(202 N.Y.S.)

Argued before HUBBS, P. J., and CLARK, DAVIS, SEARS, and CROUCH, JJ.

George A. Adams, of Salamanca, for appellant.

Orla E. Black, of Salamanca, for respondents.

CLARK, J. [1] This action is brought on a promissory note given to plaintiff by defendants. It was given for part of the purchase price of an automobile, and was a renewal note. When it became due, one of the defendants took the car back to plaintiff's service station in Salamanca and left it, but this occurred in the absence of plaintiff. When the car was purchased, the business was done by defendants through one H. E. Waite, who was plaintiff's sales agent.

Defendants claimed on the trial that the car was returned in pursuance of an arrangement made by them with this Mr. Waite to the effect that they might return the car to plaintiff in payment of this note. There is no claim that plaintiff was present at the time of this alleged talk with Waite, and the latter denied that he ever made any such arrangement, and plaintiff disclaimed all knowledge of it. On the trial, and over plaintiff's objection and exception, defendants were permitted to give evidence as to this claimed arrangement with Waite, without proving his authority to make such an arrangement, and without connecting plaintiff with it in any way.

We think this was such a substantial error that it requires a reversal of the judgment. There was no proof that plaintiff personally made the arrangement, or that he knew anything about it, or that Waite was authorized to act for him in any way, except to sell the automobile. Defendants claim that, when they returned the car, plaintiff's bookkeeper was present and was told about this arrangement; but there is no proof that he had authority to accept the car in payment of the note, or that plaintiff knew anything about the car being returned until later. [2] When defendants returned the automobile, in pursuance of this arrangement they claimed to have made with plaintiff's selling agent and bookkeeper, it was all in plaintiff's absence, and under the circumstances it was incumbent on defendants to know of the agent's authority, and to prove it, before plaintiff could be bound by the arrangement. Dudley v. Perkins, 235 N. Y. 448, 139 N. E. 570; Churchill Grain & Seed Co., Inc., v. Buchman, 204 App. Div. 30, 197 N. Y. Supp. 552.

[3] While the negotiations with defendants for the sale of the automobile were made with plaintiff's selling agent, Waite, there was a written contract, subsequently made between the parties, and signed by plaintiff and the defendants. Waite was at most a special agent, authorized to sell cars, and, if defendants undertook to deal with him to the extent of modifying the terms of the written contract between the parties, relying on the agent's authority to do it, they were acting at the risk of being bound by the contract as it was made and signed by the parties. Dudley v. Perkins, supra. When Waite sold defendants the automobile, his powers were exhausted, and he had no implied authority to change the written contract. Churchill Grain & Seed Co., Inc., v. Buchman, supra: 31 Cyc. 1360; 1 McAdam on Landlord & Tenant (4th Ed.) 914. This latter author says on this subject:

"An agent may have power to make a contract, without having or retaining the power of altering or rescinding it, after it has been made."

[4, 5] Plaintiff complains that he was deprived of a substantial right by being refused permission to open and close the case. I do not think there was error in the holding of the trial court. The action was brought by the payee of a note against the makers, which note had never passed out of the payee's hands; at least, there is no allegation in the complaint to that effect. It was therefore not necessary to show presentment and protest, and protest fees were not recoverable. 8 Corpus Juris, 1103; Hills v. Place, 48 N. Y. 520, 8 Am. Rep. 568; Bush v. Gilmore, 45 App. Div. 89, 61 N. Y. Supp. 682.

[6] The admission in evidence of alleged conversations with plaintiff's selling agent, Waite, about returning this automobile in payment of the note, which conversations were not in the presence of plaintiff, and without his knowledge and authority, was error, for the declarations of the agent were inadmissible to establish his authority. Tiernan v. Havens, 162 App. Div. 656, 147 N. Y. Supp. 786; Shesler v. Patton, 114 App. Div. 846, 100 N. Y. Supp. 286; Miller v. Barnett, 158 App. Div. 862, 144 N. Y. Supp. 40.

These errors, which unfortunately crept into the case, require a new trial, and it will not be necessary to discuss the other points raised by the exceptions.

The judgment and order should be reversed upon the law, and a new trial granted, with costs to appellant to abide the event. All concur, except DAVIS, J., who dissents and votes for affirmance.

(207 App. Div. 605)

SHIRAI v. BLUM.

(Supreme Court, Appellate Division, First Department. January 11, 1924.) Sales174-Buyer's failure to extend letter of credit held material breach, excusing seller.

Where buyer agreed to have a letter of credit, which he had established in seller's behalf, extended if seller could not make delivery within the life thereof, his failure to do so, though seller gave no notice that bank had canceled the credit, was a material breach of contract, justifying seller's refusal to proceed, and the reinstatement of the credit six months later did not revive buyer's right to demand shipment.

Appeal from Trial Term, New York County.

Action by Ichiro Shirai against Julius Blum. From a judgment for plaintiff, and an order denying a motion for a new trial, defendant appeals. Reversed, and complaint dismissed.

Argued before CLARKE, P. J., and DOWLING, SMITH, MERRELL and McAVOY, JJ.

Leventritt, Riegelman, Carns & Goetz, of New York City (W. M. Schwarz, of New York City, of counsel, and W. L. Carns, of New York City, on the brief), for appellant.

Abraham P. Wilkes, of New York City, for respondent.

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

(202 N.Y.S.)

MCAVOY, J. The complaint in this action sought damages for breach of contract because of appellant's failure to deliver the merchandise, the subject-matter of the parties' agreement. The learned. trial court left but the issue of damages to the jury.

The evidence is that in October, 1919, plaintiff, an agent for Nakazawa & Co., Limited, made a written offer to the defendant to purchase 100 gross tons of black steel sheets at the price of $5.22 per 100 pounds. One of the terms of the offer was the establishment by the plaintiff of a bankers' irrevocable letter of credit in defendant's behalf. On November 13, 1919, the Bank of Taiwan, on the application of Nakazawa & Co., Limited, acting through the plaintiff, issued its irrevocable letter of credit, expiring December 31, 1919, for account of Nakazawa & Co., Limited, in favor of the defendant. By its terms this letter of credit provided for payment to defendant of $11,575.88 upon presentation to the bank before December 31, 1919, of shipping documents covering the specified merchandise, and required shipment to be made "strictly in accordance with the terms of your [defendant's] contract or order with Nakazawa & Co., and a statement to that effect, duly signed, noted on the invoice."

Upon receipt of this letter of credit, defendant accepted, on November 14, 1919, plaintiff's offer, and entered the order for shipment in about eight weeks from date, calling to plaintiff's attention that it was to be understood and agreed that the plaintiff would provide for an extension of the letter of credit, if delivery of the merchandise was not made within the life thereof. On the same day (November 14th) plaintiff in writing confirmed the understanding that shipment would be made in approximately eight weeks. The period of eight weeks from November 14, 1919, would bring the date of intended shipment to January 9, 1920.

The letter of credit having expired on December 31, 1919, the Bank of Taiwan on January 8, 1920, requested the return thereof for cancellation. On January 9, 1920, the defendant returned the letter of credit to the bank, and it was produced upon the trial of this cause by a representative of the Bank of Taiwan. The defendant claims that this indicated that the plaintiff no longer desired to proceed with the contract, the material not yet having been shipped, and therefore the defendant made no further effort to proceed with the order. From November 14, 1919, to January 26, 1920, the plaintiff, according to his witnesses, did nothing whatsoever in regard to the contract, and made no inquiry in regard to the shipment or delivery of the merchandise, either of the defendant or the Bank of Taiwan, at whose office the shipping documents were to be tendered.

On January 26, 1920, the plaintiff for the first time wrote the defendant, stating that the time of delivery had already expired, and inquiring as to whether the mill had made shipment of the merchandise. A day or two later there was a telephone conversation between representatives of the parties, as a result of which plaintiff wrote defendant on January 29, 1920, that plaintiff would have been ready to extend the letter of credit, if notified to do so by the defendant. On the same day, January 29, 1920, the Bank of Taiwan wrote the defendant, of

fering to extend the letter of credit for the account of Nakazawa & Co. to February 29, 1920.

Upon receipt of plaintiff's letter of January 29, 1920, the defendant replied under date of February 4, 1920, stating that he had been unable to deliver the goods, due to conditions beyond his control, and that it had been the understanding of the parties that, pending delivery, the letter of credit would be kept good; that, furthermore, the letter of credit not having been extended, and the bank having recalled the original thereof, this was equivalent to a cancellation of the contract on plaintiff's part, and that the defendant would not reinstate the contract at that late date. In reply thereto, plaintiff's attorney wrote, contending that the action of the bank was without the plaintiff's knowledge, and that the defendant should have notified the plaintiff of the cancellation of the credit. The defendant, under date of February 14, 1920, reiterates his position, claiming that no duty rested upon him to give such notice to the plaintiff.

With the exception of the telephone conversation of January 28, 1920, all dealings between the parties were in writing. It appears beyond dispute that the plaintiff, by failing to extend the letter of credit on December 31, 1919, failed in performance of a term of the contract which was so material as to justify refusal of shipments, and that an offer to reinstate the credit a month later was no revivor of the right to demand shipments thereafter.

The theory which the learned trial court adopted, holding: "The mere expiration of that letter of credit on the 31st of December was ineffective to warrant a breach of contract by the defendant without reasonable notice to the plaintiff to extend it"-cannot be sustained, and we find constitutes reversible error. The plaintiff argued that the defendant must give notice of rescission under section 146 of the Personal Property Law, as added by Laws 1911, c. 571. The defendant contends that the action of the plaintiff in allowing the letter of credit to lapse was such a fault as to furnish ample justification to the defendant for not proceeding further.

That the failure of a plaintiff to perform excuses the defendant from performance of his obligations is well established. Strasbourger v. Leerburger, 233 N. Y. 55, 134 N. E. 834; Lord Construction Co. v. Edison Portland Cement Co., 234 N. Y. 411, 138 N. E. 39; Heller & Bro. v. Continental Mills, 196 App. Div. 7, 187 N. Y. Supp. 511, affirmed, 233 N. Y. 641, 135 N. E. 951; Partola Manufacturing Co. v. General Chemical Co., 234 N. Y. 320, 137 N. E. 603; Williston on Sales (1909 Ed.) 980; Anvil Mining Co. v. Humble, 153 U. S. 540, 14 Sup. Ct. 876, 38 L. Ed. 814; Henderson Tire & Rubber Co. v. P. K. Wilson & Son, 235 N. Y. 489, 139 N. E. 583; De Vivo v. Gallerani, 105 Misc. Rep. 606, 174 N. Y. Supp. 13.

In Heller & Bro. v. Continental Mills, supra, this court said: "The defendant did not plead rescission, but merely justification for not proceeding further, or in other words for not performing in so far as it had not performed. The plaintiff made no attempt to explain its delay in making the payment until after the defendant ceased to make deliveries and claimed that the contract had been terminated; and the explanation then made was wholly insufficient, as matter of law at least, to justify or excuse its failure to pay as required by the contract."

(202 N. Y.S.)

Williston on Sales states the rule as follows:

"By a long line of decisions, usually referred to under the heading of 'implied conditions,' it became established that generally where one party to a contract was in default, or was evidently going to be in default in the performance of his obligation, he could not recover from the other party if the latter failed to perform his obligations. This right of the defendant to refuse to go on has frequently been called 'rescission.' The danger of so-calling the right is that it leads to the inference that the contract has ceased to exist, and that neither party can sue upon it. It is important, therefore, to distinguish the rescission of the contract from the excuse of one party or the other from the performance of his obligations."

In Anvil Mining Co. v. Humble, supra, the court says:

"Whenever one party thereto is guilty of such a breach as is here attributed, to the defendant, the other party is at liberty to treat the contract as broken and desist from any further effort on his part to perform; in other words, he may abandon it. Such an abandonment is not technically a rescission of the contract, but is merely an acceptance of the situation which the wrongdoing of the other party has brought about."

The plaintiff's failure to extend the letter of credit on December 31, 1919, was a failure of performance by him of an essential term of the contract, which constituted an abandonment of the contract, and justified the defendant in not proceeding further with the carrying out thereof.

The judgment and order should be reversed, with costs, and the complaint dismissed, with costs. All concur.

(207 App. Div. 545)

BELDEN v. BELDEN.

(Supreme Court, Appellate Division, Third Department. January 9, 1924.) Divorce130, 133(1)-Evidence held insufficient to show "cruel treatment" or "abandonment."

In an action for separation, evidence held insufficient to show husband's cruel and inhuman treatment of wife, making cohabitation unsafe and improper, within Civil Practice Act, § 1161, or that he abandoned and refused to provide for her.

[Ed. Note. For other definitions, see Words and Phrases, First and Second Series, Abandon—Abandonment; Cruelty.]

Appeal from Supreme Court, Chenango County.

Action by Ruth Belden against Daniel S. Belden. From final and interlocutory judgments, granting a decree of separation, following a trial by the court without a jury, and from an order awarding counsel fees and alimony to plaintiff, defendant appeals. Reversed, and complaint dismissed.

Argued before COCHRANE, P. J., and HENRY T. KELLOGG, VAN KIRK, HINMAN, and McCANN, JJ.

Minnie L. Seeley, of Norwich (Hubert L. Brown, of Norwich, of counsel), for appellant.

David F. Lee, of Norwich, for respondent.

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