Court Opinion

ID: 7129689
Source: CourtListenerOpinion
Date Created: 2022-07-24 15:17:26.428321+00
Date Added: 2024-06-11T16:14:25.418278
License: Public Domain

Judge Simpson
delivered the opinion of the court.
The Lexington Insurance Company, on the 5th of August, 1851, drew a bill of exchange on James H. Wheeler, its agent at New Orleans, payable at six months, for the sum of $7,182, which it sold to David A. Sayre.
In November, 1851, the company made a general assignment of all its effects to Buckner, as trustee for the payment of its debts.
The bill of exchange which Sayre had purchased was accepted by Wheeler as the agent of the company, and was protested for non-payment. The *755funds which Wheeler had in his hands, being upwards of three thousand dollars, were paid over by hi.n to Buckner, the trustee, after the execution of the deed of assignment.
1. The drawing of a bill of exchange by a debtor, and its acceptance by thetharee.isan appropriation of that fund to the holder of the bill, and the drawer of the bill has no right thereafter to control it either by receiving or assigning it.
.Sayre, as the holder of the bill, claims that fund, and denies the right of the trustee to appropriate it to the purposes of the trust. He. alleged in his petition that the bill of exchange was drawn by sail} company, in anticipation of premiums to be received by said agent, and was accépted by him befoi*e the assignment was executed.
The trustee admitted, in his answer, that the assignment was made after the bill of exchange waa drawn, but stated that he did not.know whether the bill was accepted before or after the assignment was made. He did not however deny that he had any knowledge or information thereof sufficient to form a belief as to the truth of the allegation, and therefore it must, for the purposes of the action, be taken as true.
In Story on Bills of Exchange, sec. 13, .it is said by the author, that the general theory upon which “bills * of exchange rests, is that the drawer has funds in 4 the hands of drawee, that he sells or assigns to the ‘ payee, for a valuable consideration, such part there- ‘ of as amounts to the sum payable, by the bill; that when the drawee accepts to pay the amount it is 4 an appropriation of the funds pro tanto for the ser4 vice, and use of the payee, or other person holding 4 the bill under him, so that the amount ceases hence-4 forth to be ihe money of the drawer, and becomes 4 that of the payee, or other holder, in the hands, qf4 the acceptor.” And in Chitty on Billsof Exchange, page 1, it is said by the author, that a bill of exchange 44 is an assignment to a third person, of a debt due 4 to the person drawing the bill, from the person upoit 4 whom it is drawn.”
The same doctrine was recognized in -the case of Mandeville vs Welch, 5 Wheaton, 285, and it was said by the court to be undoubtedly true, that a bill of ex*756change, where it has been accepted, is an assignment to the payee of a debt due from the drawee to the drawer, whether it be drawn on general funds, or a specific fund, for in such a case, the acceptor, by his assent, binds and appropriates the funds for the use of the payee. The court also recognize the existence of a distinction between a case where an order or draft is drawn for the whole of a particular fund, and one where it is drawn, either on a general or a particular fund, for a part only. In the first case, it amounts to an equitable assignment of that fund, and after notice to the drawee it binds the funds in his hands. But in the last case, it does not amount to an assignment of that part, or give a lien on the fund in the hand of the drawee, unless he consent to the appropriation, by' an acceptance of the draft. The reason of the distinction is, that a creditor shall not be permitted to divide a single cause of .action, without the assent of his debtor, so as to subject him to several and distinct liabilities, not contemplated in his original contract. It has also been held that a draft on the executor of a debtor, which the executor promised to discharge on his receiving assets, is an equitable assignment of the debt, available against assignees in bankruptcy. (Chitty on Bills, 194.)
In the case of Luff vs. Pope, 5 Hill, 418, a different doctrine is asserted, but no authority except a decree of the Vice Chancellor of the same state is referred to in support of the decision. It appears from the decision that under the statutory law of that state ‘ tip obligation can be imposed upon the drawee of a bill, except by a written acceptance, and the reasoning of the court shows that the principle object which.it had in view in its decision, was to- advance ' and effectuate the legislative intention, with respect to that statutory provision.
It has been repeatedly decided that an order drawn ■ foy a debtor on a person having funds in his hands, is after presentment to the drawee, an assignment *757of such funds to the extent of the order, and the drawee cannot legally part with such funds to the drawer or any other person. (Peyton vs. Hallelt, 1 Caine’s Rep. 379; Cutts vs. Perkins, 12 Mass. Rep. 206; Yeates vs. Groves, 1 Vesy, Jun. 280; Lett vs. Morris, 4 Sim. 607; Bradley vs. Root, 5 Paige, 632, 641.
2. A general assignment of assets, after a bilí of exchange has been drawn and accepted, will not pass the fund which by the bill of exchange had been appropriated to its payment.
These cases are analogous, although not on bills-of exchange, the principles applicable to both class of cases having a strong resemblance. They therefore tend to sustain the general doctrine that an accepted bill of exchange, operates as an equitable assignment to the payee or holder thereof, of the funds in the hands of the acceptor, to which the drawer was entitled.
According to this doctrine, Sayre as the holder of the bill of exchange, was entitled to the fund in the hands of the acceptor, which the' latter, by his acceptance, had appropriated for his use and benefit. The fact that the acceptor was the agent of the company, and his acceptance was in that character, cannot have the effect of avoiding the operation of the principle by which the drawing and acceptance of the bill amounts to an assignment of the fund in the hands of the acceptor. Funds in the hands of an agent are as much the subject'of an assignment as funds in the hands of a debtor, indeed they would seem to be more peculiarly the subject of an assignment, inasmuch as they are more under the control of the principal, than a debt due from a debtor is under the control of a creditor.
Nor do we think that Sayre’s right to this fund was prejudiced by his presence at the time the assignment was made by tlie company, and his assent to its execution.. The fund in controversy was not mentioned on that occasion, nor is it specified in the deed of assignment. No implied assent by Sayre to its transfer, nor any waiver of his claim to it, can therefore be inferred, from any thing that then occurred. The deed of assignment transfers to the trustee, in general terms, all the effects, debts, choses *758in action, &c., that then belonged to the company. It does not purport to convey any thing which had been previously assigned away by the. company, and of course does not embrace this fund which had been assigned and appropriated for the payment of the bill of exchange of which Sayre was the holder. I'd consenting to the execution of the deed, Sayre only agreed that the company might transfer the effects and funds that belonged to it, to the purposes of the trust; he should not be regarded as consenting to the transfer of a fund to which be was entitled. He may not have known at that time, of his fight to this fund, as the holder of the bill; but if he did, he was under no obligations to assert it, inastfnuch as the right to transfer it was not claimed by iihe company, nor was the right to it the subject of discussion between the parties.
Wherefore the judgment is affirmed.