
    Morris E. Jacobs, Respondent, v. Julius A. Bernstein and Bernard Bernstein, Appellants.
    First Department,
    April 18, 1913.
    Estoppel — action by assignee of bills to recover moneys advanced thereon— evidence — when defendant estopped from offsetting counterclaim against assignor of plaintiff — promise to pay debt — consideration.
    Defendants, under a written contract with a weaver of silk, agreed to consign to him thrown silk which was to remain at all times the property of the defendants and which he was tó weave into the finished product and return to them. Defendants charged the weaver with the thrown silk delivered to him, and he in turn charged them "with the silk, and bills were rendered from one party to the other. The weaver made an arrange'ment with the plaintiff to finance his business by discounting his bills against the defendants. The plaintiff, after he began to discount such bills, had a conversation with one of the defendants in which he was informed that their financial standing entitled them to more credit, to which the plaintiff replied that he would extend credit to the weaver to the extent of $3,500, and that if the bills now due him were met promptly, he would allow the weaver to ship more of the finished products, and the defendants thereupon acknowledged that they owed the plaintiff and would meet the bills promptly, although at this time, apparently unknown to the plaintiff, the weaver was indebted to the defendants in an amount which largely exceeded the sum for which plaintiff held bills ' against the defendants. The defendants failed to inform the plaintiff of their claim against the weaver.
    In an action by the plaintiff to recover moneys advanced to the weaver upon the bills against the defendants, held, that the defendants having failed to inform the plaintiff of the status of the accounts between his firm and the weaver, and having by their silence induced the plaintiff to increase the amount of his investment in the bills, are estopped from offsetting against the advances made after the conversation any counterclaim they may have against the weaver, and a judgment should be entered in favor of the plaintiff for the amount advanced to the weaver in reliance upon sáid conversation.
    The agreement by the plaintiff to permit the weaver to make further shipments to the defendants was not a' sufficient consideration for defendants’ new promise to pay the plaintiff the full amount of his claim as, under the agreement, the defendants held the actual title of the silks and were absolutely entitled to receive them as soon as finished.
    Appeal by the ¡defendants, Julius A. Bernstein and another, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 24thday of February, 1912, upon the verdict of a jury, and also from an order entered in said clerk’s office on the 27th day of February, 1912,. denying the defendants’ motion for a new trial made upon the minutes.
    
      Samuel Meyers, for the appellants.
    
      Walter J. Rosenstein, for the respondent.
   Scott, J.:

The plaintiff sues as assignee of one Nathanson, and the only question involved is as to the allowance of a counterclaim in favor of defendants. The defendants and Nathanson did business together under a written contract, whereby defendants agreed to consign to Nathanson from time to time what is described as thrown silk, which was to remain at all times the property of defendants, and which Nathanson was to weave into the finished product known as broad silk, and immediately upon weaving was to deliver the finished produpt to defendants. Defendants were to charge Nathanson with the thrown silk delivered to him; and he in turn was to charge defendants with the finished silk delivered to them, it being explained in the contract that this method of charging and counter charging was adopted simply as á convenient means of bookkeeping and to avoid disputes between the parties when the finished product was delivered. Under this arrangement defendants rendered bills to Nathanson for thrown silk delivered to him, and he in turn rendered bills to them for finished silks delivered to them. In September, 1910, Nathanson made an arrangement with plaintiff tó finance his business by discounting his bills. Plaintiff, who describes himself as a commercial banker, would advance Nathanson a certain percentage of each bill, taking an assignment of the amount apparently due thereon. When the bill was collected he would pay Nathan-son the amount of the bill less the sum previously advanced and also less a commission. The bills were stamped with a notice of their assignment to plaintiff, and in that condition sent to the debtor. When plaintiff first began to discount Nathanson’s bills against defendants the latter held claims against Nathanson largely exceeding any amount they owed him.

On October 21, 1910, plaintiff and the defendant Bernard Bernstein had a conversation respecting the bills ■ against defendants then held by plaintiff. These parties differ radically as to what took place at that interview, but as the jury by their verdict indicate that they believed the plaintiff, we shall assume that his version is correct." He testified that he then held bills against defendants amounting to $1,877, and that he told Bernstein that he did not care to extend further credits to defendants. Bernstein said that Nathanson" had on hand some finished silk which defendants much desired to receive, and proceeded to convince plaintiff that their financial standing entitled them to more credit. The witness said: “I then told him that I would extend him a credit up—to owe me up to $2,500, if these bills that are now due me, $1,877 and some cents, if yob. meet these promptly, as the bills stipulate, payable to me, and the additional, that I would allow Mr. Hathanson to ship more merchandise, and if he owes me over $2,500, he must anticipate some of the bills; that I at no time will allow him to owe me more than $2,500, and this he agreed to do. He said, I know I owed you that money and I will meet my bills promptly, and that is about the end of the conversation as far as I can remember.” At this time Hathanson was indebted to defendants for thrown silk delivered in an amount as to which there is some dispute, but which largely exceeded the $1,877, for which plaintiff held bills against defendants. After this conversation plaintiff acquired further bills against defendants which brought up his total claims, allowing for certain discounts .and allowances, to $2,893.51.

Bernstein did not inform plaintiff at the interview of October twenty-first that he held a counter charge against Hathanson exceeding the amount of defendants’ apparent indebtedness to Hathanson, nor was the plaintiff apparently aware of that fact.

The case was sent to the jury with, a charge that if the conversation between plaintiff and Bernstein was as was testified to by the latter, then plaintiff was entitled to recover the whole amount of his claim, because the agreement of plaintiff to permit Hathanson to make further shipments to defendants furnished a sufficient consideration for what was deemed to be defendants’ new promise to pay the plaintiff the full amount of his claim. We.are of opinion that this instruction was erroneous. Under the agreement between defendants and H athanson the former held at all. times the actual ownership of and title to the silks, ;and was absolutely entitled to receive them as soon as finished. 'It was no concession to defendants to “permit” Hathanson to deliver their own property to them, and, therefore, no consideration passed from plaintiff to defendants for any new or independent promise to pay plaintiff the apparent claims against them which he then held.

The plaintiff relies, however, upon a well-established rule that under certain circumstances a party will be estopped from asserting, as a defense to a claim against, him,- a counterclaim which, hut for his own acts, would be perfectly available. Such an estoppel arises where a party keeps silent when good faith would make it a duty to speak. (House v. Brilliant, 46 Misc. Rep. 432.) As was said in Chemical Nat. Bank v. Kellogg (183 N. Y. 92, 95): “Whoever conceals facts required by good faith and fair dealing to be disclosed, acts inequitably and will not be permitted to assert those facts to the injury of one misled by such conduct.”

When Bernstein had his interview with plaintiff on October 21, 1910, and asked plaintiff to make it possible for Nathanson to ship more goods, he must have known that in consenting to do so the plaintiff relied upon collecting the bills for such goods from "defendants. It was Bernstein’s duty then, in good faith, to have informed plaintiff of the relations between his firm and Nathanson and the state of the accounts between them. Having failed in this duty, and by his silence induced plaintiff to increase the amount of his investment in Nathan - son’s bills against defendants, the latter cannot now offset against the advances made after that conversation any counterclaim they may have against Nathanson. This rule does not, however, apply to the $1,877 advanced before the conversation because that advance was not made in reliance upon anything defendants had done or neglected to do. The judgment and order appealed from must, therefore, be reversed and a new trial granted, with costs to appellant to abide the event, unless plaintiff stipulates to reduce the recovery to the sum of $1,016.51, with interest from January 3, 1911, in which case the judgment as so reduced and modified will be affirmed, without costs to either party.

Ingraham, P. J., McLaughlin, Laughlin and Clarke, JJ., concurred.

Judgment and order reversed and new trial ordered, with costs to appellant to abide event, unless plaintiff stipulates to reduce recovery to $1,016.51, with interest from January 3, 1911, in which event judgment as so modified and order affirmed, without costs. Order to be settled on notice.  