Div. 555, 185 N. Y. Supp. 527; Sturges & B. Mfg. Co. v. American Separator Co. 158 App. Div. 63, 142 N. Y. Supp. 697; American Metal Co. v. Neumann, 184 App. Div. 229, 171 N. Y. Supp. 560; Erdreich v. Zimmermann, 190 App. Div. 443, 179 N. Y. Supp. 829.

Mr. Winthrop W. Aldrich, with Messrs. Murray, Prentice, & Aldrich, for Equitable Trust Company, amici curiæ:

The contract involved in the present case was an executory contract, subject to the ordinary rules applying to such contracts.

Atlantic Communication Co. V. Zimmermann, 182 App. Div. 862, 170 N. Y. Supp. 275; Zweifler v. Public Bank, 196 App. Div. 969, 188 N. Y. Supp. 959; Pfotenhauer v. Equitable Trust Co. 115 Misc. 396, 188 N. Y. Supp. 464, affirmed without opinion in 210 App. Div. 846, 193 N. Y. Supp. 949; Goepel v. Zimmerman, 199 App. Div. 915, 190 N. Y. Supp. 927; Chemical Nat. Bank v. Equitable Trust Co. 201 App. Div. 485, 194 N. Y. Supp. 177; Safian v. Irving Nat. Bank, 202 App. Div. 459, 196 N. Y. Supp. 141; Bank of British North America v. Cooper, 137 U. S. 473, 34 L. ed. 759, 11 Sup. Ct. Rep. 160; Bank of China v. American Trading Co. [1894] A. C. 266, 63 L. J. P. C. N. S. 92, 6 Reports, 494, 70 L. T. N. S. 849-P. C.; Equitable Trust Co. v. Keene, 232 N. Y. 290, 19 A.L.R. 1137, 133 N. E. 894; Strohmeyer & A. Co. v. Guaranty Trust Co. 172 App. Div. 16, 157 N. Y. Supp. 955.

On general principles of contract law, whether the transaction is an executory contract or an executory sale, the plaintiff would be entitled to rescind.

Pore v. Allis, 115 U. S. 363, 29 L. ed. 393, 6 Sup. Ct. Rep. 69; Freer v. Denton, 61 N. Y. 492; Cockcroft v. Muller, 71 N. Y. 367; Bigler v. Morgan, 77 N. Y. 312; Brokaw v. Duffy, 165 N. Y. 391, 59 N. E. 196; Glenn v. Rossler, 88 Hun, 74, 34 N. Y. Supp. 608; Nash v. Towne, 5 Wall. 689, 18 L. ed. 527; Williston, Contr. §§ 1455, 1457; Flandrow v. Hammond, 148 N. Y. 129, 42 N. E. 511; Chapman v. Brooklyn, 40 N. Y. 372.

Messrs. Frederick T. Kelsey and Charles C. Pearce, with Messrs. Lewis & Kelsey, amici curiœ:

A wireless transfer transaction creates an executory contract, as distinguished from a sale.

Paul v. Travelers' Ins. Co. 112 N. Y.

472, 3 L.R.A. 443, 8 Am. St. Rep. 758, 20 N. E. 347; Rickerson v. Hartford F. Ins. Co. 149 N. Y. 307, 43 N. E. 856; Gillett v. Bank of America, 160 N. Y. 549, 55 N. E. 292; Page, Contr. § 2054; Wright v. Reusens, 133 N. Y. 298, 31 N. E. 215; Mansfield v. New York C. & H. R. R Co. 102 N. Y. 205, 6 N. E. 386; Atlantic Communication Co. v. Zimmermann, 182 App. Div. 862, 170 N. Y. Supp. 275; Chemical Nat. Bank v. Equitable Trust Co. 201 App. Div. 485, 194 N. Y. Supp. 177; Bank of British N. A. v. Cooper, 137 U. S. 473, 34 L. ed. 759, 11 Sup. Ct. Rep. 160; Safian v. Irving National Bank, 116 Misc. 647, 190 N. Y. Supp. 532; Stern v. Barrett, 202 App. Div. 830, 195 N. Y. Supp. 160; Dermer v. Barrett, 202 App. Div. 828, 195 N. Y. Supp. 703; Temmer v. Zimmermann, 202 App. Div. 832, 195 N. Y. Supp. 412; Pfotenhauer v. Equitable Trust Co. 115 Misc. 396, 188 N. Y. Supp. 464; Oshinsky v. Taylor, 172 N. Y. Supp. 231; Wasserman v. Irving Nat. Bank, 114 Misc. 704, 187 N. Y. Supp. 243; American Woolen Co. v. Samuelsohn, 226 N. Y. 61, 123 N. E. 154; Merry Realty Co. v. Shamokin & H. Real Estate Co. 230 N. Y. 316, 130 N. E. 306; Williston, Contr. § 1469; Slivick v. American Exp. Co. 176 Wis. 314, 186 N. W. 185.

Rescission is the proper remedy.

Williston, Contr. § 1375; Clark, Contr. 2d ed. pp. 469, 471; Page, Contr. $ 3027; Putnam v. Wescott, 19 Johns. 73; Chapman v. Brooklyn, 40 N. Y. 372; Cockroft v. Muller, 71 N. Y. 367; Bigler v. Morgan, 77 N. Y. 312; Graves v. White, 87 N. Y. 463; Welsh v. Gossler, 89 N. Y. 540; Hill v. Blake, 97 N. Y. 216; Northridge v. Moore, 118 N. Y. 419, 23 N. E. 570; Bean v. Carleton, 36 N. Y. S. R. 123, 12 N. Y. Supp. 519, affirmed in 126 N. Y. 642, 27 N. E. 852; Darragh v. Ross, 5 Silv. Sup. Ct. 323, 28 N. Y. S. R. 632, 7 N. Y. Supp. 864, affirmed in 130 N. Y. 641, 29 N. E. 1033; Flandrow v. Hammond, 148 N. Y. 129, 42 N. E. 511; Glenn v. Rossler, 156 N. Y. 161, 50 N. E. 785; Brokaw v. Duffy, 165 N. Y. 391, 59 N. E. 196; Nelson v. Hatch, 70 App. Div. 206, 75 N. Y. Supp. 389, affirmed in 174 N. Y. 546, 67 N. E. 1085; Callanan v. Keeseville, A. C. & L. C. R. Co. 199 N. Y. 268, 92 N. E. 747; Clarke Contracting Co. v. New York, 229 N. Y. 413, 128 N. E. 241; Smith v. McCluskey, 45 Barb. 610; Altschul v. Koven, 94 N. Y. Supp. 558; Washburne

v. Rainier Co. 130 App. Div. 42, 114 N. Y. Supp. 424; Chesapeake & O. Canal Co. v. Knapp, 9 Pet. 541, 9 L. ed. 222; Farmers' Loan & T. Co. v. Galesburg, 133 U. S. 156, 33 L. ed. 573, 10 Sup. Ct. Rep. 316; Columbus v. Mercantile Trust Co. 218 U. S. 645, 54 L. ed. 1193, 31 Sup. Ct. Rep. 106.

Time of performance was of the

essence.

Booth v. Spuyten Duyvil Rolling Mill Co. 60 N. Y. 487; Helgar Corp. v. Warner's Features, 222 N. Y. 449, 119 N. E. 113; Schmidt v. Reed, 132 N. Y. 108, 30 N. E. 373; Wilson v. Empire Dairy Salt Co. 50 App. Div. 116, 63 N. Y. Supp. 565; Blanchard v. Archer, 93 App. Div. 463, 87 N. Y. Supp. 665; Henderson v. McFadden, 50 C. C. A. 304, 112 Fed. 394; Williston, Contr. § 846; Page, Contr. § 2109; 13 C. J. 688; Garrett v. Cohen, 63 Misc. 450, 117 N. Y. Supp. 129; Mercantile Nat. Bank v. Heinze, 75 Misc. 551, 135 N. Y. Supp. 963.

Messrs. George E. Morgan and Paul G. Gravenhorst, for respondent:

In order to entitle a defendant to a trial he must show that he has a bona fide defense to the action, which he may be able to establish, and that it is a defense that is plausible and fairly arguable, and of a substantial character.

Dwan v. Massarene, 199 App. Div. 872, 192 N. Y. Supp. 577.

The answer interposed by the defendants presents no fact sufficient to raise a triable issue, nor does it set forth any principle of law which constitutes a defense to the action.

Atlantic Communication Co. v. Zimmermann, 182 App. Div. 862, 170 N. Y. Supp. 275; Pfotenhauer v. Equitable. Trust Co. 115 Misc. 396, 188 N. Y. Supp. 464, affirmed without opinion in 201 App. Div. 846, 193 N. Y. Supp. 949; Cutler v. American Exch. Nat. Bank, 113 N. Y. 593, 4 L.R.A. 328, 21 N. E. 710; People ex rel. Zotti v. Flynn, 135 App. Div. 276, 120 N. Y. Supp. 511.

Mr. Harold W. Bissell, with Messrs. Stetson, Jennings, & Russell, amici curiæ:

Cable, wireless, and draft transactions in foreign exchange have one fundamental feature in commoneach form of transaction is a sale of an order on a foreign bank, plus an engagement that the foreign bank will honor the order on due presentation

(or upon arrival as the equivalent of presentation).

Suse v. Pompe, 8 C. B. N. S. 538, 141 Eng. Reprint, 1276, 30 L. J. C. P. N. S. 75, 7 Jur. N. S. 166, 3 L. T. N. S. 17, 9 Week. Rep. 15; American Exp. Co. v. Cosmopolitan Trust Co. 239 Mass. 249, 132 N. E. 26; Bank of United States v. United States, 2 How. 711, 11 L. ed. 439; Pavenstedt v. New York L. Ins. Co. 203 N. Y. 91, 96 N. E. 104, Ann. Cas. 1913A, 805; Leavitt v. De Launy, 4 N. Y. 363.

Upon the sale theory of a wireless transaction, there would seem to be no question but that rescission and recovery of the dollar purchase price are not permissible.

Suse v. Pompe, supra; American Exp. Co. v. Cosmopolitan Trust Co. 239 Mass. 249, 132 N. E. 26; Chemical Nat. Bank v. Equitable Trust Co. 201 App. Div. 485, 194 N. Y. Supp. 177.

Hiscock, Ch. J., delivered the opinion of the court:

This action involves a transaction in foreign exchange, and leads to the practical question: "Who shall bear the loss springing out of that transaction?"

On March 31, 1917, the plaintiff's assignor paid to the defendants the sum of $8,500, in consideration of which they agreed to make a wireless transfer of 47,222 marks to the account of a designated payee at a designated bank in Berlin. Owing to the war into which we were then about to enter, our government at this date had taken control of wireless stations, and mail communications between this country and Germany were soon suspended, and, as the result of these conditions, the marks were not placed to the credit of the payee until January, 1920. The plaintiff, claiming that the original contract was an executory one, and that it had been duly rescinded because of the failure of defendants to comply therewith, brought this action to recover the money paid to them as above stated, and subsequently made an application for summary judgment, which was granted.

The defendants by their answer, and by supporting affidavits, presented four alleged defenses in oppo

sition to such application, which require consideration. They claimed: First, that the transaction was an executed, present sale of exchange, and therefore not subject to rescission; second, that, whatever otherwise might have been the interpretation of their contract, there were certain customs governing the subject of foreign exchange which relieved them from responsibility; third, that a modified contract had been substituted; fourth, that the plaintiff's assignor, whatever right it may have had to do so, never, in fact, effected a rescission of its contract, and therefore that this action cannot be maintained. If they made it appear that under any one of these defenses a genuine and substantial issue was created, they were entitled to a trial in the regular order, and a summary judgment was improper. General Invest. Co. v. Interborough Rapid Transit Co. 235 N. Y. 133, 139 N. E. 216.

Trial-summary judgment for plaintiff when improper.

The first of the questions presented, the one whether the ordinary transaction for the acquirement of foreign exchange results in an executed sale of something or an executory contract to do something, has become one of great importance in banking and commercial circles, and is the subject of earnest discussion. This court has not as yet had occasion to pass upon the question in its familiar form. In Legniti v. Mechanics & Metals Nat. Bank, 230 N. Y. 415, 16 A.L.R. 185, 130 N. E. 597, we expressly reserved decision of the question. In Equitable Trust Co. v. Keene, 232 N. Y. 290, 19 A.L.R. 1137, 133 N. E. 894, the question arose on demurrer to a complaint, and the allegations of the complaint, without entirely controlling our views as to the nature of the transaction, did somewhat limit them. We come now to the consideration of one of these transactions, presented in what we judge. to be a fairly typical manner.

The negotiations between plain

tiff's assignor and defendants began with the request by the former for a quotation at which the latter would "sell about 45,000 marks wireless," and which was duly answered with quotations. This was followed by some telephonic or telegraphic messages which are not considered of importance, and then by the final communications between the parties, which, interpreted in the light of their conduct thereunder, must fix the nature of the transaction. The assignor wrote to the defendants a letter containing the following paragraph: "Confirming telegram exchanged and phone conversation we accept your rate of 72 for $8,500 wireless transfer to Berlin and shall thank you to transfer the equivalent, viz., 47,222.22 marks to the Deutsche Asiatic Bank, Berlin, in favor of Mr. Max Mittag, Shanghai. As agreed we shall reimburse you by telegraph first thing to-morrow morning for the amount of $8,500, and on receipt of your bill for wireless charges we shall be pleased to send you check for the same."

In response to this defendants delivered to the assignor a memorandum which read as follows:

"To Zimmerman & Forshay, 9 and 11 Wall Street:

"Terms: Cash or certified check.

"M 47,222, wireless transfer at
18
Wireless expenses

Check

Due us

$8,500.00 10.60

"Neither Zimmerman & Forshay nor their correspondents are responsible for delayed payment or nonpayment of the above amount caused by any delay or error on the part of the Cable Co. in the transmission or the delivery of the message ordering the payment.

"In case of nondelivery of cable message payment will be effected by

our correspondent upon receipt of our mail confirmation.

"Kindly remit. Payable to Deutsche Asiatic Bank, Berlin, for account of Max Mittag, Shanghai, through Deutsche Bank, Berlin.'

To this memorandum the assignor answered: "We are in receipt of your favor of 31st ult. As requested inclose check for $10.60 in settlement of cost of wireless regarding transfer of 47,222 marks of the Deutsche Asiatic Bank Berlin, for the account of Mr. Max Mittag, Shanghai."

Immediately defendants delivered to the wireless telegraph company a message for transmission to the Deutsche Bank of Berlin, where they had an account, instructing said bank to pay to the Deutsche Asiatic Bank of Berlin for the account of the said Max Mittag the sum of marks in question.

It would be impossible within reasonable limits, and we think rather profitless, to attempt to review all of the authorities which have debated the issue whether such a transaction as this was a sale or an executory contract, or to attempt to analyze at length all of the arguments and different theories which have been earnestly urged upon us in favor of the former answer to that question. The transaction as evidenced by the agreement between the parties, and as interpreted by the acts of the defendants in trying to effectuate their agreement, seems to us to contain certain fundamental features which cannot be eliminated, and which give to the contract the charto transfer mon- acter of future perey-character. formance; that is, make it executory rather than an executed sale and transfer. We are aided in determining what the undertaking is by clearly seeing what it is not.

Bank-contract

Concededly, the defendants did not deliver to plaintiff's assignor any marks, and did not set apart actual. money which it then undertook, for the account of the purchaser, to transport and deposit to the credit

of the designated payee in a given bank. Certainly no actual money passed from the banker to or for the account of the customer. But it has been urged that the customer purchased a contract to create a credit for its payee, and that thus there was an executed sale. This seems to us to involve a mere redundancy of words. If a person made a contract with a carpenter, whereby in consideration of the payment of a certain sum of money the latter agreed to build a house, nobody, we believe, would think of calling this the purchase of a contract, but would regard it as a simple contract whereby something was to be done in the future. The same reasoning seems to us to apply to the agreement in one of these transactions, whereby the banker agrees to erect a credit for a given amount of foreign money.

In the Keene Case, supra, the theory was especially pressed upon us that one of these transactions was a sale of credit, and therefore executed; but we answered that theory in languages entirely applicable here. We said: "In such an agreement [one relating to foreign exchange] there is no guaranty or necessary implication that the contractor has any credit which he is selling, or agreeing to sell, or that he will place the credit through a third party as correspondent. can fulfil the terms of such an agreement through his branch office, and he can, after making the agreement, create for himself the credit which will enable him to place to the credit of the other party to the agreement the funds in question. We are unable to see how such an agreement is other than a contract for future action, no matter how speedily accomplished, or how it can be a sale of an existing right."

He

On the present appeal a strenuous effort is made to liken a transaction in foreign exchange to the purchase of a draft or bill of exchange, and then to force the conclusion that because the latter transaction is regarded as a purchase or sale, the

former also must be stamped with that character. Assuming that there may be some similar features in the case of a purchased draft and of an order for the transmission of foreign exchange, we think there is no similarity between them in respect of the question which we are discussing. One who secures a draft obtains a written order by the drawer upon the drawee, which by commercial usage, and even by statutory enactment in some jurisdictions, has come to be recognized as the symbol and equivalent of money, and which enables the one who has obtained it, without further action by the drawer, to secure from the drawee the moneys which it represents. In consideration of the money paid by him he has actually obtained an instrument for the payment of money, and which is regarded as its equivalent, and it is perfectly natural to speak of such a transaction as resulting in the executed purchase of a draft. A person who makes a contract for a credit in foreign exchange accomplishes no such result. He has secured nothing which will pass for money or which will enable him, except through the action of the banker, to obtain the exchange which he desires. It gives him no control whatever over the course of events which will lead to the establishment of the credit. The banker retains entire control of this, and by his future actions causes to be set up the credit which will eventually enable the customer to obtain the exchange in money which he desires.

So, considering what the banker in a transaction like the present one does not do or attempt to do, as well as that which he does do, it seems to us that in the final and accurate analysis his contract is that, in consideration of the money paid to him, he will create a credit. for a given person, of a given amount of the desired foreign money, at a given place, through orders despatched by wireless and confirmed by mail to somebody who will obey

his directions in setting up the credit, and that thus his contract, when he makes it, is not an executed act, but an executory agreement.

But it is argued that, whatever otherwise might be the meaning and effect of the contract made by defendants, this meaning and effect were so modified by clauses in their memorandum and by custom pertaining to transactions in foreign exchange, of which they might give evidence upon the trial, that the liability which has been imposed by the present judgment was unwarranted. The clauses in the memorandum to which reference is made are the ones providing that the bankers shall not be liable "for delayed payment or nonpayment . caused by any

delay or error on the part of the cable company in the transmission or the delivery of the message ordering the payment." Interpreted in the light of other provisions in the memorandum, and of the entire transaction, we think that these exemptions were applicable only to an ordinary case of delay or error, and were not sufficient to cover an instance exemption

-construction of

of total suspension provision. of telegraphic and mail communications, such as was encountered in the present case.

The customs claimed by defendants to prevail in the city of New York in respect of transactions in foreign exchange, and to have been known by plaintiff's assignor at the time the present transaction was consummated, were stated upon the motion to be: That "the seller of the wireless or cable transfer is not responsible for the actual delivery to this correspondent of the message ordering the payment, and such seller does not obligate itself actually to make such payment through its correspondent. Under said customs the wireless telegraph company and the United States Postoffice are the agents of the purchaser, and not of the seller, for the purposes of transmission, and delivery of the message to a wireless telegraph company and the deposit of