New York Law Review

Tag: 1927

  • Cundill v. Lewis, 245 N.Y. 383 (1927): Delivery Requirements When Goods Held by a Third Party

    Cundill v. Lewis, 245 N.Y. 383 (1927)

    When goods sold are in the possession of a third party, the seller’s obligation to deliver is not fulfilled until the third party acknowledges to the buyer that it holds the goods on the buyer’s behalf.

    Summary

    Cundill contracted to buy camphor from Lewis, which was stored in a warehouse. Lewis provided a delivery order to Cundill. Cundill paid for the camphor and paid the warehouse for one month’s storage. Before Cundill could take possession, the camphor disappeared from the warehouse. Cundill sued Lewis for breach of contract, alleging failure to deliver the goods. The court held that Lewis had not fulfilled his delivery obligation because the warehouse never acknowledged to Cundill that it was holding the goods on Cundill’s behalf. The mere acceptance of a storage payment was insufficient to establish such acknowledgement.

    Facts

    On March 14, 1925, Cundill agreed to buy camphor from Lewis, which was stored at S. & S. Storage Warehouse Co.
    Lewis provided Cundill with a warehouse delivery order.
    The camphor was originally stored at 1085 Grand Street but was moved to Maspeth Avenue.
    On March 21, 1925, Cundill paid Lewis for the camphor.
    Storage was paid until March 17, 1925.
    On March 24, 1925, Cundill paid the warehouse $1.95 for one month’s storage.
    On March 27, 1925, Cundill presented the delivery order, but the camphor had disappeared from the warehouse prior to this date.

    Procedural History

    Cundill sued Lewis for breach of contract in the Trial Term, alleging failure to deliver the camphor.
    The jury returned a verdict for Cundill.
    The Appellate Division reversed the judgment, finding the issue of acknowledgement was not adequately presented to the jury and ordered a new trial. (219 App. Div. 742).
    Cundill appealed to the New York Court of Appeals, stipulating that judgment absolute would be rendered against him if the order was affirmed.

    Issue(s)

    Whether Lewis fulfilled his obligation to deliver the camphor to Cundill when the camphor was in the possession of a third-party warehouse and the warehouse accepted a storage payment from Cundill.

    Holding

    No, because the warehouse company never acknowledged to Cundill that it held the goods on Cundill’s behalf, as required by Personal Property Law § 124(3).

    Court’s Reasoning

    The court relied on Personal Property Law § 124(3), which states that when goods are in the possession of a third person at the time of sale, the seller must ensure the third person acknowledges to the buyer that they hold the goods on the buyer’s behalf to fulfill their delivery obligation.
    The warehouse receipt stated the camphor was held “for account of John D. Lewis” and was marked “Non Negotiable.”
    The court reasoned that the warehouse would have violated its promise to Lewis by acknowledging to Cundill that it held the camphor on Cundill’s behalf without proper endorsement and surrender of the receipt.
    The court stated, “The warehouse company was wholly ignorant of the fact that the plaintiff had a delivery order from the depositor. The plaintiff had never informed it that he had bought the camphor, that he was the owner thereof, or that he held a delivery order from the depositor. In the absence of such information, the making of a promise to hold the camphor on the plaintiff’s behalf would have indicated a willingness on its part to violate the law.”
    Acceptance of a check for storage was not sufficient to imply such acknowledgement. The court noted that the warehouse company might have thought Cundill was paying Lewis’s debt, or that it would hold the camphor for Cundill only upon presentation of the warehouse receipt.
    Because there was no acknowledgement as a matter of law, Lewis never delivered the camphor to Cundill.

  • Neumond v. Farmers Feed Co., 244 N.Y. 202 (1927): Effect of War on Contractual Obligations

    244 N.Y. 202 (1927)

    War suspends contractual obligations between belligerents if the contract is executory, and the obligations are discharged if resuming them after the war would thwart the contract’s essential purpose or materially impair its value.

    Summary

    This case concerns the impact of World War I on a contract between a New York company (Farmers Feed) and German citizens (the Neumonds) regarding a trademark option and restrictions on the Neumonds’ business activities. The court held that the war suspended the contract’s obligations, and because the plaintiffs’ obligations expired during the war, the defendant’s obligation to make payments was discharged. The court reasoned that reviving the payment obligation after the war would be inequitable, as the defendant did not receive the full benefit of the bargain due to the wartime suspension of the plaintiffs’ obligations.

    Facts

    The Neumonds, German citizens, had a partnership buying and selling grains in Germany and the US, owning the trademark “Goldnes Kalb.” They granted Farmers Feed an option to buy the trademark, contingent on the Neumonds discontinuing their grain business. Farmers Feed agreed to pay $2,000 annually for the option and the Neumonds’ agreement to restrict their business activities within a specific territory. The contract also included restrictions on Farmers Feed’s sourcing of grains. One of the Neumonds resided in Germany, and the other, initially in New York, was later interned after the US entered World War I.

    Procedural History

    Farmers Feed made the payment due shortly after the war began but then stopped making payments. The Neumonds sued to recover the unpaid installments. The lower courts ruled in favor of the plaintiffs, holding that the defendant must pay the stipulated consideration for the plaintiffs’ contractual obligations. This appeal followed.

    Issue(s)

    Whether the contractual obligation of Farmers Feed to make stipulated payments to the Neumonds revived at the close of World War I, after the Neumonds’ obligations under the contract had been suspended and expired during the war.

    Holding

    No, because the suspension of the Neumonds’ obligations during the war resulted in a failure of consideration, making it inequitable to require Farmers Feed to resume payments after the war.

    Court’s Reasoning

    The court reasoned that war suspends executory contracts between belligerents. If the contract’s essential purpose is thwarted by delay or its value materially impaired, the contract is terminated. Here, the Neumonds’ obligation to restrict their business and the contingent option to purchase the trademark were suspended during the war. By the time the war ended, the period for these obligations had expired. The court stated, “the truth is, that the doctrine of the revival of contracts suspended during the war is one based on considerations of equity and justice, and cannot be invoked to revive a contract which it would be unjust or inequitable to revive.” The consideration for Farmers Feed’s payment was the Neumonds’ promise to restrict their business and grant the option. Because the war suspended the Neumonds’ obligations, Farmers Feed did not receive the full benefit of the bargain. Although Farmers Feed’s option was contingent, it had potential value before the war. However, the suspension of the Neumonds’ obligations eliminated any chance of the contingency arising. The court concluded that it would be unfair to require Farmers Feed to pay for a “chance it never received.”