Case ID: tenn_58/html/0539-01.html
Source: Caselaw Access Project
Author: {"author": "McFaeland, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Montague v. Myers.
    Obdeb. Verbal acceptance. Garnishment judgment no protection to acceptor giving up the fund. There is no statute requiring the written acceptance of an order. An order drawn upon a particular fund of drawer in hands of acceptor, is not within the Statute of Frauds. It is an agreement of the acceptor to pay his own indebtedness. After acceptance, it is a transfer of so much of the fund in his hands for the benefit of the holder of the order After such acceptance, it is no valid excuse for the acceptor, that being garnisheed, and having stated the facts of the case to the justice of the peaoe, that judgments were rendered against him in favor of other creditors of the drawer, and that in obedience to these judgments he paid out the fund in his hands. The acceptor should have appealed and resisted the garnishment judgment on the fund. He is therefore still responsible for the amount of the order to the holder thereof.
    FROM HAMILTON.
    Appeal in. error from Circuit Court. J. B. Hoyl, J.
    Wheeler, for plaintiff in error:
    The plaintiff in error claims that the decision of the court below was manifestly erroneous. The. engagement of Montague to pay the order depended upon a condition well understood by Myers, viz., that Howard & Co. should complete their contract. He had refused to accept any order, but agreed, if Howard & Co. should finish their, contract, in that event he would pay the order out of the retained per cent., which would be due only upon the completion of the contract, and if never completed the per cent, would never be due. The acceptance of the order was conditioned, and falls under the head of what is known as “conditioned acceptances.”
    Speaking of these acceptances, Parsons, in his work on Notes and Bills, vol. 1, p. 304, says: “An acceptance of an order for the payment of money out of the amount to be advanced to the drawer when certain houses, which he was then erecting on the drawee’s land, should be so far completed as to have the plastering done, according to a contract between the parties, is conditional; and the acceptor’s liability is dependent upon the contingency of the work being completed according to the contract; nor will such acceptance become absolute by a subsequent cancellation of the contract by the drawer and the assignee of the drawer.” °
    Referring to Neiohall v. Clarh, 3 Cush., 376, it will be seen that this is a far stronger case on the facts in favor of the party in favor of whom the order was drawn, than the one at bar, for in that case the drawee had, with the assignee of the drawer, cancelled the contract. The plaintiff in that case could, with reason, complain that he might in another way have made his money from the drawer had he not relied upon the conditional acceptance of the drawee, and he had been deprived of his money by an act not anticipated at the time of acceptance, and which act was performed by the drawee himself.
    Parsons goes on further to state, that “compliance with the condition is in the nature of a condition precedent, and if the condition is not complied with the acceptance is of no effect.”
    Upon page 305, Parsons on Notes and Bills, vol. 1, it is said: “And where a person agreed to accept, provided the goods against which the bill was drawn should be sold before the maturity of the bill, and they were attached by a creditor of the drawer while they were in the drawee’s hands, it was held that there was no acceptance. It would seem that even if the drawee himself should,’ by any act, prevent the contingency from happening, he could not be liable as acceptor.”
    It is not pretended in this case that Howard & Go. were prevented from completing their contract by any act of Montague’s, or that he did not act with absolute good faith toward Myers.
    But it is insisted by counsel for the defendant in error, that, inasmuch as Montague did not insist upon the forfeiture of the contract, and was still willing, after Howard & Co. had absconded, to pay whatever might be in his hands after the work was done, although the law would not compel him to do so, this failure to claim the forfeiture enures to the advantage of Myers.
    We cannot perceive that this act of Montague’s can possibly affect Myers’ rights. Montague’s acceptance was dependent upon the completion of the contract by Howard & Co., and dependent upon that alone. If they failed to complete it, he was not to pay Myers. They did not complete it, and Montague was at liberty to disregard the order from thenceforth. Montague could not have made up his mind to refrain from claiming the forfeiture until after Howard & Co. absconded, and the garnishments of the laborers of Howard & Co. were served upon him, which were done the same night Howard & Co. left. He could then have insisted upon his rights under the law, but he was unwilling to do this, when poor men, by whose daily toil his property had been enhanced in value, would be deprived of their hard-earned wages. ' It was not a waiver of his rights for the benefit of the defendant in error. The contract had not been completed when these men served their garnishments upon him, and the Myers order was payable only on the completion of the order.
    Neither the workmen nor Myers could have any rights as against Montague until after he had made up his mind not to insist upon his own rights, and these garnishments had been already served upon him, and to the fund in the hands of Montague these workmen, and not Myers, had the superior title, both in law and morals. The justice of the peace took this view of the case when he.'rendered judgment upon Montague’s answer to the garnishments, and it is poor recompense for a generous action,' if Montague must pay both the workmen and Myers, when, as a matter of law, he was under no obligation, and knew he was under none, to pay either.
    We insist that his Honor, Judge Hoyl, mistook the law in this case — he could not have mistaken the evidence — and his decision should be reversed.
    We rely upon Parsons on Notes and Bills, vol. 1, pp. 304 and 305, and the cases cited in foot notes. We rely also upon the Statute of Frauds. See .Campbell v. Findley, 3 Hum., 330, 332.
    VabtDyke, Cooke & VanDyke, for Myers, said:
    This suit was instituted before a justice of the peace of Hamilton county, upon an order, of which the following is a copy:
    “Chattanooga, April 21, 1871.
    “T. G. Montague, trustee, please pay R. M. Myers two hundred dollars out of the 25 per cent, back pay for foundation at old Crutchfield grounds.
    
      “ (Signed,) W. A. Howard & Co.”
    By consent, Judge John B. Hoyl heard and determined this case upon the evidence adduced, without the intervention of a jury, and rendered judgment in favor of plaintiff for the amount of the order and costs of cause, from which- defendant appealed to this court.
    It is respectfully submitted, that there was a verbal acceptance of the order by defendant, and that he thereby became liable to plaintiff upon the same.
    The proof shows that Howard & Co. had contracted with defendant for the building of a foundation on what is known as the Crutchfield grounds; that the work on the foundation was to be paid for as the same progressed, every Saturday, less twenty-five per cent., which was to be retained by the defendant until the completion of the work; that Howard & Co. became indebted to plaintiff Myers in the sum of $200; that Myers went to defendant and asked, him if he would accept an order for $200 from Howard & Co., to which he answered no, stating that Howard & Co. took up the per cent, as fast as it was earned. Myers then asked defendant if he would accept an order from them for that amount, to be paid out of the twenty-five per cent, retained, and, according to the testimony of Myers, the defendant answered that he 'would; and according to the testimony of defendant, he answered that if Howard & Co. completed the contract he, defendant, would pay the $200 out of the retained per cent. The plaintiff then went out, presently returned with the order for $200, as above copied, handed same to defendant, who read it, said it was all right, and filed same away among his own (defendant’s) papers, and the plaintiff went away, leaving the order with defendant, and supposed all was right. After the work was completed, plaintiff called upon defendant for payment of the order, which was refused by defendant. The defendant held on to the order, thereupon suit was brought against defendant, and notice served upon him to produce and file the order in the cause, which was done. The proof further shows that to the date of said order defendant had paid Howard & Co. $1,500 or $2,000, which was seventy-five per cent, of the finished work, which, at the time of the acceptance of said order, would leave in the hands of defendant, payable to Howard & Co. upon completion of the work, some four or five hundred dollars.
    
      After the acceptance of the order by defendant, Howárd & Co. absconded without completing their contract with defendant, but defendant employed hands and completed the work to be done under the contract, and after completing same there were in his hands due upon the contract about two hundred and forty dollars.
    No forfeiture of contract or damages are claimed by defendant, hence it must follow that the $240 is subject to the debts of/ Howard & Co., and the defendant in his testimony says he is willing for it to go to the parties entitled.
    When Howard & Co. absconded, various creditors sued out attachments before the justice of the peace and served garnishments upon defendant to reach what might be due Howard & Co. from him. These attachments were served upon defendant sometime after the acceptance of the order; but even if they had been served before, it could in nowise effect the rights of plaintiff, as his right rests in the acceptance of the order.
    It is therefore respectfully insisted that the facts constitute an acceptance of the order on the part of defendant, and renders defendant liable to plaintiff upon the same.
    No special form, or manner, or words of acceptance are necessary, nor is the signature of the drawee essential. The rule as established by the elementary writers, and reaffirmed by this court, is that if a bill is presented to the drawee for acceptance, and if he does anything to or with it which does not distinctly indicate that he will not accept it, he is held as an acceptor, for it is his duty to put the question beyond the possibility of doubt: Parsons on Bills and Notes, vol. 1, p. 282.
    In this case the plaintiff handed the order to defendant; “defendant looked at it, said it was all right,” and placed same among his files. This is a clear and distinct acceptance to pay according to the tenor of the order. The language used legitimately led the plaintiff Myers to believe it was accepted, and prevented him from taking other steps to secure his debt, which he could have done and saved his' debt.
   McFaeland, J.,

delivered the opinion of the court.

K. M. Myers brought this suit before a justice of the peace, and upon appeal in the Circuit Court a jury was waived and the cause submitted to the judge, who gave judgment for the plaintiff, and the defendant appealed in error.

W. A. Howard & Co. had contracted to do certain excavations and stone work for Montague, for which a certain price was to be paid — 75 per cent, to be paid as the work progressed, and 25 per cent, to be retained until the work was completed. Said Howard & Co. were indebted to Myers, and during the progress of the work Myers called upon Montague to know if he would accept an order from Howard & Co. for $200. He replied .he would not. He was then asked if he would accept such- order, to be paid out of the 25 per cent., to be retained as aforesaid. He said he would, or would if Howard & Co. completed the work. Myers left, and soon returned with the following order:

“Chattanooga, April 21, 1871.

“T. G. Montague, trustee, please pay R. M. Myers two hundred dollars out of the 25 per cent, back pay for foundation at old Crutchfield grounds.

“W. A. Howard & Co.”

Montague received the order and filed it away in his office, he being cashier of a bank. . Howard & Co. soon after absconded without completing the work, but Montague hired hands and completed the job. He did not insist upon a forfeiture, but was willing Howard & Co. should have the benefit of the contract and back pay due them, charged with the amount paid by him to complete the work. Upon this basis, there was found to be due Howard & Co. $240. Montague was served with garnishment at the suit of other creditors of Howard & Co., and stated the facts before the justice, who rendered judgments covering the $240, which he paid.

Upon these .facts, is Myers entitled to recover?

1. We are of opinion that such an order may be accepted verbally. There is no statute in this State requiring the acceptance to be in writing,, and it,is not within the statute of frauds. An'.order drawn upon a particular fund, and accepted, amounts to a transfer of so- much of the fund in the hands of the drawee to the holder, and the promise of the acceptor in such ease is to pay his own debt and not the debt of another: 2 Head, 120. Verbal acceptance is valid in the absence of statute, if communicated to him who takes the bill, and he takes it on the credit of such acceptance: Leading Cases on Bills and Notes, p. 42, and notes and authority there cited; Parsons on Bills and Notes, vol. 1, p. 282. And such we understand to be this case. Myers did not receive the order until told by Montague that he would accept it upon the condition stated, and he says if he had not relied upon this acceptance he could have made his debt out of Howard & Co.

We think the facts show a verbal acceptance; but this order was drawn on a particular fund, and Montague was only bound to pay it in the event there was such fund. Montague did not insist upon a forfeiture of the back pay due to Howard & Co. by reason of their failure to complete the contract, and the consequence was thqt the back pay due Howard & Co. was sufficient to pay this order, and therefore the order was payable.

It is argued that Montague only waived this forfeiture in favor of the employees of Howard & Co., who had served garnishments, but that he may insist upon it as against Myers. His agreement not to insist upon the forfeiture, enures to the benefit of Howard & Co. The question whether Myers or the attaching creditors shall have the benefit of this fund, was not then a question at the option of Montague, but was to be determined upon their equal rights. Myers’ right being first in time, was superior. It is no defense to Montague that judgments were rendered against him in favor of the attaching creditors. If "the fund was not sufficient to pay all, he should have appealed from these judgments.

We think there is no error. Let the judgment be affirmed.