Case Name: Hargous, Brothers, v. J. Lahens & Co.
Court: New York Superior Court
Jurisdiction: New York
Decision Date: 1849-10-06
Citations: 1 Sandf. 213
Docket Number: 
Parties: Hargous, Brothers, v. J. Lahens & Co.
Judges: (Before Oakley, Ch. J., and Vakderpoel and SaNdford, J. J.)
Reporter: Reports of cases argued and determined in the Superior Court of the city of New York
Volume: 3
Pages: 213–221

Head Matter:
Hargous, Brothers, v. J. Lahens & Co.
In an action by the holder of a bill of exchange against the drawers, an indorsement by the plaintiff to a subsequent indorsee remaining upon the bill, uncancelled, after the suit is brought, is no objection to the plaintiff’s recovery, if he produce the bill as the holder. And it is immaterial whether he is the owner, or the agent of the owner, as long as he is the holder.
Where a bill of exchange drawn in New York on parties in France, and accepted, has been protested for non-payment, the holders are entitled to damages from the drawers, and the right to recover becomes perfect on the return of the bill. A subsequent part payment by the acceptor, has no influence in reducing that fixed and determinate liability.
Where a protested foreign bill, after being returned, has been sent back, to the place of payment, and partial payments are made by the acceptor, a tender of the balance due upon the face of the bill is defective, if accompanied by the condition that the bill be delivered up without an offer to pay damages.
The holders are entitled to retain the bill, to enforce their claims for damages against the proper party.
Where a bill is payable in Paris, a tender to a clerk of the sub-agent in Havre of the holder’s agent in Paris, to whom the bill has been sent, is insufficient.
The holder of a foreign bill is entitled to his damages, on its non-payment, irrespective of the place where he may subsequently receive entire or partial payment of its amount.
(Before Oakley, Ch. J., and Vakderpoel and SaNdford, J. J.)
Sept. 21;
Oct. 6, 1849.
This was an action brought to recover a balance due to the plaintiffs, as holders, from the defendants, as the drawers, of a bill of exchange for 50,000 francs, dated Feb. 24th, 1848, drawn by the defendants, merchants in New York, in favor of the plaintiffs, directed to Melnn & Co., at Havre, and payable at Paris, sixty days after sight. The plaintiffs resided in New York. The draft w^as accepted by the drawees, and at its maturity, May 15, 1848, was presented for payment, and payment being refused, was protested, and notice thereof given to the defendants. Subsequently to the notice of protest, the draft was sent by the plaintiffs from New York to their correspondents in France, to whom payments were thereupon made by the acceptors, to the amount of $7,559 79, leaving a balance due and unpaid upon the draft, for which balance and the damages and protest, this action was brought.
The answer of the defendants denied that the plaintiffs were the legal holders of the bill, at the time of the notice, or the commencement of the suit, but that on receiving notice, they, believing the plaintiffs to be the legal holders, had entered into a new contract with the plaintiffs, as a substitute for the one arising out of the bill in question, by which the plaintiffs were to return the same to their correspondent in France, and seek to recover the amount thereof, or as ranch as could be realized from the acceptors, the deficiency to be paid by the defendants, together with all legal damages. That various payments were thereupon made by the acceptors, and that the balance due upon the draft, with interest, had been tendered to the plaintiffs’ correspondent, or bis agent, which was refused, and that such refusal was in violation of the substituted contract between the parties. The reply denied that any new contract had been entered into; and as to the alleged tender, it averred that there was a pretended offer to pay a sum of money equal to the balance mentioned in the bill with interest, but that such tender was unaccompanied by any offer to pay damages, and was upon the condition that the bill should be delivered up.
At the trial before the Chief Justice, in May, 1849, after proof of the protest of the bill, and notice to the defendants, it appeared that the following correspondence took place between the parties:
On the 12th June, 1848, the defendants addressed a letter to the plaintiffs, as follows :
“ GeNtlemeN You hold the following bill of exchange, now under protest, and for which we are liable to you, with the usual damages, viz.
“ No. 229. J. Lahens & Co. on Ye. L. Melun & Co., Havre, payable in Paris, at 60 days’ sight, dated 24th February, 1848, for 50,000 fes.
“We deem it essentially for our interest, that that hill should be returned to France, where the funds and provisions to meet It are deposited, and where we hope and believe that you will realize the amount. We therefore authorize you and mpiest you to return that bill to your correspondent in France, to take such measures, either in concert with our house there, or otherwise, as you or your agents may see fit, for its recovery, we holding ourselves responsible to you, (though not claimed by others,) for the usual damages thereon, allowed by law in this country, in case such damages are not recovered or received by you in France; and also holding ourselves responsible to you for the whole amount of such exchange, or so much thereof as shall not be recovered or received by your agent from the other party, liable to the same.”
The plaintiffs answered, the next day, in these words:
“ GeNtlemeN : — We have just received your letter of 12th inst., which is perfectly satisfactory, with one exception. As the transaction upon which we are entering is a new transaction, we wish it to be well understood, that we will credit you but with the net proceeds of the amounts collected by our friends in Paris, and that if any commissions are charged, that they will be borne by you.”
After their signature, they added,
“ In regard to your remark concerning the damages claimed, we wdll state, that inasmuch as we have always paid them, we think it but just that we should in our turn claim them.”
The bill was accordingly sent back by the plaintiffs to their agent at Paris, M. Suberveille.
It was admitted that the balance claimed, with interest, was the sum of $3,198 84. The plaintiffs thereupon rested.
It appeared in evidence on the part of the defendants, that the bill of exchange in suit had been purchased by the plaintiffs with the funds of Garruste & Co., of Mexico, and had been forwarded by them for collection to J. V. Suberveille, of France, the agent of Garruste & Co. That after its protest, the plaintiffs remitted funds for the purpose of covering the bill. The account current of the plaintiffs with Garruste & Co., under date of March, 1849, in which the bill was charged to the latter, was given in evidence. It also appeared, that on the 8th of August, 1848, a tender was made in Havre, to a clerk of Mr. Bielley, merchant, of Havre, who was the agent there of Suberveille, of Paris, of an amount equal to the balance of the face of the bill, with interest and expenses; and that the tender was accompanied by a demand for the delivery of the bill, without any offer to pay damages. The hill, wdien produced upon the trial, appeared toiiave been indorsed by the plaintiffs to M. Suber-veille ; and it was shown that such indorsement had been erased with a pen, after the action was commenced.
The defendants moved for a nonsuit, on the following grounds : — 1. Because the plaintiffs had no title to the bill at the time of the bringing of tbe suit. 2. Because no contract was established between the parties, to warrant the claim for damages. 3. Because, if any contract was made, it was not fulfilled by the plaintiffs, they having broken it by refusing to accept the tender, given in evidence.
The court denied the motion, and the defendants’ counsel excepted.
The counsel for the defendants then asked the justice to charge the jury, that the defendants were entitled to their verdict on the same grounds. The justice refused so to charge, and directed the jury that the plaintiffs were entitled to a verdict for the whole amount claimed, -«'hereupon the defendants’ counsel excepted. The jury found a verdict for the plaintiff^ for the sum of $3,198 84 damages; and from the judgment entered upon that verdict, the defendants appealed to the general term.
W. W. Van Wagenen and Wm. Kent, for the appellants.
I. The plaintiffs had no title to the bill at the time of the bringing of the suit.
II. No contract was established between the parties to warrant a claim for damages. The exception contained in the plaintiffs’ letter of June 13th was never assented to.
IH. If any contract was made it was not fulfilled by tbe plain tiffs; they having broken it by refusing to accept the tender given in evidence.
IY. The plaintiffs having received from the acceptors, on account of the said bill, over $7,500, would not be entitled by law to recover damages upon the amount so received; and the verdict, under the charge of the judge, given for damages on the whole amount of the bill, is erroneous.
V. The judge erred in refusing to nonsuit the plaintiffs, and in charging the jury that they were entitled to recover the whole amount claimed.
T. J. Glover, for the plaintiffs.
I. The bill of exchange was remitted for collection, and never ceased to be tbe property of the plaintiffs, who would have been entitled to recover, even without any erasure of the indorsement. (Chautauque Co. Bit. v. Davis, 21 Wen. 584; Dugan v. U. S., 3 Wheat. 172; Dolfus v. Froseh, 1 Denio 367.)
II. The jury were authorized to presume, from the acquiescence of the defendants, that the terms of the plaintiffs’ letter of June 13th, were accepted by the defendants. Besides it only expresses what was implied in the defendants’ letter of June 12th.
III. Even if there had been no acceptance of the terms of that letter, the defendants’ liability for the damages would have been the same; it is imposed by the law-merchant, and was prior to the correspondence of the parties. (Story on Bills, § 107.)
IY. The refusal of the tender, even if validly made, was not in violation of any contract between the parties. And we were entitled to retain the bill to recover our damages against the drawers.
Y. The tender was clearly bad. (1st.) It was subsequent to the day of payment. (Sume v. People,, 8 East 168.) (2d.) It was not a personal tender. {Smith v. Smith, 2 Hill 351.) (3d.) It was conditional. (Wood v. Hitchcock, 20 Wend. 47 ; 1 Ch. Gen. Pr. 506-7.) It ought to be such as not to prejudice any claim the holder may have against other parties.
(4th.) It was insufficient, inasmuch as the acceptors being in funds, and bound to accept and to pay, were liable for damages. (Story on Rills, 464, note 4; 465, note 1, 1st ed.; Bayley on Bills, 353; '7 Orancli 500; Potbier de Change, n. 115 to 117; Jouss, Comm,.sur 1’ord., pp. 140, 141; Bell’s Comm, p, 407.)

Opinion:
By the Court.
Sandford, J.
We decided in Mottram v. Mills, (1 Sand. R. 37,) that the plaintiff's full indorsement of a bill to a subsequent indorsee, remaining thereon uncancelled at the trial, is no objection to his recovery against a prior party, if he produce it as the holder. But it is said, these plaintiffs were never the proprietors of the bill; they were agents merely of J. Garruste & Co. We suppose it is of no consequence whether they held the bill as owners, or as agents. They were the holders, in either event, and entitled to recover, either for their own benefit, or that of their principal. But we think, on the evidence, they were the exclusive owners of the bill.
The defendants next contend that they were discharged from liability, by the plaintiffs' omission to receive the sum offered by the acceptors at Havre; it being a violation of the agreement upon which the bill was returned to France.
It is not material, probably, whether the agreement was fully made, or whether the plaintiffs ought to have accepted the offer at Havre; because, if both points were conceded, their remedy on the hill against the defendants as drawers, was unimpaired.
But the objections are all untenable. The agreement was perfect. The qualification in the plaintiffs' note of June 13th, was no more than an expression of what was fairly implied in the defendants' proposal; and if it were a new term of the contract, their silence would furnish plausible evidence of their assenting to it.
The tender or offer was defective, for two reasons : — 1. It was made to a clerk of the sub-agent in Havre of the plaintiffs' agent in Paris, to whom the bill was sent. The clerk declared that he could make no answer to the offer, and there is no ground for inferring that he had any authority to act in the premises. 2. The party tendering, required the bill to be given up, without any offer to pay the damages which the holders were entitled to receive. The acceptors were not bound, (we will assume,) to pay those damages; but until they were paid, the holders were entitled to retain the bill to enforce their payment. All the- acceptors would ask was, an exoneration from the bill, on paying their own liability.
The principal point in the case remains. The plaintiffs, after the bill was returned here dishonored, remitted to their correspondent at Havre to cover the same; and subsequently returned the protested bill to Paris, and there received from the acceptors, $7,559 79. On this portion of the amount of the bill, it is contended they are not entitled to damages.
We are unable to perceive any good reason why they are not. The allowance of damages rests upon the theory, that the holder of the bill, by reason of its non-payment, is put to the expense of remitting the same amount to replace that expressed in the bill, in the country where it was payable. The rate of exchange measures the damages, in the absence of a statutory or customary regulation. This allowance is made without any inquiry as to the fact of a remittance to cover the amount of the protested bill. The liability to pay the damages becomes perfect, on the return of the bill protested. A subsequent part payment by the acceptor, can have no greater influence in reducing or extinguishing that liability, than a similar partial payment by the drawer or any other party. It is as fixed and determinate an obligation, as the debt represented by the sum expressed in the bill itself.
We were referred to two decisions, as supporting the defendants' position on this subject. In one of them, Laing v. Barclay, 3 Stark. R. 38, the bill was drawn at Deinarara on London, for £500. The case states it was protested for only £100; £400 having been paid upon it by the acceptors. The damages were limited to the £100. It is evident to us, from the report of the case, that the partial payment was made either before or at the time the bill was presented for payment; so that there was not even in theory, any re-exchange incurred by the holder in respect of the £400.
The other case cited, was The Bangor Bank v. Hook, 5 Greenl. R. 174, which was an action against the indorser of a bill, drawn at Belfast, in Maine, on a party in Boston, duly accepted and protested for non-payment. The plaintiffs had sued the acceptor in Boston, and collected nearly the whole bill. In the suit against the indorser, they claimed the balance of the bill, and damages on the whole amount for which it was drawn. Weston, J., in delivering the opinion of the court, stated the ground on which damages were allowed on bills of exchange, and that the statute intended to give damages on the same principle as they were given by the common law in the cases to which that was applicable. That according to the common law principle, if the bill, after being dishonored, was paid or received at the place where it was payable, the holders' claim for damages was reduced pro tanto; that incident which would have otherwise attached to it ceasing, because the money was paid at the place appointed. The learned judge declared that the right to receive, and the liability to pay damages, accrued on the protest of the bill. The holders could then have enforced it against the indorser: they were under no obligation to sue the acceptor, or to receive the contents of the bill without the damages; but when they did receive from the acceptor at Boston, where the bill was payable, the greater part of the bill, they were to be considered, (nothing appearing to the contrary,) as having pro tanto waived and lost their right to recover the re-exchange, or the damages substituted therefor. The court decided that, the plaintiffs' claim for damages was limited to the sum uncollected from the acceptor.
If the position of the judge as to payment of the bill by the acceptor, had been limited to a partial payment made at or before a protest of the bill, it would have been precisely the same as that ruled by Chief Justice Abbott in the nisi prius case cited from 3d Starkie. The argument in the Bangor Bank v. Hook, evidently rests upon the ground, that because the holder of a protested bill ultimately receives it, in whole or in part, at the place where it was due and payable, he is placed in the same situation as he would have been had the bill been paid when it matured. After fully considering the subject, we are satisfied that the argument is fallacious. On the protest of a bill abroad, the remitter, for the protection of his credit, must at once take it up ; and for this purpose he must encounter the expenses of re-exchange. So the Bangor Bank in the case cited, having remitted the bill in suit to Boston to supply funds there for their business occasions ; on its being protested, were doubtless compelled to remit to Boston, other funds to the same amount, to supply the deficiency made by its non-payment. Now it is obvious, that the subsequent collection of the amount of the protested bill at the place where it was payable, will not make the remitter whole in the transaction, unless it shall so happen that the rate of exchange is at that time so favorable to him, that he can sell a bill drawn by him against such collection, for as much as it cost him to remit and take up the protested bill when he received notice of its dishonor — together with his expenses in the collection. Thus the result, in reference to an actual reimbursement of the remitter, or a restoration to the same state he would have been in if the bill had been paid according to its tenor and obligation, would depend upon the fluctuations of exchange, the credit of the holder as a drawer of foreign bills, the continued solvency of his agent abroad; and other considerations, which we need not enumerate. It was intended by the rule of fixed damages provided in the statute, to avoid all inquiries of this character, in every case of protested bills of exchange. . And we think the good sense of the thing, whether regarded as under the statute or the law merchant, entitles the holder of a foreign bill to his damages on its non-payment, irrespective of the place where he may subsequently receive entire or partial payment of its amount.
In the case at bar, we might reasonably hold that there is no room for inferring any waiver of damages, by the proceeding against the acceptors. The bill was sent back oil a stipulation, which, fairly construed, continued the liability of the drawers for the damages to which the plaintiffs were at that time entitled.
The judgment at the special term must be affirmed.