Eames Vacuum Brake Co. v. Prosser

• Decision Date: 22 November 1898
• Parties: EAMES VACUUM BRAKE CO. v. PROSSER et al.
• Court: New York Court of Appeals Court of Appeals

157 N.Y. 289

51 N.E. 986

EAMES VACUUM BRAKE CO.

v.PROSSER et al.

Court of Appeals of New York.

Nov. 22, 1898.

Appeal from supreme court, general term, Fourth department.

Action by the Eames Vacuum Brake Company against Thomas Prosser and another. From a judgment of the general term (34 N. Y. Supp. 398) affirming a judgment on a report of a referee in favor of plaintiff, defendants appeal. Affirmed.

Watson M. Rogers and John Lansing, for appellants.

Elon R. Brown, for respondent.

HAIGHT, J.

The plaintiff, a corporation, is engaged in the manufacture of air brakes. In 1877 it entered into a contract with the defendants whereby it appointed them sole agents throughout the United States and Canada for the sale of all the brakes made by the company; the defendants to receive for their services 10 per cent. of the net receipts, to be deducted on the receipt of the price paid to them on such sales. In June, 1882, the defendants leased from the plaintiff, in the absence of the president of the company, all its property, real and personal, including its plant for the manufacture of brakes, and entered into the possession thereof. Soon afterwards Frederick W. Eames, the president, and Martha S. Eames, as stockholders in the company, brought an action against the defendants to set aside the lease as ultra vires. This action resulted in a judgment of ouster against the defendants. An appeal was then taken to the general term, and during the pendency of that appeal, and on the 23d day of May, 1883, the parties entered into a written agreement in and by which the suit was settled, the contract of 1877 canceled, and all of the property of the company obtained by the defendants through the lease retransferred to the company, including all stock and materials manufactured and in process of manufacture, and all orders received for goods not filled in full, together with orders which might be thereafter received by the defendants, growing out of their connection with the business. This agreement was in consideration that the plaintiff ‘pay to the said Prossers for their advances in said business and for said property as follows: The said company to give to the said Prossers its note, dated May 19, 1883, on interest at four months, to be satisfactorily indorsed, for the amount due thereon on account of advances, being hereby agreed and fixed at $25,452.98; said Prossers to hold said note, collect the outstanding accounts, and those for orders unfilled at this date, and, as fast as collections made, to apply on said note till paid, and when note is paid the balance collected of said accounts to be paid, and those not collected be transferred to the company, and the said company to pay to the said Prossers $10,000 in cash; said note and cash to be given and paid in fifteen days from this date; and, upon such note and cash being given and paid, the transfers, assignments, and delivery of above property to be given by the said Prossers as aforesaid; the said Prossers to use all due diligence in collecting said accounts. All orders up to this date unexecuted to be filled through the said Prossers, as sales agents, as before.’ The $25,452.98 note was given and the $10,000 cash was paid by the plaintiff in accordance with the provisions of the agreement; and the Prossers collected from the outstanding accounts, and from the accounts on orders which were unexecuted at the time of the settlement, more than sufficient to pay the $25,452.98 note, and assigned and transferred to the plaintiff the property of the company; but in the collections made by them they retained 10 per cent. as commissions, claiming that they were still entitled thereto under the contract of 1877. This action was brought to recover the amount of such commissions.

The answer alleged that the defendants' right to retain commissions was expressly reserved by the contract of May 23, 1883; that there had been an account stated, which operated as a settlement between the parties; that there was a mistake in the contract of May 23, 1883, in not expressly reserving the commissions; and judgment, among other things, was asked that the contract be reformed in that particular, and the complaint dismissed. The case was, by consent of parties, referred to a referee, and upon the trial there was a sharp contest over the issue raised with reference to there being a mutual mistake in the contract. Evidence was given on behalf of the defendants to the effect that the understanding was that they were to have commissions, and equally as positive evidence was given on behalf of the plaintiff that commissions were not to be allowed; that the settlement was a complete settlement as of the date of the instrument, for which the defendants were paid a bonus of $10,000; and that the accounts and unfilled orders were left in the hands of the defendants for the purpose of enabling them to make collections and satisfy their $25,452.98 note. The names of several prominent and well-known lawyers appear among the list of witnesses sworn upon this issue. The referee found the facts in favor of the plaintiff, and awarded judgment for the amount of the commissions, and that judgment has been affirmed in the general term. The finding of the referee upon that issue, having been made upon a conflict in the testimony, and having been affirmed in the general term, is final and conclusive upon the parties, and leaves nothing upon that issue which this court has the power to review.

It is now contended, however, that the contract of May 23, 1883, when properly construed, reserves to the defendants the commissions, and that no reformation of the contract was necessary. This contention is based upon the concluding sentence in the contract: ‘All orders up to this date unexecuted to be filled through the said Prossers, as sales agents, as before.’ Prior to this, and under the contract of 1877, the Prossers made sales as agents, collected the moneys due upon sales made, and retained therefrom their commissions, remitting the balance to the plaintiff; and the argument is that the provision of the contract for orders to be filled through the Prossers, as sales agents, as before, entitled them to retain their commissions as before. It will be observed, however, that nothing is said in the contract about the commissions. It treats only of filling unexecuted orders, and provides that these orders shall be filled by the Prossers, as agents, as before. It has reference to the manner, and the persons by whom, unexecuted orders are to be filled, and remains silent with reference to the rights of the parties thereunder. In the case of McCreery v. Day, 119 N. Y. 1, 23 N. E. 198, Andrews, J., in delivering the opinion of the court, says: ‘Where a contract is rescinded while in the course of performance, any claim in respect of performance, or of what has been paid or received thereon, will ordinarily be referred to the agreement of rescission; and in general no such claim can be made, unless expressly or impliedly reserved upon the rescission.’ Adopting this language as correctly stating the rule, it is evident that the agreement of rescission does not in this case expressly reserve to the defendants the commissions. Does it impliedly reserve them? In determining this question we may properly take into consideration the surrounding circumstances under which the parties were acting, and the contents of the instrument of which the clause in question forms a part. Referring to these circumstances, we find the parties to have been engaged in a sharp litigation, and then in the act of effecting a settlement. The plaintiff was to pay the defendants, within four months, the amount of the advances made by them, which amounted to $25,452.98. This amount was secured by a note, and as collateral security for the payment of the note the Prossers were to hold the outstanding accounts, fill the uncompleted orders, collect the accounts, and apply the same in payment of their note. In addition to this, the plaintiff was to pay the defendants $10,000 in cash. The defendants agreed, in consideration therefor, to surrender the stock of the plaintiff corporation, which they had theretofore held as collateral security for advances made to the company, to cancel and surrender its agreement of 1877, and to transfer and assign over to the plaintiff all stock and materials...