
    Ernst Thalmann and Others, Copartners under the Firm Name of Ladenburg, Thalmann & Co., Respondents, v. Capron Knitting Company, Appellant.
    
      A complaint alleging that the plaintiffs had a lien on goods, and that the defendant received them with notice thereof, and that the amount payable therefor belonged to the plaintiffs, states a cause of action — implied promise.
    
    The complaint in an action alleged that the plaintiffs had an agreement with the J. Freeman Brown Company by which they agreed to make loans and advances to that-company, to be secured by a pledge of merchandise belonging to the latter and the proceeds of . the sale of said merchandise; that it was part of the agreement, and also the regular course of dealing between the parties, that the plaintiffs would authorize the Brown. Company from time to time to.deliver to purchasers merchandise pledged under the agreement, but that the plaintiffs consented to such deliveries on the sole condition that the purchaser should be given notice at the time of the receipt of the goods that the plaintiffs had an interest therein or a lien thereon, and that the purchase price was payable only to the plaintiffs.
    The complaint further alleged that at the time specified the plaintiffs authorized and permitted the Brown Company to deliver to the defendant company merchandise pledged under the agreement, and that such merchandise “ was delivered to the defendants and accepted and retained by them, with notice that the plaintiffs had a lien thereon or interest therein, and that the amount due therefor was payable only to the plaintiffs."
    
      Held, that the complaint stated a cause of action for the value of the goods;
    That an implied promise on the part of the defendant to pay the plaintiffs for the goods was to be inferred from the allegation that the goods were accepted with knowledge of the plaintiffs’ relation to them, and with knowledge of the fact that the proceeds of the goods were to be paid to the plaintiffs.
    Ingraham and McLaughlin, JJ., dissented.
    Appeal by the defendant, the Capron Knitting Company, from ap interlocutory judgment of the Supreme Court in favor of the plaintiffs, entered in the office of the ,clerk of the county of New-York on the 8th day of June, 1904, upon the decisión of the court, rendered after a trial at the New York Special Terra, overruling the defendant’s demurrer to the plaintiffs’ complaint.
    
      Herbert C. Smyth, for the appellant.
    
      Frederick B. Van Vorst, for the respondents.
   Patterson, J.:

This is an appeal from an interlocutory judgment. overruling a demurrer to the complaint. • The allegations of that pleading are* in substance, that the plaintiffs had a lien on goods manufactured by the J. Freeman Brown Company; that it arose Out of an agreement between the plaintiffs and that company by which they contracted to make loans and advances to it, to be secured by a pledge of merchandise and the proceeds of the sale of such merchandise that the company was to keep with the plaintiffs a margin of at least ten per cent between the value of the merchandise and other securities pledged and the amount of its indebtedness at any time, to the plaintiffs; any depreciation in the value of the security to be instantly' made good; that it was also a part of the agreement (and! the regular course of dealing between the plaintiffs and the J. Freeman Brown Company) that the plaintiffs would authorize and permit the said J. Freeman .Brown Company to deliver from time to time to purchasers and customers of that company, merchandise pledged under the agreement with the plaintiffs, but the plaintiffs; consented to such deliveries and the relinquishment of their right to the possession of the merchandise om the sole condition that every purchaser from the J. Freeman Brown Company" receiving merchandise should be -given notice at or about the time of the receipt thereof, that the plaintiffs had an interest therein or lien • thereon, and that the money due therefor was payable only to the plaintiffs-

The. plaintiffs, then set forth in the complaint that at a time specified the. J, Freeman Brown Company was largely indebted to them in excess of --merchandise and other, securities and that there, was included in’ the-merchandise which had been pledged to them a quantity of cotton yarn and cloth which they, the plaintiffs, authorized and permitted the J. Freeman. Bro.wn Company to deliver to the.;defendant, according to the regular course of dealing between the plaintiffs and the J. Freeman Brown Company, and the following allegation-is then made, viz. : “ And the plaintiffs allege upon information and belief that the aforesaid cotton yarn and cloth was-delivered to the defendants and accepted and retained by them,with notice that the plaintiffs had a lien thereon or interest therein, and that the amount due therefor was payable only to the plairitiffs.”

The complaint states .a cause of action. It shows that the plaintiffs abandoned their lien by allowing the goods to be delivered. to the- defendants, who accepted them with notice and knowledge that the plaintiffs were entitled to the money to be paid therefor. The basis of the claim is an implied promise of the defendant to pay. It is not charged as an express promise, but all the facts are set forth from which a promise in law would be implied, for it is to be inferred from the allegation that the goods were accepted with, knowledge of the plaintiffs’ relation to them, and with knowledge-of the fact that the proceeds of the goods were to be paid to the plaintiffs. The plaintiffs are not entitled to the possession of the. goods, but under the allegations of the complaint they are entitled to the value of them or the amount for which they were sold by the J. Freeman Brown Company to the defendant. Implied contracts are such as reason and justice dictate, and which th’e law, therefore, presumes that every man undertakes to perform. (2 Black. Com. 443.)

The interlocutory judgment should be affirmed, with costs, with leave to the defendant to withdraw demurrer and to answer within twenty days on payment of costs in this court and in the court below.

Van Brunt, P. J., and Laughlin, J., concurred; Ingraham and McLaughlin, JJ., dissented.

Ingraham, J.

(dissenting): I do not concur with Mr. Justice Patterson. This, cause, of action is based'upon an allegation that by an agreement between the plaintiffs and the J. Freeman Brown Company the plaintiffs made loans and advances to the corporation, to be secured by the hypothecation and pledge of certain merchandise and the proceeds of the sale thereof, the corporation agreeing to keep and maintain a margin of at least ten per cent between the value of the merchandise and other securities hypothecated and pledged by it and the .amount of its indebtedness at any time to the plaintiffs; that it was ■a part of the agreement for the plaintiffs to authorize and permit the ■corporation to deliver from time to time to purchasers ánd customers of its own the merchandise hypothecated and pledged to the plaintiffs under the said agreement, but that the plaintiffs consented to such . -deliveries and the relinquishment of their right to the possession of ■ the said merchandise upon the condition'that every purchaser from the J. Freeman Brown Company, receiving merchandise previously .hypothecated and pledged to the ¡plaintiffs,, should be given notice, at ■or about the time of the receipt thereof, that the plaintiffs had an interest therein or lien thereon, and that the money due therefor was payable only to the plaintiffs. There is no. allegation that this merchandise was actually delivered. to the plaintiffs, or that their lien thereon was anything but an agreement by the corporation that Its merchandise should be subject to a lien in favor of the plaintiffs ■for the amount of the advances that the plaintiffs had made. It is further alleged that prior to the 7th day of December, 1903, the plain"tiffs had" made large loans and advances to the corporation, and on that •day a petition in bankruptcy was filed against the company; that at "the date of filing that petition the corporation was indebted to the, ¡plaintiffs in excess of tlie merchandise and other securities held by the plaintiffs as security for said indebtedness, and that there was included in said merchandise hypothecated and pledged to the plaintiffs certain cotton yarns and cloth particularly described in the complaint; that the plaintiffs authorized and permitted the corporation, to deliver •.such cotton yarns and cloth according to the practice and" regular •course of dealing under the agreement alleged; that the. aforesaid , •cotton yarns and cloth were delivered to the defendant and accepted -and retained by that company, with notice that the plaintiffs had a lien thereon or interest therein, and that the amount due therefor was payable only to the plaintiffs. Then follows an allegation that the ■cotton yarn and cloth were of the “ agreed value ” of $"46,720.17 and that by reason of the premises the defendant had promised and .agreed to pay that sum to the plaintiffs. There is no allegation that the defendant promised to pay to the corporation, or to any one -else, the alleged value of these goods, or any promise by the defendant made either to the plaintiffs or the corporation to pay anything, for the goods, except the implied promise which it is claimed arose because of the facts stated. The plaintiffs having some sort of a lien on this merchandise, if it was alleged that the goods had been .sold by the corporation to the defendant and that in consideration thereof the defendant had by express promise agreed to pay the -consideration for the sale of the goods to the plaintiffs, the plaintiffs would be entitled to recover the amount that the defendant had •expressly promised to pay to them under the principle established in Lawrence v. Fox (20 N. Y. 268).

The plaintiffs rely upon McLachlin v. Brett (105 N. Y. 391); but in that case the merchandise, to recover the value of which the ^action was brought, never belonged to Hall & Co., who had shipped •the goods to the defendants, and notice was given to the defendants before they received the goods that Hall & Co. were not the owners •of the goods that they were shipping to the defendants in pursuance of .a contract which they had made for the sale of goods of a like character.

Here the goods belonged to the corporation that delivered them to the defendant, but the terms upon which these goods were delivered ,are not set forth. Whether the corporation sold the goods to the defendant, or delivered them for safekeeping is not disclosed, the •agreement between the corporation and the plaintiffs being that the plaintiffs would be entitled to. the moneys realized upon the sale of the goods. There is nothing, however, to show that notice of this agreement was given to the defendant. I do not think that the mere fact that the defendant had notice that the plaintiffs had :a lien upon the goods raised an implied promise of the defendant to pay the plaintiffs the value of the goods delivered when they were delivered to the defendant with the express assent of the plaintiffs. Whatever lien the plaintiffs had upon the goods was lost by a delivery of the goods to the defendant with the consent of the plaintiffs, and there is no allegation that the defendant was notified of any agreement between the corporation and the plaintiffs by which the amount that the defendant was to pay for the goods was to be payable to the plaintiffs.

I think, therefore, that the demurrer should have been sustained.

McLaughlin, J.

(dissenting): I concur in the opinion of Mr. Justice Ingraham in so far as he bolds that the complaint does not state facts- sufficient to constitute a cause of action, but upon the facts alleged, I think the lien survived. • the delivery, by the J. Freeman .Brown Company to the defendant. This, however, does not enable the plaintiffs to maintain an action, at law to recover the purchase price. All they can do, so far as the defendant is concerned, is to enforce the lien, and the facts stated are insufficient for-that purpose..'

The demurrer should have been sustained.

Judgment affirmed, with costs, with leave .to defendant to withdraw demurrer and to answer on payment of costs in this court and -in the court below. ,  