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storage upon eggs of the quality contracted for. The general manager of the defendant testified that selected storage eggs stored the length of time that the eggs in question were do not deteriorate in quality in storage, except that there is a slight evaporation.

Upon the question of quality it appeared that the first car load-one fifth of the total amount-was delivered about the 1st of December, 1899, and the other four car loads between that date and the 8th of January following; that immediately upon delivery of each car load the eggs were inspected by plaintiffs' manager, the official egg inspector of the New York Mercantile Exchange, and others, all persons experienced in the business and competent to pass upon the quality of eggs, who substantially agreed that the eggs were "storage seconds," a quality inferior to "storage firsts," and were not of the grade known as "selected April storage eggs." On the part of the defendant the witness Hanford testified that he saw the first car and inspected the eggs; that they were of the usual high quality of Hanford packed, and were of the quality sold. It appears, however, that he did not examine the other four cars, nor did the defendant have any one else examine them, although afforded an opportunity to do so. The president of the defendant testified that the eggs were "fancy storage packed Aprils," but, in answer to a cross-interrogatory, stated in substance that he had nothing personally to do with the selection of the eggs, and defendant's warehouseman, whose testimony was taken by commission, also stated that the eggs were selected storage packed April eggs, but, in answer to a cross-interrogatory, said he did not personally make any selection of the eggs-that such selection was made by a force of from 20 to 60 hands, under the direction of the superintendent.

This being the condition of the evidence at the close of the trial, we think the court could not do otherwise than submit the case to the jury to pass upon the question involved, viz., whether the eggs were of the quality contracted to be sold. The jury rendered a verdict for $1,800, the difference between what the eggs brought on the sale and what they would have brought had they been of the quality represented, and from the judgment entered thereon the defendant has appealed.

I think the trial court correctly held, upon the facts presented, that under the terms of the contract there was a warranty on the part of the defendant as to the quality of the eggs. The rule seems to be well settled that upon a sale of personal property, where inspection of it is not possible at the time, and the seller knows the quality and the buyer does not, the representations made by the seller as to the quality are to be regarded as a warranty. White v. Miller, 71 N. Y. 118, 27 Am. Rep. 13; Carleton v. Lombard, 149 N. Y. 137, 43 N. E. 422; Kellogg Bridge Co. v. Hamilton, 110 U. S. 108, 3 Sup. Ct. 537, 28 L. Ed. 86. Here, the sale was made in New York. The eggs were in defendant's warehouse at Sioux City, Iowa. The defendant knew the quality, and represented them to be "fancy selected eggs in storage." The defendant knew that the plaintiffs were relying upon its representations as to quality because they had no representative at Sioux City, and, if they had, it is difficult to see how an inspection-the eggs being then in storage could have been made. The evidence shows that eggs when placed in storage retain their quality, except for a slight evaporation,

and the evidence is sufficient to sustain the finding that the eggs when delivered were not of the quality purchased.

But it is said that the plaintiffs ascertained the quality of the eggs when the first car load was received, and therefore they are not in a position to recover, inasmuch as they thereafter ordered the other car loads sent forward. I am unable to see any force in this contention. It would hardly be claimed, if the first car load had proved satisfactory and been accepted, that the plaintiffs would thereby have been bound to accept the other four car loads, even though of an inferior quality. Nor do I think the plaintiffs would have been justified in rejecting all of the eggs because the first car load proved to be unsatisfactory. The eggs were composed of five separate lots, for which five distinct warehouse receipts were given, each having a separate number, which indicated where stored, and each lot was separately insured. The plaintiffs did not have a right to assume, under such circumstances, that all of the eggs were inferior in quality because the first car load was. But whether this conclusion be correct or not, if there was a warranty, then the plaintiffs had a right to rely upon it, order all of the eggs delivered, and look to the defendant for any damages which they might sustain for a breach of the warranty. Pierson v. Crooks, 115 N. Y. 529, 22 N. E. 349, 12 Am. St. Rep. 831.

Other questions are raised by the appellant as to the admission of evidence. An examination of the record fails to disclose any errors in this respect. Nor was any error committed in the instructions given to the jury. All of defendant's requests to charge, with one exception, were granted, and that was properly refused. It was: "The defendant is entitled to a verdict, and the jury must decide accordingly." From what has been said, it is clear that instructions to this effect would have been error. It was for the jury to determine from all of the facts, under the rule of law laid down by the trial court, whether or not there was a breach of warranty. The measure of damages adopted was the correct one. It was the difference between what the eggs brought on the sale and what they would have brought had the quality been as represented. This was less than the difference between the price paid and what was realized, the plaintiffs having to stand the loss by reason of the depreciation of the market price.

It follows that the judgment and order appealed from must be affirmed, with costs. All concur.

HUNTER v. FISS.

(Supreme Court, Appellate Division, First Department. March 11, 1904.) 1. BILLS AND NOTES-ACTIONS-COUNTERCLAIMS JUDGMENT ON FAILURE TO REPLY.

Code Civ. Proc. § 502, subd. 2, provides that: "If the action is upon a negotiable note or bill of exchange which has been assigned to the plaintiff after it became due, a demand, existing against a person who has assigned or transferred it after it became due, must be allowed as a counterclaim to the amount of the plaintiff's demand, if it might have been so allowed against the assignor, while the note or bill belonged to him." 86 N.Y.S.-71

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Held, that a demand which may be set up thereunder was not to be distinguished from any other counterclaim, and therefore, when properly pleaded as such, it must be replied to or defendant may take such judgment as he may be entitled to on a failure to do so.

2. SAME.

In an action on a note assigned to plaintiff after maturity for failure to reply to counterclaims growing out of demands against the plaintiff's assignor, defendant served notice of a motion under Code Civ. Proc. § 515, for judgment on the counterclaims, dismissing the complaint, with costs, "or for such other and further relief as to the court may seem proper." Held, that defendant was not entitled to an absolute dismissal of the complaint, as that would have resulted in a judgment on the merits destroying his liability, and yet leaving the counterclaims open to enforcement against plaintiff's assignor, but that, as the notice of motion was broad enough to afford defendant any affirmative relief to which he was entitled, under its terms he should have been allowed to take a proper judgment.

Appeal from Special Term, New York County. Action by Wilson R. Hunter against William Fiss to recover on a promissory note. From an order denying a motion for judgment on the counterclaims contained in his answer, defendant appeals. Reversed.

Argued before VAN BRUNT, P. J., and MCLAUGHLIN, PATTERSON, O'BRIEN, and LAUGHLIN, JJ.

August Becker, for appellant.
John W. Ingram, for respondent.

PATTERSON, J. The question presented on this appeal arises upon a motion made by the defendant for judgment upon matters set up as counterclaims contained in the defendant's answer, and which as counterclaims were not replied to. It was a special motion made under the provisions of section 515 of the Code of Civil Procedure, by which it is enacted that:

"If the plaintiff fails to reply or demur to the counterclaim, the defendant may apply, upon notice, for judgment thereupon; and if the case requires it, a reference may be ordered or a writ of inquiry may be issued, as prescribed in chapter 11 of this act, where the plaintiff applies for judgment."

The defendant's application was denied on the ground, apparently, that all that he sought was a dismissal of the plaintiff's complaint. The action is upon a promissory note for a thousand dollars, made by the defendant, payable to H. N. Vedder. The complaint alleges the delivery of this note to Vedder, and that prior to the commencement of the action it was assigned and transferred to the plaintiff. Although not appearing by the complaint in so many words, it is conceded that the note was assigned and transferred to the plaintiff after its maturity. Such being the fact, it was open to the defendant to set up by way of counterclaim indebtedness of the assignor of the note to him, the defendant, to an extent sufficient to extinguish the claim arising on the cause of action set out in the complaint. It is provided by subdivision 2 of section 502 of the Code of Civil Procedure that:

"If the action is upon a negotiable promissory note or bill of exchange, which has been assigned to the plaintiff after it became due, a demand, existing against a person who assigned or transferred it after it became due, must be allowed as a counterclaim to the amount of the plaintiff's demand, if it

might have been so allowed against the assignor, while the note or bill belonged to him.”

Under this permissive provision of the Code the defendant set up several counterclaims, each of which on its face is good as against the assignor of the note at the time such assignor held it. It is idle to speculate as to the status of these counterclaims, for we are not required to go beyond the terms of section 502 to ascertain that. It is specifically required that the demand existing against the assignor be allowed as a counterclaim. A demand that may be set up under that section acquires ex vi termini the status of a counterclaim. It is to be pleaded as such, could not be allowed unless it were so pleaded, and it necessarily follows that, if it is properly pleaded as a counterclaim, it must be replied to, or the defendant may take such proper judgment as he may be entitled to by reason of a failure to reply. There is no distinction between a counterclaim under this section of the Code and any other counterclaim. There is but one rule of pleading applying to counterclaims.

If this is the correct view, it follows that the defendant was entitled to judgment on the counterclaims; not to an absolute dismissal of the complaint, but to a proper judgment; one which would establish the rights of the parties under the pleadings. The learned judge below denied the motion on the ground that the defendant was not entitled to an absolute dismissal of the complaint. He was right in so holding, but the notice of motion served by the defendant was sufficient to entitle him to a proper judgment on the pleadings. The motion was made "for judgment dismissing the complaint, with costs, upon the counterclaims contained in the defendant's answer herein, or for such other and further relief as to the court may seem proper." That notice was broad enough to afford the defendant any affirmative relief to which he was entitled. Under the terms of this notice of motion, the defendant should have been allowed to go on, and take that proper judgment. He was not entitled to an absolute dismissal of the complaint, because that would have resulted in a judgment on the merits, destroying the defendant's liability on the promissory note, and yet leaving all the counterclaims open to enforcement against the plaintiff's assignor.

We think, therefore, the order should be reversed, with $10 costs and disbursements of appeal, and, inasmuch as a proper judgment must be framed, the motion should be remitted to the Special Term for further consideration. All concur.

GILBERT et al. v. BUNNELL et al.

(Supreme Court, Appellate Division, First Department. March 11, 1904.) 1. EQUITY-COMPLAINT-SUFFICIENCY.

Where the complaint alleged that plaintiff agreed to buy, and defendant agreed to sell, certain participating subscription rights in a corporation underwriting syndicate; that defendant had refused to perform the contract, and had received a part of the subscription and dividends to which plaintiff was entitled; that the value of the subscription rights was very

and 120 New York State Reporter

great; and prayed for a specific performance of the contract, and for a money judgment for the sums received by defendant on account of subscription rights, and such further relief as might be proper-it did not state a case for equitable relief.

2. TRIAL-TRANSFER TO LAW CALENDAR.

Where the court refused equitable relief on the ground that plaintiff failed to show that he was entitled thereto, and the averments of the complaint showed that he was entitled to a legal remedy, it was error to dismiss the complaint, but the case should have been placed on the jury calendar.

Van Brunt, P. J., and Ingraham, J., dissenting.

Appeal from Trial Term.

Action by Edward L. Gilbert and another against Irving Bunnell and another. From a judgment dismissing the complaint on the pleadings, plaintiffs appeal. Reversed.

Argued before VAN BRUNT, P. J., and HATCH, McLAUGHLIN, INGRAHAM, and LAUGHLIN, JJ.

Robert E. L. Lewis, for appellants.

F. K. Pendleton, for respondents.

HATCH, J. The complaint in this action was evidently intended to be framed for equitable relief. Such are its general features, and yet it is clear that facts are averred under which the plaintiffs show themselves entitled to strictly legal relief, and the prayer of the complaint, in part, is for a money judgment. So far as is essential to a disposition of the question presented by this appeal, the complaint avers that the plaintiffs are copartners engaged in the business of buying and selling on commission and dealing in securities in the city of New York; that the defendants are copartners engaged in the same business in said city; about the 26th day of February, 1901, the defendants, in writing, agreed to sell, and plaintiffs agreed to purchase, certain participating subscription rights in the United States Steel Corporation Underwriting Syndicate, of the par value of $10,000, agreeing to pay therefor a specified sum, such right to be evidenced by a written assignment from the defendants to the plaintiffs; that the latter have been at all times ready and willing to fulfill the contract on their part, but the defendants have refused to execute the contract transferring such right. The complaint then avers the character of the United States Steel Corporation Underwriting Syndicate, the method by which it transacted its business, the value of the subscription rights, and the substantial value of the right which the defendants had agreed to transfer, and further charges that under such right defendants had received the sum of $1,250, returned to them as a part of their subscription, to which the plaintiffs are entitled, and also the further sum of $1,000, declared as dividends, and paid by the syndicate to the defendants in amounts of $500 each. The complaint further avers that said subscription rights are limited in number, and cannot be pur chased in the open market; that the underwriting syndicate is still in existence, and that very large profits to it will be realized; that the value of such subscription is very great, the amount of which is conjectural and unknown to the plaintiffs; that there is no basis upon