Parker v. Simon

Hiscock, Ch. J.

This appeal involves the question whether plaintiff’s complaint states a cause of action.

*505 The Special Term held that it did not and sustained the defendant’s demurrer; the Appellate Division took the opposing view and held that the complaint did state a cause of action. Our conclusion is that the Special Term was correct and that a cause of action is not stated. Independent of allegations which are formal or immaterial and which need not be repeated, the complaint alleged in substance that the plaintiff and defendant entered into a written contract for the sale by the former and the purchase by the latter of a quantity of steel rails on specified terms; that it was understood that the defendant immediately should establish “ an irrevocable letter of credit in a bank in New York city in fayor of the Sweet’s Steel Company * * * which letter of credit could be drawn against by said Sweet’s Steel Company upon the presentation of invoices,” etc.; that it was agreed and understood on the signing of the contract that the plaintiff had arranged to transfer the same to the Sweet’s Steel Company which was to deliver the rails to defendant .under the terms of said agreement upon the defendant’s establishing a letter of credit; that “ it was further understood that upon the defendant’s performing the said agreement and the said mill (said Sweet’s Steel Company) thereupon performing the same that the plaintiff was to receive one per cent, of the sales price of the material covered by said agreement from said mill as his compensation; and it was understood that if the defendant did not perform the conditions on their part that .the plaintiff would not receive said commission or any compensation whatsoever from said Sweet’s Steel Company; ” that the plaintiff assigned the said contract to the said Sweet’s Steel Company which thereupon agreed to carry out and perform the same in all respects in the place and stead of the plaintiff; that it was ready, able and willing to perform its part of the contract and offered to do so but that the defendant neglected and refused to establish the letter of credit referred to in the agreement or *506 any letter of credit whatever, and finally defaulted in the performance of his contract; that by reason of the premises the said Sweet’s Steel Company did not deliver the said rails to the defendant and the plaintiff was not paid his said commission or compensation which would have amounted to $2,250 and for payment of which sum as damages demand is made.

We are entirely unable to get started upon any theory which leads to the conclusion that plaintiff has a cause of action against defendant under the allegations of his complaint. Too plainly for debate he has no cause of action under the terms of the agreement for the purchase by the defendant of steel rails. The purpose and obligations of that contract are defined by its written terms. The defendant as vendee became obligated to take a certain amount of merchandise on terms therein specified and if he defaulted in his obligation he became hable solely and exclusively to the vendor for the damages which the latter had suffered by reason of such default. Under that contract he incurred no obligation to anybody other than the vendor. Originally plaintiff as such vendor might have recovered damages for defendant’s alleged breach of contract. But before the action was brought he had assigned his contract to the Sweet’s Steel Company which thenceforth held the obligations of defendant and the right to recover damages for any breach thereof. Undoubtedly the plaintiff in making this assignment might have reserved certain rights under the contract against defendant but he did not do so. His assignment was absolute and coextensive with the contract and he lost all relationship with and gave up all rights against the defendant thereunder.

Therefore, if plaintiff has a cause of action against defendant' for loss of his commissions or compensation it must be by virtue of some contract or obligation in addition to the written one to which we have referred. We find no allegation of any such. It is not alleged in *507 the remotest manner that defendant made any independent contract with plaintiff that he would carry out the principal contract assigned to Sweet’s Steel Company so as to permit plaintiff to earn his commissions, or that he in any manner guaranteed that plaintiff should earn and receive his commissions or that he would be responsible for the payment thereof if through his fault or otherwise Sweet’s Steel Company failed to pay them, or that he had employed plaintiff to bring about the sale and purchase of the rails so that he was responsible for his commission. It is true that the complaint alleges that defendant “ understood ” that if the primary contract was carried out plaintiff was. to receive from the Sweet’s Steel Company a certain compensation. But this understanding in the light of the other allegations of the complaint did not in any manner make defendant responsible for the payment of such compensation or hable beyond the limits of the ordinary obligations which he assumed under the contract for the purchase of the rails.

Therefore, we conclude that defendant is not hable to plaintiff under the terms of the written contract because plaintiff has assigned that contract with all of his rights thereunder, and there is no independent contract for a valuable consideration by which defendant became hable for the payment to plaintiff of his compensation and, therefore, liable for damages for breach of contract.

In this respect this case differs decisively from those cited by the plaintiff and of which we may select his leading citation of James v. Home of the Sons & Daughters of Israel ( 153 N. Y. Supp. 169 ) as a sample. That decision proceeded upon the theory that the defendant had made a contract with the plaintiff to procure the purchase of a certain piece of property. The plaintiff procured the property in accordance with the terms which had been authorized by defendant and then the latter refused to take the property with the result that the purchase fell through and plaintiff lost his commissions. The *508 court held that there was a contract between the defendant and the plaintiff for the purchase of the property and that when the defendant broke its contract the plaintiff became entitled to damages which he had suffered as the result of such breach and which were measured by the compensation that he would have earned if the defendant had fulfilled its obligations. Thus there was present in that case what we utterly fail to find in' the allegations of this complaint, an existing contract between the plaintiff and defendant which the latter had broken with the resulting liability for damages.

In accordance with these views the order of the Appellate Division should be reversed and that of the Special Term affirmed and the question certified answered in the negative, with costs in this court and in the Appellate Division.

Hogan, Cardozo, Pound, Crane and Andrews, JJ., concur; Chase, J., deceased.

Ordered accordingly.