Forsstrom v. Utility Steel Co.

Gentjng, J. Action is brought by the plaintiffs to recover the sum of $500 upon a trade acceptance, drawn by the Orbis Corporation on October 1, 1926, and accepted by the defendant on the said date, and payable on December ■ 1, 1926. The said trade [472] acceptance was presented on the said date, when it was payable, and payment was refused and had been stopped by the defendant. The said trade acceptance evidenced the amount due from the defendant to the Orbis Corporation by reason of a prior sale of steel by the said Orbis Corporation to the defendant. The plaintiffs became the holders of said trade acceptance prior to the date it was payable, December 1, 1926. The defendant has interposed as a separate defense and by way of counterclaim an allegation of damages in the sum of $2,500 for breach of contract, made on or about June 23, 1926, by which the Orbis Corporation agreed to sell to the defendant 250 tons of channels of various sizes to be shipped during the month of August, 1926, at a price of $1.80 per 100 pounds F. O. B. pier No. 2, Erie Basin, duty paid, and demands that said counterclaim be allowed against the demand of the plaintiffs, who hold said trade acceptance as assignees and former officers of the Orbis Corporation. It is well settled that a counterclaim, such as the defendant sought to establish could not be interposed to the cause of action set forth in the complaint. (Levine v. Hogan-Levine Company, 200 App. Div. 487.) In that case Page, J., said: “ Clearly, even if the plaintiff was not a bona fide holder for value, this counterclaim could not be asserted against him, for -while one who is not a bona fide holder takes the negotiable instrument subject to all existing equities which may be set up as a defense, he does not become liable for damages sustained by reason of the breach of warranties or guaranties, or false representations made by the payee.” Even if the said counterclaim of the defendant could be asserted against the plaintiffs herein, the contract between the Orbis Corporation and the defendant specifically excused the Orbis Corporation for the alleged breach set forth in the answer. The contract does not call for delivery in August, 1926, but merely says: “ Wanted. Shipment during the month of August, 1926.” The contract contains general conditions to the effect that the sellers shall not be responsible or liable for any delay or inability to deliver, due to fires, strikes, war, civil commotions, epidemics, accidents, delays in transportation, or “ to any other causes beyond their reasonable control,” and that any delay in the delivery through “ inability of the manufacturers to perform their contract due to causes beyond their reasonable control as mentioned in the general conditions above will likewise relieve sellers towards the buyers.” Such provisions have been upheld by the courts of this State. (Normandie Shirt Co. v. Eagle, Inc., 238 N. Y. 218; Jones & Co., Inc., v. Winter, 209 App. Div. 76; Mora y Ledon v. Havemeyer, 121 N. Y. 179; 35 Cyc. 246.) Although it is claimed by the [473] defendant that the channels called for by this contract were not delivered to the defendant at any time, and that from August to November, 1926, the defendant made repeated requests for the delivery, and that some of the channels which had been ordered from Belgium were diverted to another customer at a higher price, it is not disputed that the delay in shipment from Belgium and in delivery to the defendant was due to causes beyond the reasonable control of the Orbis Corporation. The defendant, having failed to notify the plaintiffs or their assignor that delivery must be made within a definite time, cannot claim damages for failure to deliver. (Trainor Co. v. Amsinck & Co., Inc., 199 App. Div. 693; Pierson & Co. v. American Steel Export Co., 194 id. 555; Taylor v. Goelet, 208 N. Y. 253.) The defendant has failed to establish its counterclaim or setoff by the proper proof of damages. (Tilatitsky, Inc., v. Raymond-Hadley Co., Inc., 126 Misc. 585; O’Gara v. Ellsworth, 85 App. Div. 216; Bonelli v. Pisani, 158 N. Y. Supp. 1033; Greenberg v. Weintraub, 186 id. 600.) It follows, therefore, that plaintiffs are entitled to recover judgment against the defendant in the sum of $500, with interest as demanded, and to a dismissal of the counterclaim or setoff, with ten days stay of execution.