Joseph Mogul, Inc. v. C. Lewis Lavine, Inc.

• Decision Date: 10 January 1928
• Citation: 247 N.Y. 20,159 N.E. 708
• Parties: JOSEPH MOGUL, Inc., v. C. LEWIS LAVINE, Inc.
• Court: New York Court of Appeals Court of Appeals

247 N.Y. 20

159 N.E. 708

JOSEPH MOGUL, Inc.,

v.C. LEWIS LAVINE, Inc.

Court of Appeals of New York.

Jan. 10, 1928.

Action by Joseph Mogul, Inc., against C. Lewis Lavine, Inc. From a judgment of the Appellate Division (220 App. Div. 287, 221 N. Y. S. 391), reversing an order of the Special Term which denied plaintiff's motion for summary judgment under civil practice rule 113, and granting such motion for the relief demanded in the complaint, defendant appeals.

Judgment of the Appellate Division reversed, and order of the Special Term affirmed.Appeal from Supreme Court, Appellate Division, First department.

Henry W. Fried, of New York City, for appellant.

Edward C. Raftery, Denis F. O'Brien, and M. L. Malevinsky, all of New York City, for respondent.

CARDOZO, C. J.

Plaintiff in Philadelphia delivered to defendant, a common carrier, a case of goods to be delivered to a buyer in New York. The merchandise was shipped C. O. D., and $3,524.41 was stated to be the amount to be collected. Defendant failed to exact cash upon the delivery of the goods, but accepted, instead, the consignee's check to the order of the consignor. The check appeared to be certified. In fact, the certification was a forgery, and the check worthless. The plaintiff sues for the price on the theory that the carrier, by the acceptance of a check as a substitute for cash, has made the buyer's debt its own.

The case comes here upon an application for summary judgment under civil practice rule 113, which is limited to causes of action for the recovery of ‘a debt or liquidated demand arising * * * on a contract, express or implied.’ If the carrier is chargeable as upon an assumption of a debt, irrespective of the solvency of the consignee or the value of the merchandise, the remedy invoked is proper. If the measure of the recovery is the loss suffered by the shipper, the damage, now unliquidated, must be proved, and the summary remedy must fail. Norwich Pharmacal Co. v. Barrett, 205 App. Div. 749, 200 N. Y. S. 298;Interstate Pulp & Paper Co. v. New York Tribune, 207 App. Div. 453, 202 N. Y. S. 232.

[1][2][3] An express company or other carrier, receiving merchandise on a C. O. D. shipment, acts in two capacities, as bailee to transport the goods and as agent to collect the price. Hutchinson, Carriers, § 726. For breach of its duty as bailee to carry and deliver to the person and on the conditions stated by the shipper, it is liable, as in the case of any other misdelivery, for the value of the goods. Murray v. Warner, 55 N. H. 546, 20 Am. Rep. 227;Fowler Commission Co. v. Chicago, R. I. & P. R. Co., 98 Mo. App. 210, 71 S. W. 1077. For breach of its duty to act as agent for the shipper in the collection of the price, it is liable, like any other collection agent, for whatever could have been collected if the duty had been fulfilled. Mechem, Agency, § 1320.

[4][5] The law is settled that, in the absence of agreement or custom to the contrary, an agent to collect may accept money and nothing else. Federal Reserve Bank v. Malloy, 264 U. S. 160, 165, 44 S. Ct. 296, 68 L. Ed. 617, 31 A. L. R. 1261. The defendant says that there is a custom whereby a carrier may accept as a substitute a certified check. Its position is not bettered if the custom be assumed. By concession, this was no certified check, but only a pretense of one. The defendant was bound to satisfy itself that the instrument was genuine when it took a substitute for money. The chance of deceit of forgery was one of the risks of its calling. It took the risk and lost. In such circumstances we do not question the ruling of the court below that upon the conceded facts there must be a recovery by the plaintiff, at least for some amount. We think, however, that the amount is not a debt or other liquidated claim, but is measured by the damage.

[6] The subject has been much considered in actions against banks for negligence or other default in the collection of commercial paper. Prima facie, the amount of the damage is the amount to be collected. First Nat. Bank of Meadville, Pa., v. Fourth Nat. Bank of New York, 77 N. Y. 320, 328,33 Am. Rep. 618;Id., 89 N. Y. 412; Mechem, supra. If nothing more is proved, the damages will be assessed upon that basis. The agent in default may prove, however, in mitigation of the damages, that collection would have been impossible, though cash had been demanded. First Nat. Bank v. Fourth Nat. Bank, supra. In such a situation the amount to be recovered will be limited accordingly. The courts were asked, as long ago as 1838, when the case of Allen v. Suydam, 20 Wend. 321, 32 Am. Dec. 555, was decided by the Court of Errors, to give judgment upon the theory that the agent chargeable with negligence had made the debt his own. See 20 Wend. at page 337. The theory was rejected then. Later cases in this court, confirming the rejection, have put the measure of liability upon a basis of established law. First Nat. Bank v. Fourth Nat. Bank, supra; cf. Fahy v. Fargo, 63 Hun, 625, 17 N. Y. S. 344;Dern v. Kellogg, 54 Neb. 560, 74 N. W. 844;Omaha Nat. Bank v. Kiper, 60 Neb. 33, 82 N. W. 102;Noble v. Doughten, 72 Kan. 336, 351, 83 P. 1048,3 L. R. A. (N. S.) 1167;First Nat. Bank of Trinidad v. First Nat. Bank of Denver, Fed. Cas. No. 4,810, 4 Dill. 290.

[7] We cannot doubt that any presumption in favor of the collectible quality of the consignor's demand has been rebutted to the circumstances. A consignee, willing to utter a forged and worthless check, would not have paid cash, if the check had been rejected. In such circumstances,the limit of the recovery is the value of the merchandise surrendered. This, for all that appears, may have been less than the price to be collected. If the consignee had been able...