Case ID: f-cas_5/html/0274-01.html
Source: Caselaw Access Project
Author: {"author": "NELSON, Circuit Justice.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Case No. 2,502.
    CASSEL v. DOWS et al.
    [1 Blatchf. 335: 1 Liv. Law Mag. 193.]
    
    Circuit Court, S. D. New York.
    Oct. Term. 1848.
    Bill of Exchange — Action by Holdek —Striking Oct Endorsements — Acceptance — Promise to Accept.
    1. Where tlie endorsements on a bill of exchange. subsequent to that of the payee, were made for the purpose of transmitting and collecting the paper, they may be stricken out at the trial, in a suit by an endorsee.
    2. liven if tlie endorsements were made for value, yet the suit may properly be brought in the name .of the party who is the owner of the paper at tlie time of bringing the suit, whether tlie endorsements be stricken out at the trial or not.
    3. A bill was protested for non-acceptance, and also for non-payment: a qualified acceptance was written on tlie bill at the date of the latter protest, to the amount of the proceeds of certain property against which the bill was drawn; the proceeds were afterwards paid and receipted on the hill: Held, that they were not accepted in satisfaction but only as far as they would go.
    4. A letter written within a reasonable time before or after the date of ft bill of exchange, describing it in terms not to lie mistaken, and promising to accept it. is a virtual acceptance, binding on the person who makes the promise, if the bill be taken on tlie credit of the letter by a person to whom it is shown.
    5. Where, however, the letter has no reference to the particular bills to he drawn, but is a general authority to draw at any time and to any amount, against property to lie shipped, the party writing it cannot be held as acceptor of a bill drawn under it.
    0. The ietter may however he regarded as a promise to accept the bill, and the writer of it may lie sued on such promise by any person who may have taken the hill on the credit of the promise.
    At law. This was an action [by James W. Cassel against David Dows and Ira B. Cary] on the following bill of exchange:
    “St. Louis, Mo. March 10th, 1S40. J. W. C. Ninety days after date of this my original bill of exchange, (duplicate of same tenor and date unpaid,) pay to tlie order of Andrew Huston, five thousand dollars, value received, and charge tlie same to account of your obt. se’t, Andrew Huston. To Messrs. Dows & Cary, New-York.
    (Endorsed.)
    “Pay W. G. W. Gano. Cashier, or order, “Andrew Huston.
    “W. B. Taylor, Jr.” (Erased.)
    “Pay C. J. Stedman, Esq., or order,
    “W. G. W. Gano. Cas.” (Erased.)
    On the face of tlie bill was written tlie following acceptance: “We accept tlie within draft, for so much of tlie amount therein mentioned, (§5000,) as the nett proceeds of one hundred and eighty-five casks of hams, against which it was drawn, shall amount to, after deducting commissions and all charges. and for no more, payable when tlie nett proceeds shall be received by us in cash, and the amount of such nett proceeds ascertained. New-York. June 11. 184(1. Dows & Cary.” On the back of the bill was the following receipt: “Received, New-York. October 13th, 1S40, from Dows & Cary, their check for thirty-eight hundred and sixty-two 51-100 dollars, being in full for the nett proceeds of tlie within named 1S5 casks of hams, for which this draft ivas accepted by said Dows & Cary, as per tlieir account of sales rendered. For C. J. Stedman, J. B. Varnum.”
    The plaintiff was a citizen of Ohio, and the defendants were citizens of New York, composing the firm of Dows & Cary. The declaration contained a count against the defendants as acceptors, two counts on their promise to accept drafts drawn against consignments of western produce to them by tlie owner, and the usual money counts. Tlie defendants pleaded the general issue and payment, and gave notice of set-off. The cause was tried at New-York before Mr. Justice Nelson, in May, 1S48.
    It appeared on tlie trial that, before and at tlie time of the drawing of the bill, one Benjamin F. Smith was the agent of the defendants at St. Louis, Missouri, to obtain consignments of produce to them and make advances for them upon the same. He was specially advised by them by letters under date of December 12th. 1S45. and February 2d, 1S46, that in case be could find any good safe lots of pork, lard or flour, for consignment, the drafts of the owner would be duly honored, on the property being put in safe condition for shipment, át §4 1-2 to §4 3-4 per barrel on flour. §5 1-2 per barrel on prime pork, §7 1-2 per barrel on mess pork. 5 cents per pound on lard, and 4 1-2 cents per pound on hams. Previously to the receipt of those letters Smith had acted as the agent of the defendants, under a verbal authority from them to procure consignments and make advances, and, in order to obtain funds for such advances, he was authorized by them to draw or cause drafts to be drawn on them at New-Xork.
    The bill in question was drawn by Huston under the authority and in pursuance of the direction of Smith, on a consignment of hams to the defendants. It was negotiated to the plaintiff on the same day on which it was drawn, (March 10th. 1S46,) and he advanced in money the face of it less the interest. Before he consented to take the draft he made particular inquiries of Smith as to the authority of Huston to draw it, and was assured by Smith that Huston drew it by his, (Smith’s) direction, against a consignment of property to the defendants, and that he, (Smith,) was fully authorized to make the arrangement. The letters of December 12th, 1S45, and February 2d. 184G, were also shown to the plaintiff by Smith, before he purchased the draft, and, upon the faith of the letters and of Smith’s assurances, he consented to advance the money. The defendants were immediately advised, both by Smith and by Huston, of the consignment, and of the draft drawn against it. the receipt of which advice's they acknowledged in a letter to Smith dated March 20th. In that letter they complained that a draft at 90 days was too short, and requested that any further advances should be made on longer time, but did not intimate that there was any want of authority to draw, or that the paper would not be accepted. The draft was presented to the defendants on the 21st of March, acceptance of it was refused, and it was protested for non-acceptance. In a letter written by the defendants to Smith on that day they assigned as a reason for the non-acceptance that the advance of 4 cents per pound on hams was too much as the market then stood, but they afterwards wrote to Smith that the paper would have been accepted had it not come through a house in New-Xork which would sell their acceptances for the first offer, to the injury ■of their credit.
    Warehouse receipts for the hams were given by Huston to Smith when the draft was drawn and the money advanced, and the property, which was at Quincy and at Bards-town, Illinois, was shipped to the defendants •on the 27th of March and the 22d of April. It was received by them, and on the 12th of 'October they rendered an account of the sale of it, by which the nett balance amounted to $3.862 51.
    On the trial, a member of the firm in New-York through which the draft was sent, testified that W. B. Taylor, Jr., whose name had been on the back of the bill, but was stricken •out. was a clerk of his. and had put his name •on the draft for security in its transmission, and had no interest in it; that the initials J. W. 0. was a mark of his house, and indicated that the paper was received from the plaintiff. The bill was presented for payment on the 11th of June, 1846, but payment was refused, and it was duly protested for non-payment, at the request of C. J. Stedman, -of New-York. Gano, whose name was on the bill, was cashier of a bank in Cincinnati. He endorsed the bill to Stedman. and his endorsement was stricken out after the receipt of October 13th, 1S46, on the bill, was given. The original bill was received for collection from the plaintiff by his attorney, before the commencement of the suit, and was then in its present state as to endorsements and erasures. It was admitted that the plaintiff was indebted to the defendants in the sum of $410 35, with interest from the 1st of February, 1S44. The court charged the jury that the plaintiff was entitled to recover the amount of the bill, after deducting the payment receipted on it and the set-off. The defendants excepted to the charge, and, a verdict having been found against them for $859 46, they now moved for a new tidal, on a case.
    George C. Goddard, for plaintiff.
    Cornelius Van Santvoord, for defendants.
   NELSON, Circuit Justice.

I. The case of Dugan v. U. S.. 3 Wheat. [16 U. S.] 172, is an authority in favor of the right of the plaintiff to sustain this suit in his own name, notwithstanding the endorsements upon the bill subsequent to that of Huston. The proof shows with reasonable certainty, that those endorsements were made for the purpose of transmitting and collecting the paper. They, therefore, might have been stricken out at the trial. But, if otherwise, and if they had been made for value, in the usual course of business, inasmuch as it appears that the plaintiff was the holder and owner of the paper at the time the suit was brought, it was properly brought in his name; and this, whether the endorsements were stricken out at the trial or not. On the plaintiff's becoming revested with the title to and interest in the bill, the endorsements, whether for value or transmission, became matters of form, and were properly disregarded.

II. The bill was presented for acceptance on the 21st of March, acceptance was refused, and it was duly protested. After-wards, on the 11th of June, it was protested for non-payment. A qualified acceptance by the defendants appears on the bill under the latter date, to the amount of the proceeds of the hams against which it was drawn, and it is insisted that this is conclusive upon the plaintiff, as he must be presumed to. have taken the conditional acceptance, and to have waived the benefit of the previous refusal.

There is no positive proof in explanation of the circumstances under which this conditional acceptance was written on the bill, The fact, however, that Stedman, who presented the bill for payment at that time, caused it to be protested on tbe same day for non-payment, affords ground for tbe conclm sion, that be did not assent to tbe qualified acceptance, but, on tbe contrary, regarded it as a refusal of payment, and as dishonoring tbe paper. Tbe subsequent receipt from tbe defendants of tbe avails of tbe bams, when taken in connection with tbe previous facts and circumstances, must be deemed to bave been an application of the proceeds, only as far as they would go towards payment, and not an acceptance of them in satisfaction. Tbe receipt does not purport to be in full, and the protest which Stedman caused to be made, at tbe time of tbe conditional acceptance, is altogether irreconcilable with the idea, that be intended to assent to that acceptance and take tbe proceeds in satisfaction. Tbe conclusiveness of tbe receipt of tbe proceeds depends upon tbe conclusiveness of tbe conditional acceptance. If tbe latter fails, tbe former must also.

III. Tbe main question in tbe case is, whether or not tbe plaintiff can maintain tbe suit in bis own name, under tbe counts charging tbe defendants with a promise to accept drafts drawn against consignment of western produce to him by tbe owner. Tbe draft in question having been drawn by Huston in pursuance of authority communicated by tbe defendants to Smith their agent, there can be no doubt that Huston could bave maintained tbe action in bis own name. It is insisted, however, that the plaintiff cannot, on tbe ground of a want of privity between him and tbe defendants, and that tbe promise, if made at all, was made to the owner and shipper of tbe produce, and not to any third person who might choose to advance money upon tbe draft.

Tbe eases of Coolidge v. Payson, 2 Wheat. [15 U. S.] 66, and of Boyce v. Edwards, 4 Pet. [20 U. S.] 111, are direct authorities to show, that the defendants in this case are not chargeable as acceptors of tbe bill. To make them liable in that capacity, the letters authorizing Huston to draw should have described the bill to be accepted, with reasonable certainty, so that its identity could not be mistaken by the party who should take it upon tbe faith of such authority. In Coolidge v. Payson the letters specified the particular bill to be drawn, and the endor-see, who had taken it on the faith of such authority, recovered against the defendants as acceptors. Tbe court came to the conclusion, after a review of all the cases, that a letter written within a reasonable time before or after the date of a bill of exchange, describing it in terms not to be mistaken, and promising to accept it, was a virtual acceptance, binding on the person who made the promise, if the bill was taken on tbe credit of the letter by a person to whom it was shown. In Boyce v. Edwards the plaintiff failed to recover against the defendants as acceptors, tbe authority to draw having been general, as it was in tbe case before us. The defendants were merchants in Charleston, who gave a general letter of credit to one Anderson of Georgia, to buy and ship cotton to them, and, on sending the bill of lading, to draw upon them for tbe price. The bills in question had been drawn in pursuance of this authority, and negotiated to the plaintiff, who took them on tbe faith of tbe letter of credit. In the court below tbe plaintiff was allowed to recover against the defendants as acceptors. Tbe supreme court, after referring to tbe case of Coolidge v. Payson, and other cases affirming the same doctrine, held, that the judgment of the court below was erroneous, on tbe ground, principally, that tbe letter bad no reference to the particular bills to be drawn, but was a general authority do draw at any time and to any amount, upon lots of cotton shipped, and that it did not describe any particular bills in terms not to be mistaken, which was indispensable in order to make the defendants liable as acceptors. The court further remarked, that tbe distinction between an action on a bill as an accepted bill, and one founded on a breach of a promise to accept, seemed not to have been adverted to, but that tbe evidence necessary to support tbe one or the other was materially different; that to maintain the former, tbe promise must be applied to tbe particular bill alleged in tbe declaration to bave been accepted, while in tbe case of the latter, the evidence might be of a more general character, and tbe authority to draw be collected from circumstances and extended to all bills coming fairly within tbe scope of the promise. The court also observed, that, as respected the rights and remedies of the immediate parties to tbe promise to accept, and of all others who might take bills upon the credit of such promise, they were as secure and as attainable by an action on the breach of the promise to accept, as they could be by an action on the bill itself; and that tbe action might bave been sustained, as the evidence stood, if tbe declaration bad contained a count, properly framed, on a breach of tbe promise to accept.

Tbe same doctrine was asserted and applied in the'case of Russell v. Wiggin [Case No. 12,165]. There the defendants gave to one Breed a letter of credit, authorizing one Bndicott to value on them at London, at six months sight, at any place in India, for account of Breed, for any sums not exceeding in all fifteen thousand pounds sterling, engaging that tbe bills should be duly honored when presenten, if drawn within twelve months from tbe date of the letter. The plaintiffs, to whom tbe letter was exhibited, took tbe bills in question for value, relying on tbe commercial standing of tbe defendants, and on their promise in tbe letter. The declaration contained a count on a promise to accept. Judge Story, after an elaborate examination of tbe question, both on principle and authority, came to the eonelusion that the plaintiffs were entitled to recover. He referred to the case of Boyce v. Edwards, as affirming the same doctrine, and observed that in that case the court held, that if, because the bill to be drawn was not definitely described in the manner limited by the case of Coolidge v. Payson, the promise to accept would not operate as an acceptance in favor of the party receiving the bill, still it would operate as a promise to him to accept the bill when drawn, and thus be equally available. See, also, Adams v. Jones, 12 Pet. [37 U. S.] 207.

Upon the foregoing view of the authorities, therefore, this suit was properly instituted in the name of the plaintiff, and may be sustained on the promise to accept, as laid in the third and fourth counts of the declaration. New trial denied.