Court Opinion

ID: 3600950
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:47:25.936085+00
Date Added: 2024-06-11T09:41:15.499776
License: Public Domain

The question at issue in this cause arises upon a letter of the defendant, written by its president, authorizing an order to be drawn upon it by one of its employes, and a subsequent order drawn by the person so authorized.
In February, 1868, one J.A. Borst was in the defendant's employment, at a monthly salary, payable at the end of each month, of $118. On the twenty-sixth day of that month his brother, W.W. Borst, having previously written a letter to the defendant, received the following reply: "Replying to your note of this date, I have to say, that if your brother" (meaning J.A. Borst) "makes an order on O.H. Palmer, treasurer of the company, for any portion of his salary, and the person in whose favor the order is made will file it with Judge Palmer, whatever sum is named therein will be paid monthly to the party in whose favor it is drawn, so long as your brother continues in our service, and the order remains unrevoked. Very respectfully, William Orton, president."
On the twenty-seventh day of February, next, W.W. Borst exhibited the letter to J.A. Borst, who thereupon drew and delivered to W.W. Borst the following order:
"O.H. Palmer, Esq., treasurer Western Union Telegraph Co.: Please pay to Mr. D.L. Noyes, fifty dollars, monthly, on the last day of each and every month, commencing March 31, 1868, until the sum of $300 is paid, and charge the same to my salary account. J.A. BORST.
"NEW YORK, February 27th, 1868." *Page 467 
The same day, W.W. Borst took this order and the letter of the defendant to one D.L. Noyes and delivered them to him, receiving at the same time a valuable consideration therefor. Noyes, on the same day, took the order and letter to the office of the defendants, with notice that he held the order, and left the papers with Horner, the defendant's cashier, by General Palmer's direction.
On March thirtieth, the day before the first payment became due by the terms of the order, J.A. Borst sent to the defendant the subjoined notice:
"Dear Sir: If not accepted, I hereby countermand the order given to D.L. Noyes. Please return to him unpaid."
    "Respectfully, yours,                         J.A. BORST. "Hon. O.H. PALMER, treasurer, etc."
J.A. Borst continued to be in the employment of the defendant during the months succeeding February, 1868, and there was due to him at the end of each month $118.
After the notice of March thirtieth, the defendant refused to pay anything upon the order of February twenty-seventh.
Noyes assigned his claim to the plaintiff on April twenty-eighth, who commenced this action for the first fifty dollars due on the order of February twenty-seventh.
On this state of facts the question is, whether these papers, taken together, amount to an obligation binding upon the defendant.
The question may first be considered on the supposition that the order of February twenty-seventh is a bill of exchange. On that hypothesis the letter of President Orton may properly be regarded as a conditional promise to accept the bill when it shall be drawn. The doctrine of conditional promises to accept bills is now well settled. The condition may be any lawful act which the party making the acceptance may see fit to impose. If the condition is complied with, a contract is entered into, which may be enforced by a holder who acts on the faith of the acceptance. (Mason v. Hunt, 1 Doug., 296; Browne v. Coit,
1 McCord, 408; Sproat v. Matthews, 1 T.R., *Page 468 
182; Smith v. Vertue, 9 C.B. [N.S.], 214; Murdock v.Mills, 11 Metc., 5; Banbury v. Lisset, 2 Strange, 1211; 1 Parsons on Notes and Bills, 300-312; Chitty on Bills, 302, 303.) On the other hand, if the condition is not performed the acceptance is void. In Mason v. Hunt (supra) A., before the bill was drawn, wrote a letter to his partner, B., that he (A.) had agreed that in case certain owners of tobacco would give B. orders for insurance and sundry bills of lading of goods consigned to him, that bills of exchange for the value of the goods would be accepted and paid by himself (A.). The owners of the tobacco having been made aware of this acted upon it. The court held it to be a valid, conditional acceptance, and that the owners of the tobacco took it subject to the conditions — such as insurance, bills of lading, consignment, etc. Under this doctrine, a person may accept to pay out of a fund which he shall hereafter receive. Thus, in Rowe v. Young (2 Bligh, 409), the lord chancellor said: "A man may accept to pay out of the produce of a cargo consigned to him, when that cargo shall arrive in England." This statement is very near to the present case, since the promise to pay is out of a fund hereafter to be in the possession of the defendant, viz., his salary, when earned. InJulian v. Shobrooke (2 Wilson, 9) the promise was to pay when in cash for the cargo of a ship. This case is quite analogous to the present. (1 Parsons on Bills, 300-310.)
It is not material that the order of J.A. Borst was not in existence when the letter of Orton was delivered to W.W. Borst. A promise to accept before a bill is drawn is valid in the hands of one who, acting upon it, takes the bill, when drawn, for a valuable consideration. (Greele v. Parker, 5 Wend., 414;Bank of Michigan v. Ely, 17 id., 508; 1 Parsons on Bills, 293, 294, and cases cited; Goodrich v. Gordon, 15 Johns., 6.)
It makes no difference that the letter of Orton was written to W.W. Borst. It was plainly intended by the defendant that it should inure to the benefit of any one who should act upon it. The language is very broad; he promises to *Page 469 
pay "the person in whose favor it is made." This phrase includes the plaintiff's assignor. In Mason v. Hunt, already cited, it will be observed that the letter was written to the brother of the writer, and it was still held to be a conditional acceptance in favor of those to whom it was exhibited. Moreover, in this State, such a promise would fall within the class of cases holding that a promise made to one for the benefit of another is available to the person in whose favor the promise is made. (Barker v. Bucklin, 2 Denio, 45; Burr v. Beers,24 N Y, 178; Van Schaick v. Third Avenue Railroad,
38 id., 346.) The present case is clearer than the cases there decided, since the consideration here moved from the person to be benefited by the promise.
It cannot be said that the order of J.A. Borst, on which the plaintiff's assignee acted, did not correspond with Orton's letter. It is true, it was not strictly drawn for a "portion of his salary," but it was drawn generally, with a direction to charge to salary account. Any deviation from the authorization must be regarded as waived by the act of Palmer, the treasurer, in directing Horner, the cashier, to receive and file the order, as drawn by J.A. Borst. If this reasoning is correct, the plaintiff complied with the conditions necessary to his recovery. The employe, J.A. Borst, continued in the service of the defendant, so as to comply with the order. He remained six months, so that Noyes became entitled to $300. The order was not revoked. The word "revoked" must mean legally revoked. J.A. Borst, as between himself and Noyes, was estopped from asserting that the order drawn by him did not correspond with the defendant's letter. He exhibited both to Noyes as an inducement to advance the money, and cannot, after all the parties have acted upon it, maintain that the instrument did not have the effect which it was intended that it should have.
A binding contract thus sprung up between the defendant and Noyes, which was irrevocable by the drawer of the order, and subject to only one condition, viz., that Borst should continue in the defendant's service. This condition having *Page 470 
been complied with, the defendant is liable to the plaintiff, as Noyes' assignee.
Thus far the case has been considered on the assumption that the order of February twenty-seventh was a bill of exchange, without establishing it. The cases show that it was a bill. The words "charge the same to my salary account," added to an instrument complete without them, and which would otherwise be a bill of exchange, do not change its character. (Kelley v.Mayor, 4 Hill, 263; Macleed v. Snee, 2 Strange, 762; Hoyt
v. Lynch, 2 Sandf., 328.) It cannot, of course, be contended that the instrument is a negotiable bill of exchange, as it is not payable to order or to bearer; still, it is a bill of which acceptance may be affirmed; and an acceptor's liability is in no respect different, as between him and Noyes, than it would have been had negotiable words been employed. (Story on Bills, § 60; 3 Kent's Com., 77.) If, however, this is not a bill of exchange, but a mere order, the result is the same. To an order the doctrine of conditional acceptance is equally applicable. Had this been an order in precise accordance with Mr. Orton's letter — for a portion of Borst's salary — his prior promise to pay would have been a conditional promise to accept the order when drawn. This promise would have made the defendant liable atlaw; while such an order, without the promise of the defendant, might have amounted to an equitable assignment. This distinction is clearly set forth by Lord ELDON in Ex parte South (3 Swans., 392-394); he says: "It has been decided in bankruptcy, that if a creditor gives an order on his debtor to pay a sum in discharge of his debt and that order is shown to the debtor, it binds him. On the other hand, this doctrine has been brought into doubt by some decisions in the courts of law, who require that the party receiving the order should in some way enter into a contract. This has been the course of their decisions, but is, certainly, not the doctrine of this court (equity). In this case the executor of the debtor, instead of returning the draft (not a bill of exchange) to the person who presented it, retains it, with a *Page 471 
declaration that he cannot then accept, payable at any particular time, but that it shall be paid whenever the state of the testator's assets enable him to pay it. I am of opinion that this is not an absolute but a conditional acceptance of the order; for this document, though not in the form of a bill of exchange, is rather an order for the payment of money than anything else; and I think that the act of the executor is such an acknowledgment as takes this case out of the decisions of the Court of King's Bench." On this theory, assuming that the letter of J.A. Borst, construed with the letter of Mr. Orton, amounts to a mere order, the two papers taken together, and connected with Noyes' advances, cause a contract to spring up between him and the defendant, in which there is a conditional element — the continuance of Borst in the defendant's service — and that having been performed, Noyes would recover on the same principle as on the supposition that Borst's order constituted a bill of exchange. Noyes, as in that case, becomes "the person in whose favor the order is made," and recovers in the same way, under the rule in Barker v. Bucklin (supra).
It only remains to consider the effect, in equity, of Borst's order, without the aid of Orton's letter. In that case, it is entirely clear that no recovery can be had at law, as there is no promise by the defendant. The transaction, however, may amount to an equitable assignment under Lord ELDON'S distinction in Exparte South (supra). It may be conceded that this would not have been the case had Borst's order contained negotiable words. It would then have been such a bill as requires acceptance in order that any action may be maintained against a drawee. (Cases already cited.) But where the instrument is non-negotiable, the reasons are quite different. In this case few of the inconveniences will occur which may be reasonably claimed to attend an uncertainty whether a commercial instrument shall be regarded as a bill of exchange, requiring acceptance, or an equitable assignment needing no acceptance. Non-negotiable paper does not enter into commerce; and it is well known to be subject to the equities *Page 472 
between the original parties. There appears to be no solid objection to carrying into effect what may reasonably be presumed to have been the intent of the parties. Parsons, in his work on Bills and Notes, after maintaining that a negotiable instrument cannot properly be regarded as constituting an equitable assignment as against the drawee, adds: "Where the draft is not
negotiable and drawn for a part of the fund, the cases are somewhat conflicting. Perhaps the weight of authority favors the rule that the assent of the drawer is necessary; but there are cases that appear to hold that it operates as an assignment of the particular fund from the time the drawee receives notice." The guarded form of expression here applies to the rule in the courts of law, for he proceeds: "In courts of equity, where the doctrine of equitable assignments was first laid down, such drafts have been held to be an assignment, even against the will of the drawee." (Pp. 334-336.) This doctrine seems quite clear, where the whole debt is drawn for (Ex parte South, supra); while a careful examination of the authorities leaves the matter open to much doubt, where an instrument in the form of a non-negotiable bill of exchange, and not purporting to be drawn on a particular fund, is drawn for less than the amount of the debt. The reason for the doubt is, that a contrary view would expose the debtor to a multiplicity of actions, and that an entire claim cannot be assigned in part without the debtor's consent. (Mandeville v. Welch, 5 Wheaton, 282.) This argument is not available in this State, as our cases hold that there may be a partial assignment by apt words. (Pattison v. Hull, 9 Cow., 747, and cases collated by Mr. Hill in his note to Morton
v. Naylor, 1 Hill, 583; where the New York cases are distinguished from Mandeville v. Welch; see, also, Field v.Mayor, 2 Seld., 179.) Following these cases, I am prepared to hold that a non-negotiable order for a part of a debt will, in this State, operate as a valid assignment in equity. On either ground discussed in this opinion, the plaintiff is entitled to recover.
The fact that the debt was not due when the order of February *Page 473 
twenty-seventh was drawn, is immaterial; it will be an assignment of the money to become due. It is enough that there is an existing contract, out of which the debt may arise. (Crocker v.Whitney, 10 Mass., 319; Cutts v. Perkins, 12 id., 211;Clarke v. Adair, cited by BULLER, J., in Master v.Miller, 4 Term, 343.) In the case of Clarke v. Adair,
Dubray, an officer in the army, drew a bill on an agent of a regiment, payable out of the first money that should become due to him on an account. This was held to be a good assignment of money thereafter to become due.
On these grounds, the judgment of the court below should be reversed and a new trial ordered.
All concur with LOTT, Ch. C., for affirmance, except DWIGHT, C., dissenting, and GRAY, C., not voting.
Judgment affirmed.