
    Benedict and others v. Field.
    Jpon an executory contract for the delivery of goods, sold for payment, upon such delivery, in the notes of a third party, who becomes insolvent between the time of the contract and that stipulated for its performance, the seller is not bound to deliver upon a tender of notes, though they are not entirely worthless.
    Goods were sold “ to arrive ” by a certain vessel, and to be paid for, at what should be the market price on the day of delivery, in the notes of L. B., whom both parties supposed to be solvent, without recourse. Before the ship arrived L. B. failed, and the notes thereupon were depreciated, so as to be worth but from ten to thirty cents on the dollar; Held, that the vendor was not bound to deliver the goods upon a subsequent tender of the notes.
    Appeal from the Superior Court of New-York city. The plaintiffs sued for the refusal of the defendant to deliver a ■quantity of bleaching powders. ' At the trial, before Mr. Justice Boswortii and a jury, it was proved that on the 25th of October, 1853, the defendant sold to the plaintiffs, at the city of New-York, fifty casks of bleaching powders, to arrive by the ship Emma Field, to be paid for, at the market price ruling at the time of delivery, in the notes of Leggett Brothers, a mercantile firm of the same city, without recourse. Both parties, at the time of making the contract, supposed Leggett Brothers to be solvent. They failed on the 4th of November, 1853, ,and their paper, after their failure, was worth from ten to thirty cents on the dollar. On the 7th of November, 1853, the ship arrived with the bleaching powders. The plaintiffs thereupon tendered the notes of Leggett Brothers for the requisite amount, and demanded the delivery of the powders, which the defendant refused to make. Upon the ¡ilaintiffs resting their case, the court, on the application of the defendants counsel, dismissed the complaint. Upon appeal, the Superior Court at general term affirmed the judgment, and the plaintiffs appealed to this court.
    
      W. H. Scott, for the appellants,
    argued, among other things, that the depreciation on the value of the notes, amounting at most to a partial failure of consideration, does not excuse the defendant. The mistake of fact, if any, in relation to the solvency of Leggett Brothers at the time of making the contract, did not prevent its binding the defendants, such mistake relating, first, to a matter, from its own nature, doubtful 'and subject to contingency; second, to the amount of benefit to be derived by the defendant. (Story's Eq. Jur., %% 149, 150 ; Willard's Eq. Jur., 72; Hitchcock v. Giddings, 1 Daniels, 1,7.)
    , This case is distinguishable from Roget v. Merritt (2 Caines, 119), where there was no evidence that the note which was to have been received in payment had any value whatever, and the court decided upon the aramnpf ton that it was entirely worthless, and from Lighbody v. Ontario Bank (13 Wend., 101), where the bill of a bank which had already suspended payment, was given in payment of a precedent debt. The contract by the defendant was to take the notes of Leggett Brothers, subject to all risk of their subsequent depreciation. Upon no other construction can proper effect be given to the words without recourse. (Whitbeck v. Van Ness, 11 John., 452; Breed v. Cook, 15 id., 241; Graves v. Friend,, 5 Sandf. S. C. R,., 568; Read v. Hutchinson, 3 Camp., 352.)
    
      David D. Field, for the respondent.
   Comstock, J.

By the terms of the sale note, the defendant “sold” to the plaintiffs the fifty casks of bleaching powders “ to arrive ” by the vessel Emma Field, to be paid for on delivery in the paper of Leggett Brothers. On the part of the appellants it is insisted that this contract passed the title immediately to them as the purchasers. We are clearly of opinion that the title was not intended to pass until the goods should arrive and be delivered, in other words, that the sale was in its nature executory. But this is not a material question. The goods were to be delivered for immediate payment, and the defendant was not bound to make delivery on any other terms. The agreement was to be performed , by each party simultaneously. If, therefore, the terms of the agreement had been such, and the goods had been so situated in respect to their designation and separation from others of the same kind that the title could pass, still the defendant was not bound to part with the possession unless he was also bound to accept in payment the notes of Leggett Brothers. Those two questions are identical. If the notes of Leggett Brothers were rightfully tendered, that firm having failed before the goods arrived, and if the defendant ought to have accepted them, then he violated the agreement in refusing to deliver. If otherwise, then he is not guilty of the violation and th*j action cannot be maintained. This, is, therefore, the true question to be examined.

The ingenious argument of the appellants’ counsel nas failed to convince us that the action will lie. The defen dants was not bound to part with his property and accept in payment the notes of an insolvent firm, such insolvency having occurred, or at least having been ascertained, after the sale and before the time of delivery. If the goods had been delivered without any qualification before the insolvency had happened or become known, then it is clear that the vendor could have, under and upon the contract, no other remédy for the price than to accept the note. (Des Arts v. Leggett, ante, 582.) ‘ But it is a very different question whether he was bound to perform the contract and deliver the goods after the firm whose notes were to be accepted had failed. The agreement was executory, as we have said, in respect to title: it certainly was in respect t< the delivery; and before the time for performance arrived the essential consideration on which it was based had failed It is true that the sale, looking only at the precise letter the contract, was not defeasible in the event which occurred But when the parties contracted, the firm of Leggett Bro tliers was in good credit and was supposed to be solvent Their notes were to be accepted as payment, but the ability of that firm to give good notes was assumed, and was really the consideration of the defendant’s engagement to sell and deliver the goods. It seems hardly necessary to observe that the words in the agreement, “without recourse,” only mean that there was to be no recourse after the notes should be accepted.

The analogies to be derived from the law of stoppage in transitu are perhaps not perfect, but they are, I think, sufficiently near to furnish a rule for the present case. Where goods are sold to be paid for in the notes of the buyer, and he becomes insolvent before the delivery is complete, the seller may arrest the delivery and rescind the sale. Such is the right of the seller, although in such cases the title to the goods has passed by the sale, and they are placed at the buyer’s risk by being put in transit. But this is a right which violates the mere forms of the sale. There is nowhere in the terms of the contract any such condition. The law implies it, because the assumed ability of the buyer to pay for the goods was the inducement to the sale. The principles involved in this branch of the law, it seems to me, carry us somewhat farther than it is necessary to go in order to exonerate the seller from his contract, where he is to accept the obligations of a third person, and the insolvency occurs before the goods are put in transit and while the contract remains strictly executory.

The question in this case appears to have been fully decided in Roget v. Merrit (2 Caine, 117). In that case the agreement was to sell two hundred and twenty barrels of flour and to accept in payment the note of one Lyon, who failed after the agreement was made, but before either the flour or the note was delivered. The day after Lyon’s failure the note was tendered and the flour demanded, which the defendants refused to deliver, and the suit was brought for the non-delivery. Some other objections to a recovery were suggested, but they were either not considered or were overruled, and the judgment of the court was placed very distinctly on the ground that the sellers were not bound to deliver the flour in consequence of the insolvency of the maker of the note. Judge Spencer observed: “In this case I hold there was a valid contract, executory in its nature, but before the period of its execution arrived the consideration agreed to be given by the plaintiff wholly failed, in the insolvency of Lyon. The offer by the plaintiff to pay in the note of a bankrupt was not an offer of payment.” This decision was in accordance with the reason and justice of the case, and we are content to follow it.

The judgment should be affirmed.

Selden and Roosevelt, Js., dissented; all the othei judges concurring,

Judgment affirmed.  