Lieberman v. Templar Motor Co.

• Decision Date: 29 May 1923
• Citation: 140 N.E. 222,236 N.Y. 139
• Parties: LIEBERMAN v. TEMPLAR MOTOR CO.
• Court: New York Court of Appeals Court of Appeals

236 N.Y. 139

140 N.E. 222

LIEBERMAN

v.TEMPLAR MOTOR CO.

Court of Appeals of New York.

May 29, 1923.

Action by David Lieberman against the Templar Motor Company. From a judgment of the Appellate Division (202 App. Div. 136,195 N. Y. Supp. 885), unanimously affirming a judgment for defendant, entered upon dismissal of the complaint by the court at Trial Term, plaintiff, by permission, appeals.

Reversed, and new trial granted.

Appeal from Supreme Court, Appellate Division, First Department.

Emory R. Buckner, H. H. Nordlinger, Isidor Enselman, and Samuel H. Hofstadter, all of New York City, for appellant.

Clarence Mellen, of Cleveland, Ohio, and John Schulman, of New York City, for respondent.

CARDOZO, J.

The Hudson Auto Body Corporation, plaintiff's assignor, made a contract on August 21, 1919, with the defendant, the Templar Motor Company, to manufacture automobile bodies for use in the defendant's cars. The contract is in writing. It calls for 2,500 bodies to be made according to a special design. Deliveries are to commence on December 1, and to continue at the rate of 10 bodies a day. The price is to be $130 per body, f. o. b. freight cars, New York City. If railroad facilities are lacking, the bodies may be stored at the defendant's expense. The manufacturer is not to be held responsible for delay by reason of strikes or other causes not within its control.

The Hudson Company began work upon the bodies as soon as the defendant's specificationswere complete. Delay ensued as the consequence of a strike, which started in October, 1919, and ended in February, 1920. Work was then renewed, and shipments were made in April, 1920, and at frequent intervals thereafter. Much inconvenience was caused, however, by the shortage of freight cars. The situation was the subject of a conference between the Hudson Company's representatives and those of the defendant, held at the Hotel Pennsylvania in New York on May 19, 1920. There is testimony that at this conference the written contract of August was modified by word of mouth. The manufacturer offered to store the completed bodies free of cost in its own rooms until freight cars were at hand, and thus to save the defendant the enormous loss resulting from storage in a public warehouse. A weekly invoice was to be forwarded, showing the production of bodies for the week, and shipment was to follow as soon as cars could be procured. In return, the defendant's representatives agreed that when invoices were forwarded with the O. K. of their inspector, they would make payment at once, and in advance of delivery, for the bodies then completed. The Hudson Company, pursuant to this agreement, sent its invoices from week to week, though in many instances without waiting for the inspector's approval. They shipped the bodies by rail as facilities were offered, and transmitted to the defendant the bills of lading for the shipments.

By August 27, 1920, invoices had been sent to the defendant for 610 bodies. By August 30, all but three of these 610 bodies had been shipped, and bills of lading forwarded. The invoices from April 28 to July 16, inclusive, covering 420 bodies, were paid in full. The invoices from July 23 to August 27, covering 190 bodies, and calling for payments of $24,158.50, were paid in part. There was unpaid a balance of $16,358.50. As early as August 6 the defendant gave evidence of its unwillingness to go forward with the contract. On that day, its president, Mr. Bramley, wrote the Hudson Company that there was ‘practically no demand’ for cars, and that he wished to ‘arrange to stop production entirely, or limit production to a minimum.’ Conferences followed. Mr. Bramley asked for cancellation. He said the defendant was not paying out any money to any one. The Hudson Company said that cancellation was impossible, and that its bills must be paid; but offered concessions. It offered to suspend production altogether if the defendant would pay the overhead charges during the period of suspension. The defendant refused. It offered to take trade acceptances for completedbodies if the banks would accept them, but the banks were unwilling. It offered to limit production to 25 cars a week, and this the defendant apparently approved, though continuing to disregard the invoices which steadily accumulated. On September 9, 1920, the Hudson Company's attorney went to Cleveland to find out why the invoices had not been paid, and if possible collect them. Bramley refused to pay. He said that the defendant had no money even for its pay roll. He offered no other excuse. When told that the Hudson Company would sue, he said to go ahead. ‘The best thing your company can do is to file a petition in bankruptcy.’ This action followed in October, 1920.

Two causes of action are stated in the complaint. The first is for $16,358.50, the balance said to be unpaid for bodies delivered to the defendant, or ready for delivery. The second is for damages resulting from the defendant's refusal to go forward with performance.

[1] We think the defendant's conduct on September 9, 1920, viewed in the light of earlier happenings, might be found by a jury to have been intended as a repudiation of the contract. The argument is made that the money was not due. The O. K. of the inspector, which was necessary only if payment was demanded before shipment, had not been placed upon the invoices. There is room for doubt whether some castings of trifling value were sent forward with the bodies. The defendant, however, did not put its refusal to pay on any of these grounds. There was not a word in any of the conferences about an invoice or a casting. Such defects, if they existed, could have been easily supplied. 2 Williston on Contracts, §§ 743, 744; Strasbourger v. Leerburger, 233 N. Y. 55, 60, 134 N. E. 834;Callanan v. Keeseville, Ausable Chasm & L. C. R. Co., 199 N. Y. 268, 284,92 N. E. 747. There was an unexcused and definitive refusal to pay a dollar either then or in the future. Helgar Corp. v. Warner's Features, Inc., 222 N. Y. 449, 119 N. E. 113. The refusal was couched in terms that were equivalent to a renunciation of performance. So, at least, a jury might interpret its significance.

The Appellate Division, conceding repudiation by the defendant, found the evidence insufficient on the side of the plaintiff to show ability and readiness to perform in accordance with the contract. The oral modification on May 19, 1920, was disregarded as ineffective under the statute of frauds. The plaintiff or his assignor was held to be in default when performance was tested by the contract as originally made. The test, we think, is inappropriate.

[2] The contract of August, 21, 1919, was one by its terms not to be performed within a year. That is the only reason why at the time of its making there was need of a written memorandum. Personal Property Law (Consol. Laws, c. 41) § 31. Deliveries beginning on December 1, and continuing at the rate of 10 bodies a day, would cover a period of 10 months from December 1, which would be more than 12 months from August 21. The contract was not one for the sale of goods, for the bodies were to be manufactured according to a special design, which belonged to the defendant and not to dealers generally. Personal Property Law, § 85, subd. 2. Besides, there was part payment, and also acceptance and receipt. Except, therefore, for the element of time, a writing was unnecessary. But on May 19, 1920, when the modification was adopted, performance could have been carried to completion in a time much shorter than a year. In such circumstances, the necessity for a writing no longer existed. A contract originally within the statute because not to be performed within a year, and then reduced to writing so as to be valid at its making, may be modified without a writing at a time when performance within the year is possible. Williams v. Moss' Empires, Ltd., [1915] 3 K. B. 242; Blake v. Neils Lumber Co., 111 Minn. 513, 516, 127 N. W. 450;Sherman, Clay & Co. v. Buffum & Pendleton, 91 Or. 352, 355, 179 Pac. 241;Murray v. Boyd, 165 Ky. 626, 631, 177 S....