Wormser v. Rubinstein

Shearn, J. The action is for goods sold and delivered on accounts assigned to plaintiffs. The defense is payment by the delivery of notes to plaintiffs’ assignor, which were paid in due course. Defendants purchased yarn manufactured by plaintiffs’ assignor. Plaintiffs are bankers. It is uncontradicted that there was an arrangement made between plaintiffs’ assignor Eeissman, who was ■out of funds and could not make prompt deliveries, that defendants should give their notes to Eeissman in lieu of cash advances, the notes to be considered as advances against yarn to be delivered, and that pursuant to the arrangement defendants gave Eeissman note's for $873.35 (which included $272.58 for yarn already delivered), $914.75 and $793.11. Simultaneously with the delivery of these notes Eeissman gave defendants notes of his concern for $603.15, $914.75 and $793.11, respectively. It is established without contradiction that defendants paid these three notes last mentioned aggregating $2,311.01 out of defendants’ funds in defendants’ bank, and at the time of payment received [390] other notes from Reissman in corresponding amounts, which notes were never paid by Reissman. Defendants contend that these payments were, according to the arrangement made, payments for the merchandise against which the defendants ’ original notes had been delivered. Reissman assigned the accounts for the merchandise in question to plaintiffs who sent invoices to defendants. Although the merchandise had been paid for according to defendants’ contention, defendants did not notify plaintiffs of such fact on receipt of the invoices, but now when sued by the bankers rely for their defense upon the aforesaid claim of payment. Plaintiffs insist that the defendants are estopped from setting up payment by their conduct in failing to reveal to the bankers that the bills had been paid. Defendants’ conduct was such as to work an estoppel. But defendants are only estopped to the extent to which the plaintiffs have been damaged. Here, concededly, if defendants are held, they will have been obliged to pay twice, for these goods. If the defendants are to pay twice and if this result is to follow from sustaining plaintiffs’ contention of estoppel, the application of the rule of estoppel necessitates proof of the consideration that the plaintiffs parted with for the assignments. There is no satisfactory evidence in the record showing what the plaintiffs advanced to Reissman for the assignments. If it appeared that "the plaintiffs had only advanced half the amount of the bills, it would work a manifest injustice to compel the defendants, on the theory of an equitable estoppel, to pay the plaintiffs the face of their claim when the full amount of it had already been paid to plaintiffs’ assignor. The doctrine of estoppel can be invoked only so far as necessary to make the injured party whole. [391] It is no answer to this to assert that Reissman and the defendants were kiting notes. Moreover,. as pointed out, it is uncontradicted that the amount of the bills, represented by the exchanged notes, was actually paid by defendants in cash. The verdict is contrary to law and contrary to the evidence, for the estoppel should only apply to the extent to which plaintiffs prove that they have been damaged. The judgment and order appealed from should be reversed and a new trial ordered, with costs to appellants to abide the event. Guv and Pendleton, JJ., concur. Judgment and order reversed and new trial ordered, with costs to appellants to abide event.