
    J. Pratt Carroll, Plaintiff, v. Clara A. Sharp et al., Defendants.
    (Supreme Court, Niagara Special Term,
    April, 1910.)
    Cause of action — Character of cause of action — Ex contractu or ex delicto.
    Contracts — Interpretation of contract — Particular agreements —Agreements to assume indebtedness and liabilities of to to third persons — Meaning of obligations.
    Where defendants set up by way of counterclaim that they placed with the firm of which plaintiff was a member a quantity of fruit “to be sold on commission, with instructions not-to export any of it under any circumstances; that said firm exported the whole of said fruit contrary to said instructions without defendants’ knowledge, whereby, defendants were damaged upwards of $1,000; that plaintiff’s said firm was afterwards dissolved and plaintiff succeeded to its assets and assumed and agreed to pay and become liable for all of its obligations prior to the commencement of the action,” held:
    1. The counterclaim states a cause of action on contract in favor of tilie defendants against plaintiff.
    2. Although the word “ obligation,” when given the meaning now commonly assigned to it in law, implies no more than a cause of action evidenced by a writing, it is fair to assume that, in the pleading under consideration, the defendants used the word in a wider sense.
    The same propositions were held as to like allegations constituting a similar counterclaim for damages for selling goods held in cold storage before the time fixed by the instructions of defendants’ firm.
    Demurrer to defendants’ counterclaims,
    David Tice, for demurrer.
    Burt G. Stockwell, opposed.
   Pound, J.

Plaintiff brings this action to recover $2,989, with interest and protest fees, on four past due promissory notes, made payable to his order by the defendants in their copartnership name in the year 1909.

Defendants have served an amended answer which does not deny any of the allegations of the complaint, but which sets up two counterclaims thereto.

The first counterclaim charges that, about three years prior to the commencement of plaintiff’s suit, the defendants placed a quantity of fruit with plaintiff’s then firm to be sold on commission, with instructions not to export any of it under any circumstances; that said firm exported the whole of said fruit, contrary to such instructions and without defendants’ knowledge, whereby defendants were damaged upward of $1,000; that plaintiff’s said firm was afterward dissolved, and plaintiff succeeded to its assets and assumed and agreed to pay and become liable for all of its obligations, prior to the commencement of the action.

The second counterclaim charges that, about three years prior to the commencement of plaintiff’s suit, defendants placed with plaintiff’s then firm to be sold on commission another quantity of fruit which they had in cold storage, with instructions not to remove any of it from such cold storage before a specified date, unless the market .price for it had reached a stated sum; that said firm removed all of said fruit from said cold storage, contrary to defendants’ instructions and without defendants’ knowledge, prior to said date, without the market price having reached the stipulated sum, and sold it, whereby defendants were damaged several thousand dollars; that plaintiff’s firm was afterward dissolved, and plaintiff succeeded to its assets and assumed and agreed to pay and become liable for its obligations, prior to the commencement of this action.

The defendants demand an affirmative judgment against plaintiff on their counterclaims for more than five thousand dollars.

The plaintiff has demurred to each of said counterclaims upon the grounds:

1. That said counterclaim is insufficient in law, upon the face thereof.

2. That it appears upon the face of said counterclaim that it sets forth a cause of action in tort against a copartnership of which plaintiff was formerly a member, and that it did not arise out of the contract or transaction set forth in the complaint as the foundation of plaintiff’s claim and is not connected with the subject of plaintiff’s action.

3. That it appears upon the face of said counterclaim that it does not state facts sufficient to constitute a cause of action against the plaintiff.

The question is whether the counterclaims pleaded by defendants state causes of action on contract in favor of defendants against the plaintiff. Code Civ. Pro., § 501.

The question is not whether, on the facts pleaded, the plaintiff could be made liable in trover, as for conversion. Clearly, the pleader states merely a disregard of instructions on the part of plaintiff’s firms, and has not alleged, in terms, conversion, fraud, willful misconduct or wrongful act, nor undertaken to treat such firms as tort-feasors, as the rule seems to permit him to do in cases where the commission merchant sells in violation of the principal’s instructions. Minneapolis Trust Co. v. Mather, 181 N. Y. 205.

Even if, upon the facts alleged; a cause of action in tort might be read into the pleading, every intendment is in favor of construing the counterclaims as being in contract. Goodwin v. Griffis, 88 N. Y. 639.

And, where the tort is waived, the debt may be counterclaimed in an action on contract. Conyngham v. Shiel, 20 Misc. Rep. 590; Slade v. Montgomery, 53 App. Div. 343.

I fail to see wherein the rule of damages applicable to this case would differ whether the cause of .action be for a breach of contract or for a mere violation of duty, not fraudulent or willful (Scott v. Rogers, 31 N. Y. 676); and, therefore, plaintiff cannot be prejudiced on the merits by defendants’ election to treat their cause of action as being in contract.

Although the counterclaims state causes of action in contract against plaintiff’s former firms, the joint liability of the firms cannot be set off -against the debt of defendants to plaintiff. Spofford v. Rowan, 124 N. Y. 108.

Is a several liability of plaintiff properly pleaded ?

If plaintiff has assumed such liabilities of his former firms as defendants set up in their -ansAver, it seems clear that he is liable directly to defendants and that they not only may but must proceed against him as the principal debtor, if they have knowledge of such an arrangement. Colgrove v. Tallman, 67 N. Y. 95; Phillips v. Mendelsohn, ante, p. 142.

Defendants allege that plaintiff assumed and agreed to pay merely the “ obligations ” of his former firms. The word. “ obligation ” has been given wide and varied meanings, being limited, on one hand, to sealed instruments of a certain kind only, and extended, on the other, to include all legal duties. 29 Cyc. 1308.

Giving the word the meaning now commonly assigned to it in law, it implies no more than a cause of action evidenced by a writing and would not extend to an unliquidated liability, sounding in tort. Munzinger v. United Press, 52 App. Div. 341; Thorn v. Hall, 10 App. Div. 412; affd., 160 N. Y. 661.

But, in disposing of the demurrer, it is fair to assume that the pleader used the word in the wider sense. For mere faults of indefmiteness, the remedy is by motion under Code of Civil Procedure, section 546. Marie v. Garrison, 83 N. Y. 14.

The demurrer is overruled, with costs; but plaintiff may withdraw his demurrer and reply, on payment of the costs of the demurrer.

Judgment accordingly.  