Rice, Barton & Fales Machine & Iron Co. v. Hoffman-Youmans Paper Mills

Lambert, J.:

The action is upon a promissory note, as to the inception of which there is no dispute; nor is it disputed but that the same has not been paid. The controversy arises with reference to a counterclaim sought to be interposed and maintained by the defendant.

February 16, 1910, plaintiff and defendant entered into a contract whereby plaintiff agreed to sell to defendant a paper machine at the. stipulated price of $12,750 and to have same ready for shipment within eight weeks. This contract provided for payment as follows: $1,000 upon the signing of the contract and the balance by way of notes. The machinery was to be manufactured and it was not réady for shipment within the time provided for in the contract, and in fact was not set up and'in operation until November of that year. The counterclaim is for damages resulting from plaintiff’s breach of such contract as to time of delivery. Prior to the agreed time of delivery it became apparent that the machine would not be completed in time to comply with the contract in that particular, and plaintiff notified defendant of such fact. A lengthy correspondence then followed between these parties, continuing until after the delivery of the machine. The failure to comply with the agreement at the contracted time v seems to have resulted, to some extent, from labor difficulties and there is slight intimation of some misunderstanding with reference to certain drawings furnished by the defendant. The letters from the defendant following the notification of plaintiff’s inability to deliver on time, are ample to establish a waiver of such time of delivery. Such letters are replete with requests to make delivery as soon as possible, and do not contain any intimation of a present or prospective claim of damages for the delay.

Following the delivery of the machine the defendant executed and delivered'to plaintiff the promissory notes in accordance with the terms of the original agreement. These notes were renewed from' time to time for short intervals, until eventually plaintiff refused further renewals of the note in suit, and commenced action thereon. Extensive correspondence was had between the parties relative to these renewals and the payment of this particular note and such letters contained no intimation of a claim for damages for delay in delivery. It was only when this action was brought that this claim was first asserted by the defendant.

The referee has disallowed such counterclaim upon the theory that the same was waived by defendant. Such conclusion seems well established by the evidence. In June, 1910, it appears that defendant was indebted to plaintiff upon other purchases than those involved in this contract, for the amount of which indebtedness plaintiff was asking payment. On June fifteenth, in response, apparently, to such a demand, defendant wrote the plaintiff as follows: “ In regard to the open account, we are always willing to accommodate and play fair, but on account of your delay in shipping our machine which is now two months, we will have to ask that you wait a short time. ” Also on June eleventh, defendant wrote plaintiff, in speaking of this open account, as follows: “If you will kindly hurry along our shipments, we will be glad to reciprocate in the way of settlement.” From the above and similar letters found in this correspondence it is to be observed that defendant was claiming an extension of credit upon this open account by reason of the delay in delivery of the machine contracted for. Evidently this exchange of courtesies was acquiesced in by the plaintiff, for on September nineteenth the plaintiff wrote the defendant as follows: “We are very glad indeed to know that you will put paper over the machine to-morrow. We trust that everything will be found satisfactory in every respect and that we may receive a check from you, as you advised us that you would send one when the machine started up making paper. ”

From the above it will be noted that the parties mutually agreed to an extension of the time of delivery because of the exigencies of the situation. This would not, however, necessarily defeat a claim for damages for the delay. The parties, however, further, by the asking and the granting of the extension of credit, adjusted all such claim for damages and fully satisfied same. Defendant made claim to a right of such extension of credit because of the delay in shipment. The plaintiff acquiesced in such claim and granted such extension. The extension of credit was a valuable concession and affords ample consideration for the waiver and satisfaction of the damages occasioned through the delay in delivery. In effect the parties made a new agreement whereby the time for delivery was extended, and all claim for damages "because of such delay extinguished. This new agreement was founded upon a sufficient consideration and was fully performed. Such performance of the substituted agreement fully satisfies the original one.

As was said in McCreery v. Day (119 N. Y. 9): “ The technical distinction between a satisfaction before or after breach seems to have been disregarded in this State and a new agreement by parol, followed by actual performance of the substituted agreement whether made and -executed before or after breach, is treated as a good accord and satisfaction of the covenant.”

For the foregoing reasons the judgment appealed from should be affirmed, with costs.

All concurred, except Foote, J., who dissented in an opinion.