Detmer Woolen Co. v. Van Horn

Giegerich, J. Gilmartin & Dewell, by an instrument in writing, dated July 21, 1906, transferred to the defendant their tailoring establishment, “ together with all the stock of goods belonging to said firm wherever situated, and all accounts now due or to grow due to said firm, together with the good will of said business;” in consideration of which transfer the defendant assumed all the indebtedness of that firm. The plaintiff seeks to recover upon such assumption agreement on the defendant’s part. The defense is a failure of consideration. Upon the trial, the defendant attempted .to prove that a considerable part of the stock of goods belonging to the firm had not been transferred, but had in fact been appropriated by one of the members of said firm; but such evidence, as well as all testimony tending to shew a failure of consideration of the promise in suit, was excluded upon the objection of the plaintiff; and the defendant duly excepted. The plaintiff’s right to recover upon the promise in question is subject to the equities between the original parties thereto (Merrill v. Green, 55 N. Y. 270; Hinman v. Bowen, 3 Hnn, 192; Dunning v. Leavitt, 85 N. Y. 30; Wheat v. Rice, 97 id. 296; Loeb v. Willis, 100' id. 231; Arnold v, Nichols, 64 id. 117; 7 Am. & Eng. Ency. of Law [2d ed.], 109), and it was, therefore, the defendant’s right to prove, if he could, either [165] an entire or partial failure of consideration for such promise. Hinman v. Bowen, supra,; Dunning v. Leavitt, supra; Loeb v. Willis, supra; 6 Am. & Eng. Ency. of Law (2d ed.), 792, 795. It is urged by the plaintiff that the defendant got all he bargained for by the bill of sale; but this court, in November, 1907, in construing this instrument upon the facts then before it, held otherwise. Gilmartin v. Van Horn, 107 N. Y. Supp. 131. Another point advanced by the plaintiff is that the defendant entered into possession of and continued the business so transferred for about one year and compromised with all the firm’s creditors, except t-he plaintiff, and that, consequently, it is too late now to assert that some of the firm’s property was not turned over to him; but, under the rule above stated, the facts which the defendant sought to establish, if true, tended to show that the defendant had, to some extent at least, a defense to the plaintiff’s action. It was, therefore, error to exclude the evidence upon the points referred to; and the judgment should, therefore, be' reversed and a new trial ordered, with costs to the appellant to abide the event. Gildersleeve, J., concurs.