BUILDING CONTRACT. N. Y. COURT OF APPEALS. Mansfield, applt., v. Beard et al., respts. Decided Sept. 21, 1880. deducting payments, of $4,878.09. Defendants then proved the two contracts alleged in their answer, and gave evidence tending to show that the labor and materials mentioned in the complaint were furnished under one or both of the contracts; that plaintiff failed to fully perform the contracts, and defendants were obliged to expend certain moneys to complete the performance thereof. This was an action to recover for The referee, in his report, stated labor and materials alleged to have the account between the parties, as been furnished by plaintiff to de- follows: Under a building contract, the owner is bound to notify the contractor of defects that exist and give him an opportunity to remedy them before he is entitled to remedy them himself, and offset the cost thereof in an action for the contract price. "Contract price of fendant, between June 1, 1872, and Aug. 20, 1873, in building a "confirst contract...... $11,130 00 veyor and spoutings" on certain Contract price of secstorehouses in Brooklyn. Plain- ond contract....... tiff claimed $7,635.55, with interest, Paid by defendants after deducting $2,631.10, paid. Total credit to the those contracts upwards of $20,000, which they claimed to offset and counterclaim in this action; that they had fully performed the con had fai ed to perform his, in conse upon first contract second contract.... 3,400 00 $14,530 00 11,130 00 703 00 828 12 2,626 85 2,140 00 $17,427 97 tracts on their part, but plaintiff Balance due defend ants.... $2,897 97" quence of which they suffered dam- For this balance, with interest, he ages, which they also alleged as a ordered judgment for the defendcounterclaim. Upon the trial be- ants. The referee found that before a referee, plaintiff proved the fore plaintiff had completed the amount and value of labor and mate- second contract defendants disrials furnished in building the con- charged him and furnished labor veyor and spoutings. His evi- and materials to complete it. He dence showed a balance due, after also found that they failed to prove how much of the contract was un- expended; that they were bound to performed at the time of the dis- notify plaintiff of the defects that charge, and how much work and existed, and give him an opportumaterials they furnished on his ac-nity to remedy them. Opinion by Earl, J. All concur. count on that contract, and hence Judgment of General Term, affirmmade no allowance to them on ac- ing judgment for defendants on recount thereof. The first contract port of referee, reversed, and new provided what capacity the elevator trial granted. should be of, and that if defective plaintiff should remedy the defects, and for a withholding of twentyfive per cent. of the price as security until the whole work should be completed and accepted. Plaintiff ACCOUNT STATED. N. Y. COURT OF APPEALS. Thomson et al., respts., v. The Decided Sept 21, 1880. Plaintiff, in 1870, drew upon their account in built the elevator, and defendants Bank of British North America, took possession and commenced to applt. operate and continued to do so. They paid plaintiff the contract price in full. There were some defects which plaintiff remedied on his attention being called to them. There were some defects to remedy which, and to improve the elevator, defendants afterwards expended in labor and materials the amount of the three items above allowed, and thus increased the capacityof the elevator. It did not appear that plaintiff refused or failed to remedy any defects which were brought to his notice. Defendants did not notify plaintiff of the defects they claimed to have discovered and request him to remmedy them, or give him an opportunity to do so. There was no proof as to how much it would have cost to complete the elevator according to the contract, or what was the precise cost of the defects plaintiff could have been required to remedy. B. F. Tracy, for applt. D. P. Barnard, for respts. Held, That there was no basis in the evidence to uphold the allowance to defendants of the amounts defendant bank, and received its check upon another bank, which they invested in a bond and mortgage made by one H. The check was given to H.'s attorney, who endorsed H.'s name upon it without authority, and deposited it in his own bank. The check was paid and charged to defendant's account by the bank on which it was drawn, and defendant charged same to plaintiffs on settlement of their account. Subsequently, in 1876, H. discovered the fraud of her attorney and procured the cancellation of the bond and mortgage. Held, that as it did not appear that defendant had lost its right of action against the other bank, and plaintiffs' account having been settled under a mistake of fact, it was proper to allow the settlement to be opened and to permit plaintiffs to show that the check was returned to defendant without a valid payment; that such other bank having paid the check on a forged indorsement was the party who should sustain the ultimate loss, and as defendant is the only party to whom it is liable, defendant should make good the payment charged to plaintiffs, and seek reimbursement from such other bank. As to whether an agent's authority to receive payment is of itself sufficient to authorize him to indorse his principal's name on a check received in payment, quaere. This action was brought to open an account stated between plaintiff nor was there any proof at what and defendant, and to recover the amount of a check given by defendant to plaintiffs to the order of one H., upon the Merchants' National Bank, and which was charged to plaintiffs in said account. point in the various transactions it was certified. The attorney paid for H. down to May 13, 1870, various sums amouuting to $3,200. She was, until the fraud was discovered, ignorant of the existence of the mortIt appears that on and before gage or the check, or the fact of deMarch 9, 1870, defendant was a posit. On May 13, 1870, the loan banking corporation in the City of for $15,000 was made on H.'s bond New York, having funds of plain- and mortgage, which was forthwith tiffs on deposit; that plaintiffs de- recorded. The bond and mortgage siring to invest in bond and mort- to plaintiff was recorded in June, gage, their attorney informed them 1870, and the attorney sent it to that he had arranged with H. to plaintiffs, who resided in Canada. give them a bond and mortgage for The attorney paid the interest to $17,500. On March 9, 1870, plain- plaintiffs until the latter part of 1576; tiffs drew on defendant for $17,562, thereupon plaintiffs made inquiry, and received $62 in cash, and a and the nature of the transaction was check on the Merchants' National disclosed. H. brought an action to Bank for $17,500 to the order of H. cancel plaintiffs' mortgage, and had Before this date plaintiffs' attorney judgment to that effect. The Merhad also acted as attorney for H., chants' Bank having paid the $17,and as agent for taking care of her 500 check, its amount was charged property. H. was in the habit of to defendant and sent to it as a signing papers on her attorney's direction, without knowing their contents. She knew that negotiations were on foot to borrow for her, on bond and mortgage, $15,000. On March 9, 1870, at the request of her attorney she signed a bond and mortgage to plaintiffs for $17,500. The same day the attorney deposited the check in his bank, having endorsed H.'s name upon it without any authority from her to do so. Under this endorsement was the name of the attorney, the names of his bankers, who deposited the check in their bank. The check was certified by the Merchants' Bauk. The judge found that it did not appear by whom it was presented for certification, or when it was certified, voucher for such charge, and retained Held, that as it did not appear that defendant had lost its right of still have his remedy upon it against action against the Merchants' Bank, the bank, but could not have reand the account between plaintiffs course against the drawer whose and defendant was settled and bal- funds had been thus locked up, or anced under a mistake of fact, it was transferred to the credit of another proper to allow the settlement to be party. And even the subsequent opened, and permit plaintiffs to payment of the check by the bank, show that they had never received upon a forged endorsement, would payment of the check, and that it not relieve it of its liability upon the was returned to defendant without contract it had made with the true a valid payment; that the Mer- owner, nor restore to the drawer the chants' Bank, having paid the check right to draw upon the bank for the on a forged indorsement, is the party funds which had been appropriated in default, who should sustain the to the payment of the check, and ultimate loss; and as from all that were, consequently, no longer his. appears defendant is the only party 12 Hun 537; affirmed 76, N. Y., 52; to whom the Merchants' Bank is 52 N. Y., 350; 4 Otto, 343. liable, equity requires that defendant should make good the payment credited to it in its account with plaintiffs, and seek its reimbursement from the Merchants' Bank. of itself sufficient to authorize the Ordinarily, where the payee or holder of a check which is payable immediately, instead of demanding payment, procures the check to be firming judgment for plaintiffs, afcertified, the check is, as between firmed. As to whether, when a payment is made to an agent by a check, payable to the order of his principal, the authority to receive the payment is agent to endorse his principal's name on the check, (quare). Judgment of General Term, af the drawer and the holder, regarded Opinion by Rapallo, J. All concur. as paid, and holder must look to the bank, whose obligation it has JOINT LIABILITY--ESTOPPEL accepted in lieu of the money, be IN PAIS. cause by procuring the certification N. Y. SUPREME COURT. he has caused an amount of the drawer's funds or credit, equal to that for which the check was drawn, GENERAL TERM. SECOND DEPT. The City Nat. Bank of Pough respt. Decided September, 1880. to be set apart for the payment of keepsie, applt., vs. William Phelps, that check, and withdrawn from the control of the drawer, and his funds are as effectually diminished as if the money had been paid, while the bank has given a negotiable obligation to the holder of the check, which is equivalent to a certificate of deposit. If the holder of the certified check should lose it, he would) This action was brought on a guaranty executed in the firm name to plaintiff by defendant and his partner. The firm dissolved long before the plaintiff sought to enforce the guaranty, and the plaintiffs knew of the dissolution about the time thereof. Some time afterwards, upon the plaintiffs asking a renewal of the guaranty, this defendant replied that his partner refused to execute the same, the cashier of the bank wrote to but that he, P., considered it binding, which Mr. Phelps asking for a renewal of statements he afterwards reiterated to certain officers of the plaintiff. The action was dismissed on the first trial as to defendant's partner, and judgment rendered against the defendant, which was set aside by the Gen eral Term, and a new trial ordered. On the second trial the complaint was dismissed. The plaintiffs claim that this defendant was liable on an estoppel in pais established by said statements. Held, As the discharge of one joint debtor discharges all, this defendant, after the termi the guaranty. After some months Mr. Phelps replied that Mr. Kingman refused to sign a renewal, but that he (Phelps) regarded the obligation as good, that there was no advantage in a renewal, and requested the bank to let the matter remain, as he believed Mr. Woodruff would settle their claim in a nation of the action against his partner, could reasonable time. A few days therebe held on his several liability only, if such after he personally declared the liability existed. Since the evidence seems to guaranty good, in conversation with show that the statements relied upon to es- the cashier and vice-president of tablish an estoppel in pais referred plainly to the joint liability of this defendant, and evidenced no intention to substitute his several liability, such statements do not establish an estoppel in pais as to defendant's several liability. the bank. The cause was tried in 1877 and the complaint dismissed as to Mr. Kingman, and a verdict rendered against Mr. Phelps which was set aside at General Term and a new trial ordered. At that trial the Appeal from judgment entered in favor of the defendant on a dismissal of the complaint at Cir- complaint was dismissed by the cuit. court. The former trial is reported were in 16 Hun, 158. It was claimed on this appeal on this appeal that Phelps was liable by way of estoppel in pais. The defendant and K. partners in business. They executed a paper in these words: "New York, Feb. 15, '61. City Bank, Poughkeepsie, N. Y. We hold ourselves responsible for the payment of any sum not to exceed five thousand dollars Mr. C. H. Woodruff may require of your bank for legitimate purposes. Yours respectfully, Phelps & Kingman." This was taken to the city bank at about the date of execution, and advances were made by the bank upon it to Mr. Woodruff shortly afterwards. Mr. Woodruff failed, and was unable to satisfy the bank's claim. The firm of Phelps & Kingman dissolved some years before that failure. Notice was had by the bank of such dissolution soon thereafter. In 1875 J. P. H. Tallman and H. A. Nelson for applt. E. S. Clinch for respt. Held, The consideration of the effect of the alleged joint estoppel on the joint liability of Phelps & Kingman would be unnecessary, for the discontinuance of the action as to Kingman has left only a several liability to be enforced against Phelps provided he has incurred a several liability, a discharge of one joint debtor being a discharge of all. Assuming that the several liability by Phelps is before this court, it appears that the evidence relied upon to establish an estoppel relates exclusively to a joint liability. The |