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(111 Misc. Rep. 605)

ROSCO TRADING CO., Inc., v. W. M. PRINGLE & CO., Inc.

(Supreme Court, Appellate Term, First Department. May 13, 1920.) 1. Indemnity On 3—Waiver of claim for improper packing is consideration.

Where the buyer claimed that the goods delivered by seller were not packed in the manner required by the contract, but paid the purchase price on receipt from the seller of a written agreement to indemnify the buyer against any claims by his clients for improper packing, the waiver of buyer's claims for defective condition of the goods, which it might have enforced, even after accepting them under Sales Act (Personal Property Law, art. 5) 8 130, was sufficient consideration for the contract of in

đemnity. 2. Indemnity w 9 (1)–Contract held to indemnify only against legal claim.

A written contract by seller to be responsible for claims against buyer by its clients on account of deficiency in packing the goods requires the seller to repay any sum which the plaintiff was legally obliged to pay to its client, but does not render the seller liable for claims paid by the

buyer, if it was not obliged to pay them. 3. Indemnity w15(7)–Evidence held not to show legal damages to indem

nitee.

In an action on a contract by a seller to indemnify his buyer against claims for defective packing of the goods, evidence which showed that the buyer had paid a claim for defective condition of the goods, but which showed that other defects beside the packing entered therein, without showing the amount of damage caused by the defective packing, or that the claim was valid, held insutficient to show any legal damage which

the indemnitor was bound to repay. Appeal from Municipal Court, Borough of Manhattan, First District.

Action by the Rosco Trading Company, Incorporated, against W. M. Pringle & Co., Incorporated. Judgment for defendant, and plaintiff appeals. Affirmed.

Argued April term, 1920, before GUY, FINCH, and WAGNER, JJ.

Everett B. Heymann, of New York City (Jacob Schnebel, of New York City, of counsel), for appellant.

Julius Miller, of New York City, for respondent.

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GUY, J. Plaintiff appeals from a judgment dismissing its complaint in an action brought to recover the sum of $408.20 for damages for breach of a contract of indemnity. The answer was a general denial.

The contract of indemnity was given under the following circumstances: In May, 1918, defendant gave plaintiff an order for certain paper, the invoice price of which was $613.80. The order given by defendant and accepted by plaintiff contains the following provision:

"Goods must be packed in smallest possible cubic space, but sufficiently strong to withstand ocean transportation, etc. Cases must be iron-strapped.

This order is placed subject to conditions and particulars specified in your letter of May 7, 1918.

Packing-In bales of 500 pounds each.
Bales to be covered with waterproof paper, with boards on top and bottom
and iron-strapped.”
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(182 N.Y.S.) The letter of defendant, dated May 7, 1918, referred to in the above order, contains the same clause:

"To be packed in bales of 500 pounds each. Bales are covered with waterproof paper, with boards top and bottom and iron-strapped, which is the regular packing for export."

The goods were delivered, as per plaintiff's shipping instructions, on board vessel on or about August 14, 1918. On August 21, 1918, defendant wrote plaintiff :

"Inclosed please find dock receipts for 23 and 45 bales of newspaper print, which we trust are satisfactory."

The 45 bales refer to another order, and the 23 bales refer to the matter in controversy herein. On August 14, 1918, plaintiff wrote defendant:

"Referring to shipment on our orders Nos. CH/542-543, which you have partly effected to the steamship Melderskin, of the Wessel-Duval Steamship Line, we had one of our representatives at the pier to-day, and he reports that the bales delivered by you are in a lamentable condition, and it is a question as to what condition these packages will arrive at destination. The packing is extremely frail for packages of their weight. Besides, they are in no way protected with waterproof paper or boards and strapping as they should be, if packed in bales, as specified on our above-mentioned orders. Please bear in mind that we will have to hold you responsible for any claims that may result from this very poor packing, if such you can call it. Payment of these invoices will be passed only on receipt of clean dock receipts."

Order No. 543, referred to in the foregoing letter, is the contract of sale between the parties hereto. On receipt of defendant's letter of August 21st inclosing dock receipts, some conversation appears to have taken place between the parties; and on August 28th defendant wrote plaintiff :

“In furtherance of the conversation held this morning with our Mr. Strange, we appreciate your position in this matter. We are willing to be held responsible for any neglect on our part as to the packing of these goods, and feel confident that you would not impose upon us in case of any trouble with your client. We are more than pleased at all times to make good when we are at fault."

事 *

Plaintiff replied on August 29th as follows:

“We, howerer, regret to state that, while we believe that your intentions are sincere in this matter, the wording of your letter is not in accordance with the arrangements talked over with your Mr. Strange, and, in order to expedite settlement of your bills, we will gladly pay same if you will agree, in writing, to be responsible for any claims that we may receive from our clients on account of the deficient packing of the paper in question.”

In reply to said letter defendant wrote plaintiff (Exhibit 7):

“Answering your favor of the 29th inst., we herewith express to you our readiness to be responsible for any claims that may be made to you by your client on account of any deficiency in the packing of the 15 tons of newsprint paper which we delivered to you."

Following the receipt of this letter, plaintiff paid defendant in full for the goods ordered, and subsequently plaintiff received a claim from its client for $408.20, which claim plaintiff paid, and demanded

repayment by defendant, which payment defendant refused; and this action is brought by plaintiff to recover the amount of said claim, made by plaintiff's client and paid by plaintiff in reliance on defendant's agreement of indemnity.

[1] Two questions arise on this appeal: First, whether there was sufficient consideration for the contract of indemnity; second, whether, assuming the contract to be valid and for sufficient consideration, plaintiff has proved damage. I am of the opinion that there was sufficient consideration for the contract of indemnity, as plaintiff, in consideration thereof, waived all individual claim for defective condition of the goods, which claim it might have enforced even after acceptance of the goods. Saies Act (Personal Property Law (Consol. Laws, c. 41] art. 5) § 130.

[2] As to the second question, I think plaintiff has failed to offer competent proof of damage, and, in the absence of such proof, the complaint was properly dismissed. It is the theory of the plaintiff appellant that under the contract of indemnity defendant was obligated to pay any claim made upon plaintiff by its client (the consignee), whether the same had any proper basis in fact or constituted any legal obligation on the part of plaintiff appellant to the consignee. In Niagara Falls Paper Co. v. Lee, 20 App. Div. 217, 47 N. Y. Supp. 1, cited by plaintiff, though not entirely analogous, the court held that plaintiff had proven that it was actually damaged, and goes on to say:

"The law imposes upon a party, subjected to an injury by a breach of contract by the other party, the active duty of making reasonable exertions to render the injury as light as possible."

In French v. Vix, 143 N. Y. 90, 37 N. E. 612, the court say:

“The indemnitors could not be liable, unless the party to be indemnified became liable."

Defendant's indemnity agreement must be construed as meaning to repay any sum which plaintiff was legally obligated to pay, and unless the plaintiff was legally bound to pay the claim of the consignee, defendant would not be liable under its guarantee. See Koehler v. Reinheimer, 20 Misc. Rep. 62, 45 N. Y. Supp. 337. “Every contract implies good faith and fair dealing between the parties.” Simon v. Etgen, 213 N. Y. 595, 107 N. E. 1066; Gorham Cons. Co. v. Woolman, 181 N. Y. Supp. 379.

[3] The case is entirely lacking in proof showing that the goods were defectively packed, or that there was any breach of the provisions of the contract, except the dock receipts, on which are stamped the words, “Partly protected; Shipper's risk,” which was clearly hearsay, defendant's letter of August 28th, which was a self-serving declaration based on hearsay, and certain affidavits made by people at the point of destination, which, if admitted, were not competent proof as to the condition of the goods at the time of shipment in New York and certainly did not establish at all the damage claimed by plaintiff. One of said affidavits states as a basis for the consignee's claim of damage:

"We also have been able to attest to the fact that not all of the paper is the same kind, as we have found paper of four different colors and thicknesses”

(182 N.Y.S.) --and arbitrarily fixes the damage at a minimum of 40 per cent. of the invoice value. The depositions of these witnesses, with opportunity for cross-examination, were not taken; and on the incompetent proof it was impossible to determine how much of the damage claimed was due to improper packing, how much due to conditions connected with transportation over which the defendant had no control, and for which it could not be held liable, and how much to the fact that the goods were not of the kind or quality specified in the order.

I think the complaint was properly dismissed, and I recommend affirmance. Judgment affirmed, with $25 costs

All concur.

HAYDEN v. PURCELL.

SAME v. DOTY. (Supreme Court, Appellate Term, First Department. May 25, 1920.) 1. Attorney and client Cw166 (3)—Burden of proving that attorney procured

contract for retainer by fraud held on clients.

In an attorney's action for retainer, where client conceded execution of contract, but claimed that attorney had misrepresented that the instruments they had signed were mere letters to other attorney, the burden of

proving such fraud was on clients. 2. Appeal and error Om 1064 (1)-Submission of attorney's action for retainer,

without placing burden of proving fraud in procuring contract on clients, held reversible error.

In attorney's action for retainer for percentage of amount recovered by clients under a settlement in which attorney did not participate, where defense was that attorney had procured execution of contract by fraud, the submission of the case on instructions to find for clients, if plaintiff failed to establish his right to recover, without charging that clients had burden of proving the fraud, held reversible error, since jury might have given clients verdict on ground that attorney did not participate in the

settlement. Appeal from Municipal Court, Borough of Manhattan, Seventh District.

Consolidated actions by Frank Case Hayden against Julia Purcell, and against Agnes Doty. From a judgment for defendants and from an order denying a motion for new trial, plaintiff appeals. Reversed, and new trial ordered.

Argued April term, 1920, before GUY, FINCH, and WAGNER, JJ.
Frank Case Hayden, of New York City, for appellant.
Edgar A. Martin, of New York City, for respondents.

GUY, J. These two actions, tried together, are brought by plaintiff, an attorney at law, to recover sums alleged to be due him under two written agreements, identical in form, one made with each defendant, whereby he was retained by them in connection with a contested will matter then pending in Kings county, in which proceed

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ing defendants were already represented by other counsel. Said written retainers provided as follows: "I

hereby retain Frank Case Hayden to act as my attorney in the matter of the contest of the will of my sister, Mary Waldron, deceased, and in the disposition of my share in the said estate, and agree to allow him 25 per cent. of any amount received by way of settlement or otherwise for me, exclusive of an agreement with John A. Bolles [her other attorney)."

Plaintiff testified that, at the request, by telephone, of a relative of defendants, he called upon one of the defendants, and she consulted with him as to a will contest then pending, in which she and her sister were represented by another attorney, and stated that they had been offered $500 each in settlement of the controversy; that after a two hours' conference he advised them to refuse the offer of settlement; that subsequently they called at his home and again consulted him, and in their presence he prepared the retainers in evidence, which were then read to them by him, after which they were signed by defendants; and he then called upon defendants' previously retained attorney, told him he also had been retained, and then and on a subsequent occasion conferred with him about the matters in controversy in the will case, and then examined authorities and performed necessary and valuable legal services under his retainers. Two weeks after plaintiff was retained, the parties, without notification to him, settled the will contest on the basis of a payment of $3,000 to each defendant, with interest from a given date. Defendants have collected said interest, and plaintiff sues to recover 25 per cent. of said interest.

The answers, while not specifically alleging fraud as a defense, allege that plaintiff, at the time the retainers were signed by defendants, represented to them that the retainers were mere letters of introduction to their attorney, and that defendants signed them, without reading, relying upon said statement, and defendants' testimony supports these allegations, which were denied by plaintiff,

[1] The execution of the contracts of retainer being conceded, it was for the defendants to establish the fraud relied upon. No definite issues, however, were submitted to the jury; the court charging that,

"If you find that the plaintiff has established by a greater weight of the credible testimony the cause of action which he has alleged, namely, his right to recover 25 per cent. of the amount received by these defendants in pursuance of this agreement, then your verdict must be for the plaintiff. If he has failed to establish his cause of action by a greater weight of the testimony, or you find the testimony is so evenly balanced that you cannot determine in whose favor the greater weight of the testimony lies, then your verdict must be for the defendants.”

It was thus left to the jury to determine, according to their own conception of the justice of the case, whether the plaintiff had a right to recover; the burden being apparently imposed upon the plaintiff to establish the truth of the controverted facts. The testimony of the defendants, that, without any communication from plaintiff, they sent for him, knowing him to be an attorney at law, sought his advice, and signed two separate letters written by him in their presence, believing them to be merely letters of introduction to their attorney,

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