Court Opinion

ID: 8031725
Source: CourtListenerOpinion
Date Created: 2022-09-09 03:16:18.724223+00
Date Added: 2024-06-11T16:36:59.610339
License: Public Domain

The following opinion on motion for rehearing was filed December 15, 1919. Former judgment of „reversal vacated, and judgment of district court affirmed.
Letton. J.
Plaintiffs are creditors of M. J. Mechaley, being holders of bank checks issued by him in payment for live stock purchased on the 2d and 6th of January, 1917, .and presented after January 8, 1917, payment of which checks was refused by the Lamro State Bank upon which they were drawn, on account of lack of funds.
Mechaley was a stock buyer and shipper at Winner, South Dakota. It was his custom to purchase hog’s and cattle, ship them to commission firms, and draw a sight draft for the proceeds upon the firm to which the cattle were shipped. Mechaley’s account was overdrawn and he was denied, further credit. On January 4, 1917, the Lamro State Bank telephoned to the Omaha Live Stock Commission Company, inquiring if it would pay drafts issued by Mechaley for the net proceeds of any stock shipped to it by him. The company replied both orally and by a letter written that day: “We will pay Mr. Mechaley Js draft for the net proceeds of any stock billed to us, but will not pay these drafts ahead of ship*268ment.” On Saturday, January 6, a car of hogs and one of cattle purchased by Mechaley were being delivered in the yards of the railway company at Winner to be loaded the next day. On that day Mechaley delivered to the bank a draft upon the commission company for the sum of $3,000 in favor of Lamro State Bank. The live stock was shipped on Sunday, January 7, and arrived in South Omaha on Monday morning, January 8. After its arrival that morning, the commission company received the following telegram:
“January 7, 1917,
“Omaha Live Stock Commission Co.,
“Omaha, Neb.
“Calling your attention to shipment two cars stock by Mechaley today, car number nine 0 five nine three, eighty hogs, car number two five’ one seven five, twenty-four cattle.
“We have M. J. Mechaley draft on you for throe thousand, will be presented by Live Stock National Bank, also hold mortgage on stock. Pay Mechaley.no money under any circumstances.
“Lamro State Bank.”
Later in the day the commission company were informed by another commission man that a bank at Winner had sent him word that some persons in Winner, South Dakota, were claiming part of the proceeds of the sale. The draft was presented to the commission company that day through a local bank at South Omaha, and payment was refused on account of this notice. Afterwards, on January 29, an action was begun against Mechaley by Soppe, one of the creditors mentioned, and the commission company was served with garnishee process. The garnishee answered, stating that it had sold stock for Mechaley to the net amount of $3,233.74; that Mechaley had drawn a sight draft for the proceeds in favor of the Lamro State Bank which had been presented for payment, and that it had been notified that *269$148.66 was claimed on an account by Ferd Soppe against Mechaley; that it has no interest in the money, but offers to bring it into conrt so that parties may interplead. .The Lamro State Bank then filed a petition in intervention, claiming the sum of $3,000 by virtue of the draft and its acceptance. The answer to the petition in intervention admits that on February 2 the Live Stock Commission Company paid to the Lamro State Bank $2,342.18 from the proceeds of the sale, so that it is undisputed that the company has retained 'in its hands', or paid into court, $657.79 to meet the claims o'f plaintiffs in case it should be found that their right to the money was superior to that of the Lamro State Bank.
The commission company, drawee of the draft, is raising no question as to its validity or acceptance, and makes no objection to the payment of the draft. The only question-presented' is whether the garnishment by the creditors can take precedence of the transfer of the funds made by the drawing and acceptance of the draft.
Section 5449, Bev. St. 1913, provides that the acceptance of a bill must be in writing and signed by the drawee.
"Section 5451 recognizes the validity of an acceptance written on paper other than the bill itself, and provides that “it does not bind the acceptor except in favor of a person to whom it is shown and who, on the faith thereof, receives the bill for value.”
Section 5455, provides: “A bill may be accepted before it has been signed by the drawer or while otherwise incomplete.”
Section 5456. “An acceptance is either general or qualified. ’ ’
Section 5458. “An acceptance is qualified which is: First — Conditional, that is to say, which makes payment by the acceptor dependent upon the fulfilment of a condition therein stated. * * # Fourth — Qualified as to time.”
*270The bank delivered Mechaley’s note to him, relying upon the delivery of the draft, and the written promise to pay in the letter of the commission company. The promise to accept and pay is an acceptance, says Lord Ellenborough in Wynne v. Raikes, 4 East (Eng.) 514, followed in Scudder v. Union Nat. Bank, 1 Otto (U. S.) 406, 23 L. ed. 245. The acceptance was qualified in that it made payment by the acceptor dependent xipon the shipment and receipt of stock. As soon as the stock was shipped and received, if the proceeds in the hands of the commission company equalled or exceeded the amount of the bill, the conditions and qualifications were fulfilled, and the bill operated, as an assignment of the money in the commission company’s hands. This is admitted by the drawee, since it paid $2,342.18 to the bank upon the sole ground that it was authorized to do so by the draft, and its acceptance.
Mechaley having received a valuable consideration in good faith for the draft, he and those claiming under him are estopped to assert that, upon its acceptance by the drawee, it did not transfer the fund pro tanto. The transaction between the bank and the commission company was completed by the letter of acceptance, the notification to the commission company that the stock was shipped in accordance with the conditions of its acceptance, and by the receipt of the proceeds of the sale. Since the title to the fund had passed from Mechaley, and an attaching creditor can only reach the property of the debtor, the garnishment could only affect the interest of Mechaley in the excess of the proceeds of sale over the amount of the draft.
In Scudder v. Union Nat. Bank, supra, it is said: “It is a sound principle of morality, which is sustained by well-considered decisions, that one who promises another, either in writing or by parol, that he will accept a particular bill of exchange, and thereby induces him to advance his money upon such bill, in reliance upon his promise, shall be held to make good his promise. The *271party advances his money upon an original promise, upon a valuable consideration, and the promisor is, upon principle, bound to carry out his undertaking. Whether it shall he held to be an acceptance, or whether he shall be subjected in damages for a breach of his promise to accept, or whether he shall be held to be estopped from impeaching his word, is a matter of form merely. The result in either event is to compel the promisor to pay the amount of the bill with interest.”
The following’ cases support the conclusions reached in the opinion: Nelson v. First Nat. Bank, 48 Ill. 36; Hall v. First Nat. Bank, 133 Ill. 234; McCausland v. Wheeler Savings Bank, 43 Ill. App. 381; Milwaukee Corrugating Co. v. Traylor, 95 Kan. 562; Storer v. Logan, 9 Mass. 55; Putnam Nat. Bank v. Snow, 172 Mass. 569; First Nat. Bank v. First Nat. Bank, 210 Fed. 542; Fourth Street Bank v. Yardley, 165 U. S. 634; See, also, 7 Cyc. 776, 777.
The district court found that the $657.79 remaining in the hands of the commission company belonged to the intervening bank. This judgment was right. The former judgment and opinion in this case is vacated, and the judgment of the district court is .
Affirmed.
Morrissey, C. J., and Rose, J., dissent.