NICHOLS
AND
RAYNBRED.

Hill. 12 Jac. Rot. 131.
[K.B. 1615]

Assumpsit.

Suff. Jenk. Cent. 296. 4 Co. 94. 17.38. Ben. 150. Dy.30.a. Yelv. 134. 4 Leo. 3. 3 Cro. 543. Promise for promise. Post. 106.

Nichols brought an assumpsit against Raynbred, declaring that in consideration, that Nichols promised to deliver the defendant to his own use a cow, the defendant promised to deliver him 50 shillings: adjudged for the plaintiff in both Courts, that the plaintiff need not to aver the delivery of the cow, because it is promise for promise. Note here the promises must be at one instant, for else they will be both nuda pacta.

[319] 54.

PORDAGE
versus
COLE.

[K.B. 1669]
Hil. 20 & 21 Car. II. Regis, Rol. 1607.

[Applied, Lloyd v. Lloyd, 1837, 2 My. & Cr. 204. Referred to, Elderton v. Emmens, 1848, 6 C. B. 175. Approved, Marsden v. Moore, 1859, 4 H. & N. 504. Explained, Hoare v. Rennie, 1859, 29 L. J. Ex. 77; 5 H. & N. 19. Referred to, Churchward v. R., 1865, L. R. 1 Q. B. 195. Paynter v. James, 1867-68, L. R. 2 C. P. 357; 18 L. T. 449; Button v. Thompson, 1869, L. R. 4 C. P. 343; Bradford v. Williams, 1872, L. R. 7 Ex. 261; Robinson v. Mollett, 1875, L. R. 7 H. L. 814; Bettini v. Gye, 1876, 1 Q. B. D. 187. Followed, Simpson v. Crippin, 1872, L. R. 8 Q. B. 17. Distinguished, Honck v. Muller, 1881, 7 Q. B. D. 100. Referred to, Mersey Steel & Iron Company v. Nayler, 1884, 9 App. Cas. 443; Ebbw Vale Steel & Iron Company v. Blaina Iron Company, 1901, 6 Com. Cas. 36.]

S. C. 1 Sid. 423. 1 Lev. 274. Sir T. Raym. 183. 2 Keb. 533, 542, 543. If it be agreed between A. and B. that B. shall pay A. a sum of money for his lands, &c. on a particular day, these words amount to a covenant by A. to convey the lands; for agreed is the word of both; bllt it is an independent covenant, and A. may bring an action for the money before any conveyance by him of the land.^[1]

Debt upon a specialty for £774 15s. The plaintiff declares that the defendant, by his certain writing of agreement made at, &c. by the plaintiff by the name, &c. and the defendant by the name, &c. and brings the deed into Court, &c., it was agreed between the plaintiff and defendant in manner and form following, (viz.) that the defendant should give to the plaintiff the sum of £775 for all his lands, with a house called Ashmole-House thereunto belonging, with the brewing vessels remaining in the said house, and with the malt-mill and wheelbarrow; and that in pursuance of the said agreement, the defendant had given to the plaintiff 5s. as an earnest; and it was by the said writing further agreed between the plaintiff and defendant, that [85 Eng Rep. 450] the defendant should pay to the plaintiff the residue of the said sum of £775 a week after the Feast of St. John the Baptist then next following (all other moveables, with the corn upon the ground, except). And although the defendant has paid five shillings, parcel, &c. yet the said defendant, although often requested, has not paid the residue to  the damage, &c. The defendant prays oyer of the specialty, which is entered in hæc verba, to wit: "11 May, 1668. It is agreed between Doctor John Pordage and Bassett Cole, Esquire, that the said Bassett Cole shall give unto the said doctor £775 for all his lands, with Ashmole-House, [1 Wms. Saunders 320] thereunto belonging, with the brewing-vessels as they are now remaining in the said house, and with the malt-mill and wheelbarrow. In witness whereof we do put our hands and seals: mutually given as earnest in performance of this 5s.; the money to be paid before Midsummer, 1668; all other moveables, with the corn upon the ground, excepted." And upon oyer thereof the defendant demurs. And Withins, of counsel with the defendant, took several exceptions to the declaration: 1. That the demand by the declaration is of £774 15s.; whereas the whole sum is £775; and the 5s. paid for earnest shall not be taken as part of the sum of £775. Sed non allocatur; for per Curiam it shall be intended as part of the sum. 2. That the exception of the residue of the moveables is not well recited: for the word (except) in the declaration is not good for want of sense. Sed non allocatur; for it is sensible enough in the declaration: and if it were not, the declaration is good; for an insensible clause does not make the rest of the deed vitious which is sensible in itself ^[2] 3. The great exception was, that the plaintiff in his declaration has not averred that he had conveyed the lands, or at least tendered a conveyance of them; for the defendant has no remedy to obtain the lands, and therefore the plaintiff ought to have conveyed them, or tendered a conveyance of them, before he brought his action for the money. And it was argued by Withins, that if by one single deed two things are to be performed, namely, one by the plaintiff and the other by the defendant, if there be no mutual remedy, the plaintiff ought to aver performance of his part: Trin. 12 Jac. 1, between Holder v. Tayloe,^[*] Ughtred's case,^[†] and Sir Richard Pool's case there cited, and Gray's case:^[‡] and that the word (pro) made a condition in things executory.^[§] And here in this case it is a condition precedent which ought to be performed before the action brought; wherefore he prayed judgment for the defendant.

But it was adjudged by the Court, that the action was well brought without an averment of the conveyance of the land; because it shall be intended that both parties have sealed the specialty. And if the plaintiff has not conveyed the land to the defendant, he has also an action of covenant against the plaintiff upon the agreement contained in the deed, which amounts to a covenant on the part of the plaintiff to convey the land; and so each party has mutual remedy against the other. But it might be otherwise if the specialty had been the words of the defendant only, and not the words of both parties by way of agreement as it is here. And by the conclusion of the deed it is said, that both parties had sealed^[3] it; and therefore judgment was given for the plaintiff,^[4] which was afterwards affirmed in the Exchequer-Chamber, Trin. 22 of King Charles the Second.

----------

[1] S. C. cited and recognised, 1 Salk. 171. 1 Lutw. 251. 12 Mod. 461, 462. 1 Ld. Raym. 665. 8 Mod. 42. 1 Salk. 113. 2 H. Black. 393. For perhaps the conveyance cannot be made by the day appointed for payment of the money. Sir T. Raym, 183.

[2] S. P. Vaug. 176, Crowle v. Swindles. 1 Lutw. 493, 496, Hilton v. Smith.

[*] 1 Rol. Abr. 518 (C), pl. 2, 3.

[†] 7 Rep. 10.

[‡] 5 Rep. 78, 79. S. C. Cro. Eliz. 405.

[§] Co. Litt. 204 a.

[3] It appears indeed from the profert, that the defendant had sealed the agreement; but if it were at all material towards the support of this case, that both parties should have sealed the agreement, they do not appear to have done so here. It does not follow because the words "in witness whereof we do put our hands and seals" are used in the conclusion of the agreement, that therefore it was sealed by them. On the contrary, it has been decided, that these words do not amount to an averment that the parties sealed the instrument: see ante, 291, Cabell v. Vaughan, and note (1).

[4] Almost all the old cases, and many of the modern ones all this subject, are decided upon distinctions so nice and technical, that it is very difficult, if not impracticable, to deduce from them any certain rule or principle by which it can be ascertained, what covenants are independent, and what dependent; and of course, when [85 Eng Rep. 451] it is necessary to aver performance in the declaration, and when not. Thus, if A. covenant with B. to serve him for a year, and B. covenant with A. to pay him £10, it is held that these are independent covenants, and A. may maintain an action against B. for the money before any service; but if B. had covenanted to pay him £10 for the service, these words make the service a condition precedent, and A. cannot enforce payment of the money until he has performed the service. So where A. covenants with B. to marry his daughter, and B. covenants to convey an estate to A. and the daughter in special tail, it is said that though A. marry another woman, or the daughter another man, still A. may have an action against B. on the covenant; but if B. had covenanted to convey the estate for the cause aforesaid, the marriage is a condition precedent, and no action will lie until it be solemnised. 15 H. 7, 10, pl. 17. Bro. Covenant, 22. 12 Mod. 460, Thorpe v. Thorpe. Hob. 106, Lampleigh v. Brathwait. Also where A., in consideration of £10, promised to deliver to B. all the books of the law, it has been said, that B. may bring an action against A. for the books before any payment; but if A., in consideration that B. will pay him £10, will deliver to him all the books of the law, B. cannot bring an action for the books before he has paid the money. 1 Rol. Rep. 125, Everard v. Hopkins, per Coke C.J. So where B. covenanted with C. his copyholder, to assure to him and his heirs the freehold and inheritance of his copyhold, and C., in consideration of the same performed, covenanted to pay such a sum, it was adjudged that this was a condition precedent, and B. must make the assurance before he is entitled to the money; but if the words had been, in consideration of the said covenant to be performed, B. might bring an action for the money before he made the assurance. 3 Leon. 219, Brocas's case. And lastly, where articles of agreement were made between A. and B. and a covenant by A., that, for the consideration thereafter expressed, he should convey certain lands to B. in fee, and B., on his part, for the consideration aforesaid, covenanted to pay a sum of money to A.; it was held, that these were independent covenants, and A. might bring an action for the money before any conveyance of the lands. 1 Rol. Abr. 415, pl. 8, S. C. cited 12 Mod. 463, Thorpe v. Thorpe. 1 Ld. Raym. 665, 666. 1 Lutw. 251, 252. There are many other authorities of a similar nature which I refer the reader to. 1 Rol. Rep. 336, Spanish Ambassador v. Gifford. Yelv. 133, 134, Bettisworth v. Campion. Hob. 88, Nichols v. Raynbred. 1 Lev. 293, Beany v. Turner. Hard. 102, 103, Gibbons v. Prewd. 1 Str. 535, Blackwell v. Nash. Ibid. 712, Dawson v. Myer. 1 Wils. 88, Martindale v. Fisher. Hence it appears that the Judges in these cases seem to have founded their construction of the independency or dependency of covenants or agreements on artificial and subtle distinctions, without regarding the intent and meaning of the parties. For the rule which is contained in them all seems clear and indisputable; that where there are several covenants, promises, or  agreements, which are independent of each other, one party may bring an action against the other for a breach of his covenants, &c. without averring a performance of the covenants, &c. on his, the plaintiff's part; and it is no excuse for the defendant to allege in his plea a breach of the covenants, &c. on the part of the plaintiff; according to Justinian's rule in the civil law, "Qui actionem habet ad rem recuperandum, ipsam rem habere videtur." Justin. de Regulis Juris, 361. But where the covenants, &c. are dependent, it is necessary for the plaintiff to aver and prove a performance of the covenants, &c. on his part, to entitle himself to an action for the breach of the covenants on the part of the defendant; and so are also 7 Rep. 10 a. b. Ughtred's case. Doug. 690, 3d ed. Kingston v. Preston, cited in Jones v. Barkley. The difficulty lies in the application of  this rule to the particular case. It is justly observed, that covenants, &c. are to be construed to be either dependent or independent of each other, according to the intention and meaning of the parties, and the good sense of the case; and technical words should give way to such intention. 1 T. R. 645, Hotham v. East India Company. 6 T. R. 668, Porter v. Shephard. Ibid. 571, Campbell v. Jones. 7 T. R. 130, Morton v. Lamb. In order therefore to discover that intention, and thereby to learn, with some degree of certainty, when performance is necessary to be averred in the declaration, and when not, it may not be improper to lay down a few rules, which will perhaps be found useful for that purpose.

1. If a day be appointed for payment of money, or part of it, or for doing any other act, and the day is to happen, or may happen, before the thing which is the con [85 Eng Rep. 452] sideration of the money, or other act, is to be performed, an action may be brought for the money, or for not doing such other act before performance; for it appears that the party relied upon his remedy, and did not intend to make the performance a condition precedent: and so it is where no time is fixed for performance of that, which is the consideration of the money or other act. Dyer, 76 a. in margine. 1 Salk. 171, Thorpe v. Thorpe. S. C. 1 Ld. Raym. 665. 1 Lutw. 250. 12 Mod. 461. 1 Vent. 177, Peter v. Opie, per Hale C.J. 2 Saund. 350, S. C.  1 Salk. 113, Callonel v. Briggs. 2 H. Black. 389, Terry v. Duntze. 6 T. R. 572, Campbell v. Jones.^[a] This seems to be the ground of the judgment in this case of Pordage v. Cole, the money being appointed to be paid on a fixed day, which might happen before the lands were, or could be, conveyed. And upon the same ground is 48 Edw. 3, 2, 3, decided. Lord Holt, in Thorpe v. Thorpe, 12 Mod. 461. 1 Lutw. 250, 251, observes, that the report of 48 Edw. 3, in 7 Rep. 10 b. Ughtred's case, is incorrect. It is thus put in that book. Sir Richard Pool covenants with Sir Ralph Tolcelser to serve him with three esquires in the wars of France; Sir Ralph Tolcelser covenants, in consideration of those services, to pay him so much money; and it is said, that an action will lie for the money before any service. But in the book at large the case will be found to have been adjudged upon the above-mentioned rule. The report is this-Sir Richard Pool covenants with Sir Ralph Tolcelser to serve him with three esquires in the wars of France; and Sir Ralph covenants with him to pay so much money for the service; and it was further agreed that half the money should be paid in England on a certain day before they went for France; and the rest by quarterly payments (which also might incur before the service): and it was held that an action might be brought for the money before the service.

But, 2. When a day is appointed for the payment of money, &c. and the day is to happen after the thing which is the consideration of the money, &c. is to be performed, no action can be maintained for the money, &c. before performance. 1 Salk. 171, Thorpe v. Thorpe, 2d Resolution. 12 Mod. 462. 1 Ld. Raym. 665. 1 Lutw. 251. Dyer, 76 a. pl. 30.^[b]

3. Where a covenant goes only to part of the consideration on both sides, and a breach of such covenant may be paid for in damages, it is an independent covenant, and an action may be maintained for a breach of the covenant all the part of the defendant, without averring performance in the declaration. As where A. by deed conveyed to B. the equity of redemption of a plantation in the West Indies, together with the stock of negroes upon it, in consideration of £500. and an annuity of £160 for life, and covenanted that he had a good title to the plantation, was lawfully possessed of the negroes, and B. should quietly enjoy: and B. covenanted that, A. well and truly performing all and every thing therein contained on his part to be performed, he would pay the annuity: in an action by A. against B. on this covenant, the breach  assigned was, the lion-payment of the annuity: plea, that A. was not at the time legally possessed of the negroes on the plantation, and so had not a good title to convey. The Court of K. B. on demurrer held the plea to be ill, and [85 Eng Rep. 453] added, that if such plea were allowed, anyone negro, not being the property of A., would bar the action. E. T. 17 Geo. 3, K. B. Boon v. Eyre. 1 H. Black. 273, note (a). 2 Black. Rep. 1312, S. C. The whole consideration of the covenant on the part of B. the purchaser to pay the money, was the conveyance by A. the seller to him of the equity of redemption of the plantation, and also the stock of negroes upon it. The excuse for non-payment of the money was, that A. had broke his covenant as to part of the consideration, namely, the stock of negroes. But as it appeared that A. had conveyed the equity of redemption to B., and so had in part executed his covenant, it would be unreasonable that B. should keep the plantation, and yet refuse payment, because A. had not a good title to the negroes. 6 T. R. 573, per Ashhurst J. Besides, the damages sustained by the parties would be unequal, if A.'s covenant were held to be a condition precedent. 1 H. Black. 279, Duke of St. Alban's v. Shore. For A. on the one side would lose the consideration money of the sale, but B.'s damage on the other might consist perhaps in the loss only of a few negroes. So where it was agreed between C. and D. that, in consideration of £500, C. should teach D. the art of bleaching materials for making paper, and permit him, during the continuance of a patent which C. had obtained for that purpose, to bleach such materials according to the specification; and C., in consideration of the sum of £250 paid. and of the further sum of £250 to be paid by D. to him, covenanted that he would with all possible expedition teach D. the method of bleaching such materials, and D. covenanted that he would, on or before the 24th of February 1794, or sooner, in case C. should before that time have taught him the bleaching of such materials, pay to C. the further sum of £250; in covenant by C. against D. the breach assigned was the non-payment of the £250. Demurrer, that it was not averred that C. had taught D. the method of bleaching such materials. But it was held by the Court, that the whole consideration of the agreement being, that C. should permit D. to bleach materials as well as teach him the method of doing it, the covenant by C. to teach formed but part of the consideration, for a breach of which D. might recover a recompence in damages. And C. having in part executed his agreement by transferring to D. a right to exercise the patent, he ought not to keep that right without paying the remainder of the consideration, because he may have sustained some damage by D.'s not having instructed him; and the demurrer was overruled. 6 T. R. 570, Campbell v. Jones.^[c] Hence it appears that the reason of the decision in these and other similar cases, besides the inequality of the damages, seems to be, that where a person has received a part of the consideration for which he entered into the agreement, it would be unjust that because he has not had the whole, he should therefore be permitted to enjoy that part without either paying or doing any thing for it. Therefore the law obliges him to perform the agreement on his part; and leaves him to his remedy to recover any damage he may have sustained in not having received the whole consideration. And hence, too, it seems it must appear upon the record [85 Eng Rep. 454] that the consideration was executed in part: as in Boon v. Eyre, above-mentioned, the action was on a deed, whereby the plaintiff had conveyed to the defendant the equity of redemption of the plantation; for the defendant did not deny the plaintiff's title to convey it: so in Campbell v. Jones, the plaintiff had transferred to the defendant a right to exercise the patent. Therefore, if an action be brought on a covenant or agreement contained in articles of agreement or other executory contract where the whole is future, it seems necessary to aver performance in the declaration of the whole, or at least of part of that which the plaintiff has covenanted to do; or at least it must be admitted by the plea that he has performed part. As where A., by articles of agreement, in consideration of a sum of money to be paid to him by B. on a certain day, covenants to convey to B. on the same day a house together with the fixtures and furniture therein, and that he was lawfully seised of the house, and possessed of the fixtures and furniture; in an action against B. for the money, A. must aver that he conveyed either the whole of the premises, or at least the house, to B., or it must be admitted by B. in his plea that A. did convey the house, but was not lawfully possessed of the furniture or fixtures.^[d]

4. But where the mutual covenants go to the whole consideration on both sides, they are mutual conditions, and performance must be averred. 1 Vent. 147, Large v. Cheshire. 1 H. Black. 270, Duke of St. Alban's v. Shore.

5. Where two acts are to be done at the same time, as where A. covenants to convey an estate to B. on such a day, and in consideration thereof B. covenants to pay A. a sum of money on the same day, neither can maintain an action without shewing performance of, or an offer to perform, his part, though it is not certain which of them is obliged to do the first act: and this particularly applies to all cases of sale. 1 Salk 112, 113, Callonel v. Briggs. Ibid. 171, Thorpe v. Thorpe. 2 Salk. 623, Lancashire v. Killingworth. Doug. 691, 3d ed., Kingston v. Preston. Ibid. 684. Jones v. Barkley. 4 T. R. 761, Goodisson v. Nunn. 6 T. R. 665, Porter v. Shephard. 7 T. R. 125, Morton v. Lamb. 8 T. R. 366, Glazebrook v. Woodrow. 2 Saund. 352, Peeters v. Opie, note (5). 2 H. Black. 178, French v. Campbell. Ibid. 123, Phillips v. Fielding. 2 Saund. 106, Holdipp v. Otway. 1 East, 203, Rawson v. Johnson. Ibid. 619, Heard v. Wadham. 4 East, 477, Hall v. Cazenove. 6 East, 555, Martin v. Smith.^[e]

----------

[a] [1 B. & Ad. 124, Ikin v. Brook. 4 C. & P. 309, Irving v. King. 10 A. & E. 50, Mattock v. Kinglake. 2 P. & D. 343, S. C. 10 A. & E. 793, Lord Howden v. Simpson. 2 P. & D. 714, S. C. 9 M. & W. 315, Pistor v. Cater. 10 M. & W. 355, Wilks v. Smith. See also 1 Bing. N. C. 671, 677, Alexander v. Gardner. 1 Scott, 630, S. C.]

[b] Therefore, where a ship was let to freight at a certain sum per month, to be paid on her final discharge at the end of the voyage, and she was lost in the middle of the voyage, it was held that no action could be maintained for any freight. Byrne v. Pattinson, Abbot on Shipping, 347. 8 East, 473, Smith v. Wilson. [2 Bing N. C. 555, Mitchell v. Darthez. 2 Scott, 771, S. C.] So where freight was to be paid on the ship's arrival at her first destined port, and she was lost before her arrival. 2 B. & A. 17, Gibbon v. Mendez. But where a day is specified for the performance of certain works, and money is to be paid' on performance, although the works be not performed on the day specified, yet an action may be maintained for the money when they are performed, and the party who is to pay the money must have recourse to a cross action for any damages occasioned by the delay. Cock v. Curtoys, K. B. M. T. 2 Geo. 4, M. S. [3 Bing. N. C. 737, Lucas v. Godwin. 4 Scott, 502, S. C.]

[c] See 10 East, 295, Ritchie v. Atkinson, which was decided upon the same grounds. Also 10 East, 555, Harelock v. Geddes. 12 East, 389, Davidson v. Gwynne. 3 M. &. S. 308, Storer v. Gordon. 8 Taunt. 576, Fothergill v. Walton. 2 B. Moore, 630, S. C. [4 Doug. 356, Ohlsen v. Drummond. 4 Bing. 409, Carpenter v. Cresswell. 1 Moo. & P. 66, S. C. 2 B. & Ad. 822, 829, 831, Rose v. Poulton. 4 A. & E. 599, Franklin v. Miller. 3 Bing. N. C. 355, Stavers v. Curling. 3 Scott, 740, S. C. 3 Bing. N. C. 737, Lucas v. Godwin. 4 Scott, 502, S. C. 2 M. & Cr. 192, Lloyd v. Loyd. 4 Bing. N. C. 105, Dallman v. King. 5 Scott, 382, S. C. 4 M. & W. 734, 747, Corrall v. Cattell. 1 Mann. & Gr. 841, 851, Clark v. Morrell. 2 Scott, 17, S. C. But see also 5 B. & C. 269, Whitcher v. Hall. Post, Vol. II. 352, et seq. notes to Peeters v. Opie. Where the consideration for the payment of money is entire and indivisible, as where the benefit expected by the defendant under the agreement is to result from the enjoyment of every part of the consideration jointly, so that the money payable is neither apportioned by the contract, nor capable of being apportioned by a jury, no action is maintainable, if any part of the consideration has failed; for, being entire, by failing partially, it fails altogether. 4 M. & W. 295, Chanter v. Leese. 5 M. & W. 698, S. C. in Cam. Scacc. Where the plaintiff has been guilty of a breach of contract on his part, which goes only to part of the consideration, the defendant may give evidence of such breach in mitigation of damages. 1 Cr. & M. 832, Allen v. Cameron. 3 Tyrw. 907, S. C.]  

[d] [4 M. & W. 295, Chanter v. Leese. 5 M. & W. 698, S. C. in Cam. Scacc.]

[e] 7 T. R. 381, Cook v. Jennings. 8 Taunt. 62, Ferry v. Williams. 1 B. Moore, 498, S. C. [See post, Vol. II. 352, et seq. note (3) to Peeters v. Opie.]

Kingston
v.
Preston

E. 13 Geo. 3.
Court of King's Bench, 1773.

"It was an action of debt, for non-performance of covenants contained in certain articles of agreement between the plaintiff and the defendant. The declaration stated;—That, by articles made the 24th of March, 1770, the plaintiff, for the considerations therein-after mentioned, covenanted, with the defendant, to serve him for one year and a quarter next ensuing, as a covenant-servant, in his trade of a silk-mercer, at £200 a year, and in consideration of the premises, the defendant covenanted, that at the end of the year and a quarter, he would give up his business of a mercer to the plaintiff, and a nephew of the defendant, or some other person to be nominated. by the defendant, and give up to them his stock in trade, at a fair valuation ; and that, between the young traders, deeds of partnership should be executed for 14 years, and from and immediately after the execution of, the said deeds, the defendant would permit the said young traders to carry on the said business in the [2 Douglas 690] defendant's house.—Then the declaration stated a covenant by the plaintiff, that he would accept the business and stock in trade, at a fair valuation, with the defendant's nephew, or such other person, &c. and execute such deeds of partnership, and, further, that the plaintiff should, and would, at, and before, the sealing and delivery of the deeds, cause and procure good and sufficient security to be given to the defendant, to be approved of by the defendant, for the payment of £250 monthly, to the defendant, in lieu of a moiety of the monthly produce of the stock in trade, until the value of the stock should be reduced to £4000.—Then the plaintiff averred, that he had performed, and been ready to perform, his covenants, and assigned for breach on the part of the defendant, that he had refused to surrender and give up his business, at the end of the said year and a quarter.—The defendant pleaded, 1. That the plaintiff did not offer sufficient security; and, 2. That he did not give sufficient security for the payment of the £250, &c.—And the plaintiff demurred generally to both pleas.—On the part of the plaintiff, the case was argued by Mr. Buller, who contended, that the covenants were mutual and independant, and, therefore, a plea of the breach of one of the covenants to be performed by the plaintiff was no bar to an action for a breach by the defendant of one of which he had bound himself to perform, but that the defendant might have his remedy for the breach by the plaintiff, in a separate action. On the other side, Mr. Grose insisted, that the covenants were dependant in their nature, and, therefore, performance must be alleged: the security to be given for the money, was manifestly the chief object of the transaction, and it would be highly unreasonable to construe the agreement, so as to oblige the defendant to give up a beneficial business, and valuable stock in trade, and trust to the plaintiff's personal security, (who might, and, indeed, was admitted to be worth nothing,) for the performance of his part.

In delivering the judgment of the Court, Lord Mansfield expressed himself to the following effect: There are three kinds of covenants: 1. Such as are called mutual and independant, where either party may recover damages from the other, for the injury he may have received by a breach of the covenants in his favour, and where it is no excuse for the defendant, to allege a breach of the covenants on the part of the plaintiff. 2. There are covenants which are conditions and dependant, in which the [2 Douglas 691] performance of one depends on the prior performance of another, and, therefore, till this prior condition is performed, the other party is not liable to an action on his covenant^[1]. 3. There is also [99 Eng. Rep. 438] a third sort of covenants, which are mutual conditions to be performed at the same time; and, in these, if one party was ready, and offered, to perform his part, and the other neglected, or refused, to perform his, he who was ready, and offered, has fulfilled his engagement, and may maintain an action for the default of the other; though it is not certain that either is obliged to do the first act.—His Lordship then proceeded to say, that the dependance, or independance, of covenants, was to be collected from the evident sense and meaning of the parties^[3], and, that, however transposed they might be in the deed, their precedency must depend on the order of time in which the intent of the transaction requires their performance. That, in the case before the Court, it would be the greatest injustice if the plaintiff should prevail: the essence of the agreement was, that the defendant should not trust to the personal security of the plaintiff, but, before he delivered up his stock and business, should have good security for the payment of the money. The giving such security, therefore, must necessarily be a condition precedent.—Judgment was accordingly given for the defendant, because the part to be performed by the plaintiff was clearly a condition precedent."

[1] Vide Duke of St. Alban's v. Shore, C. B. T. 29 Geo. 3, H. Bl. 270, 279, 280, where a rule laid down in Boone v. Eyre, viz. that where a covenant goes to the whole of the consideration on both sides, it is a condition precedent, was adopted and confirmed^[2].

[2] See Glazebrook v. Woodrow, 8 T. R. 366, acc.: where this case of Kingston v. Preston, is referred to by Grose and Le Blanc, Justices, as a leading authority on the construction of covenants as dependant or independant. The converse of this proposition was also maintained in Campbell v. Jones, 6 T. R. 570, where the covenant sued upon was to pay £500, and the covenant which the defendant relied upon was a covenant that be, the plaintiff, would instruct the defendant in bleaching, and permit him to bleach in the same manner, during the continuance of his (plaintiff's) patent.—Defendant demurred to the declaration, because it did not state that plaintiff had so instructed him; but the Court thought it not a condition precedent.

[3] Acc. per Cur. in Hotham v. E. India Company, 1 T. R. 638. It was there held that a ship owner might recover in covenant against the freighters for short tonnage, notwithstanding a covenant that no such claim should be allowed, unless it should be found upon a survey taken at the end of the voyage, by persons appointed between the parties; of which last covenant no mention was made in the declaration: the Court, considering it in the nature of a defeasance, or condition subsequent, to be shewn by the defendants as matter of defence, if they meant to rely on it. See also Morton v. Lamb, 7 T. R. 125, as to the necessity of averring readiness at least in the declaration, to do the plaintiff's part, (where something is to be done by both parties to a contract at the same time), in order to entitle him to recover against the defendant for not performing his part. But this need not amount to an actual tender to do an act, which the party was not bound to perform, to entitle him to claim performance from the other party. Rawson v. Johnson, 1 East, 203, where the action was for nondelivery of malt at a certain price, on request; and it was held, that an averment that the plaintiff made the request, and was ready and willing to receive and pay for the malt, but that the defendant refused to deliver it, was sufficient, without stating an actual tender of the money.

126 Eng. Rep. 160(a)

Boone
v.
Eyre

[K.B. 1777]
B. R. East. 17 Geo. 3.^[*]

[See S. C. 2 W. Bl. 1312; 96 E. R. 767 (with note), to which add General Billposting Company v. Atkinson, [1909] A. C. 121.]

Covenant on a deed, whereby the plaintiff conveyed to the defendant the equity of redemption of a plantation in the West Indies, together with the stock of negroes upon it, in consideration of £500 and an annuity of £160 per annum for his life; and covenanted that he had a good title to the plantation, was lawfully possessed of the negroes, and that the defendant should quietly enjoy. The defendant covenanted, that the plaintiff well and truly performing all and every thing therein contained on his part to be performed, he the defendant would pay the annuity. The breach assigned was the non-payment of the annuity. Plea, that the plaintiff was not, at the time of making the deed, legally possessed of the negroes on the plantation, and so had not a good title to convey.

To which there was a general demurrer.

LORD MANSFIELD.—The distinction is very clear, where mutual covenants go to the whole of the consideration on both sides, they are mutual conditions, the one precedent to the other. But where they go only to a part, where a breach may be paid for in damages, there the defendant has a remedy on his covenant, and shall not plead it as a condition precedent. If this plea were to be alIowed, anyone negro not being the property of the plaintiff would bar the action. Judgment for the plaintiff. ^[†]

[*] [2 W. Black. 1312, S. C.]

[†] [Accord. Campbell v. Jones, 6 T. R. 570. Ritchie v. Atkinson, 10 East, 295. Harelock v. Geddes, 10 East, 555. Davidson v. Gwynn, 12 East, 389. Storer v. Gordon, 3 M. & S. 308. Fothergill v. Walton, 8 Taunt. 576. 2 B. Moore, 630, S. C. 1 Saund. 320 c. notes. 5th edit.]

115 U.S. 188 (1885)
6 S.Ct. 12
115 U.S. 188
29 L.Ed. 366
NORRINGTON
v.
WRIGHT and others.^[1]
Filed October 26, 1885.

[189] This was an action of assumpsit, brought by Arthur Norrington, a citizen of Great Britain, trading under the name of A. Norrington & Co., against James A. Wright and others, citizens of Pennsylvania, trading under the name of Peter Wright & Sons, upon the following contract:

"PHILADELPHIA, January 19, 1880.

"Sold to Messrs. Peter Wright & Sons, for account of A. Norrington & Co., London: Five thousand (5,000) tons old T iron rails, for shipment from a European port or ports, at the rate of about one thousand (1,000) tons per month, beginning February, 1880, but whole contract to be shipped before August 1, 1880, at forty-five dollars ($45.00) per ton of 2240 lbs. custom-house weight, ex ship Philadelphia. Settlement, cash, on presentation of bills accompanied by custom-house certificate of weight. Sellers to notify buyers of shipments with vessels' names as soon as known by them. Sellers not to be compelled to replace any parcel lost after shipment. Sellers, when possible, to secure to buyers right to name discharging berth of vessels at Philadelphia.

EDWARD J. ETTING, Metal Broker."

The declaration contained three counts. The first count alleged the contract to have been for the sale of about 5,000 tons of T iron rails, to be shipped at the rate of about 1,000 tons a month, beginning in February, and ending in July, 1880. The second count set forth the contract verbatim. Each of these two counts alleged that the plaintiffs in February, March, April, May, June, and July shipped the goods at the rate of about 1,000 tons a month, and notified the shipments to the defendants; and further alleged the due arrival of the goods at Philadelphia, the plaintiff's readiness to deliver the goods and bills thereof, with custom-house certificates of weight, according to the contract, and the defendants' refusal to accept them. [190] The third count differed from the second only in averring that 400 tons were shipped by the plaintiff in February and accepted by the defendants, and that the rest was shipped by the plaintiffs, at the rate of about 1,000 tons a month, in March, April, May, June, and July. The defendants pleaded non assumpsit. The material facts proved at the trial were as follows:

The plaintiff shipped from various European ports 400 tons by one vessel in the last part of February, 885 tons by two vessels in March, 1,571 tons by five vessels in April, 850 tons by three vessels in May, 1,000 tons by two vessels in June, and 300 tons by one vessel in July, and notified to the defendants each shipment.

The defendants received and paid for the February shipment upon its arrival in March, and in April gave directions at what wharves the March shipments should be discharged on their arrival; but on May 14th, about the time of the arrival of the March shipments, and having been then for the first time informed of the amounts shipped in February, March, and April, they gave Etting written notice that they should decline to accept the shipments made in March and April, because none of them were in accordance with the contract; and in answer to a letter from him of May 16th, wrote him on May 17th, as follows:

"We are advised that what has occurred does not amount to an acceptance of the iron under the circumstances, and the terms of the contract. You had a right to deliver in parcels, and we had a right to expect the stipulated quantity would be delivered until the time was up in which that was possible. Both delivering and receiving were thus far conditional on there being thereafter a complete delivery in due time and of the stipulated article. On the assumption that this time had arrived, and that you had ascertained that you did not intend to, or could not, make any further deliveries for the February and March shipments, we gave you the notice that we declined accepting those deliveries. As to April, it is too plain, we suppose, to require any remark. If we are mistaken as to our obligation for the February and March shipments, of course we must abide the consequences; but if we are right, you have [191] not performed your contract, as you certainly have not for the April shipments. There is then the very serious and much debated question, as we are advised, whether the failure to make the stipulated shipments in February or March has absolved us from the contract. If it does, we of course will avail ourselves of this advantage."

On May 18th Etting wrote to the defendants, insisting on their liability for both past and future shipments, and saying, among other things: "In respect to the objection that

there had not been a complete delivery in due time of the stipulated article, I beg to call your attention to the fact that while the contract is for five thousand tons, it expressly stipulates that deliveries may be made during six months, and that they are only to be at the rate of about one thousand tons per month."

"As to April, while it seems to me 'too plain to require any remark,' I do not see how it can seem so to you, unless you intend to accept the rails. If you object to taking all three shipments made in that month, I shall feel authorized to deliver only two of the cargoes, or, for that matter, to make the delivery of precisely one thousand tons. But I think I am entitled to know definitely from you whether you intend to reject the April shipments, and, if so, upon what ground, and also whether you are decided to reject the remaining shipments under the contract. You say in your last paragraph that you shall avail yourselves of the advantage, if you are absolved from the contract: but, as you seem to be in doubt whether you can set up that claim or not, I should like to know definitely what is your intention."

On May 19th the defendants replied:

"We do not read the contract as you do. We read it as stipulating for monthly shipments of about one thousand tons, beginning in February, and that the six months' clause is to secure the completion of whatever had fallen short in the five months. As to the meaning of 'about,' it is settled as well as such a thing can be; and certainly neither the February, March, nor April shipments are within the limits. As to the proposal to vary the notices for April shipments, we do not think you can do this. The notice of the shipments, as soon as known, you were bound to [192] give, and cannot afterwards vary it if they do not conform to the contract. Our right to be notified immediately that the shipments were known is as material a provision as any other, nor can it be changed now in order to make that a performance which was no performance within the time required."

"You ask us to determine whether we will or will not object to receive further shipments because of past defaults. We tell you we will if we are entitled to do so, and will not if we are not entitled to do so. We do not think you have the right to compel us to decide a disputed question of law to relieve you from the risk of deciding it yourself. You know quite as well as we do what is the rule and its uncertainty of application."

On June 10th Etting offered to the defendants the alternative of delivering to them one thousand tons strict measure on account of the shipments in April. This offer they immediately declined.

On June 15th Etting wrote to the defendants that two cargoes, amounting to 221 tons, of the April shipments, and two cargoes, amounting to 650 tons, of the May shipments, (designated by the names of the vessels,) had been erroneously notified to them, and that about 900 tons had been shipped by a certain other vessel on account of the May shipments. On the same day the defendants replied that the notification as to April shipments could not be corrected at this late date, and after the terms of the contract had long since been broken.

From the date of the contract to the time of its rescission by the defendants, the market price of such iron was lower than that stipulated in the contract, and was constantly falling. After the arrival of the cargoes, and their tender and refusal, they were sold by Etting, with the consent of the defendants, for the benefit of whom it might concern.

At the trial the plaintiff contended (1) that under the contract he had six months in which to ship the 5,000 tons, and any deficiency in the earlier months could be made up subsequently, provided that the defendants could not be required to take more than 1,000 tons in any one month (2) that, if this was not so, the contract was a divisible contract, and the remedy of the defendants for a default in any month was not by rescission of the whole contract, but only by deduction of [193] the damages caused by the delays in the shipments on the part of the plaintiff.

But the court instructed the jury that if the defendants, at the time accepting the delivery of the cargo paid for, had no notice of the failure of the plaintiff to ship about 1,000 tons in the month of February, and immediately upon learning that fact gave notice of their intention to rescind, the verdict should be for them.

The plaintiff excepted to this instruction, and, after verdict and judgment for the defendants, sued out this writ of error.

Saml. Dickson and J. C. Bullitt, for plaintiffs in error.

[Argument of Counsel from pages 193-202 intentionally omitted]

[202] R. C. McMurtrie, for defendants in error.

[203] GRAY, J.

In the contracts of merchants, time is of the essence. The time of shipment is the usual and convenient means of fixing the probable time of arrival, with a view of providing funds to pay for the goods, or of fulfilling contracts with third persons. A statement descriptive of the subject-matter, or of some material incident, such as the time or place of shipment, is ordinarily to be regarded as a warranty in the sense in which that term is used in insurance and maritime law, that is to say, a condition precedent upon the failure or non-performance of which the party aggrieved may repudiate the whole contract. Behn v. Burness, 3 Best & S. 751; Bowes v. Shand, 2 App. Cas. 455; Lowber v. Bangs, 2 Wall. 728; Davison v. Von Lingen, 113 U. S. 40; S. C. 5 Sup. Ct. Rep. 346.

The contract sued on is a single contract for the sale and purchase of 5,000 tons of iron rails, shipped from a European port or ports for Philadelphia. The subsidiary provisions as to [204] shipping in different months, and as to paying for each shipment upon its delivery, do not split up the contract into as many contracts as there shall be shipments, or deliveries of so many distinct quantities of iron. Mersey S. & I. Co. v. Naylor, 9 App. Cas. 434, 439. The further provision that the sellers shall not be compelled to replace any parcel lost after shipment, simply reduces, in the event of such a loss, the quantity to be delivered and paid for.

The times of shipment, as designated in the contract, are "at the rate of about 1,000 tons per month, beginning February, 1880, but whole contract to be shipped before August 1, 1880." These words are not satisfied by shipping one-sixth part of the 5,000 tons, or about 833 tons, in each of the six months which begin with February and end with July. But they require about 1,000 tons to be shipped in each of the five months from February to June inclusive, and allow no more than slight and unimportant deficiencies in the shipments during those months to be made up in the month of July. The contract is not one for the sale of a specific lot of goods, identified by independent circumstances,—such as all those deposited in a certain warehouse, or to be shipped in a particular vessel, or that may be manufactured by the seller, or may be required for use by the buyer, in a certain mill,—in which case the mention of the quantity, accompanied by the qualification of "about," or "more or less," is regarded as a mere estimate of the probable amount, as to which good faith is all that is required of the party making it. But the contract before us comes within the general rule:

"When no such independent circumstances are referred to, and the engagement is to furnish goods of a certain quality or character to a certain amount, the quantity specified is material, and governs the contract. The addition of the qualifying words 'about,' 'more or less,' and the like, in such cases, is only for the purpose of providing against accidental variations arising from slight and unimportant excesses or deficiencies in number, measure, or weight."

Brawley v. United States, 96 U. S. 168, 171, 172.

The seller is bound to deliver the quantity stipulated, and has no right either to compel the buyer to accept a less quan [205] tity, or to require him to select part out of a greater quantity; and when the goods are to be shipped in certain proportions monthly, the seller's failure to ship the required quantity in the first month gives the buyer the same right to rescind the whole contract that he would have had if it had been agreed that all the goods should be delivered at once.

The plaintiff, instead of shipping about 1,000 tons in February and about 1,000 tons in March, as stipulated in the contract, shipped only 400 tons in February, and 885 tons in March. His failure to fulfill the contract on his part in respect to these first two installments justified the defendants in rescinding the whole contract, provided they distinctly and seasonably asserted the right of rescission.

The defendants, immediately after the arrival of the March shipments, and as soon as they knew that the quantities which had been shipped in February and in March were less than the contract called for, clearly and positively asserted the right to rescind, if the law entitled them to do so. Their previous acceptance of the single cargo of 400 tons shipped in February was no waiver of this right, because it took place without notice or means of knowledge that the stipulated quantity had not been shipped in February. The price paid by them for that cargo being above the market value, the plaintiff suffered no injury by the omission of the defendants to return the iron; and no reliance was placed on that omission in the correspondence between the parties.

The case wholly differs from that of Lyon v. Bertram, 20 How. 149, in which the buyer of a specific lot of goods accepted and used part of them with full means of previously ascertaining whether they conformed to the contract.

The plaintiff, denying the defendants' right to rescind, and asserting that the contract was still in force, was bound to show such performance on his part as entitled him to demand performance on their part, and, having failed to do so, cannot maintain this action.

For these reasons we are of opinion that the judgment below should be affirmed. But as much of the argument at the bar was devoted to a discussion of the recent English cases, [206] and as a diversity in the law, as administered on the two sides of the Atlantic, concerning the interpretation and effect of commercial contracts of this kind, is greatly to be deprecated, it is proper to add that upon a careful examination of the cases referred to they do not appear to us to establish any rule inconsistent with our conclusion.

In the leading case of Hoare v. Rennie, 5 Hurl. & N. 19, which was an action upon a contract of sale of 667 tons of bar iron, to be shipped from Sweden in June, July, August, and September, and in about equal portions each month, at a certain price payable on delivery, the declaration alleged that the plaintiffs performed all things necessary to entitle them to have the contract performed by the defendants, and were ready and willing to perform the contract on their part, and in June shipped a certain portion of the iron, and within a reasonable time afterwards offered to deliver to the defendants the portion so shipped, but the defendants refused to receive it, and gave notice to the plaintiffs that they would not accept the rest. The defendants pleaded that the shipment in June was of about 20 tons only, and that the plaintiffs failed to complete the shipment for that month according to the contract. Upon demurrer to the pleas, it was argued for the plaintiffs that the shipment of about one-fourth of the iron in each month was not a condition precedent, and that the defendants' only remedy for a failure to ship that quantity was by a cross-action. But judgment was given for the defendants, Chief Baron POLLOCK saying:

"The defendants refused to accept the first shipment, because, as they say, it was not a performance, but a breach of the contract. Where parties have made an agreement for themselves, the courts ought not to make another for them. Here they say that, in the events that have happened, one-fourth shall be shipped in each month, and we cannot say that they meant to accept any other quantity. At the outset the plaintiffs failed to tender the quantity according to the contract,—they tendered a much less quantity. The defendants had a right to say that this was no performance of the contract, and they were no more bound to accept the short quantity than if a single delivery had been contracted for. There [207] fore the pleas are an answer to the action."

5 Hurl. & N. 28. So in Coddington v. Paleologo, L.R. 2 Exch. 193, while there was a division of opinion upon the question whether a contract to supply goods, "delivering on April 17th, complete 8th May," bound the seller to begin delivering on April 17th, all the judges agreed that if it did, and the seller made no delivery on that day, the buyer might rescind the contract.

On the other hand, in Simpson v. Crippin, L. R. 8 Q. B. 14, under a contract to supply from 6,000 to 8,000 tons of coal, to be taken by the buyer's wagons from the seller's colliery in equal monthly quantities for 12 months, the buyer sent wagons for only 150 tons during the first month; and it was held that this did not entitle the seller to annul the contract and decline to deliver any more coal, but that his only remedy was by an action for damages. And in Brandt v. Lawrence, 1 Q. B. Div. 344, in which the contract was for the purchase of 4,500 quarters, 10 per cent. more or less, of Russian oats, "shipment by steamer or steamers during February," or, in case of ice preventing shipment, then immediately upon the opening of navigation, and 1,139 quarters were shipped by one steamer in time, and 3,361 quarters were shipped too late, it was held that the buyer was bound to accept the 1,139 quarters, and was liable to an action by the seller for refusing to accept them.

Such being the condition of the law of England as declared in the lower courts, the case of Bowes v. Shand, after conflicting decisions in the queen's bench division and the court of appeal, was finally determined by the House of Lords. 1 Q. B. Div. 470; 2 Q. B. Div. 112; 2 App. Cas. 455.

In that case, two contracts were made in London, each for the sale of 300 tons of "Madras rice, to be shipped at Madras or coast for this port during the months of March and/or April, 1874, per Rajah of Cochin." The 600 tons filled 8,200 bags, of which 7,120 bags were put on board, and bills of lading signed in February; and for the rest, consisting of 1,030 bags put on board in February, and 50 in March, the bill of lading was signed in March. At the trial of an action by the seller against the buyer for refusing to accept the cargo, evidence [208] was given that rice shipped in February would be the spring crop, and quite as good as rice shipped in March or April. Yet the house of lords held that the action could not be maintained, because the meaning of the contract, as apparent upon its face, was that all the rice must be put on board in March and April, or in one of those months.

In the opinions there delivered the general principles underlying this class of cases are most clearly and satisfactorily stated. It will be sufficient to quote a few passages from two of those opinions.

Lord Chancellor CAIRNS said:

"It does not appear to me to be a question for your lordships, or for any court, to consider whether that is a contract which bears upon the face of it some reason, some explanation, why it was made in that form, and why the stipulation is made that the shipment should be during these particular months. It is a mercantile contract, and merchants are not in the habit of placing upon their contracts stipulations to which they do not attach some value and importance." 2 App. Cas. 463.

"If it be admitted that the literal meaning would imply that the whole quantity must be put on board during a specified time, it is no answer to that literal meaning,—it is no observation which can dispose of, or get rid of, or displace, that literal meaning,—to say that it puts an additional burden on the seller without a corresponding benefit to the purchaser; that is a matter of which the seller and purchaser are the best judges. Nor is it any reason for saying that it would be a means by which purchasers, without any real cause, would frequently obtain an excuse for rejecting contracts when prices had dropped. The non-fulfillment of any term in any contract is a means by which a purchaser is able to get rid of the contract when prices have dropped; but that is no reason why a term which is found in a contract should not be fulfilled." Pages 465, 466.

"It was suggested that even if the construction of the contract be as I have stated, still if the rice was not put on board in the particular months, that would not be a reason which would justify the appellants in having rejected the rice altogether, but that it might afford a ground for a cross-action by them if they could show that any particu [209] lar damage resulted to them from the rice not having been put on board in the months in question. My lords, I cannot think that there is any foundation whatever for that argument. If the construction of the contract be as I have said, that it bears that the rice is to be put on board in the months in question, that is part of the description of the subject-matter of what is sold. What is sold is not 300 tons of rice in gross or in general. It is 300 tons of Madras rice to be put on board at Madras during the particular months."

"The plaintiff, who sues upon that contract, has not launched his case until he has shown that he has tendered that thing which has been contracted for, and if he is unable to show that, he cannot claim any damages for the non-fulfillment of the contract." Pages 467, 468.

Lord BLACKBURN said:

"If the description of the article tendered is different in any respect, it is not the article bargained for, and the other party is not bound to take it. I think in this case what the parties bargained for was rice, shipped at Madras or the coast of Madras. Equally good rice might have been shipped a little to the north or a little to the south of the coast of Madras. I do not quite know what the boundary is, and probably equally good rice might have been shipped in February as was shipped in March, or equally good rice might have been shipped in May as was shipped in April, and I dare say equally good rice might have been put on board another ship as that which was put on board the Rajah of Cochin. But the parties have chosen, for reasons best known to themselves, to say: We bargain to take rice, shipped in this particular region, at that particular time, on board that particular ship; and before the defendants can be compelled to take anything in fulfillment of that contract it must be shown not merely that it is equally good, but that it is the same article as they have bargained for, otherwise they are not bound to take it." 2 App. Cas. 480, 481.

Soon after that decision of the house of lords, two cases were determined in the court of appeal. In Reuter v. Sala, 4 C. P. Div. 239, under a contract for the sale of "about 25 tons (more or less) black pepper, October and/or November [210] shipment, from Penang to London, the name of the vessel or vessels, marks, and full particulars to be declared to the buyer in writing within 60 days from date of bill of lading," the seller, within the 60 days, declared 25 tons by a particular vessel, of which only 20 tons were shipped in November, and five tons in December; and it was held that the buyer had the right to refuse to receive any part of the pepper. In Honck v. Muller, 7 Q. B. Div. 92, under a contract for the sale of 2,000 tons of pig-iron, to be delivered to the buyer free on board at the maker's wharf "in November, or equally over November, December, and January next," the buyer failed to take any iron in November, but demanded delivery of one-third in December and one-third in January; and it was held that the seller was justified in refusing to deliver, and in giving notice to the buyer that he considered the contract as canceled by the buyer's not taking any iron in November.

The plaintiff in the case at bar greatly relied on the very recent decision of the house of lords in Mersey Co. v. Naylor, 9 App. Cas. 434, affirming the judgment of the court of appeal in 9 Q. B. Div. 648, and following the decision of the court of common pleas in Freeth v. Burr, L. R. 9 C. P. 208.

But the point there decided was that the failure of the buyer to pay for the first installment of the goods upon delivery does not, unless the circumstances evince an intention on his part to be no longer bound by the contract, entitle the seller to rescind the contract, and to decline to make further deliveries under it. And the grounds of the decision, as stated by Lord Chancellor SELBORNE in moving judgment in the house of lords, are applicable only to the case of a failure of the buyer to pay for, and not to that of a failure of the seller to deliver, the first installment.

The Lord Chancellor said:

"The contract is for the purchase of 5,000 tons of steel blooms of the company's manufacture, therefore, it is one contract for the purchase of that quantity of steel blooms. No doubt, there are subsidiary terms in the contract, as to the time of delivery,—'delivery 1,000 tons monthly, commencing January next,'—and as to the time of [211] payment,—'payment net cash within three days after receipt of shipping documents,'—but that does not split up the contract into as many contracts as there shall be deliveries for the purpose of so many distinct quantities of iron. It is quite consistent with the natural meaning of the contract that it is to be one contract for the purchase of that quantity of iron to be delivered at those times and in that manner, and for which payment is so to be made. It is perfectly clear that no particular payment can be a condition precedent of the entire contract, because the delivery under the contract was most certainly to precede payment; and that being so, I do not see how, without express words, it can possibly be made a condition precedent to the subsequent fulfillment of the unfulfilled part of the contract by the delivery of the undelivered steel." 9 App. Cas. 439.

Moreover, although in the court of appeal dicta were uttered tending to approve the decision in Simpson v. Crippin, and to disparage the decisions in Hoare v. Rennie and Honck v. Muller, above cited, yet in the house of lords Simpson v. Crippin was not even referred to, and Lord BLACKBURN, who had given the leading opinion in that case, as well as Lord BRAMWELL, who had delivered the leading opinion in Honck v. Muller, distinguished Hoare v. Rennie and Honck v. Muller from the case in judgment. 9 App. Cas. 444, 446.

Upon a review of the English decisions, the rule laid down in the earlier cases of Hoare v. Rennie and Coddington v. Paleologo, as well as in the later cases of Reuter v. Sala and Honck v. Muller, appears to us to be supported by a greater weight of authority than the rule stated in the intermediate cases of Simpson v. Crippin and Brandt v. Lawrence, and to accord better with the general principles affirmed by the house of lords in Bowes v. Shand, while it in no wise contravenes the decision of that tribunal in Mersey Co. v. Naylor.

In this country there is less judicial authority upon the question. The two cases most nearly in point that have come to our notice are Hill v. Blake, 97 N. Y. 216, which accords with Bowes v. Shand and King Philip Mills v. Slater, 12 R.I. 82, which approves and follows Hoare v. Rennie. The recent [212] cases in the supreme court of Pennsylvania, cited at the bar, support no other conclusion. In Shinn v. Bodine, 60 Pa. St. 182, the point decided was that a contract for the purchase of 800 tons of coal at a certain price per ton, "coal to be delivered on board vessels as sent for during the months of August and September," was an entire contract, under which nothing was payable until delivery of the whole, and therefore the seller had no right to rescind the contract upon a refusal to pay for one cargo before that time. In Morgan v. McKee, 77 Pa. St. 228, and in Scott v. Kittanning Coal Co., 89 Pa. St. 231, the buyer's right to rescind the whole contract upon the failure of the seller to deliver one installment was denied, only because that right had been waived, in the one case by unreasonable delay in asserting it, and in the other by having accepted, paid for, and used a previous installment of the goods. The decision of the supreme judicial court of Massachusetts in Winchester v. Newton, 2 Allen, 492, resembles that of the house of lords in Mersey Co. v. Naylor.

Being of opinion that the plaintiff's failure to make such shipments in February and March as the contract required prevents his maintaining this action, it is needless to dwell upon the further objection that the shipments in April did not comply with the contract, because the defendants could not be compelled to take about 1,000 tons out of the larger quantity shipped in that month, and the plaintiff, after once designating the names of vessels, as the contract bound him to do, could not substitute other vessels. See Busk v. Spence, 4 Camp. 329; Graves v. Legg, 9 Exch. 709; Reuter v. Sala, above cited.

Judgment affirmed.

The chief justice was not present at the argument, and took no part in the decision of this case.

[1] S.C. 5 Fed. Rep. 768.

400 F.2d 112 (1968)
Adrien MIRON and Raymond Miron, Gilbert Miron, Vincent Miron and Adrien Miron as
Executors of the Estate of Gerard Miron, Plaintiffs-Appellees,
v.
YONKERS RACEWAY, INC. and Saul Finkelstein, Defendants-Appellants.
No. 486, Docket 32158.
United States Court of Appeals Second Circuit.
Argued May 8, 1968.
Decided August 12, 1968.

[113] Adlai S. Hardin, Jr., New York City (Edward J. Reilly, Jr., and Milbank, Tweed, Hadley & McCloy, New York City, on the brief), for plaintiffs-appellees.

Arthur P. West, White Plains, N. Y. (Bleakley, Platt, Schmidt, Hart & Fritz, White Plains, N. Y., on the brief), for defendant-appellant Yonkers Raceway, Inc.

Jesse Moss, New York City (Sue Caplan, New York City, on the brief), for defendant-appellant Saul Finkelstein.

Before LUMBARD, Chief Judge and SMITH and ANDERSON, Circuit Judges.

J. JOSEPH SMITH, Circuit Judge:

Yonkers Raceway, Inc. and Saul Finkelstein appeal from a judgment of the District Court for the Southern District of New York, Richard H. Levet, Judge, entered after a trial without a jury, rendering them liable to plaintiffs for the purchase price of a horse and dismissing their counterclaims on the merits. The horse was sold to Finkelstein under a warranty that it was sound, but on the day after the sale it was found to have a fractured bone in its leg, and Finkelstein demanded that the plaintiffs take it back. They refused to do so, and eventually sued the Raceway and Finkelstein for the purchase price in the District Court, jurisdiction being based upon diversity of citizenship, and New York law governing. Finkelstein counterclaimed for the expense of maintaining and caring for the horse. The Raceway, a defendant by reason of having been the plaintiffs' agent for the sale of the horse at public auction, counterclaimed for its commission, attorneys' fees, and expenses, and entered a cross-claim against Finkelstein. Judge Levet held that Finkelstein had accepted the horse and therefore bore the burden of proving a breach of warranty, and found that Finkelstein had failed to prove by a fair preponderance of the credible evidence that the horse was not sound at the time of sale. He also held that Raceway had breached its contract with the plaintiffs by delivering the horse to Finkelstein before payment of the purchase price and [114] was thus not entitled to its commission, and that there was no basis for awarding Raceway its attorneys' fees. On the cross-claim, Finkelstein was held liable to Raceway to the extent that Raceway is liable to the plaintiffs. Jurisdiction was retained so that the court could entertain, if necessary, a suitable application from Raceway for judgment against Finkelstein on account of contributions by Raceway toward payment of any part of the plaintiffs' judgment; and upon a finding of no just reason for delay, judgment was entered for plaintiffs. We affirm.

I.

In September 1965, plaintiffs^[1] entered the horse "Red Carpet" in an auction called the "Old Glory Horse Sale," sponsored by Raceway. The contract by which Red Carpet was consigned to Raceway for sale provided that Raceway would act as plaintiffs' exclusive agent for the sale of the horse and would receive a commission of 10% on the accepted bid, and incorporated by reference the "Terms and Conditions of Sale." The Terms and Conditions of Sale provided, inter alia: that the horses were offered for sale according to the laws of New York, that title and "all risk and responsibility for the horse" pass to the buyer at the fall of the auctioneer's hammer, that "No delivery will be made until final settlement," and that

"unless otherwise expressly announced at time of sale, there is no guarantee of any kind as to the soundness or condition or other quality of any horse sold in this Sale except that horses which are unsound in eyes or wind, or are 'cribbers,' must be announced at time of sale. . . . Any horse whose condition is as aforesaid and is not so announced at time of sale, or where sex is incorrectly represented at time of sale, will be subject to return to Consignor . . .  provided that the buyer gives notice in writing within seven days of sale. Any other representation, warranty or guarantee of the Consignor which is announced or otherwise given shall not extend beyond 24 hours after the fall of the Auctioneer's hammer or until final payment has been made, whichever is sooner."

Plaintiffs delivered Red Carpet to Raceway on October 17, 1965; the auction of the horse took place early in the afternoon of October 19. At $17,000 there was a lull in the bidding, whereupon Murray Brown, plaintiffs' employee, took the microphone and said:

This horse has won 2 of his last 3 starts. On September 24, he raced on a muddy track, big stake race in Montreal . . . beating Mr. Sea Song. Now, you know what Mr. Sea Song has done this year . . . he's a top free-for-all horse and this horse beat him racing a good trip, and this is just recently. He's as sound — as, as gutty a horse as you want to find anywhere. He'll race a good mile for you every time. He's got loads of heart and you're way off on the price of this horse.^[2]

The bidding then resumed, and defendant Finkelstein submitted the highest bid, which was $32,000.

By about 3:00 p. m. that day, Raceway delivered possession of Red Carpet to Finkelstein without obtaining any part of the purchase price, and Finkelstein immediately had the horse transported to his barn at Roosevelt Raceway, Westbury, Long Island. The next morning, Cruise, the trainer for Finkelstein's horses, took Red Carpet out of his stall and hitched him to a jog cart. He observed some swelling of the horse's left hind leg at that time, and when the horse was caused to walk and trot, it limped and favored its left hind leg. Cruise returned Red Carpet to the stall, [115] and summoned Dr. Bernard F. Brennan, a veterinarian, who found that Red Carpet's left hind leg was swollen, warm and sensitive.

Finkelstein notified Raceway, at about 11:30 a. m. that day, October 20, that Red Carpet was lame and not sound, and that afternoon an official of Raceway notified Brown, at plaintiffs' stables, of Finkelstein's complaint. Finkelstein subsequently demanded, as we have said, that plaintiffs take back the horse because it was not sound, as warranted, but they have continued to refuse to accept its return. Neither Raceway nor Finkelstein has paid plaintiffs any part of the purchase price for Red Carpet.

The basic factual issue tried below was whether Red Carpet was sound, as warranted, at the time when the auctioneer's hammer fell and all risks passed to Finkelstein as the buyer. The defendants' evidence on this issue consisted of X-rays of the horse's left hind leg.

Dr. Brennan testified that he took X-rays of Red Carpet's leg on the afternoon of October 20, and prints were introduced as the defendants' Exhibits B, C, D1 and E1. The X-rays revealed a broken splint bone, which, it was agreed by witnesses for all of the parties, is enough to render a racehorse unsound.^[3] Both of the defendants' expert witnesses, Dr. Brennan and Dr. Charles F. Reid, testified that Exhibits B and D1 revealed calcification around the site of the fracture indicating that the fracture was two or three weeks old. The plaintiffs' experts testified, however, that Exhibit D1, unlike Exhibit B, did not show calcification, and concluded that the X-rays must have been taken on different days. The defendants countered by offering testimony that a difference in intensity between the exhibits explained the fact that callus growth was less visible on D1 than on B, but the court found that Exhibit D1 showed no calcification and that it therefore was not taken on the same day as Exhibit B. The court also found that Exhibits D1 and E1 were undated, that Exhibits B and C were admittedly incorrectly dated, and that no business records sufficient to prove the date on which the X-rays were taken had been produced, and concluded that the exhibits lacked sufficient probative force to establish the date on which the fracture occurred.^[4] We see no reason why this conclusion should not stand.

The expert witnesses were in substantial agreement that the symptoms of a broken splint bone are swelling, heat which is perceptible to the touch, and sensitivity and lameness, and that these symptoms become apparent immediately or very soon after the occurrence of the fracture. Thus if Red Carpet's splint bone was broken at the time of sale, an examination of the horse after the sale would have disclosed that fact. Finkelstein testified that he was not an experienced horse buyer, and ordinarily has a trainer or veterinarian examine the legs of horses he buys, but he went to the auction on October 19, 1965 intending to buy two brood mares, and for that reason did not have his trainer or a veterinarian with him. Although he observed the horse when it was led into the ring at the auction, he did not examine it or look at its legs at the time of the sale. The court found that neither Finkelstein nor his agents inspected or examined the horse prior to the time when Cruise observed a swelling of its left hind leg on the day after the sale.

The plaintiffs offered, on the basic issue of the time of the fracture, testimony of persons who had observed and examined Red Carpet on the day of the sale. Roger White, a competitor of the Mirons, testified that he inspected the horse with the intention of buying it [116] if the price was right, and that he couldn't see anything wrong with it. Dr. Rene Rosaire Gauthier, who accompanied White to the auction and examined Red Carpet for him, testified that when he examined Red Carpet's legs he observed no heat or swelling, and that he saw the horse trotting and walking without limping or manifesting any lameness. The court found, on the basis of this and other testimony, that "On October 19, 1965, prior to sale, the horse's left hind leg was neither swollen, hot, nor lame."^[5]

The District Court's finding on the basic factual issue was expressed in terms of failure to carry the burden of proof. Concluding that under New York law Finkelstein had accepted Red Carpet and therefore had the burden of proving a breach of warranty, the court found: "Defendant Finkelstein has failed to prove by a fair preponderance of the credible evidence that the horse was not 'sound' at the time of its sale to him on October 19, 1965."

We will first consider the questions relevant to whether there was a breach of warranty, and then turn to the issues raised by the counterclaims.^[6]

II.

We affirm the judgment below on the breach of warranty issue, because we agree with the District Court that under New York law Finkelstein had the burden of proving a breach of warranty and we find ample support in the record for the finding that Finkelstein did not carry that burden successfully. The plaintiffs have argued forcefully that we need not consider who had the burden of proof on the issue, but we must disagree.

The argument is that the District Court's subordinate findings of fact show that the holding in the plaintiffs' favor did not depend upon the conclusion that Finkelstein had the burden of proof, so that the only question we need answer is whether or not the finding that the horse was sound at the time of sale is clearly erroneous. If the facts had been found by a jury, we of course would be obligated to consider the correctness of the instructions on the burden of proof, for we would have to assume that those instructions influenced the verdict. But where the facts are found, as here, by the court, our position is very different. One of the reasons for requiring the trial court to "find the facts specially and state separately its conclusions of law thereon," Fed.R.Civ.P. 52(a), is to afford the appellate court a clear understanding of the basis of the trial court's decision. See, e. g., Leighton v. One William Street Fund, Inc., 343 F.2d 565, 567 (2 Cir.1965). If the District Court's findings of fact and conclusions of law made it clear that the basic finding, in the judge's view, turned on who had the burden of proof, there would be no question but that his conclusion on that issue must be reviewed. If, instead, the findings and conclusions showed us that the judge considered the evidence to weigh sufficiently in the plaintiffs' favor so that the basic finding was independent of the conclusion that Finkelstein had the burden of proof, we could limit ourselves to a consideration of whether the finding was clearly erroneous, deeming it immaterial which party had the burden.^[7]

[117] Fulton National Bank v. Tate, 363 F.2d 562, 566-567 (5 Cir. 1966). And we would so limit ourselves if we could, in order to avoid deciding a question of New York law which has not yet been passed upon by the New York courts.^[8]

Our problem is that the District Court's findings and conclusions do not indicate explicitly that the judge would have found for the plaintiffs even if he had thought that they had the burden; the most we can say is that some of the subordinate findings of fact suggest that the outcome did not depend upon who had the burden.^[9] Every reference to the primary factual issue in the opinion, findings and conclusions is in terms of whether Finkelstein had carried his burden of proof.^[10][11][12]

Although we think it probable that plaintiffs would have prevailed below no matter who the judge thought had the burden of proof, nonetheless we would feel compelled to remand for new findings of fact were we to conclude that Finkelstein did not have the burden. We must state, then, why we agree with the District Court that he did.

The District Court based its determination that Finkelstein had the burden on New York Uniform Commercial Code ("U.C.C.") § 2-607(4), which provides: "The burden is on the buyer to establish any breach with respect to the goods accepted."^[13] The question thus is whether Finkelstein accepted the horse, and we turn for guidance to U.C.C. § 2-606(1), which states:

Acceptance of goods occurs when the buyer
(a) after a reasonable opportunity to inspect the goods signifies to the seller that the goods are conforming or that he will take or retain them in spite of their nonconformity; or
(b) fails to make an effective rejection (subsection (1) of Section 2-602), but such acceptance does not occur until the buyer has had a reasonable opportunity to inspect them; or
(c) does any act inconsistent with the seller's ownership; but if such act is wrongful as against the seller it is an acceptance only if ratified by him.

[118] It has not been argued that Finkelstein accepted the horse under subsection (a). We doubt he could be said to have done any act inconsistent with the plaintiffs' ownership of the horse, within the meaning of subsection (c), but we need not decide the applicability of that subsection, for we think the trial judge was right in finding that Finkelstein failed to make an effective rejection of the horse under U.C.C. § 2-602(1), thereby accepting it under subsection (b). U.C.C. § 2-602(1) provides: "Rejection of goods must be within a reasonable time after their delivery or tender. It is ineffective unless the buyer seasonably notifies the seller."

Finkelstein accepted the horse, then, if having had a reasonable opportunity to inspect it, he did not reject it within a reasonable time.^[14] What is reasonable depends upon an evaluation of all of the circumstances, and we would therefore be reluctant to overturn the findings and conclusions of the trial judge on these issues. He has a feel for the circumstances of the case which we could not possibly have.^[15] Moreover, the finding that Finkelstein did not reject the horse within a reasonable time^[16] seems to us to be clearly correct.

As the trial judge rightly pointed out, "The fact that the subject matter of the sale in this case was a live animal . . . bears on what is a reasonable time to inspect and reject." Finkelstein's own testimony showed that it is customary, when buying a racehorse, to have a veterinarian or trainer examine the horse's legs, and we agree that the existence of this custom is very important in determining whether there was a reasonable opportunity to inspect the horse. See Official Comment to U.C.C. § 1-204, para. 2. We gather from the record that the reason it is customary to examine a racehorse's legs at the time of sale is that a splint bone is rather easily fractured (there was testimony that a fracture could result from the horse kicking itself), and although the judge made no specific findings as to this, we assume that is generally what he had in mind when he pointed out that "a live animal is more prone to rapid change in condition and to injury than is an inanimate object." As we have said, Finkelstein did not have the horse examined either at the place of sale or at his barn later the day of the sale. He thus passed up a reasonable opportunity to inspect Red Carpet.

Finkelstein having had a reasonable opportunity to inspect Red Carpet on the day of the sale, we have no problem with the finding that the attempted rejection on the next day did not come within a reasonable time. In addition to our reluctance to question the trial judge's finding as to what is [119] a reasonable time, we take into account that what is a reasonable time for rejection depends on the purpose of rejection. See U.C.C. § 1-204(2). Where goods are effectively rejected for breach of warranty, the burden of proving that they conform presumably remains on the seller,^[17] whereas upon acceptance the buyer has the burden to establish any breach. U.C.C. § 2-607(4). In this case, the subject of the sale is a racehorse warranted to be sound, and the record clearly shows that an injury such as occurred here, rendering a horse unsound, may be a matter of chance, proof of the exact time of injury being very difficult to make. In these circumstances, the burden of proof on the issue of soundness at the time of sale cannot fairly rest on the seller where the buyer has taken possession of the horse, transported it to his barn, and kept it overnight before discovering the injury and informing the seller of it. We conclude that rejection did not take place within a reasonable time after delivery, and Finkelstein thus accepted the horse. In short, since one of the consequences of acceptance is that the buyer bears the burden of proving any breach, the fairness of allocating the burden one way or the other is relevant in determining whether acceptance has occurred — here, whether rejection took place within a reasonable time.

The defendants have argued strenuously that inspection and rejection on the day after the sale is certainly soon enough, and the argument would gain substantial strength if another sort of defect were involved and we took into account that the customary type of inspection at the time of sale might not disclose aspects of a horse's soundness other than the condition of its legs, and that these aspects, unlike the condition of the legs, would be very unlikely to change overnight. There is nothing in the record as to how much the customary inspection at the time of sale would show; Finkelstein testified only that he has a trainer or veterinarian examine the legs of horses he buys. In any case, if there are defects which are not discoverable by the inspection which the District Court found Finkelstein had a reasonable opportunity to make, the problem is taken care of by U.C.C. § 2-608(1), which provides in relevant part:

The buyer may revoke his acceptance of a lot or commercial unit whose non-conformity substantially impairs its value to him if he has accepted it. . .
(b) without discovery of such nonconformity if his acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the seller's assurances.

The answer to the argument is that inspection is not necessarily final; where there are defects discoverable by a customary inspection at the time of sale, a buyer in Finkelstein's position will not be excused from making that inspection and rejecting the goods within a reasonable time, if a defect is disclosed, on the ground that there are possible critical defects which only a more thorough inspection would disclose. There are no conceptual problems involved in this approach, for there is nothing ultimate about any of the conceptions we are using. Since a finding of acceptance depends upon a finding that there was a reasonable to inspect, the question whether acceptance may be revoked as reasonably induced by the difficulty of discovery before acceptance, within the meaning of U.C.C. § 2-608(1), must be answered by reference to the scope of the inspection which there was a reasonable opportunity [120] to make. Thus if Finkelstein had carried out the customary inspection and accepted the horse, and the defect allegedly rendering Red Carpet unsound at the time of sale were a defect not discoverable by inspection on the day of sale, rather than a broken splint bone, we may presume the District Court would not have placed the burden of proof on Finkelstein, and would have said that he had "revoked his acceptance."

The defendants argue that the provision in the Terms and Conditions of Sale that any warranty of the consignor "shall not extend beyond 24 hours after the fall of the Auctioneer's hammer or until final payment has been made, whichever is sooner," fixes by agreement, a reasonable time for rejection, U.C.C. § 1-204(1), and that since Finkelstein rejected within 24 hours of the fall of the hammer, he did not accept Red Carpet under U.C.C. § 2-206(1) (b). There was considerable confusion over the meaning of this provision at the trial; Finkelstein submitted a memorandum in which it was argued that under the provision any defect violating the warranty appearing within 24 hours is presumed to be a defect existing at the time of sale, so that the seller must show that "some external, intervening cause occurred after the horse passed from its possession." The trial judge interpreted this as an argument that the provision converted any warranty into a 24-hour insurance policy and, not surprisingly, rejected that notion. He concluded that "At most, the clause means that if any futuristic warranty is stated, it could extend no longer than the period mentioned."

We think this provision must be construed simply as setting a time within which defects must be reported in order for the warranty to be valid. The setting of such a deadline does not necessarily mean that any unreasonable delay in inspection or rejection is acceptable so long as it does not extend past the deadline. Had Red Carpet been obviously lame, hobbling badly at the time he was delivered to Finkelstein, and had Finkelstein nonetheless taken the horse away to his barn without comment, it would be unreasonable to say that Finkelstein nonetheless had twenty-four hours to report the defect, because of this provision. On our view of the case, whether rejection was within a reasonable time must be answered with reference to what inspection for defects is customary, and it appears that Finkelstein had no more excuse for taking the horse away without giving its legs the customary inspection than he would have had for taking it away without comment if it had been hobbling. We will not construe a provision which by its terms sets a maximum time for reporting defects to set a minimum time as well, for some defects may be more readily discoverable than others.

We conclude, then, that Finkelstein accepted the horse by failing to reject it within a reasonable time, and thus had the burden of proving any breach of warranty. As we have already said, we find ample support for the finding that he failed to prove a breach by a fair preponderance of the credible evidence. The only evidence submitted by the defendants to establish the time of the fracture was the X-rays discussed above, and we have explained why the trial judge found that these lacked sufficient probative force to establish the date of the fracture.^[18] [121]

III.

The remaining issues can be disposed of briefly. We first consider those raised by the plaintiffs' claim against Raceway and Raceway's counterclaim. The Terms and Conditions of Sale provided that "No delivery will be made until final settlement." The District Court concluded that Raceway breached that provision by delivering Red Carpet to Finkelstein before receiving final payment, and therefore is jointly liable with Finkelstein for the purchase price, and is not entitled to its commission. Raceway does not argue that if it breached the contract, it nonetheless is not liable for the purchase price and is still entitled to its commission; it merely argues that it did not breach the contract, and, by implication, that any breach was not material.

We think that the breach clearly was material. If Raceway had obtained payment before delivering the horse, the provision that no warranty extended beyond final payment would have become applicable, and it is likely that litigation would have been avoided.

Raceway's claim that it did not breach the contract by delivery before payment is based upon an alleged custom known to the plaintiffs, permitting the delivery of a horse sold at auction before payment if the buyer is known to be financially responsible and has a running account with the auctioneer. The District Court held that the provision against delivery before final settlement is unambiguous, and that under the traditional New York rule, custom and usage are therefore inadmissible to vary the terms of the provision.^[19] Even under the more liberal standard of U.C.C. § 1-205(4),^[20] we think that the judge was correct. It is hardly conceivable that in the absence of the provision Raceway would deliver a horse to a buyer without obtaining at least some evidence that payment was owing; thus, we think that the provision against delivery before final settlement must mean more than Raceway argues it means.^[21]

Both defendants argue that the District Court erred in excluding their Exhibit K, an X-ray taken by Dr. Reid during the trial for purposes of illustrating and supporting the testimony that the difference in intensity between Exhibits B and D1 sufficiently accounted for the fact that callus growth was less visible on D1 than on B. (The apparent difference in extent of callus growth was one of the reasons the trial judge concluded that the X-rays were not taken on the same day, and thus lacked probative force.) The trial judge had the opportunity carefully to weigh the conflicting testimony of the expert witnesses on whether there was a difference in callus growth, and he had a broad discretion in the matter of admission of exhibits intended solely for use as illustrations.

Affirmed.

[1] The horse was consigned by Adrien and Gerard Miron Stable, St. Augustin, Quebec, Canada. Adrien and Gerard Miron were the original plaintiffs; after the trial, Gerard Miron died, and Raymond Miron, Gilbert Miron, Vincent Miron and Adrien Miron were substituted as executors of his estate.

[2] This statement was recorded on tape. Plaintiffs have conceded that it constituted a warranty that the horse was sound.

[3] Red Carpet is a "pacer," a racehorse with a lateral gait.

[4] Dr. Brennan testified that the X-rays were taken under his supervision on October 20, 1965. The exhibits which were dated were inscribed "10/21/65" in red crayon.

[5] The horse's groom, who cared for it from September 24, 1965 to October 19, exercising it and rubbing its legs daily, did not see any swelling on the left hind leg, and did not see the horse limping. An X-ray of the horse's lefthind leg taken on September 30, 1965 showed that on that date Red Carpet did not have a broken splint bone. Red Carpet raced on September 24, 1965, finishing first; on October 2, 1965, finishing first; and on October 16, 1965, finishing sixth.

[6] Finkelstein does not appeal from that part of the decision below holding him liable to Raceway on the cross-claim, since judgment has not been entered on the cross-claim. The court's determination of no just reason for delay makes the judgment entered appealable. Fed.R.Civ.P. 54 (b).

[7] Problems might arise, however, if we thought the finding clearly erroneous if one party had the burden of proof, but not if the other did, and the trial judge had clearly showed that he thought burden of proof irrelevant.

[8] The question is the proper construction of "acceptance" as defined in New York Uniform Commercial Code, § 2-606.

[9] See note 5, supra, and accompanying text.

[10] Finding No. 34: "Defendant Finkelstein has failed to prove by a fair preponderance of the credible evidence that a fracture of the splint bone in Red Carpet's left hind leg occurred prior to the sale of the horse on October 19,1965 to defendant Finkelstein."

Finding No. 35: "Defendant Finkelstein has failed to prove by a fair preponderance of the credible evidence that the horse was not `sound' at the time of its sale to him on October 19, 1965."

Conclusion No. 7: "Finkelstein has failed to prove by a fair preponderance of the credible evidence that plaintiffs breached their warranty."

[11] We suggest that where a District Judge is convinced that a factual determination does not depend upon who has the burden of proof, that be made clear in the findings of fact and conclusions of law.

[12] There was no finding as to how easily a horse's splint bone is broken; testimony indicated that a fracture can result from the horse's kicking itself.

[13] Finkelstein's argument that under New York law the seller must always prove, in an action for the price, that the goods conform, not only contradicts the clear language of U.C.C. § 2-607(4), but is in conflict with the cases he cites for support, which show that the allocation of the burden of proof has always depended upon whether the goods have been accepted or properly rejected. E.g., John Fabick Tractor Company v. Lizza & Sons, Inc., 298 F.2d 63, 65 (2 Cir. 1962); Eureka Fire Hose Co. v. Reynolds, 86 N.Y.S. 753 (App.Term 1st Dept., 1904).

[14] A "reasonable opportunity to inspect," U.C.C. § 2-606(1) (b), may of course encompass more than merely a reasonable time to inspect; here, there is no question that Finkelstein had the facilities for inspection available, and the only question on appeal was whether he waited too long.

A reasonable period for rejection overlaps a reasonable opportunity to inspect under U.C.C. § 2-606(1) (b). Thus if inspection discloses a defect, there remains the obligation to reject within a reasonable time. But in many cases where the buyer passes up a reasonable opportunity to inspect, he thus fails to reject within a reasonable time, and we think that this is one of those cases, for reasons stated in the text.

[15] Cf. the cases in which it has been said that what is a reasonable time for inspection is a question of fact for the jury; e.g., Pierson v. Crooks, 115 N.Y. 539, 22 N.E. 349 (1889); Raw Silk Trading Co. v. Kaltenbach & Stephens, 199 App.Div. 799, 192 N.Y.S. 375, 378 (1st Dept., 1922); C. W. Anderson Hosiery Co. v. Dixie Knitting Mills, Inc., 204 F.2d 503, 505 (4 Cir. 1953); see Annot., 52 A.L.R.2d 900 (1957). See also Lerman v. Fruit Processors, 89 U.S.App.D.C. 188, 191 F.2d 349, 355-356, cert. denied 342 U.S. 877, 72 S.Ct. 168, 96 L.Ed. 659 (1951).

[16] There is no specific finding, as such, to that effect, but the District Court's opinion makes it clear that the court found that there was no rejection within a reasonable time.

[17] The official comment to U.C.C. § 2-602, para. 3, states that the section applies only to rightful rejection by the buyer. Yet acceptance may depend upon whether there has been a rejection under that section, and the allocation of the burden of proving whether there was a defect, and thus whether or not there was "rightful rejection," depends upon whether there has been acceptance. See U.C.C. §§ 2-606(1) (b) and 2-607(4). The only sensible construction of these sections would seem to be that non-acceptance, consisting of attempted rejection within a reasonable time after delivery or tender, amounts to rightful rejection if the seller fails to prove that the goods conform, but is a breach if the seller proves conformity.

[18] If Finkelstein, having accepted the horse, had met his burden of proof, he would have been entitled to damages for non-conformity; see U.C.C. § 2-714.

The conclusion that the defendants did not prove by a preponderance of the evidence that Red Carpet was unsound at the time of sale means, of course, that Finkelstein's counterclaim must fail.

[19] See Chase Manhattan Bank v. May, 311 F.2d 117, 119 (3 Cir. 1962), cert. denied 372 U.S. 930, 83 S.Ct.874, 9 L.Ed.2d 733 (1963), and cases there cited.

[20] "The express terms of an agreement and an applicable course of dealing or usage of trade shall be construed wherever reasonable as consistent with each other; but when such construction is unreasonable express terms control both course of dealing and usage of trade and course of dealing controls usage of trade."

[21] Raceway's argument that it is entitled to recover its attorneys' fees from plaintiffs is mistaken; see Shindler v. Lamb, 25 Misc.2d 810, 812, 211 N.Y.S.2d 762, 764-765 (Sup.Ct.N.Y.Co.1959), aff'd 10 A.D.2d 826, 200 N.Y.S.2d 346 (1960), aff'd 9 N.Y.2d 621, 210 N.Y.S.2d 226, 172 N.E.2d 79 (1961).

239 N.Y. 386

MAURICE O'MEARA COMPANY, Appellant,
v.
THE NATIONAL PARK BANK OF NEW YORK, Respondent.

[388] (Argued October 3, 1924; decided January 27, 1925.)

APPEAL, by permission, from an order of the Appellate Division of the Supreme Court in the first judicial department, entered June 27, 1924, which affirmed an order of Special Term denying a motion by plaintiff for summary judgment.

The following question was certified: "Should the motion of the plaintiff for summary judgment herein have been granted?”

Carl A. Mead and Philip W Lowry for appellant. The plaintiff's demand is liquidated. (Kennedy v. County of Queens, 47 App. Div. 250; Mitchell v. Addison, 20 Ga. 53; Roberts v. Prior, 20 Ga. 561; Treat v. Price, 47 Neb. 875, 883; Benecke v. Haebler, 38 App. Div. 344; 166 N.Y. 631; Imbrie v. Nagase & Co., 196 App. Div. 380; Doelger v. Battery Park Nat. Bank, 201 App. Div. 515; Arctic Ice, etc., Co. v. Southgate, 287 Fed. Rep. 48, 51; Second Nat. Bank v. Columbia Trust Co., 288 [389] Fed. Rep. 17; Urquhart, Lindsay & Co., Ltd., v. Eastern Bank, Ltd., L.R. [1922] 1 K.B. 318.) An actual defect in the quality of the goods, even if shown, would not be a defense to this action, as the letter of credit required the defendant to pay against delivery of documents, not against delivery of goods. (Pordage v. Cole, 1 Saund. 320; Jones v. Barkley, 2 Doug. 659; Morris v. Sliter, 1 Den. 59; Meriden, etc., Co. v. Zingsen, 48 N.Y. 247; Kirtz v. Peck, 113 N.Y. 222; DeKay v. Bliss, 120 N.Y. 91; Raegener v. Hubbard, 167 N.Y. 301; Rosenthal Paper Co. v. National Folding Box, etc., Co., 226 N.Y. 313; Jones v. Turner, 80 Hun, 157; 149 N.Y. 611; Gray v. Booth, 64 App. Div. 231; Clark v. West, 137 App. Div. 23; Gourd v. Healy, 176 App. Div. 464.) The defendant had no right to test the goods. (Lamborn v. L.S.B. & T. Co., 196 App. Div. 504; Bank of Italy v. Merchants Nat. Bank, 236 N.Y. 106; Sawyer v. Dean, 114 N.Y. 469; Whitney v. McLean, 4 App. Div. 449; Plumb v. Hallauer & Sons Co., 145 App. Div. 20; Brown v. Raritan Chemical Works, 188 App. Div. 578; Hyman v. Hullman, 205 App. Div. 119; Horst Co. v. Biddell Brothers, [1912] App. Cas. 18; Polenghi Bros. v. Dried Milk Co., Ltd., 10 Comm. Cas. 42, 47.) The documents tendered to the defendant were sufficient. (Border Nat. Bank v. American Nat. Bank, 282 Fed. Rep. 73; Bank of America v. Whitney-Central Nat. Bank, 291 Fed. Rep. 929.) The defendant was not entitled to evidence, not required by the letter of credit, as to the quality of the paper. (Littlejohn v. Shaw, 159 N.Y. 188; Browne v. Paterson, 165 N.Y. 460; Collender v. Dinsmore, 55 N.Y. 200; Mittnacht v. Slevin, 67 Hun, 315; 142 N.Y. 683; Second Nat. Bank v. Columbia Trust Co., 288 Fed. Rep. 17, 25; Giles v. Comstock, 4 N.Y. 270; Kinney v. McBride & Co., 88 App. Div. 92; Leavitt v. de Vries, 127 App. Div. 721; Brown v. Raritan Chemical Works, Inc., 188 App. Div. 578; Banco Nacional Ultramarino v. First Nat. Bank, 289 Fed. Rep. 169.)

[390] Archibald R. Watson, John M. Harrington and Louis F. Doyle for respondent. It was incumbent upon the plaintiff, as a condition precedent to the right to demand payment of any draft drawn under the letter of credit described in the complaint, to present to the defendant evidence reasonably satisfactory to it and documents meeting with its approval showing that the newsprint paper covered thereby was of the quality in respect of bursting strength specified in the letter of credit; and, plaintiff having failed to meet such condition precedent, the defendant was justified in declining to make payment of the drafts presented and is not liable therefor in damages to the plaintiff or any other person. (Bank of Montreal v. Recknagel, 109 N.Y. 482; Portuguese Am. Bank v. Atlantic Nat. Bank, 200 App. Div. 575; Bank of Italy v. Merchants Nat. Bank, 236 N.Y. 106; Lamborn v. Lake Shore Banking & Trust Co., 196 App. Div. 504; 231 N.Y. 616; International Banking Corporation v. Irving Nat. Bank, 274 Fed. Rep. 122; 283 Fed. Rep. 102; Nat. City Bank v. Seattle Nat. Bank, 209 Tac. Rep. 705.) A dispute having arisen between the parties as to whether the documents presented did or did not meet the conditions of the letter of credit and a serious question having been presented concerning the quality of the newsprint described in the documents accompanying the first draft, the plaintiff and the defendant having thereupon made an agreement, based upon a valuable consideration, that each would abide by tests to be made by the Electrical Testing Laboratories, an impartial expert, and such test having shown that the samples of newsprint paper tested by such impartial expert were of a lower bursting strength than that required by the letter of credit, the defendant was, by that circumstance alone, absolved from the obligation, if any, to honor the draft. (Lieberman v. Templar Motor Co., 236 N.Y. 139.) The circumstance that the newsprint referred to in the documents accompanying the drafts was in fact of a [391] more bursting strength than that required by the terms of the letter of credit is fatal to the plaintiff's recovery in this action. (Old Colony Trust Co. v. Lawyers T. & T. Co., 297 Fed. Rep.  152; Williston on Sales, § 479; Gourd v. Healy, 176 App. Div. 464.) The facts pleaded in the fourth separate defense contained in defendant's answer and supported by defendant's answering affidavits raise an issue upon which the defendant is entitled to defend; for, inasmuch as it was the plaintiff's duty, in any view, to minimize the damages, and since the plaintiff willfully declined to accept the offer made to it by the Sun-Herald Corporation, after the alleged presentation of the three drafts, to pay the precise price recited in the letter of credit for all paper of the quality therein described, any resulting damage must be borne, not by the defendant, but by the plaintiff. (Parsons v. Sutton, 66 N.Y. 92; Allen v. McConihe, 124 N.Y. 342; Brown v. Weir, 95 App. Div. 78.) The present action is not one to recover a debt or liquidated damages arising on contract, within the meaning of rule 113. (Poland Export Corporation v. Marcus, 204 App. Div. 302; DeKalb v. Siegel, 70 N.Y.L.J. 76; Jankowitz v. Manhattan S. E. Co., 196 App. Div. 22.)

MCLAUGHLIN, J. This action was brought to recover damages alleged to have been sustained by the plaintiff's assignor, Ronconi & Millar, by defendant's refusal to pay three sight drafts against a confirmed irrevocable letter of credit. The letter of credit was in the following form:

                         "THE NATIONAL PARK BANK
                         "OF NEW YORK.

"Our Credit No. 14956                    October 28, 1920.
   "MESSRS. RONCONI & MILLAR,
                "49 Chambers Street,
                     "New York City, N.Y.:

“DEAR SIRS.— In accordance with instructions received from the Sun-Herald Corporation of this City, we open a confirmed or irrevocable credit in your favor for account [392] of themselves, in amount of $224,853.30, covering the shipment of 1322 2/3 tons of newsprint paper in 72½" and 36½" rolls to test 11-12, 32 lbs. at 8½¢ per pound net weight — delivery to be made in December 1920 and January 1921.

"Drafts under this credit are to be drawn at sight on this Bank, and are to be accompanied by the following documents of a character which must meet with our approval:

"Commercial Invoice in triplicate

"Weight Returns

"Negotiable Dock Delivery Order actually carrying with it control of the goods.

"This is a confirmed or irrevocable credit, and will remain in force to and including February 15th, 1921, subject to the conditions mentioned herein.

"When drawing drafts under this credit, or referring to it please quote our number as above.

"Very truly yours,
    "R. STUART,
      "Assistant Cashier.
             "(R. C.)"

The complaint alleged the issuance of the letter of credit; the tender of three drafts, the first on the 17th of December, 1920, for $46,301.71, the second on January 7, 1921, for $41,416.34, and the third on January 13, 1921, for $32,968.35. Accompanying the first draft were the following documents:

"1. Commercial invoice of the said firm of Ronconi and Millar in triplicate, covering three hundred (300) thirty-six and one-half (36½) inch rolls of newsprint paper and three hundred (300) seventy-two and one-half (72½) inch rolls of newsprint paper, aggregating a net weight of Five Hundred and forty-four thousand seven hundred and twenty-six pounds (544,726), to test eleven (11), twelve (12), thirty-two (32) pounds.

[393] "2. Affidavit of Elwin Walker, verified December 16, 1920, to which were annexed samples of newsprint paper, which the said affidavit stated to be representative of the shipment covered by the accompanying invoices and to test twelve (12) points, thirty-two (32) pounds.

"3. Full weight returns in triplicate.

"4. Negotiable dock delivery order on the Swedish American Line, directing delivery to the order of the National Park Bank of three hundred (300) rolls of newsprint paper seventy-two and one-half (72½) inches long and three hundred (300) half rolls of newsprint paper."

The documents accompanying the second draft were similar to those accompanying the first, except as to the number of rolls, weight of paper, omission of the affidavit of Walker, but with a statement: "Paper equal to original sample in test 11 /12-32 pounds;" and a negotiable dock delivery order oh the Seager Steamship Co., Inc.

The complaint also alleged defendant's refusal to pay; a statement of the amount of loss upon the resale of the paper due to a fall in the market price; expenses for lighterage, cartage, storage and insurance amounting to $3,045.02; an assignment of the cause of action by Ronconi & Millar to the plaintiff; and a demand for judgment.

The answer denied, upon information and belief, many of the allegations of the complaint, and set up (a) as an affirmative defense, that plaintiff's assignor was required by the letter of credit to furnish to the defendant "evidence reasonably satisfactory" to it that the paper shipped to the Sun-Herald Corporation was of a bursting or tensile strength of eleven to twelve points at a weight of paper of thirty-two pounds; that neither the plaintiff nor its assignor, at the time the drafts were presented, or at any time thereafter, furnished such evidence; (b) as a partial defense, that when the draft for $46,301.71 was presented, the defendant notified the plaintiff there had not been presented   "evidence reasonably satis [394] factory" to it, showing that the newsprint paper referred to in the documents accompanying said drafts was of the tensile or bursting strength specified in the letter of credit; that thereupon an agreement was entered into between plaintiff and defendant that the latter should cause a test to be made of the paper represented by the documents then presented and if such test showed that the paper was up to the specifications of the letter of credit, defendant would make payment of the draft; (c) for a third separate and distinct defense that the paper tendered was not, in fact, of the tensile or bursting strength specified in the letter of credit; (d) for a fourth separate and distinct defense that on or about January 15, 1921, and after the respective drafts referred to in the complaint had been presented to defendant for payment and payment refused, and at a time when the paper was owned and possessed by plaintiff or Ronconi & Millar, the Sun-Herald Corporation, in accordance with whose instructions and for whose account the letter of credit was issued, offered to the plaintiff that it would accept the newsprint paper referred to and pay for the same at a price of eight and one-half cents per pound, provided the plaintiff or its assignor would promptly and reasonably satisfy the Sun-Herald Corporation that the newsprint paper tested as much as eleven points to thirty-two pounds as specified in the letter of credit, and was of the sizes specified therein; that the plaintiff refused to accept said offer; and (e) as a fifth separate and partial defense, all of the allegations of the fourth defense were repeated.

After issue had been joined the plaintiff moved, upon the pleadings and affidavits, pursuant to rule 113 of the Rules of Civil Practice, to strike out the answer and for summary judgment.

The claim for damages for the non-payment of the third draft was, apparently, abandoned at or prior to the time the motion was made. It is unnecessary, therefore, to [395] further consider that and it will not be again referred to in the discussion as to the first two drafts.

The motion for summary judgment was denied and the defendant appealed to the Appellate Division, where the order denying the same was unanimously affirmed, leave to appeal to this court granted, and the following question certified: "Should the motion of the plaintiff for summary judgment herein have been granted?"

It is unnecessary to consider the denials contained in the answer, since in the answering affidavits defendant raised no issue as to any of the facts alleged in the complaint and in the plaintiff's affidavits upon which the motion was based. Defendant's affidavits used in opposition to the motion merely repeat the various denials contained in the answer. These denials were insufficient to raise an issue on a motion for summary judgment, since, under the rule, facts must be presented rather than mere general or specific denials in order to defeat a motion. (Rules Civ. Prac., rule 113; General Investment Co. v. Interborough R.T. Co., 235 N.Y. 133, 139.)

I am of the opinion that the order of the Appellate Division and the Special Term should be reversed and the motion granted. The facts set out in defendant's answer and in the affidavits used by it in opposition to the motion are not a defense to the action.

The bank issued to plaintiff's assignor an irrevocable letter of credit, a contract solely between the bank and plaintiff's assignor, in and by which the bank agreed to pay sight drafts to a certain amount on presentation to it of the documents specified in the letter of credit. This contract was in no way involved in or connected with, other than the presentation of the documents, the contract for the purchase and sale of the paper mentioned. That was a contract between buyer and seller, which in no way concerned the bank. The bank's obligation was to pay sight drafts when presented if accompanied by genuine documents specified in the letter of credit. If [396] the paper when delivered did not correspond to what had been purchased, either in weight, kind or quality, then the purchaser had his remedy against the seller for damages. Whether the paper were what the purchaser contracted to purchase did not concern the bank and in no way affected its liability. It was under no obligation to ascertain, either by a personal examination or otherwise, whether the paper conformed to the contract between the buyer and seller. The bank was concerned only in the drafts and the documents accompanying them. This was the extent of its interest. If the drafts, when presented, were accompanied by the proper documents, then it was absolutely bound to make the payment under the letter of credit, irrespective of whether it knew, or had reason to believe, that the paper was not of the tensile strength contracted for. This view, I think, is the one generally entertained with reference to a bank's liability under an irrevocable letter of credit of the character of the one here under consideration. (See Commercial Letters of Credit, 35 Harvard Law Review, 730, 734, 735, and authorities there cited; National City Bank v. Seattle National Bank, 121 Wash. 476; Bank of Plant City v. Canal-Commercial Trust & Savings Bank, 270 Fed. Rep. 477; International Banking Corp. v. Irving National Bank, 274 Fed. Rep. 122, 125; affd., 283 Fed. Rep. 103; Harper v. Hochstim, 278 Fed. Rep. 102; Horst Co. v. Biddell Brothers, [1912] App. Cas. 18, revg. [1911] 1 K. B. 934; Brown v. Raritan Chemical Works, Inc., 188 App. Div. 578, 584.)

The defendant had no right to insist that a test of the tensile strength of the paper be made before paying the drafts. Nor did it even have a right to inspect the paper before payment, to determine whether it in fact corresponded to the description contained in the documents. The letter of credit did not so provide. All that the letter of credit provided was that documents be presented which described the paper shipped as of a certain size, [397] weight and tensile strength. To hold otherwise is to read into the letter of credit something which is not there, and this the court ought not to do, since it would impose upon a bank a duty which in many cases would defeat the primary purpose of such letters of credit. This primary purpose is an assurance to the seller of merchandise of prompt payment against documents.

It has never been held, so far as I am able to discover, that a bank has the right or is under an obligation to see that the description of the merchandise contained in the documents presented is correct. A provision giving it such right, or imposing such obligation, might, of course, be provided for in the letter of credit. The letter under consideration contains no such provision. If the bank had the right to determine whether the paper were of the tensile strength stated, then it might be pertinent to inquire how much of the paper must it subject to the test? If it had to make a test as to tensile strength, then it was equally obligated to measure and weigh the paper. No such thing was intended by the parties and there was no such obligation upon the bank. The documents presented were sufficient. The only reason stated by defendant in its letter of December 18, 1920, for refusing to pay the draft, was that "there has arisen a reasonable doubt regarding the quality of the newsprint paper. * * *. Until such time as we can have a test made by an impartial and unprejudiced expert we shall be obliged to defer payment." This being the sole objection, the only inference to be drawn therefrom is that otherwise the documents presented conformed to the requirements of the letter of credit. All other objections were thereby waived. (International Banking Corp. v. Irving National Bank, supra.)

It is also suggested that the dock delivery order upon the presentation of the second draft was insufficient because it required that the paper be removed from the dock within four days from the date of the order. No [398] objection was made on this ground by the bank at the time the documents were tendered and such objection, if valid, was thereby waived. (Littlejohn v. Shaw, 159 N.Y. 188.) If the time were insufficient, further time might have been obtained. This claim was first referred to in defendant's letter of January 12, 1921, addressed, not to the plaintiff, but to the National City Bank of New York, which is not a party to this action, and the letter was not sent until the day after the time limit had expired.

It is not suggested that the dock delivery order did not carry control of the goods during the four days mentioned, or that the paper could not have been removed within that time. Then, too, if defendant required more time for the removal of the goods, it should have requested it when the documents were tendered on the 7th of January and doubtless any further time required could have been arranged for.

Some criticism is made as to the statement contained in the documents when the second draft was presented. The criticism, really, is directed towards the expressions "In Test 11/12, 32 #” and "Paper equal to original sample in test 11/12, 32 pounds." It is claimed that these expressions are not equivalent to "rolls to test 11-12, 32 Lbs." I think they are. I do not see how any one could have been misled by them or misunderstood them. The general rule is that an obligation to present documents is complied with if any of the documents attached to the draft contain the required description. The purpose, obviously, was to enable defendant to know that dock delivery orders had been issued for the paper. (Border National Bank v. American National Bank, 282 Fed. Rep. 73, 80.)

The alleged oral agreement for a test was unenforcible against plaintiff. It is not alleged that Ronconi & Millar, the beneficiaries of the letter of credit, were parties to this alleged modification of it. They did not assign it to the plaintiff until May 25, 1921, five months after the [399] agreement is alleged to have been made. The letter of credit could not have been modified in this way by parol. (Seitz v. Brewers Refrigerating M. Co., 141 U. S. 510; Gilbert v. Moline Plough Co., 119 U.S. 491.) Since the defendant was already bound by its letter of credit to pay the drafts on presentation of the documents, without any inspection of the goods, there was no consideration for the alleged new promise and the same, even if made, was invalid. (1 Williston on Contracts, sec. 130; Vanderbilt v. Schreyer, 91 N.Y. 392; Sawyer v. Dean, 114 N.Y. 469; Arend v. Smith, 151 N.Y. 502; Weed v. Spears, 193 N.Y. 289.)

Defendant largely relies upon Bank of Montreal v. Recknagel (109 N.Y. 482, 492) and Portuguese American Bank v. Atlantic National Bank (200 App. Div. 575). Each of these cases is distinguishable from the present case. In Bank of Montreal v. Recknagel (supra) the letter of credit expressly required that the description of the goods should be contained in the bills of lading and this court said: "It was an integral part of the agreement of the parties that the bills of lading should contain a statement that manila hemp was shipped." As the bill of lading did not contain this statement, the court held that the bank was not justified in paying the drafts.

In Portuguese American Bank v. Atlantic National Bank (supra) the letter of credit did not call for any documents whatever. The defendant guaranteed payment of a draft drawn to cover the purchase price of certain specified merchandise to be shipped by the drawers to the drawees and it was held that the bank was not liable on the guaranty where it appeared that neither the draft nor the express company's receipt described the merchandise specified in the guaranty.

Finally, it is claimed that the plaintiff was not entitled to a summary judgment since there was an issue raised as to the amount of damages. It appears from the affidavits in support of the motion that after the defend [400] ant had refused to pay the drafts, due notice was given to it by the plaintiff of its intention to sell the paper for the best price possible, although no notice of such resale was necessary. (Personal Property Law [Cons. Laws, ch. 41], sec. 141, subd. 4.) No attention was paid to the notice and the paper was sold as soon as practicable thereafter and for the best price obtainable, which represented the fair market value at the time of the sale. The plaintiff's damages were, primarily, the face amount of the drafts. Plaintiff, of course, was bound to minimize such damage so far as it reasonably could. This, it undertook to do by reselling the paper, and for the amount received, less expenses connected with the sale, it was bound to give the defendant credit. There was absolutely no statement in defendant's affidavits to the effect that the plaintiff did not act in the utmost good faith or with reasonable care and diligence in making the resale. The only reference thereto is that defendant did not get the best price possible. The defendant gave no evidence, however, of a market value at the time and the plaintiff submitted the affidavits of three dealers in paper that the paper was sold at the fair market value at the time of the sale. Plaintiff's damages were, therefore, liquidated by a resale on notice. (Second National Bank v. Columbia Trust Co., 288 Fed. Rep. 17, 26.) This is the rule which has long prevailed between seller and buyer. The only requirement is that the resale must be a fair one. (Pollen v. LeRoy, 30 N.Y. 549; Dustan v. McAndrew, 44 N.Y. 72; Smith v. Pettee, 70 N.Y. 13; General Electric Co. v. National Contracting Co., 178 N.Y. 369; Jardine, Matheson & Co., Ltd., v. Huguet Silk Co., 203 N.Y. 273.)

In Dustan v. McAndrew (supra) the goods were tendered on November thirtieth and sold by plaintiff on December twenty-sixth. This court held that the trial court did not err in charging the jury that the plaintiff was entitled to recover the difference between the contract price and the price he obtained on the resale and in [401] refusing the defendant's request that the court leave to the jury the question as to the market value of the goods at the time of the breach. EARL, J., who delivered the opinion of the court, said:

"In such case, the vendor is treated as the agent of the vendee to make the sale, and all that is required of him is, that he should act with reasonable care and diligence, and in good faith. He should make the sale without unnecessary delay, but he must be the judge as to the time and place of sale, provided he act in good faith and with reasonable care and diligence. * * * We are, therefore, of the opinion, that the court did not err as to the rule of damages." (p. 79.)

There was a loss on the resale of the paper called for under the first draft of $5,447.26, and under the second draft of $14,617.53, making a total loss of $20,064.79, for which amount judgment should be directed in favor of the plaintiff.

The orders appealed from should, therefore, be reversed and the motion granted, with costs in all courts. The question certified is answered in the affirmative.

CARDOZO, J. (dissenting). I am unable to concur in the opinion of the court.

I assume that no duty is owing from the bank to its depositor which requires it to investigate the quality of the merchandise (Laudisi v. American Ex. Nat. Bank, 239 N.Y. 234). I dissent from the view that if it chooses to investigate and discovers thereby that the merchandise tendered is not in truth the merchandise which the documents describe, it may be forced by the delinquent seller to make payment of the price irrespective of its knowledge. We are to bear in mind that this controversy is not one between the bank on the one side and on the other a holder of the drafts who has taken them without notice and for value. The controversy arises between [402] the bank and a seller who has misrepresented the security upon which advances are demanded. Between parties so situated, payment may be resisted if the documents are false.

I think we lose sight of the true nature of the transaction when we view the bank as acting upon the credit, of its customer to the exclusion of all else. It acts not merely upon the credit of its customer, but upon the credit also of the merchandise which is to be tendered as security. The letter of credit is explicit in its provision that documents sufficient to give control of the goods shall be lodged with the bank when drafts are presented. I cannot accept the statement of the majority opinion that the bank was not concerned with any question as to the character of the paper. If that is so, the bales tendered might have been rags instead of paper, and still the bank would have been helpless, though it had knowledge of the truth, if the documents tendered by the seller were sufficient on their face. A different question would be here if the defects had no relation to the description in the documents. In such circumstances, it would be proper to say that a departure from the terms of the contract between the vendor and the vendee was of no moment to the bank. That is not the case before us. If the paper was of the quality stated in the defendant's answer, the documents were false.

I think the conclusion is inevitable that a bank which pays a draft upon a bill of lading misrepresenting the character of the merchandise may recover the payment when the misrepresentation is discovered, or at the very least the difference between the value of the thing described and the value of the thing received. If payment might have been recovered the moment after it was made, the seller cannot coerce payment if the truth is earlier revealed.

We may find persuasive analogies in connection with the law of sales. One who promises to make payment [403] in advance of delivery and inspection may be technically in default if he refuses the promised payment before inspection has been made. None the less, if the result of the inspection is to prove that the merchandise is defective, the seller must fail in an action for the recovery of the price. The reason is that "the buyer would have been entitled to recover back the price if he had paid it without inspection of the goods" (2 Williston on Sales [2d ed.], §§ 479, 576).

I think the defendant's answer and the affidavits submitted in support of it are sufficient to permit a finding that the plaintiff's assignors misrepresented the nature of the shipment. The misrepresentation does not cease to be a defense, partial if not complete, though it was innocently made (Bloomquist v. Farson, 222 N.Y. 375; 2 Williston on Sales [2d ed.], § 632).

The order should be affirmed and the question answered "no."

HISCOCK, Ch. J., POUND and ANDREWS, JJ., concur with MCLAUGHLIN, J.; CARDOZO, J., reads dissenting opinion in which CRANE, J., concurs; LEHMAN, J., not sitting.

Orders reversed, etc.

6 N.H. 481

BRITTON
versus
TURNER.

July Term, 1834.

Where a party undertakes to pay, upon a special contract for the performance of labour, he is not liable to be charged upon such special contract, until the money is earned according to the terms of the agreement; and where the parties have made an express contract, the law will not imply and raise a contract different from that which the parties have entered into, except upon some farther transaction between them.

In case of a failure to perform such special contract, by the default of the party contracting to do the service, if the money is not due by the terms of the special agreement, and the nature of the contract be such that the employer can reject what has been done, and refuse to receive any benefit from the part performance, he is entitled so to do, unless he have before assented to and accepted of what has been done, and in such case the party performing the labor is not entitled to recover however much he may have done.

But if, upon a contract of such a character, a party actually receives useful labor, and thereby derives a benefit and advantage, over and above the damage which has resulted from a breach of the contract by the other party, the labor actually done, and the value received, furnish a new consideration, and the law thereupon raises a promise to pay to the extent of the reasonable worth of the excess. And the rule is the same, whether the labor was received and accepted, by the assent of the party prior to the breach, and under a contract, by which, from its nature, the party was to receive the labour from time to time until the completion of the whole contract, or whether it was received and accepted by an assent subsequent to the performance of all which was in fact done.

In case such contract is broken, by the fault of the party employed after part performance has been received, the employer is entitled, if he so elect, to put the breach of the contract in defence, for the purpose of reducing the damages, or showing that nothing is due, and the benefits for which he is liable to be charged, in that case, is the amount of value which he has received, if any, beyond the amount of the damage—and the implied promise which the law will raise, is, to pay such amount of the stipulated price for the whole labour, as remains after deducting what it would cost to procure a completion of the whole service, and also any damage which has been sustained by reason of the non fulfilment of the contract.

If in such case it be found that the damages are equal to, or greater than the amount of the value of the labour performed, so that the employer, having a right to the performance of the whole contract, has not upon the whole case received a beneficial service, the plaintiff cannot recover.

[482] If the employer elects to permit himself to be charged for the value of the labor, without interposing the damages in defence, he is entitled to do so, and may have an action to recover his damages for the non performance of the contract.

If he elects to have the damages considered in the action against him, he must be understood as conceding that they are not to be extended beyond the amount of what he has received, and he cannot therefore afterwards sustain an action for further damages.

ASSUMPSIT for work and labour, performed by the plaintiff, in the service of the defendant, from March 9th, 1831, to December 27, 1831.

The declaration contained the common counts, and among them a count in quantum meruit, for the labor, averring it to be worth one hundred dollars.

At the trial in the C. C. Pleas, the plaintiff proved the performance of the labor as set forth in the declaration.

The defence was that it was performed under a special contract—that the plaintiff agreed to work one year, from some time in March, 1831, to March 1832, and that the defendant was to pay him for said year's labor the sum of one hundred and twenty dollars; and the defendant offered evidence tending to show that such was the contract under which the work was done.

Evidence was also offered to show that the plaintiff left the defendant's service without his consent, and it was contended by the defendant that the plaintiff had no good cause for not continuing in his employment.

There was no evidence offered of any damage arising from the plaintiffs departure, farther than was to be inferred from his non fulfilment of the entire contract.

The court instructed the jury, that if they were satisfied from the evidence that the labor was performed, under a contract to labor a year, for the sum of one hundred and twenty dollars, and if they were satisfied that the plaintiff labored only the time specified in the declaration, and then left the defendant's service, against his consent, and without any good cause, yet the plaintiff was entitled to recover, under his quantum meruit count, [483] as much as the labor he performed was reasonably worth, and under this direction the jury gave a verdict for the plaintiff for the sum of $95.

The defendant excepted to the instructions thus given to the jury.

Handerson for the defendant.

The general principle established by all the old cases, is, that where the contract is entire, as where A agrees to do a certain thing, for which B is to make a certain compensation, the doing of the tiling by A is a condition precedent, and he has no remedy until he has fully performed his part.

There are several leading cases relating to the subject. Cutter Adr. v. Powell, 6 D. & E. 320; McMillen v. Vanderlip, 12 Johns. 165; Hudson v. Swift, 20 Johns. 24; Lantry v. Parks, 8 Cowen, 63; Ellis v. Hamlin, 4 Taunt. 52; 11 Com. Law Rep. 251; 17 ditto, 340; Faxon v. Mansfield and Holbrook, Trustee, 2 Mass. Rep. 147; Stark v. Parker, 2 Pick. 267; Mores v. Stevens, 2 Pick. 332.

Hayward v. Leonard, 7 Pick. 181, was a contract to build a house on the plaintiffs land, at a certain price, and in a particular manner. The first count was upon the contract, the second quantum meruit for work and labor, and materials found. The court there decided that the count in quantum meruit might be sustained, and refer with approbation to 14 Mass. 282, and 2 Pick. 267. They say, the defendant saw the work go on from day to day, and found no fault, either with the work or materials, and may be presumed to have agreed to receive the work as it was done, &c.

The case of Wadleigh v. Sutton, an'e 15, is like the case in the 7th Pickering, and may be sustained without affecting the case under consideration.

On a full examination of the decisions upon this subject, no doubt it will be found, that in modern times courts have, to a certain extent, relaxed from the strict rules [484] formerly adopted, and have sustained a count in quantum meruit in cases where the plaintiff had not fully performed his contract. But all the cases where it has been so held may be distinguished from this case—none have gone the length of maintaining the present action.

Take the cases of contracts to build a house, a bridge, or highway, and all the variety of cases where the agreement consists in certain labor to be done, and materials provided—the contract is not fulfilled according to its terms—the house, or bridge, or highway are built, but not so well done as agreed. No action, therefore, will lie upon the contract. But the court in those cases say when the party for whose benefit the materials are furnished, and the labor done, sees the work from day to day, as it proceeds, sees also the materials, and suffers the building to go on without objection, or without putting an end to the work, it shall be considered that he accepts it—that he in fact consents to abandon the strict terms of the contract, and makes a new one, which is to pay what the labor and materials are reasonably worth.

So also in another class of cases, where an agreement is made for the sale and delivery of articles estimated by weight or measure—Suppose A agrees to deliver me 150 bushels of wheat, at $1,50 per bushel, to be paid when it is all delivered, but he delivers only fifty. If I keep the fifty bushels I make a new contract, and agree to pay what the fifty bushels are worth. But if I decline keeping it, and request A to take it away, he cannot force it upon me nolens, volens, and compel me to pay for it against my consent.

In the foregoing cases the person with whom the contract is made, it is presumed from his conduct, has consented, in the one case to receive less than the whole amount agreed to be delivered, and in the other to receive the labor and materials of a different kind, or in a different form and manner, from that stipulated. He has in short made a new contract, and abandoned the old, [485] and it is on this ground, and this only, that those decisions can be sustained.

But the case before the court is different from those where it hits been held a quantum meruit lies. It cannot be contended that the defendant consented to receive a part of the labor, and be accountable for such part; no contract to this effect can be implied. He had it not in his power to prevent this part execution, as in the case of building the house, bridge, &c. nor could he deliver back the labor done. If any contract is fastened upon him, it is put upon him against his consent. He made a contract for an entire year's work. He has never consented to receive and pay for any time less than a year. No such consent can be implied.

The cases before cited, in 2 Mass. 147; 2 Pick. 267; 12 Johns. 165; and 8 Cowen, 63; are as fully in point as if made for the occasion; and although courts in modern times may have succeeded in getting around the old law, in sundry cases, it is believed that the decisions last referred to yet stand, having never been overruled, bat remain in full force, and they seem fully to support this defence.

To hold out inducements to men to violate their contracts, when fairly entered into, is of immoral tendency, and whether the decisions have not gone quite far enough, and held out inducements enough to men disposed to disregard their engagements, may perhaps deserve consideration.

Wilson, for the plaintiff.

PARKER, J. delivered the opinion of the court.

It may be assumed, that the labor performed by the plaintiff, and for which he seeks to recover a compensation in this action, was commenced under a special contract to labor for the defendant the term of one year, for the sum of one hundred and twenty dollars, and that the [486] plaintiff has labored but a portion of that time, and has voluntarily failed to complete the entire contract.

It is clear, then, that he is not entitled to recover upon the contract itself, because the service, which was to entitle him to the sum agreed upon, has never been performed.

But the question arises, can the plaintiff, under these circumstances, recover a reasonable sum for the service he has actually performed, under the count in quantum meruit.

Upon this, and questions of a similar nature, the decisions to be found in the books are not easily reconciled.

It has been held, upon contracts of this kind for labor to be performed at a specified price, that the party who voluntarily fails to fulfil the contract by performing the whole labor contracted for, is not entitled to recover any thing for the labor actually performed, however much he may have done towards the performance, and this has been considered the settled rule of law upon this subject.

2 Pick. 267, Stark v. Parker; 2 Mass. 147, Faxon v. Mansfield; 12 Johns. 165, McMillen v. Vanderclip; 13 Johns. 94, Jennings v. Camp; 19 Johns, 337, Reab v. Moor; 8 Cowen, 63, Lantry v. Parks; 9 Barn. & Cres. 92, Sinclair v. Bowles; 2 Stark. Rep. 256, Spain v. Arnott.

That such rule in its operation may be very unequal, not to say unjust, is apparent.

A party who contracts to perform certain specified labor, and who breaks his contract in the first instance, without any attempt to perform it, can only be made liable to pay the damages which the other party has sustained by reason of such non performance, which in many instances may be trifling—whereas a party who in good faith has entered upon the performance of his contract, and nearly completed it, and then abandoned the further performance—although the other party has had the full benefit of all that has been done, and has perhaps sustained no actual damage—is in fact subjected to [487] a loss of all which has been performed, in the nature of damages for the non fulfilment of the remainder, upon the technical rule, that the contract must be fully performed in order to a recovery of any part of the compensation.

By the operation of this rule, then, the party who attempts performance may be placed in a much worse situation than he who wholly disregards his contract, and the other party may receive much more, by the breach of the contract, than the injury which he has sustained by such breach, and more than he could be entitled to were he seeking to recover damages by an action.

The case before us presents an illustration. Had the plaintiff in this case never entered upon the performance of his contract, the damage could not probably have been greater than some small expense and trouble incurred in procuring another to do the labor which he had contracted to perform. But having entered upon the performance, and labored nine and a half months, the value of which labor to the defendant as found by the jury is $95, if the defendant can succeed in this defence, he in fact receives nearly five sixths of the value of a whole year's labor, by reason of the breach of contract by the plaintiff a sum not only utterly disproportionate to any probable, not to say possible damage which could have resulted from the neglect of the plaintiff to continue the remaining two and an half months, but altogether beyond any damage which could have been recovered by the defendant, had the plaintiff done nothing towards the fulfillment of his contract.

Another illustration is furnished in Lantry v. Parks, 8 Cowen, 83. There the defendant hired the plaintiff for a year, at ten dollars per month. The plaintiff worked ten and an half months, and then left saying he would work no more for him. This was on Saturday—on Monday the plaintiff returned, and offered to resume his work, but the defendant said he would employ him no longer. [488] The court held that the refusal of the defendant on Saturday was a violation of his contract, and that he could recover nothing for the labor performed.

There are other cases, however, in which principles have been adopted leading to a different result.

It is said, that where a party contracts to perform certain work, and to furnish materials, as, for instance, to build a house, and the work is done, but with some variations from the mode prescribed by the contract, yet if the other party has the benefit of the labor and materials he should be bound to pay so much as they are reasonably worth. 2 Stark. Ev. 97, 98; 7 Pick. 181, Hayward v. Leonard; 8 Pick. 178, Smith v. First Cong. Meeting House in Lowell; 4 Cowen, 564, Jewell v. Schroeppel; 7 Green. 78, Hayden v. Madison; Bull. N. P. 139; 4 Bos. & Pul. 355; 10 Johns. 36; 13 Johns. 97; 7 East, 479.

A different doctrine seems to have been holden in Ellis v. Hamlen, 3 Taunt. 52, and it is apparent, in such cases, that if the house has not been built in the manner specified in the contract, the work has not been done. The party has no more performed what he contracted to perform, than he who has contracted to labor for a certain period, and failed to complete the time.

It is in truth virtually conceded in such cases that the work has not been clone, for if it had been, the party performing it would be entitled to recover upon the contract itself, which it is held he cannot do.

Those cases arc not to be distinguished, in principle, from the present, unless it be in the circumstance, that where the party has contracted to furnish materials, and do certain labor, as to build a house in a specified manner, if it is not done according to the contract, the party for whom it is built may refuse to receive it—elect to take no benefit from what has been performed—and therefore if he does receive, he shall be bound to pay the value—whereas in a contract for labor, merely, from day to day, the party is continually receiving the benefit of the con [489] tract under an expectation that it will be fulfilled, and  cannot, upon the breach of it, have an election to refuse to receive what has been done, and thus discharge himself from payment.

But we think this difference in the nature of the contracts does not justify the application of a different rule in relation to them.

The party who contracts for labor merely, for a certain period, does so with full knowledge that he must, from the nature of the case, be accepting part performance from day to day, if the other party commences the performance, and with knowledge also that the other may eventually fail of completing the entire term.

If under such circumstances he actually receives a benefit from the labor performed, over and above the damage occasioned by the failure to complete, there is as much reason why lie should pay the reasonable worth of what has thus been done for his benefit, as there is when he enters and occupies the house which has been built for him, but not according to the stipulations of the contract, and which he perhaps enters, not because he is satisfied with what has been done, but because circumstances compel him to accept it such as it is, that he should pay for the value of the house.

Where goods are sold upon a special contract as to their nature, quality, and price, and have been used before their inferiority has been discovered, or other circumstances have occurred which have rendered it impracticable or inconvenient for the vendee to rescind the contract in toto, it seems to have been the practice formerly to allow the vendor to recover the stipulated price, and the vendee recovered by a cross action damages for the breach of the contract.

"But according to the later and more convenient practice, the vendee in such case is allowed, in an action for the price, to give evidence of the inferiority of the goods in reduction of damages, and the plaintiff who has broken his contract is not entitled [490] to recover more than the value of the benefits which the Turner, defendant has actually derived from the goods; and where the latter has derived no benefit, the plaintiff cannot recover at all."

2 Stark. Ev. 640, 642; 1 Starkie's Rep. 107, Okell v. Smith.

So where a person contracts for the purchase of a quantity of merchandize, at a certain price, and receives a delivery of part only, and lie keeps that part, without any offer of a return, it has been held that he must pay the value of it. 5 Barn. & Cres. Shipton v. Casson; Com. Dig. Action F. Baker v. Sutton; 1 Camp. 55, note.

A different opinion seems to have been entertained, 5 Bos. & Pul. 61, Waddington v. Oliver, and a different decision was had, 2 Stark. Rep. 281, Walker v. Dixon.

There is a close analogy between all these classes of cases, in which such diverse decisions have been made.

If the party who has contracted to receive merchandize, takes a part and uses it, in expectation that the whole will be delivered, which is never done, there seems to be no greater reason that he should pay for what he has received, than there is that the party who has received labor in part, under similar circumstances, should pay the value of what has been done for his benefit.

It is said, that in those cases where the plaintiff has been permitted to recover there was an acceptance of what had been done. The answer is, that where the contract is to labor from clay to day, for a certain period, the party for whom the labor is done in truth stipulates to receive it from day to day, as it is performed, and although the other may not eventually do all he has contracted to do, there has been, necessarily, an acceptance of what has been done in pursuance of the contract, and the party must have understood when he made the contract that there was to be such acceptance.

If then the party stipulates in the outset to receive part performance from time to time, with a knowledge that the whole may not be completed, we see no reason [491] why he should not equally he holden to pay for the amount of value received, as where lie afterwards takes  the benefit of what has been done, with a knowledge that the whole which was contracted for has not been performed.

In neither case has the contract been performed. In neither can an action be sustained on the original contract.

In both the party has assented to receive what is done. The only difference is, that in the one case the assent is prior, with a knowledge that all may not be performed, in the other it is subsequent, with a knowledge that the whole has not been accomplished.

We have no hesitation in holding that the same rule should be applied to both classes of cases, especially, as the operation of the rule will be to make the party who has failed to fulfil his contract, liable to such amount of damages as the other party has sustained, instead of subjecting him to an entire loss for a partial failure, and thus making the amount received in many cases wholly disproportionate to the injury. 1 Saund. 320, c; 2 Stark. Evid. 643.

It is as "hard upon the plaintiff to preclude him from recovering at all, because he has failed as to part of his entire undertaking," where his contract is to labor for a certain period, as it can be in any other description of contract, provided the defendant has received a benefit and value from the labor actually performed.

We, hold then, that where a party undertakes to pay upon a special contract for the performance of labor, or the furnishing of materials, he is not to be charged upon, such special agreement until the money is earned according to the terms of it, and where the parties have made an express contract the law will not imply and raise a contract different from that which the parties have entered into, except upon some farther transaction between the parties.

[492] In case of a failure to perform such special contract, by the default of the party contracting to do the service, if the money is not due by the terms of the special agreement he is not entitled to recover for his labor, or for the materials furnished, unless the other party receives what has been done, or furnished, and upon the whole case derives a benefit from it. 14 Mass. 282, Taft v. Montague; 2 Stark. Ev. 644.

But if, where a contract is made of such a character, a party actually receives labor, or materials, and thereby derives a benefit and advantage, over and above the damage which has resulted from the breach of the contract by the other party, the labor actually done, and the value received, furnish a new consideration, and the law thereupon raises a promise to pay to the extent of the reasonable worth of such excess. This may be considered as making a new case, one not within the original agreement, and the party is entitled to "recover on his new case, for the work done, not as agreed, but yet accepted by the defendant." 1 Dane's Abr. 224.

If on such failure to perform the whole, the nature of the contract be such that the employer can reject what has been done, and refuse to receive any benefit from the part performance, he is entitled so to do, and in such case is not liable to be charged, unless he has before assented to and accepted of what has been done, however much the other party may have done towards the performance, lie has in such case received nothing, and having contracted to receive nothing but the entire matter contracted for, he is not bound to pay, because his express promise was only to pay on receiving the whole, and having actually received nothing the law cannot and plight not to raise an implied promise to pay. But where the party receives value—takes and uses the materials, or has advantage from the labor, he is liable to pay the reasonable worth of what he has received. 1 Camp. 38, Farnsworth v. Garrard. And the rule is the same wheth [493] er it was received and accepted by the assent of the party prior to the breach, under a contract by which, from its nature, he was to receive labor, from time to time until the completion of the whole contract; or whether it was received and accepted by an assent subsequent to the performance of all which was in fact done. If he received it under such circumstances as precluded him from rejecting it afterwards, that does not alter the case—it has still been received by his assent.

In fact we think the technical reasoning, that the performance of the whole labor is a condition precedent, and the right to recover any thing dependent upon it—that the contract being entire there can be no apportionment—and that there being an express contract no other can be implied, even upon the subsequent performance of service—is not properly applicable to this species of contract, where a beneficial service has been actually performed; for we have abundant reason to believe, that the general understanding of the community is, that the hired laborer shall be entitled to compensation for the service actually performed, though he do not continue the entire term contracted for, and such contracts must be presumed to be made with reference to that understanding, unless an express stipulation shows the contrary.

Where a beneficial service has been performed and received, therefore, under contracts of this kind, the mutual agreements cannot be considered as going to the whole of the consideration, so as to make them mutual conditions, the one precedent to the other, without a specific proviso to that effect. 1 H. Black. 273, note, Boone v. Eyre; 6 D. & E. 570, Campbell v. Jones; 10 East, 295, Ritchie v. Atkinson; 4 Taunt. 745, Burn v. Miller.

It is easy, if parties so choose, to provide by an express agreement that nothing shall be earned, if the laborer leaves his employer without having performed the whole service contemplated, and then there can be no [494] pretence for a recovery if he voluntarily deserts the service before the expiration of the time.

The amount, however, for which the employer ought to be charged, where the laborer abandons his contract, is only the reasonable worth, or the amount of advantage lie receives upon the whole transaction, (ante 15, Wadleigh v. Sutton,) and, in estimating the value of the labor, the contract price for the service cannot be exceeded. 7 Green. 78; 4 Wendell, 285, Dubois v. Delaware & Hudson Canal Company; 7 Wend. 121, Koon v. Greenman.

If a person makes a contract fairly he is entitled to have it fully performed, and if this is not done he is entitled to damages. He may maintain a suit to recover the amount of damage sustained by the non performance.

The benefit and advantage which the party takes by the labor, therefore, is the amount of value which he receives, if any, after deducting the amount of damage; and if he elects to put this in defence he is entitled so to do, and the implied promise which (he law will raise, in such case, is to pay such amount of the stipulated price for the whole labor, as remains after deducting what it would cost to procure a completion of the residue of the service, and also any damage which has been sustained by reason of the non fulfilment of the contract.

If in such case it be found that the damages are equal to, or greater than the amount of the labor performed so that the employer, having a right to the full performance of the contract, has not upon the whole case received a beneficial service, the plaintiff cannot recover.

This rule, by binding the employer to pay the value of the service he actually receives, and the laborer to answer in damages where lie docs not complete the entire contract, will leave no temptation to the former lo drive the laborer from his service, near the close of his term, by ill treatment, in order to escape from payment; nor to the latter in desert his service before the stipulated time, without a sufficient  reason; and it will be in most in [495] stances settle the whole controversy in one action, and prevent a multiplicity of suits and cross actions.

There may be instances, however, where the damage occasioned is much greater than the value of the labor performed, and if the party elects to permit himself to be charged for the value of the labor, without interposing the damages in defence, he is entitled to do so, and may have an action to recover his damages for the nonperformance, whatever, they may be. 1 Mason's Rep. Crowninshield v. Robinson.

And he may commence such action at any time after the contract is broken, notwithstanding no suit has been instituted against him; but if he elects to have the damages considered in the action against him, he must be understood as conceding that they are not to be extended beyond the amount of what he has received, and he cannot afterwards sustain an action for farther damages.

Applying the principles thus laid down, to this case, the plaintiff is entitled to judgment on the verdict.

The defendant sets up a mere breach of the contract in defence of the action, but this cannot avail him. He does not appear to have offered evidence to show that he was damnified by such breach, or to have asked that a deduction should be made upon that account. The direction to the jury was therefore correct, that the plaintiff was entitled to recover as much as the labor performed was reasonably worth, and the jury appear to have allowed a pro rata compensation, for the time which the plaintiff labored in the defendant's service.

As the defendant has not claimed or had any adjustment of damages, for the breach of the contract, in this action, if he has actually sustained damage he is still entitled to a suit to recover the amount.

Whether it is not necessary, in cases of this kind, that notice should be given to the employer that the contract is abandoned, with an otter of adjustment and demand of payment; and whether the laborer must not wait until [496] the time when the money would have been due according to the contract, before commencing an action, (5 B. & P. 61) are questions not necessary to be settled in this case, no objections of that nature having been taken here.

Judgment on the verdict.

17 N.Y. 173

SMITH
v.
BRADY

March, 1858.

When, in a contract for the erection of a building upon the land of another, performance is to precede payment and is the condition thereof, the builder having substantially failed to perform on his part, can recover nothing for his labor and materials, notwithstanding the owner has chosen to occupy and enjoy the erection.^[1]

Mere occupation of a building, in such case, is not a waiver of strict performance; but the question of waiver is one of intention depending on all the circumstances, of which occupancy may be one.^[2]

A party is entitled to retain, without compensation, the benefits of a partial performance, where from the nature of the contract, he must receive such [174] benefits in advance of a full performance, and is by the contract under no obligation to pay until the performance is complete.^[1]

Distinguished in Morrell v. Irving F. Ins. Co., 33 N. Y. 457; Stewart v. Keteltas, 36 N.Y. 393, and Avery v. Willson, 81 N.Y. 344.

APPEAL from the Supreme Court. The complaint was for work done and materials furnished upon the laud of the defendant, at his request, to the value of $2295.60. The answer averred that the work done and materials furnished, with the exception of $295.60 charged for extra work and materials, were furnished and done under two agreements therefor, executed by the parties under seal. These were set out in the answer. By them the plaintiff agreed with the defendant to furnish materials and construct for him and upon his land, three cottages with out-houses and fences. The work was to be done in accordance with certain plans and specifications, except when otherwise provided. It was to be done in the best and most workmanlike manner, and to the entire satisfaction of certain architects who were named in the contract. It was further provided that in case of any extras or omissions in the work, the question between the parties in relation thereto should be submitted to the same Architects, and their decision should be final and con elusive in the matter.

For this work, which was to be completed before May 1, 1851, the defendant agreed to pay the plaintiff the sum of $4900, of which a part was to be paid from time to time, as the work progressed, and the balance "when all the work should be completed and certified by the architects to that effect."

The answer averred that the plaintiff had not performed the covenants on his part; that the work was not done in the most workmanlike manner, nor to the satisfaction of the architects; that the materials furnished were of inferior quality; that the plaintiff never procured the certificate of the architects, or either of them, that the cottages, or either of them, were completed; that, in respect to the extra work and materials, the defendant had, before the commencement [175] of the action, disputed the plaintiff's charges and had offered to submit the same to the architects as provided by the agreements, and the plaintiff had refused to submit them.

The plaintiff, in his reply, admitted that he had never procured any certificate of the architects, "in consequence of the unreasonableness and frivolous objections of the said architects, or one of them, in refusing to give any certificate." He further admitted that the work and materials, except as to the extra labor and materials, were performed under the contract set up in the answer.

The trial was before a referee who found that there were omissions and deficiencies in the work and materials which the contracts required to be done and furnished by the plaintiff, and that the loss to the defendant thereby amounted to $212.57; that the plaintiff had done and furnished extra work and materials to the value of $295, and that the defendant, sometime in the month of June, 1851, took possession of the three cottages, without objection at the time, and appropriated the same to his own use. He reported that, after making the proper allowances and deductions to the parties respectively, the plaintiff was entitled to judgment for $1934.43. The questions of evidence which arose upon the trial, and the manner in which they were disposed of, sufficiently appear in the following opinions. The judgment entered upon the report of the referee was, on appeal, affirmed by the Supreme Court, at general term in the second district, and the defendant appealed to this court.

Nicholas Hill, for the appellant.

Wessell S. Smith, for the respondent.

HARRIS, J. Assuming that the contracts had been so far performed as to justify the plaintiff in treating them as substantially executed, as I am inclined to think they were, yet the final payment for the work was to be made when it was [176] completed and a certificate of the architects to that effect obtained. The parties have seen fit to make the products n of such a certificate a condition precedent to the payment. The plaintiff is as much bound by this part of his contract as any other. It is not enough for him to bring his action and say that he has completed the work which he undertook to do. He has agreed that the architects named should decide whether the work is completed or not. He cannot now withdraw the decision of this question from them and refer it to the determination of a legal tribunal. (Butler v. Tucker, 24 Wend., 447, and cases there cited.)^[1]

Had it been shown by the plaintiff that he had made application to the architects for the requisite certificate, and that they had obstinately and unreasonably refused to certify, it might have been proper, perhaps, for the plaintiff to establish his right to recover by other evidence. An opinion to this effect is expressed by MCLEAN, J., in The United States v. Robeson (9 Peters, 319). However this may be, it is not pretended in this case that the plaintiff ever made an effort to procure the certificate. The referee merely finds the fact that "the architects had not given certificates that the work was all done and finished."

The referee has found that the defendant took possession of the cottages and appendages, without objection at the time, and appropriated the same to his own use, and it is insisted that, if the production of the architects' certificate was a condition precedent to the right of the plaintiff to bring his action for the balance due upon the contracts, yet the defendant has waived this condition by accepting the work without objection; but it is a sufficient answer to this position to say that, whether or not the performance of the condition in question was waived was a question of fact to be determined by the referee from the evidence before him, and no such fact has been found by him. (Vanderbilt v. The Eagle Iron Works, 25 Wend., 665.)

Thus far I have considered the case with reference [177] to the final certificate of the architects, but the provision in the contracts which requires all questions relating to extra work and omissions or deficiencies to be submitted to the architects, and declares their decision to be final and conclusive in the premises, deserves to be noticed. It is not pretended that the plaintiff ever offered to make this submission in relation to his claim for extra work. The referee has wholly disregarded this provision, and tried the case as though it was not to be found in the contracts. In this I think he erred. To avoid a protracted and expensive litigation, such as this has proved to be, the parties agreed that, in respect to all disputes between them in relation to the work, the architects should be the ultimate arbiters. All claims of the plaintiff for work not embraced in the specification were to be submitted to them, and their judgment was to be final. All claims of the defendant for deductions or allowance on account of the omission of the plaintiff to perform the work according to the contracts were to be determined in the same manner; and thus, with the award of the umpires upon the claims which the parties might mutually make against each other, and their certificate showing the completion of the work, all ground for controversy would be removed. This was the manifest intention of the parties when they made their contracts. It was wholly overlooked or disregarded on the trial.

I have said enough, I think, to show that the case has been tried upon an erroneous theory, and that the judgment should be reversed. And yet, in reference to another trial, it may not be useless to notice one or two decisions made by the referee upon questions of evidence, which are deemed to be erroneous.

One of the architects mentioned in the contracts, and who had examined the work, had described in his testimony a great number of defects and omissions. He was then asked what it would cost to make the buildings conform to the contracts, plans and specifications. The question [178] was objected to, and the objection sustained. I think the witness should have been allowed to answer the question. It was a legitimate mode of ascertaining the damages to which the defendant was entitled by reason of the failure of the plaintiff to do what he had agreed to do. He had agreed to construct houses according to certain plans and specifications. The defendant had entitled himself to have such houses constructed, and was not bound to allow the plaintiff to substitute anything else in their place. Just so far as the houses built by the plaintiff differed from those he had agreed to build, just so far the defendant had a right to have them altered at the expense of the plaintiff. This was the true rule of damages. The defendant had a right to know, therefore, from one competent to speak on the question, what it would cost to make these alterations. (Ladue v. Seymour, 24 Wend., 60.) For the same reason I think the witness should have been allowed to state what in his opinion was the difference in value between the cottages as they were built by the plaintiff, and the same cottages if completed according to the contracts. There was no pretence that he was not qualified to testify upon such a question.

The plaintiff, against the objection of the defendant, was allowed to inquire of a witness whether the houses without certain joists and beams, which were required by the specifications but had been omitted by the plaintiff, were sufficiently strong for the character of the buildings. This testimony should have been excluded. It was entirely immaterial whether the houses as constructed were sufficiently strong or not. The defendant had a right to prescribe the manner in winch he would have the houses constructed. He had agreed to pay the plaintiff his price for so constructing them. It did not lie with him to say that another mode of construction would do just as well. The admission of such testimony tends to show that the [179] referee misapprehended the principles of law applicable to the case.

For all these reasons I am of opinion that the judgment of the Supreme Court should be reversed, and a new trial granted with costs to abide the event.

SELDEN, DENIO, ROOSEVELT and PRATT, Js., concurred in this opinion.

COMSTOCK, J. It is easy to understand, from all that took place on the trial, that the defendant intended to object to any recovery against him for work done or materials furnished under the special contracts, on the ground that those contracts had not been performed by the plaintiff. But he appears to have been somewhat unfortunate in presenting that objection at such a time and in such a manner as to lay the foundation for a review in this court of the decisions made against him. The question intended to be raised was first suggested at the opening of the trial, when, as the case states: "The defendant's counsel objected to any evidence in relation to work done on the houses required by the contracts, inasmuch as it appeared by the pleadings that it was done under covenants and no performance shown, the defendant's counsel insisting that the action was in fact on the covenant, a strict performance of which was required by law." I do not see how such an objection could avail anything at that time; for, until the evidence was given, it could not appear whether the contract had been performed or not. The evidence was therefore properly received.

The referee, in making his report, which is referred to in the case and may therefore be considered as a part of it, finds as facts that the work (except as to the $295) was done under the special contracts; that there were "some omissions and deficiencies in the work and materials which the contract required to be done by the plaintiff, the value of which, or, in other words, the loss to the defendant [180] thereby," amounted to $212.57. He also found that the defendant "took possession" of the three cottages thus built for him "without objection at the time, and appropriated the same to his own use.'' Upon these facts, the referee held as a conclusion of law that the plaintiff was entitled to recover for the work done and materials furnished under the contracts, at the stipulated prices, after deducting the defendant's damages, on account of the omissions and defects before stated. The particulars in which the referee found the contracts not performed are not stated in his report, but they could not have been so unimportant that the law will refuse to notice them, because, in the same report the value of those particulars is ascertained to be over $200. Nor is it found that the plaintiff intended to perform his contract. For aught that appears, the omissions and defects were intentional and willful, and, in the absence of all explanation, the presumption is that they were so.

If, therefore, the defendant bad excepted to the legal conclusion of the referee upon the facts found by him, that exception would have presented with great distinctness the questions upon which the defence was no doubt intended principally to turn. But no such exception appears to have been taken, and it follows that those questions are not before us for examination, unless we can see that they were involved in some ruling of the referee during the trial which has not yet been noticed.

It was one of the specifications of the contract that the "nailing joists" in the frames of the cottages were to be twelve inches apart, measuring from centre to centre. The defendant's evidence tended to show that these joists were in fact placed sixteen inches apart; that, in consequence of this departure from the specification, the number of joists used in all the buildings was less by about two hundred than the contract called for; that this defect in the work affected the value, strength and substantial character of the buildings. It appeared, also, that there was a similar breach of [181] contract in respect to the distances between the beams in the third floor of the houses, being in fact twenty-four inches apart, while the contract allowed only sixteen. To meet the defence so far as it depended on these particular departures from the contract, the plaintiff was allowed to call other mechanics and ask them as follows: "Are the houses without these deficient joists and beams, sufficiently strong for the character of the buildings?" The evidence was objected to on the part of the defendant, but the objection was overruled, the plaintiff's counsel stating that the object of the inquiry was to ascertain what damages, if any, should be allowed by reason of this deficiency in the work. This ruling of the referee was duly excepted to; and the evidence being given tended to show that the houses were sufficiently strong, that the joists and beams were placed at distances customary in that neighborhood, and that the defendant really was not injured at all by this violation of the contract. The question now to be determined is whether this evidence was proper; and this will, I think, involve the inquiry whether the plaintiff, having failed in substantially performing the contract, was entitled to recover for his work and materials, making to the defendant an allowance for the breaches, to be adjusted according to some principle of equity. The violation of the contract in several particulars had already appeared when this ruling was made. Indeed, the evidence itself, so offered, objected to and received, assumed that the contract had been departed from a respect to a specification about which it was impossible to err innocently. In avowing the object for which it was offered, the plaintiff necessarily assumed that a breach of the contract, instead of being fatal to a recovery, was the subject of equitable compensation merely; and in receiving such evidence the reference must have sustained that assumption. The defendant having chosen to require, in the plain fetter of the contract, that there should be in each building certain number of joists and beams placed at certain dis [182] tances from each other, the plaintiff had no right to substitute another plan for this part of the work; nor could he justify his willful departure from the contract by the opinion of other builders, or by any custom whether local or general.  All this is extremely evident; yet, if the only consequence of so violating a contract of this kind is, that the injured party shall be compensated in damages, there was no error in receiving the evidence. Upon the mere question of compensation that evidence bore with entire directness and force. We are therefore obliged to consider this question of law in a building contract, where performance is to precede payment and becomes a condition thereof, can the builder, having failed to perform on his part, recover for his work or materials, making to the other party a compensatory allowance for the wrong done to him, it being also a further condition of the question that the employer chooses to occupy and enjoy the erection rather than to remove or require the builder to remove it from his premises?

The right to recover in such a case has never been referred to any doctrine peculiar to such contracts. On the contrary, if we look at the adjudged cases, we shall find that the right, whenever asserted by judicial tribunals, has been supposed to result from a general doctrine applicable as well to other contracts. In Hayward v. Leonard (7 Pick., 181), the action was on a conditional note, to be void if the plaintiff failed to perform an agreement of the same date by which he undertook to build a house for the defendant of a certain size and in a specified manner. The defence was that the house, although built within the time agreed on, was not in workmanship and materials according to the contract. Chief Justice PARKER said:

"The point in controversy seems to be this: whether, where a party has entered into a special contract to perform work for another and to furnish materials, and the work is done and the materials furnished, but not in the manner stipulated for in the contract, so that he cannot recover the price agreed by [183] action on that contract, yet, nevertheless, the work and materials are of some value and benefit to the other contracting party, he may recover on a quantum meruit for the labor, and on a quantum valebant for the materials."

He adds.

"We think the weight of modern authority is in favor of the action, and that, upon the whole, it is conformable to justice that the party who has the possession and enjoyment of the labor and materials of another shall be held to pay for them, so as in all events lie shall lose nothing by the breach of the contract."

In that case, there were some special facts, but the decision seemed to turn essentially on the general principle suggested in the remarks quoted, and the principle was more emphatically approved by the same court in the subsequent case of Smith v. The First Congregational Meeting House in Lowell (8 Pick., 178), which was also upon a building contract.

It will be convenient next to cite a case directly opposed which arose in the English Common Pleas, and was tried before Sir JAMES MANSFIELD. (Ellis v. Hamlin, 3 Taunt., 52.) The action was by a builder against his employer. The defence was, and the evidence supported it, that the plaintiff had omitted to put into the building certain joists and other materials. The plaintiff failing to prove performance of the special agreement resorted to a general count for work, labor and materials, claiming that the defendant having the benefit of the houses, was bound at least to pay for them according to their value. But Chief Justice MANSFIELD repudiated that doctrine. He said:

"The defendant agreed to have a building of such and such dimensions. Is he to have his ground covered with buildings of no use, which he would be glad to see removed, and is he to be forced to pay for them besides? It is said he has the benefit of the houses, and therefore the plaintiff is entitled to recover on a quantum valebant. To be sure it is hard that he should build houses and not be paid for them but the difficulty is to know where to draw the line, for if [184] the defendant is obliged to pay for one deviation from his contract he may equally be obliged to pay for anything how far soever distant from what the contract stipulated for."

The plaintiff was accordingly nonsuited; and as the reporter states, the case was never moved again.

The two cases in Massachusetts above cited, and the one before Sir JAMES MANSFIELD, were referred to in Britton v. Turner (6 N. H., 481). That was a very elaborately considered case. The plaintiff had agreed to work for the defendant for one year, and the defendant was to pay for that labor one hundred and twenty dollars. The plaintiff abandoned his contract without cause before the year was out. It was nevertheless held that he could recover as much as the labor was reasonably worth, there being no evidence of any special damages sustained by the defendant in consequence of the non-performance of the contract. The two cases in Massachusetts were cited with approbation by the court, while that before Chief Justice MANSFIELD was necessarily disapproved. In referring to that class of cases arising on building contracts, it was observed that such cases could not be distinguished from the one then under consideration

"unless it be in the circumstance that when a party has contracted to furnish materials and do certain labor as to build a house in a specified manner, if it is not done according to the contract the party for whom it is built may refuse to receive it, elect to take no benefit from what has been performed, and therefore if he does receive it he shall be bound to pay the value, whereas in a contact for labor merely, from day to day, the party is continually receiving the benefit of the contract under an expectation that it will be fulfilled, and cannot upon the breach of it have an election to refuse to receive what has been done, and thus discharge himself from payment."

"But we think," the court proceeded to say, "this difference in the nature of the contracts does not justify the application of a different rule in relation to them." "There [185] was just as much reason," it was added,

"why the employer should pay the reasonable worth of what has been done for his benefit as there is when he enters and occupies the house which has been built for him but not according to the stipulations of the contract, and which he perhaps enters, not because he is satisfied with what has been done, but because circumstances compel him to accept it such as it is, that he should pay for the value of the house."

There are few cases to be found in the books more consistently reasoned than this one in the Supreme Court of New Hampshire, although the decision stands directly opposed to the settled law of this state. I have referred to it, as well as the Massachusetts cases, somewhat at large, in order to show that the supposed liability of a person who enters and occupies a building erected on his ground to pay the builder, although the latter failed in performing his contract, has always been referred to the general doctrine that benefits received and retained under a contract must be paid for without regard to the conditions of the contract itself. I am confident that no case can be found in which the building contractor's right to recover has been maintained on the ground that the owner by the mere possession and occupancy of the building has waived the condition of performance.

The true inquiry then is, whether there is in the law of contracts in general any such doctrine as that upon which the cases referred to in New Hampshire and Massachusetts were determined. To those cases others might be added proceeding essentially on the same ground; yet the rule, I think, is quite well settled the other way. It is certainly so in this state. (McMillan v. Vanderlip, 12 John., 165, Thorpe v. White, 13 id., 53; Jennings v. Camp, id., 94, Champlin v. Rowley, 13 Wend., 258; S. C. in error, 18 id., 187; Paige v. Ott, 5 Denio, 406; Pike v. Butler, 4 Const. 860; Pullman v. Corning, 5 Seld., 93.) Among these cases, Champlin v. Rowley may be referred to as a decisive determination of the question. The action was to recover the [186] price of hay sold and delivered. The plaintiff had agreed to deliver to the defendant one hundred tons of pressed hay between the date of the contract and the close of navigation on the Hudson river, $100 to be paid in advance and the residue when the whole should be delivered. About fifty tons were delivered before the navigation closed, when the further delivery was interrupted. The defendant sold or used the quantity which he received under the contract. The $100 due in advance having been paid, it was held by the Supreme Court that entire performance was the condition of any further payment, and therefore that the plaintiff could not recover. The case was very carefully considered, on error, in the court of last resort, where the judgment was affirmed. The case cited in the Supreme Court of New Hampshire was referred to, and that, as well as the class of cases to which it belongs, were expressly overruled. Indeed, in this state the sanctity of contracts in this respect at least, has been steadily maintained, and no encouragement has ever been given to that loose and dangerous doctrine which allows a person to violate his most solemn engagements and then to draw the injured party into a controversy concerning the amount and value of the benefits received.

I think the principles which have with us been so uniformly asserted should have a peculiar application in contracts like the one under consideration. I suppose it will be conceded that every one has a right to build his house, his cottage or his store after such a model and in such style as shall best accord with his notions of utility or be most agreeable to his fancy. The specifications of the contract become the law between the parties until voluntarily changed. If the owner prefers a plain and simple Doric column, and has so provided in the agreement, the contractor has no right to put in its place the more costly and elegant Corinthian. If the owner, having regard to strength and durability, has contracted for walls of specified materials to be laid in a particular manner, or for a given number of [187] joists and beams, the builder has no right to substitute his own judgment or that of others. Having departed from the agreement, if performance has not been waived by the other party, the law will not allow him to allege that he has made as good a building as the one he engaged to erect. He can demand payment only upon and according to the terms of his contract, and if the conditions on which payment is due have not been performed, then the right to demand it does not exist. To hold a different doctrine would be simply to make another contract, and would be giving to parties an encouragement to violate their engagements, which the just policy of the law does not permit.^[1]

Cases of this kind must not be confounded with others having, perhaps, a slight resemblance but no real analogy. No doubt a person may voluntarily accept a benefit under a contract of which the conditions precedent have not been performed by the other party, and he may do this in such circumstances that a new obligation to pay for the benefit will arise. Thus, if A. should agree to manufacture and deliver to B. a carriage of a particular kind and should make a different one, B. may elect whether he will take it or not. Until he so elects, he has no property in the fabric. If he voluntarily accepts the article, he thereby either waives the objections which he might make to it and is liable to pay for it according to his contract, or a new assumpsit arises from the act of acceptance as though no previous agreement had existed. The case cited on the argument of Vanderbilt v. The Eagle Iron Works (25 Wend., 665) was determined very distinctly upon these principles.^[2]

But the rule, as it is well settled with us, allows a party to retain without compensation the benefits of a partial performance, where from the nature of the contract he must receive such benefits in advance of a full performance, and by its terms or just construction he is under no obligation to pay until the performance is complete. Thus, if a person engages to perform a year's labor for another, and pay [188] ment is to be made when the labor is done, in such a case the employer necessarily receives the benefit of each day's service when it is done, yet if the laborer without just cause abandons the service at any time, however short, before the year has expired he can recover no part of his wages. (Cases, supra) So the contract may be to sell and deliver goods at different times, to be paid for when the whole are received. If the vendor refuses to perform entirely, without good cause, the purchaser is neither bound to pay for nor to return the goods received in part performance. (Champlin v., Rowley, supra.)^[1] If A. should agree to plow the field of B., consisting of twenty acres, at a given price for the whole service, or at so much per acre to be paid when the service is done, and after plowing nineteen acres should abandon the contract, he can recover nothing for his work. The owner of the field may enter, sow it with his grain and reap the harvest, thus enjoying fully the benefits of the part performance. In so doing he waives nothing; because he cannot reasonably do otherwise. He is not obliged to abandon his field in order to be enabled to insist upon the condition of the contract. Closely analogous is the case of a building contract. The owner of the soil is always in possession. The builder has a right to enter only for the special purpose of performing his contract. Each material as it is placed in the work becomes annexed to the soil, and thereby the property of the owner. The builder would have no right to remove the brick or stone or lumber after annexation, even if the employer should unjustifiably refuse to allow him to proceed with the work. The owner, from the nature and necessity of the case, takes the benefit of part performance, and therefore by merely so doing does not necessarily waive anything contained in the contract. To impute to him a voluntary waiver of conditions precedent from the mere use and occupation of the building erected, unattended by other circumstances, is unreasonable and illogical because he is not in a situation to elect whether he will or will [189] not accept the benefit of an imperfect performance. To be enabled to stand upon the contract he cannot reasonably be required to tear down and destroy the edifice if he prefers it to remain. As the erection is his by annexation to the soil he may suffer it to stand, and there is no rule of law against his using it without prejudice to his rights.

The present case was evidently tried upon an erroneous theory of the law. Although partial payments were to be made as the work proceeded under the contracts, yet the consideration and condition of those payments was the performance of the work according to the plans and specifications, and in the best and most workmanlike manner, and the final payments were not to be made until after all the work was completed and certified by the architects. Although the contracts were not performed, the plaintiff has recovered all the installments, less the sum which the referee allowed as damages for the non-performance. In receiving the evidence as to the value and strength of the buildings, nothwithstanding non-performance of the contracts, evidence which could have no bearing except upon the question of damages, it is manifest that he proceeded upon views on the law in such cases which I have endeavored to show are unsound.

It is not necessary to give any opinion upon the question whether the referee might properly find upon the evidence that the defendant waived the conditions of the contract by any express approval of the work, or by any other interference or conduct on his part. We only say that, according to the settled law in this state, the plaintiff cannot recover the payments which by the terms or true construction of the contract are due only on condition of performance by him, unless he can show such performance or prove that it has been waived.^[1]  And the law does not adjudge that a mere silent occupation of the building by the owner amounts to a waiver, nor does it deny to him the right so to occupy and still insist upon the contract. The question of waiver of the condition [190] precedent will always be one of intention to be arrived at from all the circumstances, including the occupancy.

To conclude, there is, in a just view of the question, no hardship in requiring builders, like all other men, to perform their contracts in order to entitle themselves to payment, where the employer has agreed to pay only on that condition. It is true that such contracts embrace a variety of particulars, and that slight omissions and inadvertences may sometimes very innocently occur. These should be indulgently regarded, and they will be so regarded by courts and juries. But there can be no injustice in imputing to the contractor a knowledge of what his contract requires, nor in holding him to a substantial performance. If he has stipulated for walls of a given material and with a hard inside finish, he knows what he is to do and must perform it. If he has engaged for a given number and size of windows, joists, beams and sills, he cannot, with the specifications before him, innocently, depart from his contract. If he fails to perform when the requirement is plain, and when he can perform if he will, he has no right to call upon the courts to make a new contract for him; nor ought he to complain if the law leaves him without remedy.^[1]

The judgment should be reversed and a new trial granted.

All the judges concurred in this opinion.

Judgment reversed and new trial ordered.

----------

[1] Morrell v. Irving F. Ins. Co., 33 N.Y. 447: Mason v. Hey ward, 3 Minn. 188; Mehurin v. Stone, 37 Ohio, 56.

[2] Zottman v. San Francisco, 20 Cal. 108; Mapes v. Comm'rs of Olmstead Co., 11 Minn. 371; Belt v. Stetson, 26 Minn. 415; Bozarth v. Dudley, 44 N.J. 309; Cincinnati v. Cameron, 33 Ohio, 374.

----------

[1] Cited in Cunningham v. Jones, 20 N.Y. 487; Bonesteel v. Mayor, etc., of N.Y. 22 N.Y. 166; Catlin v. Tobias, 26 N.Y. 222; Glacius v. Black, 50 N.Y. 148; Crandall v. Grow, 41 N.J. Eq. 484.

----------

[1] Wyckoff v. Meyers, 44 N.Y. 145; Pres't, etc., D. & H. Canal Co. v. Pa. Coal Co., 50 N.Y. 264; Grube v. Schultheiss, 57 N.Y. 670; Moore v. Kerr, 65 Cal. 521; Mitchell v. Kavanagh, 38 Iowa, 292; Forristal v. Milwaukee, 57 Wis. 632.

----------

[1] Walker v. Millard, 29 N.Y. 379. Husted v. Craig, 36 N.Y. 223.

----------

[1] Avery v. Willson, 81 N.Y. 344.

----------

[1] People's Bank v. Mitchell, 73 N.Y. 414; Woodward v. Fuller, 80 N.Y. 315.

----------

[1] Glacius v. Black, 50 N.Y. 148; Phillip v. Gallant, 62 N.Y. 261 Fudickar v. Guardian Mut. L. Ins. Co., 62 N.Y. 401; Nolan v. Whitney, 88 N.Y. 650.

230 N.Y. 239, 129 N.E. 889 (1921)

JACOB & YOUNGS, INCORPORATED, Respondent,
v.
GEORGE E. KENT, Appellant.

Argued December 1, 1920; decided January 25, 1921.

Building contract — failure to fully perform — damages — when omission is trivial, measure of damages is the difference in value — improper exclusion of evidence to show that pipe was of same quality though not of the brand called for by specifications.

1. The courts never say that one who makes a contract fills the measure of his duty by less than full performance. An omission, however, both trivial and innocent, will sometimes be atoned for by allowance of the resulting damage, and will not always be the breach of a condition to be followed by a forfeiture.
2. In most cases of failure to perform the cost of replacement is the measure of damages. The owner is entitled to the money which will permit him to complete, unless the cost of completion is grossly and unfairly out of proportion to the good to be attained. When that is true, the measure is the difference in value.
3. In an action to recover a balance unpaid on a building contract, defended on the ground that the contractor had not fully performed, it appeared that in the plumbing a different brand of pipe had been used in some instances than that called for by the specifications; that the omission of the prescribed brand was neither fraudulent nor willful but was the result of the oversight and inattention of the plaintiff's subcontractor. Plaintiff offered to show that the brands installed, though made by other manufacturers, were the same in quality, in appearance, in market value and in cost as the brand stated in the contract — that they were, indeed, the same thing, though manufactured in another place. The evidence was excluded. Held, error; that if admitted it would have supplied some basis for the inference that the defect was insignificant in its relation to the project. Held, further, that in the circumstances of this case the measure of the allowance is not the cost of replacement, which would be great, but the difference in value, which would be either nominal or nothing.

Jacob & Youngs v. Kent, 187 App. Div. 100, affirmed.

(Argued December 1, 1920; decided January 25, 1921.)

APPEAL from an order of the Appellate Division of the Supreme Court in the first judicial department, entered [240] May 13, 1919, reversing a judgment in favor of defendant entered upon a verdict directed by the court and granting a new trial.

Henry W. Hardon for appellant. The plaintiff made out no case of substantial performance. (Smith v. Brady, 17 N. Y. 190; North American Co. v. Jackson Co., 167 App. Div. 779; Spence v. Ham, 27 App. Div. 379; Steel S. & E. Co. v. Stock, 225 N. Y. 173.) There was no error in rulings on evidence. (Spence v. Ham, 27 App. Div. 379; Smith v. Brady, 17 N. Y. 173.)

Frederick Hulse and Cornelius J. Sullivan, Jr., for respondent. The case was disposed of by the trial court on a wholly erroneous theory, and it was error for that court to exclude the testimony offered by the plaintiff and to direct a verdict for the defendant. (Oberlies v. Builinger, 132 N. Y. 598; Heckmann v. Pinkney, 81 N. Y. 210.)

CARDOZO, J. The plaintiff built a country residence for the defendant at a cost of upwards of $77,000, and now sues to recover a balance of $3,483.46, remaining unpaid. The work of construction ceased in June, 1914, and the defendant then began to occupy the dwelling. There was no complaint of defective performance until March, 1915. One of the specifications for the plumbing work provides that "all wrought iron pipe must be well galvanized, lap welded pipe of the grade known as ' standard pipe ' of Reading manufacture." The defendant learned in March, 1915, that some of the pipe, instead of being made in Reading, was the product of other factories. The plaintiff was accordingly directed by the architect to do the work anew. The plumbing was then encased within the walls except in a few places where it had to be exposed. Obedience to the order meant more than the substitution of other pipe. It meant the demolition at great expense of substantial parts of [241] the completed structure. The plaintiff left the work untouched, and asked for a certificate that the final payment war due. Refusal of the certificate was followed by this suit.

The evidence sustains a finding that the omission of the prescribed brand of pipe was neither fraudulent nor willful. It was the result of the oversight and inattention of the plaintiff's subcontractor. Reading pipe is distinguished from Cohoes pipe and other brands only by the name of the manufacturer stamped upon it at intervals of between six and seven feet. Even the defendant's architect, though he inspected the pipe upon arrival, failed to notice the discrepancy. The plaintiff tried to show that the brands installed, though made by other manufacturers, were the same in quality, in appearance, in market value and in cost as the brand stated in the contract — that they were, indeed, the same thing, though manufactured in another place. The evidence was excluded, and a verdict directed for the defendant. The Appellate Division reversed, and granted a new trial.

We think the evidence, if admitted, would have supplied some basis for the inference that the defect was insignificant in its relation to the project. The courts never say that one who makes a contract fills the measure of his duty by less than full performance. They do say, however, that an omission, both trivial and innocent, will sometimes be atoned for by allowance of the resulting damage, and will not always be the breach of a condition to be followed by a forfeiture (Spence v. Ham, 163 N. Y. 220; Woodward v. Fuller, 80 N. Y. 312; Glacius v. Black, 67 N. Y. 563, 566; Bowen v. Kimbell, 203 Mass. 364, 370). The distinction is akin to that between dependent and independent promises, or between promises and conditions (Anson on Contracts [Corbin's ed.], sec. 367; 2 Williston on Contracts, sec. 842). Some promises are so plainly independent that they can never [242] by fair construction be conditions of one another. (Rosenthal Paper Co. v. Nat. Folding Box & Paper Co., 226 N. Y. 313; Bogardus v. N. Y. Life Ins. Co., 101N. Y. 328). Others are so plainly dependent that they must always be conditions. Others, though dependent and thus conditions when there is departure in point of '' substance, will be viewed as independent and collateral when the departure is insignificant (2 Williston on Contracts, sees. 841, 842; Eastern Forge Co. v. Corbin, 182 Mass. 590, 592; Robinson v. Mollett, L. R., 7 Eng. & Ir. App. 802,814; Miller v. Benjamin, 142 N. Y. 613). Considerations partly of justice and partly of presumable intention are to tell us whether this or that promise shall be placed in one class or in another. The simple and the uniform will call for different remedies from the multifarious and the intricate. The margin of departure within the range of normal expectation upon a sale of common chattels will vary from the margin to be expected upon a contract for the construction of a mansion or a "skyscraper." There will be harshness sometimes and oppression in the implication of a condition when the thing upon which labor has been expended is incapable of surrender because united to the land, and equity and reason in the implication of a like condition when the subject-matter, if defective, is in shape to be returned. From the conclusion that promises may not be treated as dependent to the extent of their uttermost minutiae without a sacrifice of justice, the progress is a short one to the conclusion that they may not be so treated without a perversion of intention. Intention not otherwise revealed may be presumed to hold in contemplation the reasonable and probable. If something else is in view, it must not be left to implication. There will be no assumption of a purpose to visit venial faults with oppressive retribution.

Those who think more of symmetry and logic in the development of legal rules than of practical adaptation to the attainment of a just result will be troubled by a classification [243] where the lines of division are so wavering and blurred. Something, doubtless, may be said on the score of consistency and certainty in favor of a stricter standard. The courts have balanced such considerations against those of equity and fairness, and found the latter to be the weightier. The decisions in this state commit us to the liberal view, which is making its way, nowadays, in jurisdictions slow to welcome it (Dakin & Co. v. Lee, 1916, 1 K. B. 566, 579). Where the line is to be drawn between the important and the trivial cannot be settled by a formula. "In the nature of the case precise boundaries are impossible" (2 Williston on Contracts, sec. 841). The same omission may take on one aspect or another according to its setting. Substitution of equivalents may not have the same significance in fields of art on the one side and in those of mere utility on the other. Nowhere will change be tolerated, however, if it is so dominant or pervasive as in any real or substantial measure to frustrate the purpose of the contract (Crouch v. Gutmann, 134 N. Y. 45, 51). There is no general license to install whatever, in the builder's judgment, may be regarded as "just as good " (EasthamptonL. & C. Co., Ltd., v. Worthington, 186 N. Y. 407, 412). The question is one of degree, to be answered, if there is doubt, by the triers of the facts (Crouch v. Gutmann; Woodward v. Fuller, supra), and, if the inferences are certain, by the judges of the law (Easthampton L. & C. Co., Ltd., v. Worthington, supra). We must weigh the purpose to be served, the desire to be gratified, the excuse for deviation from the letter, the cruelty of enforced adherence. Then only can we tell whether literal fulfillment is to be implied by law as a condition. This is not to say that the parties are not free by apt and certain words to effectuate a purpose that performance of every term shall be a condition of recovery. That question is not here. This is merely to say that the law will be slow to impute the purpose, in the silence of the parties, where the significance [244] of the default is grievously out of proportion to the oppression of the forfeiture. The willful transgressor must accept the penalty of his transgression (Schultze v. Goodstein, 180 N. Y. 248, 251; Desmond-Dunne Co. v. Friedman-Doscher Co., 162 N. Y. 486, 490). For him there is no occasion to mitigate the rigor of implied conditions. The transgressor whose default is unintentional and trivial may hope for mercy if he will offer atonement for his wrong (Spence v. Ham, supra).

In the circumstances of this case, we think the measure of the allowance is not the cost of replacement, which would be great, but the difference in value, which would be either nominal or nothing. Some of the exposed sections might perhaps have been replaced at moderate expense. The defendant did not limit his demand to them, but treated the plumbing as a unit to be corrected from cellar to roof. In point of fact, the plaintiff never reached the stage at which evidence of the extent of the allowance became necessary. The trial court had excluded evidence that the defect was unsubstantial, and in view of that ruling there was no occasion for the plaintiff to go farther with an offer of proof. We think, however, that the offer, if it had been made, would not of necessity have been defective because directed to difference in value. It is true that in most cases the cost of replacement is the measure (Spence v. Ham, supra). The owner is entitled to the money which will permit him to complete, unless the cost of completion is grossly and unfairly out of proportion to the good to be attained. When that is true, the measure is the difference in value. Specifications' call, let us say, for a foundation built of granite quarried in Vermont. On the completion of the building, the owner learns that through the blunder of a subcontractor part of the foundation has been built of granite of the same quality quarried in New Hampshire. The measure of allowance is not the cost of reconstruction.

"There may be [245] omissions of that which could not afterwards be supplied exactly as called for by the contract without taking down the building to its foundations, and at the same time the omission may not affect the value of the building for use or otherwise, except so slightly as to be hardly appreciable."

(Handy v. Bliss, 204 Mass. 513, 519. Cf. Foeller v. Heintz, 137 Wis. 169, 178; Oberlies v. Bullinger, 132 N. Y. 598, 601; 2 Williston on Contracts, sec. 805, p. 1541). The rule that gives a remedy in cases of substantial performance with compensation for defects of trivial or inappreciable importance, has been developed by the courts as an instrument of justice. The measure of the allowance must be shaped to the same end.

The order should be affirmed, and judgment absolute directed in favor of the plaintiff upon the stipulation, with costs in all courts.

MCLAUGHLIN, J. (dissenting). I dissent. The plaintiff did not perform its contract. His failure to do so was either intentional or due to gross neglect which, under the uncontradicted facts, amounted to the same thing, nor did it make any proof of the cost of compliance, where compliance was possible.

Under its contract it obligated itself to use in the plumbing only pipe (between 2,000 and 2,500 feet) made by the Reading Manufacturing Company. The first pipe delivered was about 1,000 feet and the plaintiff's superintendent then called the attention of the foreman of the subcontractor, who was doing the plumbing, to the fact that the specifications annexed to the contract required all pipe used in the plumbing to be of the Reading Manufacturing Company. They then examined it for the purpose of ascertaining whether this delivery was of that manufacture and found it was. Thereafter, as pipe was required in the progress of the work, the foreman of the subcontractor would leave word at its [246] shop that he wanted a specified number of feet of pipe, without in any way indicating of what manufacture. Pipe would thereafter be delivered and installed in the building, without any examination whatever. Indeed, no examination, so far as appears, was made by the plaintiff, the subcontractor, defendant's architect, or any one else, of any of the pipe except the first delivery, until after the building had been completed. Plaintiff's architect then refused to give the certificate of completion, upon which the final payment depended, because all of the pipe used in the plumbing was not of the kind called for by the contract. After such refusal, the subcontractor removed the covering or insulation from about 900 feet of pipe which was exposed in the basement, cellar and attic, and all but 70 feet was found to have been manufactured, not by the Reading Company, but by other manufacturers, some by the Cohoes Rolling Mill Company, some by the National Steel Works, some by the South Chester Tubing Company, and some which bore no manufacturer's mark at all. The balance of the pipe had been so installed in the building that an inspection of it could not be had without demolishing, in part at least, the building itself.

I am of the opinion the trial court was right in directing a verdict for the defendant. The plaintiff agreed that all the pipe used should be of the Reading Manufacturing Company. Only about two-fifths of it, so far as appears, was of that kind. If more were used, then the burden of proving that fact was upon the plaintiff, which it could easily have done, since it knew where the pipe was obtained. The question of substantial performance of a contract of the character of the one under consideration depends in no small degree upon the good faith of the contractor. If the plaintiff had intended to, and had complied with the terms of the contract except as to minor omissions, due to inadvertence, then he might be allowed to recover the contract price, less the amount [247] necessary to fully compensate the defendant for damages caused by such omissions. (Woodward v. Fuller, 80 N. Y. 312; Nolan v. Whitney, 88 N. Y. 648.) But that is not this case. It installed between 2,000 and 2,500 feet of pipe, of which only 1,000 feet at most complied with the contract. No explanation was given why pipe called for by the contract was not used, nor was any effort made to show what it would cost to remove the pipe of other manufacturers and install that of the Reading Manufacturing Company. The defendant had a right to contract for what he wanted. He had a right before making payment to get what the contract called for. It is no answer to this suggestion to say that the pipe put in was just as good as that made by the Reading Manufacturing Company, or that the difference in value between such pipe and the pipe made by the Reading Manufacturing Company would be either "nominal or nothing." Defendant contracted for pipe made by the Reading Manufacturing Company. What his reason was for requiring this kind of pipe is of no importance. He wanted that and was entitled to it. It may have been a mere whim on his part, but even so, he had a right to this kind of pipe, regardless of whether some other kind, according to the opinion of the contractor or experts, would have been "just as good, better, or done just as well." He agreed to pay only upon condition that the pipe installed were made by that company and he ought not to be compelled to pay unless that condition be performed. (Schultze v. Goodstein, 180 N. Y. 248; Spence v. Ham, supra; Steel S. & E. C. Co. v. Stock, 225 N. Y. 173; Van Clief v. Van Vechten, 130 N. Y. 571; Glacius v. Black, 50 N. Y. 145; Smith v. Brady, 17 N. Y. 173, and authorities cited on p. 185.) The rule, therefore, of substantial performance, with damages for unsubstantial omissions, has no application. (Crouch v. Gutmann, 134 N. Y. 45; Spence v. Ham, 163 N. Y. 220.)

[248] What was said by this court in Smith v. Brady (supra) is quite applicable here:

"I suppose it will be conceded that everyone has a right to build his house, his cottage or his store after such a model and in such style as shall best accord with his notions of utility or be most agreeable to his fancy. The specifications of the contract become the law between the parties until voluntarily changed. If the owner prefers a plain and simple Doric column, and has so provided in the agreement, the contractor has no right to put in its place the more costly and elegant Corinthian. If the owner, having regard to strength and durability, has contracted for walls of specified materials to be laid in a particular manner, or for a given number of joists and beams, the builder has no right to substitute his own judgment or that of others. Having departed from the agreement, if performance has not been waived by the other party, the law will not allow him to allege that he has made as good a building as the one he engaged to erect. He can demand payment only upon and according to the terms of his contract, and if the conditions on which payment is due have not been performed, then the right to demand it does not exist. To hold a different doctrine would be simply to make another contract, and would be giving to parties an encouragement to violate their engagements, which the just policy of the law does not permit." (p. 186.)

I am of the opinion the trial court did not err in ruling on the admission of evidence or in directing a verdict for the defendant.

For the foregoing reasons I think the judgment of the Appellate Division should be reversed and the judgment of the Trial Term affirmed.

HISCOCK, Ch. J., HOGAN and CRANE, JJ., concur with CARDOZO, J.; POUND and ANDREWS, JJ., concur with MCLAUGHLIN, J.

Order affirmed, etc.