Bannerman agt. Quackenbush et al.

not affect his right to set it off in the action brought by the principal for the price of the goods, the note being then due; and that this is the law appears also by the cases of Eland agt. Karr (1 East, 375), Comfort agt. Rivett (2 M. & Sel., 510), Sehmer agt. Hawkins (2 Esp. N. P., 626), Downer agt. Eggleston (15 Wend., 51). For the set-off is a legal right, and may be insisted upon even where an express promise has been made to relinquish it (Downe agt. Eggleston, supra; Taylor agt. Okey; 13 Ves., 180).

One of the early cases in which a set-off of the vendor's paper in an action brought for the goods was not allowed (Fair agt. McIver, 16 East, 130) resembled the present case in the feature that the paper of the vendor was obtained for the purpose of using it in payment for the goods bought; but the case is distinguished from the present in the circumstance that the purchaser there was not the bona fide owner of the bill of exchange which was offered to the acceptor in payment for the goods bought, but was acting for the benefit of the real owners, one of whom, knowing that the vendor had not been regular in his payment, informed defendant, who made the purchase, that he was in doubt as to the acceptor's affairs, and upon his solicitation and suggestion, defendants undertook to secure the payment of the bill by purchasing goods of the acceptor; after the delivery of them offering the bill in payment, which he refused to take. The acceptor shortly afterwards failed, and in an action brought by his assignee against the defendants to recover for the price of the goods, it was held that the defendants could not set off the bill against the acceptor's assignees, as they were not the holders of it in their own right, but merely held it as trustee of the real owners. "As such trustees," says BAGLEY, J., "they could not set it off against a demand upon them in their own right." Lord ELLENBOROUGH went beyond this, declaring that he was not satisfied with the previous decisions of lord KENYON in Eland agt. Cor (1 East, 375), that upon the sale of goods for ready money the condition is performed by offering in payment the

Bannerman agt. Quackenbush et av.

vendor's own paper, but in subsequent cases his view was not concurred in, but that of lord KENYON was held to be the law (See the cases in Hillard on Sales [3d ed.], 239).

Where the agreement is to pay cash, there is no reason why the vendor should refuse to receive his own paper, if it is due, as equivalent to cash, and it has been so held (Mayer agt. Mias, 8 Moore, 275; 1 Bing., 311). There is not in such a case that fraud which exists where a contract is made for the purchase of goods for cash and possession of them obtained with a preconceived intention not to pay for them.

What appears in the present case is, that upon a sale of goods a delivery of them was obtained with a preconceived intention to pay for them in the depreciated paper of the vendor, which had been bought for that purpose, and does not amount to a connivance (Mayer agt. Mias, 8 Moore, 275; Id., 1 Bing.; Kennet agt. Robinson, 2 Id. Marsh. [Reg.], 84; Hillard on Sales [3d Ind. ed.], 309-405; Wells on Replevin, pp. 399-551). For the goods being delivered upon the promise to pay cash upon the Saturday following, the possession in the first instance was lawful, and the plaintiff being the owner of the goods, as he had authorized the sale of them only for cash, was entitled to a restoration of them on the breach of that condition, then a demand of them of the defendant and a refusal on their part to give them up was necessary before an action could be maintained for a conver sion, or, more properly, for the wrongful detention then of the goods (Hall agt. Robinson, 2 N. Y., 295; Addison on Torts [3d ed.], 312).

But there has been no demand for the restoration of the goods, but a demand only, as in Chapman agt. Lathrop (supra), for the purchase-money. At least there is nothing in the evidence to show how any demand has ever been made for the restoration of the property by the plaintiff, or by any one in his behalf. The complaint appears to have been framed with a view of recovering as in an action for tort. It first avers a sale and delivery of the goods for cash, payable the

Bannerman agt. Quackenbush et al.

day after the delivery, a demand of payment and a refusal. It then avers that the plaintiff was induced to deliver the goods by deceit, trick and device, practiced upon him by the defendant. It sets forth the representations of the defendants, upon which he was induced to deliver the property, which it avers were false and made with the fraudulent intent to obtain the goods without paying for them, and demands judgment for $535.38, which is the price of the goods, with interest.

The evidence could not sustain this complaint, for it was not shown that the representations were made with a fraudulent intent to obtain the goods without paying for them, but with an intent to pay for them chiefly in the protested paper of the vendor and supposed owner, which, as I have said, is not a conversion. The complaint shows that the possession which the defendants obtained was lawful, as it avers a delivery under an agreement to pay the cash for them upon the following day. It avers a breach of that payment by a refusal to pay cash and the setting up of a pretended claim as an offset against the plaintiff's bill, but there is no averment that the plaintiff had rescinded the contract or demanded a return of the property, and that the defendant had refused to restore it, which was essential to sustain an action for a wrongful detention, the taking having been lawful.

The only action that was maintainable, therefore, under the complaint, was an action for the sale and delivery of the goods, and as that affirms the contract of sale, the right of set-off exists unless the defendants knew when they made the contract that the Renz Hardware Company were the owners, but were acting as factors, or the circumstances were such as should have put them upon inquiry, and there was nothing in the evidence to warrant such a finding. The shears had been manufactured by the company, and the defendants, therefore, having ordered a certain quantity of an article of the company's manufacture, and the company having in the correspondence that ensued, and in a bill delivered with the VOL. II

39

Bannerman agt. Quackenbush et al.

goods, acted as principal, the defendants had a right to assume that the company were selling an article of which they were the manufacturers and owners.

The plaintiff having, when advised of the order, sent the shears to the company's place of business in the city, made them his factors in the sale by delivering the goods into their possession, thereby enabling them to sell and deliver them in their own name. By this he brought himself within the operation of the rule referred to, for under these circumstances the company cannot be regarded as brokers employed to sell the property, and exceeded their authority by selling it in their own name.

There is nothing in the case to show that the defendants had any intimation that the shears belonged to the plaintiff, or that there was nothing that should have put them upon inquiry, and as they had in their possession at the time of the sale and delivery an indorsed note of the company's which was past due, they had the right, regarding the company as principals in the transaction, to tender it in part payment or to set it off in an action brought for the price. There would be no doubt of this if the Renz Hardware Company were the owners of the goods, and it is the same where the company acted as owners and the buyer knew them only as such up to the time when their note was offered to them in part payment for the goods.

It may be that the plaintiff had the right to rescind the sale under the circumstances a point upon which I express no opinion and bring an action for a conversion or wrongful detention on the defendants refusing to give up the property upon demand when they were advised of the plaintiff's ownership, but he made no such demand and can maintain no such action. The action which he has brought is maintainable only as an action for the recovery of the contract-price which necessarily affirms the sale and entitles the buyers to their setoff. A demand is not required where it is apparent from the conduct of the person who has the goods that it would be use

Matter of King.

less; but that does not appear here. All that appears is when the company's clerk said to one of the defendants something about an arrest, he replied "well, go ahead; we are prepared," which must be understood as applying to the threatened arrest and cannot, as matter of law, be declared sufficient to hold that a demand was necessary.

Upon the review of the facts and the law, it appears that the charge of the judge was erroneous in instructing the jury that if the defendants had knowledge or notice on the day they received the goods, or on the day following, that the property was the plaintiff's, and that they then had it in their power to return it, that they were liable for the contract price; or, in other words, that they could not set off the note in the action for the price of the goods.

There must, therefore, be a new trial.

Judginent reversed, new trial ordered, costs to abide the event. LARREMORE and VAN HOESEN, JJ., concur.

SURROGATE'S COURT.

In the Matter of KING, minors.

Guardian-Limitation of the surrogate's authority to remove testamentary guardian- Code of Civil Procedure, sections 2472, 2817, 2832, 2858.

One who is a lawful incumbent of the office of guardian, either by appointment of the surrogate or by virtue of a testamentary provision, can successfully resist in this court an application for his removal until such facts and circumstances have been established as furnish statutory warrant for his suppression.

If, within the meaning of subdivision 2 of section 2817 of the Code of Civil Procedure, a guardian has been guilty of "misconduct in the execution of her trust," and has thereby become "unfit" to be continued in her office, she must be removed; otherwise the surrogate is powerless to displace her.

New York county, July, 1885.