
    PEUCHEN et al. v. BEHREND.
    (Supreme Court, Appellate Division, Second Department.
    November 23, 1900.)
    Contracts—Rescission.
    Plaintiffs contracted to sell defendant 15 car loads of acetic acid per month for one year,—the acid to be sold by defendant to third parties, and the price received to be divided equally between plaintiffs and defendant,— and further provided that, if defendant should purchase any acid for his. own use, the price to be paid should be tb© prevailing market price. Defendant testified that he sold acid to other parties at $2.80 per 100 pounds,, and reported the transaction to plaintiffs as a sale to the H. Vinegar Company for $2.50 per 100 pounds, retaining the difference in price; the H. Vinegar Company being another name for himself. Held to justify plaintiffs in rescinding the contract.
    Appeal from special term, Richmond county.
    Action by Arthur G. Peuchen and another against Fritz Behrend.. From a judgment setting aside a verdict in favor of defendant,, and granting a new trial, defendant appeals.
    Affirmed.
    Argued before GOODRICH, P. J., and BARTLETT, WOODWARD, HIRSCHBERG, and JERKS, JJ.
    George C. Lay, for appellant.
    Henry Adsit Bull, for respondents.
   WILLARD BARTLETT, J.

On the 31st day of October, 1898,. the plaintiffs, under their firm name of Peuchen & Co., entered into-an agreement with the defendant for the sale of acetic acid by the-plaintiffs to the defendant. The agreement was to last for one year. The plaintiffs agreed to sell and the defendant agreed to buy acetic acid at prices specified in the contract, to the amount of 15 car loads per month. The agreement contemplated further sales-by the defendant to third parties, and provided that the prices at which the article might be marketed by him should be equally divided between him and the plaintiffs. It also contained this provision:

“It is further agreed that, if E. Behrend shall purchase acetic acid for his-own use, that the price to be paid is the prevailing market price at which said goods are sold by E. Behrend.”

In the view of the case taken by the learned trial judge in his. charge to the jury, there remained unpaid under this contract, at the time of the trial, the sum of f945.45, for goods consigned to the defendant by the plaintiffs; and they were entitled to judgment for this amount, unless the defendant had established the counterclaim which he set up in the answer, for damages growing out of the fact that the plaintiffs, before the expiration of the-term of the contract, refused to perform the same any further, and declined to sell or deliver any more acetic acid thereunder. The-action of the plaintiffs in this respect was sought to be justified by proof tending to show, among other things, that the defendant had not complied with that provision in the contract which we have quoted, and which bound him, if he purchased any of the acetic acid for his own use, to pay therefor the prevailing market price-at which said goods were sold by him. There was evidence to the effect that sales really made to himself were reported by the defendant to the plaintiffs as having been made to the Hudson County Vinegar Company; and the case, as it went to the jury, turned upon this question, as stated by the learned trial judge:

“Did the defendant sell either to himself, or to the Hudson County Vinegar Company, which is himself under another name, this vinegar, and charge himself with less than the prevailing market rate? If he did, then they were justified in declining to sell him any more. If he did not, then they were not justified. Your finding upon the merits here will depend on that question.”

The jury rendered a verdict in favor of the defendant for the sum of $804.55, thus sustaining the counterclaim in a sum equal to that amount, added to the $945.45 which was conceded to be due from the defendant to the plaintiffs, as already stated. The learned judge entertained a motion for a new trial, and, after due consideration, set aside the verdict upon three grounds, which are stated in his opinion. We do not deem it necessary to pass upon the sufficiency of all of these reasons, but we think that his action in granting a new trial must be sustained on the ground that the proof clearly shows a violation of the contract on the part of the defendant in one respect. The defendant’s own testimony showed that he sold 60 barrels of acetic acid to the Weidmann Silk-Dyeing Company for $2.80 per 100 pounds, and that he reported this transaction to the plaintiffs as a sale of 60 barrels to the Hudson County Vinegar Company for $2.50 per 100 pounds. The Hudson County Vinegar Company was another name for himself, used, as the plaintiffs assert, without their knowledge, though the defendant insists that they were aware, from the entire course of business and correspondence, that he and the vinegar company were identical. However this may be, we think it is perfectly clear that the sale to Weidmann, and misrepresentation concerning it in. the account rendered to the plaintiffs, constituted a violation of the contract between Behrend and the Peuchens which warranted the Peuchens in terminating it and refusing to send Behrend any more acetic acid. In no view of the contract was Behrend paying for the acetic acid which he thus took “for his own use,” in the name of the vinegar company, “the prevailing market price at which said goods are sold by F. Behrend.” This is almost too plain for argument. It is preposterous to suppose that the Peuchens ever contemplated the idea involved in Behrend’s construction of the contract as applied to this transaction,—that Behrend should be at liberty to take acetic acid from them “for his own use” at $2.50 a hundred, and have them ship it directly to a customer of his who would pay him $2.80 a hundred for it; this profit being retained by him, instead of being shared by them. Under these circumstances, the $2.80 clearly represented “the prevailing market price at which said goods are sold by F. Behrend.” It is not necessary to adjudge that this action on Behrend’s part was a fraud. As we view the agreement, however, there is no doubt that it was a violation of the contract, upon the discovery of which the plaintiffs were justified in terminating their relations with the defendant under the agreement, unless it shall be made to appear that his conduct in respect to this matter was really known to them and received their sanction, express or implied. On a new trial the extent of their knowledge, if any, concerning this matter,, may be made more distinctly to appear.

Order affirmed, with costs. All concur.  