enforced only according to its terms, and as defendants never obtained or attempted to obtain such a draft, defendants had acquired no rights under it, (Argued December 13, 1882 ; decided March 6, 1883.) Appeal from order of the General Term of the Supreme Court, in the third - judicial department, made the first Tuesday of May, 1881, which reversed a judgment in favor of plaintiff, entered upon the report of a referee, and granted a new trial. The nature of the action and the material facts are stated in the opinion. F. Coimtryman for appellants. By his agreement with the corporation Hermanee was clearly constituted at least the general agent of the glass works, for the sale of its manufactures, and his sales of goods to the defendants were the sales of the corporation., (Jeffrey v. Bigelow, 13 Wend. 518, 522; Anderson v. Coonley, 21 id. 279; Ferguson v. Hamilton, 35 Barb. 427, 441, 442 ; Story on Agency, §§ 17-19.) It is not material whether the sales of the agent were made in his own name or in the name of the company. In either event, and whether the principal was known or unknown to the purchasers, the corporation was responsible for and could enforce the sales made by its authorized agent. (Nicoll v. Burke, 78 N. Y. 580; Hill v. Miller, 76 id. 33; Beardsley v. Duntley, 69 id. 577; Briggs v. Partridge, 64 id. 358, 362; Indianapolis, etc., R. R. Co. v. Tyng, 63 id. 655; Coleman v. First Nat. B’k, 53 id. 388.) Thé agent also had authority to sell on credit. (Leland v. Douglas, 1 Wend. 490; Van Allen v. Vanderpoel, 6 Johns. 69; Story on Agency, § 60; 1 Chitty on Contracts [11th Am. ed.], 295.) Plaintiff’s position, therefore, is no better than that of Hermanee. (Barlow v. Myers, 64 N. Y. 41; Davidson v. Alfero, 16 Hun, 353 ; S. C., 80 N. Y. 660.) The fact that defendants charged their sales to Hermanee does not conclude them. (Swift v. Pierce, 13 Allen, 136, 137; Gardiner v. Hopkins, 5 Wend. 23, 24; Walker v. Richards, 41 N. H. 388; Hogan v. Bearden., 36 Tenn. 48; Champion v. Doty, 31 Wis. 190.) Equity requires that cross-demands be set off against each other if, from the nature of the claim, or the situation of the parties, justice cannot otherwise be done. (Smith v. Felton, 43 N. Y. 419, 422, 423 ; Lindsay v. Jackson, 2 Paige, 581; Smith v. Fox, 48 N. Y. 674; Davidson v. Alfarod, 16 Hun, 353 ; S. C., 80 N. Y. 660.) By mutual credit, in the sense in which the terms are here used, we are to understand a knowledge on both sides of an existing debt due to one party and a credit by the other party founded on and trusting to such debt, as a means of discharging it. (2 Story’s Eq. Jur., § 1435; Ex parte Prescott, 1 Atk. 230; Hankey v. Smith, 3 D. & F. 507, note.) A court of law could not formerly set off independent debts against each other; but a. court of equity would not hesitate to do so, upon the ground either of the presumed intention of the parties, or of what is called a. natural equity. (2 Story’s Eq. Jur., §§ 1435, 1436; Uphon v. Wyman, 7 Allen, 499; Schiefflin v. Hawkins, 1 Daly, 289 ; Receiver v. Paterson Ins. Co., 23 N. J. Law, 283.) A joint debt may in equity (contrary to the rule at law) be set off against a separate debt, where there is a clear series of transactions establishing that there was a joint credit given on account of the separate debts, or under any special circumstances that may occur creating an equity. (2 Story’s Eq. Jur., §§ 1437, 14375; Simpson v. Hart, 14 Johns. 64; Spurr v.Snyder, 35 Conn. 172; Blake v. Langdon, 19 Vern. 485; Vulliomy v. Noble, 3 Merivale, 593; Marshall v. Cooper, 43 Ind. 47; Jeffries y. Evans, 6 B. Monr. [Ky.] 119; Brewer v. Norcross, 17 N. J. Eq. 219; Barber v. Spencer, 11 Paige, 517.) Charles A. Fowler for respondent. [MAJORITY — Rapallo, J.] Rapallo, J. The plaintiff, as assignee of Jacob Hermanee, brought this action to recover of the defendants the price of certain glassware sold to them by Hermanee. The defendants claim to set off against the plaintiff’s demand an indebtedness of an incorporated company known as the Ellenville Glass Works, to the defendants, for goods sold by them to that company. The grounds upon which the defendants claimed this set off were that Hermanee was the consignee and sole agent of the Ellenville glass works, for the sale of its wares, and that the goods sold to the defendants by him, were sold as such agent and consignee; that the company had become insolvent, and that under the circumstances the defendants should in equity be allowed to set off their claim for goods sold to the company, against the bill of goods sold to them by Hermanee as the agent of the company. They further claimed that after a part of the goods sold by them to the company had been delivered, and when the company applied to make further purchases, Hermanee agreed with them that their sales to the company should be credited upon his bill against them. The facts proved and found do not sustain these claims. It is established by the evidence and findings, that Hermanee was the consignee and agent of the company for the sale of its wares, but it also appears that he became such agent and consignee under an arrangement by which he was to make adVances to the company on the goods consigned to him, and to reimburse himself these advances out of the proceeds of the sales. That under this arrangement he made advances exceeding the value of the goods consigned, and sold the goods in his own name. He was consequently not simply the agent of the company, but he had an interest of his own in the proceeds of the sales, and there would be no equity in allowing his vendees to retain out of the proceeds of the goods thus consigned to and sold by him, and upon which he had a right to rely for the reimbursement of his advances, independent claims which his vendees might have against his consignors. The allegation that Hermanee agreed that the purchases of the company might be credited to the defendants on his account against them is not sustained. The evidence in support of this allegation consists wholly of written correspondence between the parties, which is set forth in the findings of the referee. From the correspondence it appears in substance that after the defendants had sold to the company a portion of the goods for which an offset is now claimed, they wrote to Hermanee, requesting his consent that the purchases of the company be charged to his account, and that he refused such consent, but at the same time stated that when the defendants’ account should fall due, he would accept the company’s draft for it. This promise the referee, before whom this action was tried, construed as an agreement that the goods sold by the defendants to the company should be set off against the purchases made by the defendants from Hermanee, and consequently allowed the set off. The court at General Term reversed this decision, and we think correctly. Hermanee was under no obligation to allow the claims of the defendants against the company to be set off against his sales to the defendants, upon the proceeds of which he had a lien, and his promise to accept the company’s drafts appears to have been entirely voluntary. If enforceable on the ground that goods were delivered on the faith of it, the promise could be enforced only according to its terms, and it is found as a fact that the defendants never obtained, or attempted to obtain, the order of the company on Hermanee for the bills of goods sold by° them to the company. These reasons, we think, are sufficient to require us to affirm the order of the General Term, and it follows that judgment absolute should be rendered against the appellants upon their stipulation. All concur. Order affirmed and judgment accordingly.