Samuel S. Tripp, Spec. Ref.
Reference pursuant to an order dated February 18, 1969, made by consent, to hear and determine the issues presented in this action (CPLR 4317, subd. [a]).
Since the complaint herein, verified on August 29, 1966, alleged that Chesebro-Whitman Co., originally named as plaintiff in this action, "is a Division of Patent Scaffolding Co., and in turn, a subsidiary of Harsco Corporation, which is a Delaware corporation duly qualified to do business within the State of New York" and this named plaintiff had no existence as an entity, corporate or otherwise, except as a division of the Delaware corporation, the title of the action was amended at the opening of the trial to read as it appears in the caption herein.
Inasmuch as it was conceded on the record that the plaintiff Delaware corporation was doing business within the State of New York, the defendant challenged that plaintiff was duly qualified to do so by filing of a certificate. Accordingly, the answer was amended to include the defense predicated upon subdivision (a) of section 1312 of the Business Corporation Law.
The complaint alleges three causes of action. The first is to recover $19,292.77 for rental of scaffolding and other construction equipment from June 8, 1964 through approximately March 8, 1966, pursuant to an agreement executed by the parties on June 8, 1964. The second cause of action, originally to recover $11,714.15 was reduced at the opening of the trial to $10,235.20, by reason of a credit for an insurance loss recovered by plaintiff entered on October 29, 1965 in its credit accounts receivable ledger. This cause of action is to recover for the defendant's alleged refusal to return part of the equipment which is the subject of the first cause of action, plaintiff claiming that defendant "has converted same to its own use and benefit". In the third cause of action plaintiff seeks judgment for the combined sum sought in the first two causes based "upon an account stated".
After denying material allegations of the complaint, the defendant asserts as a first defense that it deems in Point III of its main posttrial brief to constitute "an accord and satisfaction" and a third defense, that it paid to plaintiff $5,000 "on account of the rental alleged in the complaint".
By way of a second defense, setoff and counterclaim for $14,300, the answer alleges that some of the equipment was faulty, defective, out of repair, bent, and otherwise unsuitable for defendant's use, as a result of which, it was delayed in its work when plaintiff did not promptly replace or repair such equipment in accordance with its promise to do so. Additionally, defendant alleges that plaintiff undertook to pick up and promptly remove, at its request, the rented equipment and materials alleged in the complaint; that although notified to do so, plaintiff failed and neglected to do so for a long time and by reason thereof "materials and parts thereof were stolen and taken away by others not known to defendant and without defendant's fault or cause"; and that "except for the materials and/or equipment stolen as herein alleged, defendant returned all materials and equipment to the plaintiff."
The reply denies the foregoing allegations except that plaintiff admitted that it had "agreed to provide transportation if required by the defendant, which transportation was to be provided in accordance with usual trade practice."
At the close of plaintiff's case, its second cause of action for the conversion of the rented equipment that was not returned by defendant was dismissed for failure of proof, and its third cause of action based "upon an account stated" with respect to the combined sum of the first two causes of action, was dismissed outright.
With respect to the second cause of action, plaintiff's proof of damages for defendant's alleged failure to return some of the rented used equipment was bottomed solely upon its unpublished office price lists for new equipment as if that which had not been returned had been sold new. There was no basis for such computation for "shortages" in the agreement executed by the parties. Nor was there any proof of a universal custom to support such theory of recovery. Plaintiff utterly failed to adduce any proof of the reasonable value of the equipment claimed not to have been returned. Inasmuch as such proof would no doubt be available to plaintiff in a new action, the dismissal of the second cause of action was without prejudice. (Giglio v. Haber, 19 A.D.2d 793; 1964 Supplementary Practice Commentary to CPLR 5013 by David D. Siegel, Esq., McKinney's Cons. Laws of N. Y., Book 7B.)
Plaintiff unquestionably rented used scaffolding equipment to defendant, first at the so-called "Borden" site under Order No. R-2742 and later at its so-called "Maspeth" site under Order No. S-174. When defendant paid $5,000 to plaintiff in connection with the Maspeth site by check dated April 14, 1965, the plaintiff, regarding all transactions with defendant as a "running account", applied that payment "in discharge of the items of debt antecedently due in the order of time in which they stood in the account", under the "first-in first-out" rule expressed in such cases as Carson v. Federal Reserve Bank (254 N. Y. 218, 232) and Foss v. Riordan (84 N. Y. S. 2d 224, 233, affd. 273 App. Div. 982, mot. for lv. to app. dsmd. 298 N. Y. 509).
The older alleged "debt" to which plaintiff had applied the April 14, 1965 check for $5,000 included its bill dated July 24, 1964 in the sum of $4,766.32 for used equipment allegedly not returned from the "Borden" site. Since this amount was computed on the same basis as was the dismissed second cause of action in the instant suit, the parties stipulated on the sixth day of trial -- June 10, 1969 -- to withdraw, without prejudice to plaintiff, its claims for alleged "shortages" in connection with both jobs, totaling $15,001.52 subject to "defendant's right to question the power of this Court to dismiss without prejudice as to the Maspeth Avenue alleged shortage in the sum of $10,235.20." The balance of plaintiff's claim in the present action was stipulated in the maximum amount of $14,532.77 "which includes all credits to the defendant and is arrived at, as follows: Original claim, $29,534.29 less $10,235.20 (second cause of action) and $4,766.32, reported shortage" in connection with the Borden site.
It was further stipulated: "Nothing herein shall be deemed an admission of the validity of plaintiff's claim by the defendant; this stipulation being intended to define and isolate the scope of the amended action now on trial."
The foregoing stipulation leaves for determination in the instant action plaintiff's first cause of action now limited to rentals in the total sum of $14,532.77 and defendant's setoff and counterclaim for damages in the sum of $14,300. The defense, based upon subdivision (a) of section 1312 of the Business Corporation Law was dismissed. The certificate under the seal of the Secretary of State dated May 15, 1969, establishes that the plaintiff Harsco Corporation "filed qualifying papers" on March 29, 1956; that "a certificate of authority to do business in the State of New York was issued to it on the same day"; that "no Surrender of Authority has been filed" and, "so far as shown by the records" of the Department of State, "such corporation is still authorized to do business in the State of New York". To establish its claim to recover from the defendant the unpaid balance for the rental of scaffolding and other construction equipment for the Maspeth job, plaintiff relied upon its records kept in the regular course of business, consisting of delivery and return receipts and the billings to defendant. These were received in evidence pursuant to the "shop-book rule" now embodied in CPLR 4518 (subd. [a]) which is a re-enactment without substantive change in language of the ...