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(182 N.Y.S.)

$1,960, and it satisfactorily appeared by the evidence that all of the money covered thereby was the money of the plaintiffs, and that all of the stocks were carried by defendants for the plaintiffs, Goodney & Lipkien.

Upon cross-examination the plaintiff Samuel Lipkien testified that the reason why the plaintiffs dealt with the defendants was that the latter were members of the Clearing House, and the plaintiffs were not, and that said arrangement was to facilitate the purchase and sale of stocks and securities for plaintiffs' customers, which the plaintiffs were unable to execute because they were not members of the New York Clearing House. It further appeared that, so far as the transactions between the parties were concerned, the plaintiffs were the customers of the defendants, and that, while the account with the defendants stood in the name of the plaintiff Samuel Lipkien, the stocks were, in fact, carried for both the plaintiffs, and that the checks given the defendants to carry the same were the checks of the plaintiffs, and covered plaintiffs' accounts; that the defendants never inquired as to who were plaintiffs' customers; that they had nothing to do with plaintiffs' customers, and carried the account for the plaintiffs alone; that defendants charged plaintiffs and were paid half commissions upon said transactions in accordance with custom between brokers.

[2, 3] It is the contention of the respondents, upon which they seek to uphold the action of the court at Special Term, that the plaintiffs were not the customers of the defendants, but merely cleared through them, and that the relationship of broker and client did not exist, and that no fiduciary relationship ever existed between the plaintiffs and the defendants. I am unable to agree with such contention. The evidence clearly shows that so far as the defendants were concerned they knew no one in the various transactions except the plaintiffs. So far as the evidence shows, it was the plaintiffs' money alone that the defendants received. The mere fact that the plaintiffs may have acted in behalf of their customers in no wise changes the situation.

[4] Even assuming the defendants were clearing for plaintiffs who in turn were serving their customers in the transactions, still I see no reason why the defendants should not account for moneys paid to them by the plaintiffs and by whom the defendants were employed. The evidence shows that the plaintiffs paid to the defendants $1,960 of their own money. This the defendants received, and claim to have expended in various transactions which they conducted in behalf of the plaintiffs. The defendants claim that they have expended more than the moneys which they received from the plaintiffs, and that there is a balance the defendants' due. Under these circumstances I can see no reason why the defendants should not account to the plaintiffs for the moneys which they have received.

In 2 Dos Passos on Stockbrokers (2d Ed.) p. 767, it is said:

"In equity the best-known remedy to enforce a liability, where there have been numerous transactions between the client and broker, is by bill for an

accounting. It is one of the settled principles of equity jurisprudence that, where the relation of principal and agent, or broker, exists, a bill in equity will lie to compel an accounting; and the liability to do this follows, as a matter of course, from the admission or establishment of the agency. By means of a bill filed by the principal, or client, against the agent, or broker, all of the transactions may be investigated, and a fuller and more satisfactory result reached than by any other means."

The position of the plaintiffs appellants finds support in the case of Noble v. Kendall, 182 App. Div. 801, 170 N. Y. Supp. 231. This was a case where the plaintiff opened an account with a Washington firm of brokers for the purchase and sale of stock on margin. The Washington brokers employed the defendant Kendall, a New York broker, to execute said stock transactions in the city of New York. The plaintiff brought action for an accounting, joining as parties defendant the Washington brokers and the New York broker, alleging that they acted jointly as plaintiff's agents and brokers. The case reached this court upon appeal from an order denying the motion of the New York broker for judgment upon the pleadings, arising upon his demurrer to the plaintiff's complaint for insufficiency, and from the order granting plaintiff's motion for judgment overruling said demurrer. This court reversed the order appealed from and granted the motion of the New York broker for judgment upon the pleadings. While perhaps unnecessary to the decision in that case, this court, in the opinion written by Mr. Justice Laughlin, all the other members of the court concurring, said: "If, as is fairly to be inferred, the Washington brokers employed appellant's firm to execute the orders, then the latter would be answerable not to plaintiff but to the other brokers who employed them. Evans v. Wrenn, 93 App. Div. 346, affirmed 181 N. Y. 566. See, also, Montgomery County Bank v. Albany City Bank, 7 N. Y. 459; McBride v. Ill. Nat. Bank, 163 App. Div. 417."

[5] It seems to me that from the uncontroverted evidence it is shown that the account with the defendants was owned by the plaintiffs, and that the plaintiffs' moneys were paid to the defendants, and were received by them for the purpose of executing plaintiffs' orders; that, as between the parties, the plaintiffs were the customers of the defendants. The ground upon which the learned court at Special Term dismissed the complaint was not claimed by the defendants, nor does their answer contain any allegations. with reference thereto. The law is well settled that, where a customer deposits with brokers moneys to be used in the purchase of securities, a fiduciary relationship arises between them entitling the plaintiffs to require the defendants to account in a court of equity for any of the plaintiffs' moneys which they have received. Haight v. Haight & Freese Co., 112 App. Div. 475, 98 N. Y. Supp. 471, affirmed 190 N. Y. 540, 83 N. E. 1126.

The judgment appealed from should be reversed, and a new trial granted, with costs to appellant to abide event. All concur.

(192.App. Div. 186)

(182 N.Y.S.)

CHYSKY v. DRAKE BROS. CO., Inc.

(Supreme Court, Appellate Division, First Department. May 28, 1920.) 1. Appeal and error 927 (4)—Trial ~~~109-Facts stated in counsel's opening taken as true on motion and appeal.

On a motion to dismiss the complaint on the opening of counsel, and on appeal from the judgment dismissing the complaint, the statements of fact contained in such opening must be taken as true.

2. Sales 274-On sale of food, warranty of fitness implied.

Where food is manufactured and sold for human consumption, there is an implied warranty that it is wholesome and fit for human consumption. 3. Sales 255-Implied warranty of fitness held to inure to benefit of con

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Where the manufacturer of a cake containing a nail or piece of wire, which could not be discovered by examination without breaking the cake open, sold it to a retail dealer, knowing that he would sell it to a consumer, the implied warranty of fitness of the cake for human consumption inured to the benefit of the consumer, though there was no direct contractual relation between her and the manufacturer.

4. Negligence 2-Privity of contract not essential to liability.

It is unnecessary to show privity of contract or employment between one who is injured and the person whose negligence caused such injury. 5. Food 25-Manufacturer of cake containing foreign substance liable for personal injury.

The purchaser of a cake containing a nail or piece of wire, not discoverable on inspection, from a retail dealer, may sue the manufacturer for negligence, as well as for breach of the implied warranty.

Appeal from Trial Term, New York County.

Action by Bertha Chysky against the Drake Bros. Company, Incorporated. From a judgment dismissing plaintiff's complaint after a trial, plaintiff appeals. Reversed, and new trial granted.

Argued before CLARKE, P. J., and LAUGHLIN, SMITH, PAGE, and MERRELL, JJ.

Morris Kohn, of New York City (Henry Levis, of New York City, of counsel), for appellant.

William Butler, of New York City (R. Waldo MacKewan, of New York City, on the bricf), for respondent.

MERRELL, J. This appeal is by the plaintiff from a judgment entered in defendant's favor, dismissing the complaint, with costs, upon the opening of counsel for the plaintiff at the trial.

The action was to recover for personal injuries claimed to have been sustained by the plaintiff as the result of eating a cake, manufactured by the defendant, which she had purchased from a retail dealer. The complaint alleged that the defendant was a domestic corporation operating and controlling a baking establishment in the borough of Brooklyn, city of New York, where it manufactured and baked cakes for human consumption, and which defendant sold to persons willing to purchase the same; that on May 4, 1918, the plaintiff purchased of one Abraham, the proprietor of a bakery and lunch room at No. 367 Pearl street, borough of Manhattan, city of New

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

York, and who was a customer of the defendant, a cake, made and manufactured by the defendant and purchased from said defendant by said Abraham, and without any carelessness or negligence on the part of the plaintiff she attempted to eat said cake, and owing to a wire nail or piece of wire which was imbedded and baked into the dough of said cake, the gums of her mouth were punctured, causing her gums to become infected and plaintiff to suffer pain and distress, resulting in the loss of four of her teeth, and causing her to suffer other injuries, and necessitating the expenditure of large sums of money for medical and dental treatment.

Aside from admitting its incorporation, the defendant, by its answer, denied the allegations of the complaint, and as a separate defense alleged that plaintiff's injuries were caused in whole or in part by the negligence and carelessness of the plaintiff, or of some third person over whom the defendant had no control and for whose acts it was not responsible.

The issues were brought to trial before the court and a jury at Trial Term, and upon opening of counsel for the plaintiff the court dismissed the complaint, holding that the plaintiff could not recover against the defendant, because there was no contractual relation between the parties, and that the implied warranty as to the fitness of the cake for human consumption only extended and operated between the vendor and the purchaser; that plaintiff was a purchaser from a vendor other than the defendant, and therefore had no cause of action against said defendant.

[1] The opening of counsel was not taken by the stenographer, but, for the purposes of the record, the court stated to the stenographer, with the acquiescence of counsel, what counsel had said in opening the case to the jury. For the purposes of said motion to dismiss and upon this appeal the statements of fact contained in said opening must be taken as true, said facts being as follows: The defendant is in the business of manufacturing and selling to retail dealers cakes for consumption by the public; that in pursuance of its business as such manufacturer the defendant sold to one Abraham, the keeper of a bakery and lunch room, certain cake; that Abraham's business was to sell such cake at retail to such of the public as patronized him; that plaintiff purchased one of the cakes so manufactured by the defendant and sold by the defendant to Abraham, and that in eating said cake a nail or piece of wire which was concealed in the interior of the cake and not visible to the eye or discoverable upon examination, and which had been there placed in the manufacture, entered plaintiff's gums by having sunk into and punctured the same; that the nail or piece of wire was extracted from the gums, and the plaintiff washed out and rinsed her mouth, and a few hours afterwards the gums became swollen and inflamed and sore, resulting in plaintiff becoming sick, and as a consequence she was compelled to have three of her teeth extracted, and that she was damaged and injured by that cause; that plaintiff sues to recover against the defendant as manufacturer under the theory that the defendant, having manufactured and offered the cakes for sale, and plaintiff, in the or

(182 N.Y.S.)

dinary and usual course of trade, having purchased one of these cakes, which caused this injury which she could not discover upon examination, but which the defendant was bound to know by reason of the implied warranty which attached to cakes of this character, was liable for damages; that Abraham, the purchaser, could not discover the presence of the nail by an examination, and that its presence could only be discovered by breaking the cake open; that from such examination as purchasers of cakes could give without breaking open the cake he could not discover the presence of that nail; that the nail was in the cake at the time it came from the manufacturer. court stated that such were the facts, as stated by counsel for the plaintiff, which he intended to prove, and the court assumed that plaintiff could prove such facts. On the complaint, and on such opening to the jury, the court dismissed the complaint, to which dismissal counsel for the plaintiff duly excepted.

The

[2, 3] In thus disposing of the case, we think the court clearly erred. The law is too well settled to require the citation of authorities that, where food is manufactured and sold for human consumption, such sale is under an implied warranty that the food sold is wholesome and fit for human consumption. Such principle of law was not questioned by the court upon dismissing the complaint, nor does the respondent upon this appeal dispute the same. The court dismissed the complaint upon the ground that only between the retailer, Abraham, who sold the cake to the plaintiff, and the plaintiff, did any contractual relation exist, and that, therefore, there being no contractual relation, in the opinion of the trial court, between the plaintiff and the defendant, the manufacturer of said cake, there was no implied warranty by said manufacturer to the plaintiff that said cake was wholesome and fit for human consumption. I am of the opinion that, when the defendant manufactured this cake and put the same upon the market for sale, knowing that the retail dealer to whom it sold the cake would sell it to a consumer, it impliedly represented that the cake was wholesome and fit for human consumption. According to the facts stated in the opening of counsel for the plaintiff, the cake was manufactured by the defendant and sold to the retail dealer, Abraham; that contained therein at the time the cake was manufactured, and not visible to the eye or discoverable by examination, was the nail or piece of wire from which the plaintiff received her injuries. The purchaser, Abraham, could not discover said nail or wire by examination of the cake, and the same could only be discovered by breaking the cake open. Under such circumstances I am of the opinion that the implied warranty of the defendant of the fitness of the cake for human consumption extended to the ultimate consumer of the cake, the plaintiff herein, and that said implied warranty inured to the benefit and protection of the plaintiff, although there was no direct contractual relation between the plaintiff and the manufacturer of the cake.

While the courts of this state do not seem to have passed upon the precise question involved upon this appeal, viz. the liability of the manufacturer of food to the consumer thereof, the question seems to

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