Pequeno v. Taylor

By the Court, Leonard, J. The question of first moment in this case is whether there was sufficient evidence of fraudulent intent on the part of the purchasers of the molasses to require the judge at the trial to submit that question to the jury. The molasses was delivered after the purchasers had become embarrassed, and at a time when their bankruptcy was imminent; the vessel chartered by the purchasers to receive and convey the plaintiff’s molasses, was dispatched from her port in Cuba laden with 50,000 gallons; the bill of lading for this cargo furnished by the plaintiff was obtained and forwarded by the purchasers to Hew York after their failure and insolvency had become publicly known at Havana, where they resided; and all this occurred while the plaintiff was ignorant of any change in their pecuniary affairs. The price of the molasses was by the agreement of the parties payable on delivery; but the purchasers having obtained the delivery on board their vessel, and having obtained a bill of lading, caused the vessel, so laden, to depart for her port of destination after their public failure at Havana, without making payment for the molasses, and upon payment being demanded refused it, for want of ability or on account of their insolvency. — 386 — There can be little donbt that the purchasers lmew, when the molasses was being delivered, when they obtained the bill of lading and when the vessel sailed, that the price would not be paid on delivery, and that they knowingly deprived the plaintiff of the.power to assert his title, and resume the possession of his property. Their intention to refuse payment after the delivery had been completed was during all this time at least probable. It is said that the plaintiff had changed the terms of the contract of sale by receiving the note of the purchasers for $7277.50, an estimated approximation to the value of the molasses to be delivered under the contract of May 6, 1859, and of 41,000 gallons to be delivered under a former agreement. The price depended on the market value at the time of delivery. Upon making up the account after the full delivery, it appeared that a sum exceeding $3600 remained due beyond the amount of the note. As to this sum, it is beyond question that there was no extension of credit, and that it was payable when the delivery was completed. It is not wholly clear whether there was an extension of credit pro tanto intended by the parties, upon the giving of the note. The note is contemplated and agreed upon in the contract of sale. No credit upon the molasses is mentioned, and it was by custom, as well as by the absence of any terms of credit in the agreement, to be paid for on delivery. The plaintiff testifies that the note was given for. his accommoda- - tion. This evidence was not inconsistent with the contract. It is also consistent with the implied admissions of the purchasers when the account was presented for payment. The whole sum due, without reference to the note, was demanded, and no objection was made that there had been an extension of credit as .to any part of the price, or that they were-entitled to a surrender or credit for the amount of the note. I find no evidence tending to a contrary conclusion, except the receipt given by the plaintiff when he received the note on the 6th May, 1859, the same day the contract bears date. — 387 — In the receipt the note is stated to he an anticipation upon the price of the molasses. This was about six weeks prior to the delivery of the molasses. The purchasers had no security for the note when it was delivered. It follows that the note was advanced upon the credit of the plaintiff, and upon the expectation that he would fulfill his agreement and deliver the molasses, when there would be mutual demands to be settled. Had the purchasers remained in good credit it is probable the plaintiff would have allowed the amount of the note to stand as payment to that extent. It cannot be said, even from the tenor of the receipt, that there was any agreement that the plaintiff should do so. The aspect in which the note was given by the purchasers and received by the plaintiff is important in respect to the obligation of the plaintiff to offer to surrender it before action, and also in respect to the conditional character of the sale. If it was purely an accommodation note, the plaintiff was not required to surrender it until its maturity. The proper conclusion probably is, that the note did not amount to an extension of credit on the molasses, but upon the delivery of the molasses the purchasers were entitled to hold so much of the price then to become due, as a security that the plaintiff would provide for the payment of the, note. The receipt is subject to explanation. The omission of the purchasers to make any claim in respect to the note when payment for the molasses was demanded of them, and the fact of their insolvency rendering the note worthless as an advance, was a proper subject for the consideration of a jury in determining whether the purchasers had waived a return of the note at the time the plaintiff made the demand of payment. The plaintiff did however produce at the trial, and offer to surrender, a note corresponding in date, amount, time and parties, exactly with the note in question. There is no room for doubt that it was the identical note. If the question of fraud in obtaining the delivery of the jnolagges had been submitted to the jury, and they bad arrived — 388 — at the conclusion that the purchasers were guilty, it would then have been unimportant to determine whether there was an extension of credit for the amount of the note. The evidence of the fraudulent intention of the purchasers to obtain the delivery of the plaintiff’s property, without payment of the price, was sufficient to require that question to be submitted to the jury. If the intent of the purchasers was fraudulent, (and this was for the jury to determine,) then the production of the note at the trial, and the offer then made to surrender it, was in season even if it should be found that the sale was partly upon credit. (Nichols v. Michael, 23 N Y. Rep. 264. Fraschieris v. Henriques, 36 Barb. 276.) Judge Selden, considering this question in the case cited from 23 N. Y. Rep. says, it would not affect the rule “ if the notes had been at some period out of the hands of the plaintiffs, provided the possession and exclusive interest was in them at the time of the trial,” (p. 273.) This I understand to be the rule in case the notes are, as in the present instance, those of the fraudulent vendee, and not those of a third party. The equity of the rule is clear where the paper is the worthless obligation of an insolvent purchaser. The justice erroneously dismissed the complaint at the trial, without submitting the question of fraud to the jury, and there should be a new trial for that reason. In respect to the right of stoppage in transitu, that question is not in the case. The delivery by the plaintiff on board the vessel chartered by the purchasers' placed the molasses entirely in their dominion ; as much so as if placed in their warehouse. The plaintiff had made his delivery and was entitled to payment. The property had reached its destination, as between the vendor and vendees. The molasses was not in transitu, as between them, on its passage from Cuba to Hew York. The plaintiff also insisted at the trial that he was entitled to recover upon the ground that the delivery was conditional upon payment of the price, and that without payment no title — 389 — passed to the purchasers. If the note for $7277.50 was purely an accommodation note, and not an advance upon the security of the molasses when delivered; or if the purchasers, at the time the plaintiff made his demand for payment, waived a return of the note; the jury would have been justified in finding for the plaintiff as upon a conditional sale. If the note was an advance upon such terms as to entitle the purchasers to claim a lien upon the molasses or its price, or the right to appropriate so much of the price as would be sufficient to meet the note, and there was no subsequent waiver of this right, then the sale cannot be considered as conditional. The delivery must be considered conditional as to the whole of the molasses or as to none. The plaintiff could not arbitrarily separate so much of the molasses after delivery as would be an equivalent for the balance remaining unpaid, after deducting the note. The plaintiff claimed no such right. He demanded payment of the whole price, without reference to the outstanding note. He must stand on the case as made by his demand of the purchasers. I am unable to perceive that the laws prevailing in Cuba have much to do with the case, except as they bear upon the question of fraud. These laws do not relate to the construction of the contract. Had the molasses been in any of the ports of Cuba when payment was demanded and refused, no doubt the laws there prevailing would have been enforced. When the plaintiff was in a condition to claim a surrender of the molasses, it no longer remained within the jurisdiction of the legal authorities of that island. Those Spanish laws which were introduced in evidence at the trial, relate to rights and remedies which cannot be enforced elsewhere, when the property comes within another jurisdiction. The purchasers may have desired to evade the operation of those laws, and hastened the departure of the vessel having the plaintiff’s property on board, for that purpose. At least — 390 — that may have been a proper consideration for the jury in relation to the question of the intent of the purchasers. [New York General Term, November 3, 1862. The order dismissing the complaint should be set aside, and a new trial directed, with costs to abide the event. Ingraham, Leonard and Peckham, Justices.]