Court Opinion

ID: 6693634
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:43:40.389164+00
Date Added: 2024-06-11T16:01:10.822131
License: Public Domain

ClaeK, J.
(dissenting): The defendant, The Boyd Manufacturing Co., was not incorporated, but was a partnership, and was dissolved by the death of A. J. Boyd in August, 1893. Subsequently thereto, S. H. Boyd, Secretary and Treasurer of the Hermitage Cotton Mills and who was also a surviving partner in the firm known as The Boyd Manufacturing Co., drew a draft on the latter at 90 days, on May 3, 1894, in favor of the plaintiffs for $2,075.49 and attempted to accept the same himself as manager of The Boyd Manufacturing Co. At the time of the draft, The Boyd Manufacturing Co. was indebted to The Hermitage Cotton Mills in an amount considerably less than that. Before the draft fell due, the Hermitage Cotton Mills collected of the Boyd Manufacturing Co. the entire amount due. This is an action by the plaintiffs, in whose favor the draft was drawn, to collect it over again of the drawee, on the ground that it paid the Hermitage Cotton Mills in its own wrong.
S. IT. Boyd, surviving partner, had no authority to accept the draft so as to bind The Boyd Manufacturing Co., as it had been dissolved. The attempted acceptance was a nul*812lity except as to S. H. Boyd individually, and against him a judgment has been entered up and not appealed from. The position of the plaintiffs therefore, as to The Boyd Manufacturing Company, is that of a holder of a draft not accepted, and the plaintiffs have by virtue of such paper no claim against the drawee. Their claim is valid of course against the drawer.
The plaintiffs claim however that they are assignees of the debt which the Hermitage Cotton Mills Company held against the Boyd Manufacturing Company, and therefore that the latter is still liable to them, notwithstanding it has paid the debt in full to the Hermitage Company.
The answer to this is that the witness of the plaintiffs, who is uncontradicted, testifies that in fact it was not an assignment and was not intended to be, but was merely “ accommodation paper.” Another witness for plaintiffs, L. W. Sanders, testifies, “We received these papers as the acceptances of the Hermitage Company and The Boyd Manufacturing Company and as bankable paper.” It could not therefore have been an assignment of a claim. The evidence is uncontradicted that in point of fact there was no assignment of the debt, and the claim of the plaintiffs against The Boyd Manufacturing Company is simply that of the holder of an unaccepted draft, since the attempted acceptance by an unauthorized surviving partner is a nullity. Kahnweiler v. Anderson, 78 N. C., 133.
It is contended, however, that such paper may be treated as an assignment of the debt, though not so intended between the parties at the time. The question is a very important one, affecting materially the course of dealings in commercial paper, and the following principle seems well settled. To make an order operate as an assignment, it must be upon a particular fund; it is not enough that it is drawn upon a debtor. 83 Me., 242, and numerous *813cases and other authorities there cited. See also 90 Cal., 297, and 21 Am. St. Reports, 456.
Besides an unaccepted draft or check is never held to be a claim against the drawee in the nature of an assignment of the debt, unless it was due at the time when presented and the drawee at that time had funds in his hands due the drawer. This has twice been recently held by this Court, Marriner v. Lumber Co., 113 N. C., 52; Hawes v. Blackwell, 107 N. C., 196; Bank v. Shuler, 120 U. S., 511. When this paper fell due, the drawee had no funds in hand due the drawer, and was not indebted to it, having paid to it, or on its sight drafts, the full amount due. It is true there had been a former draft on the Boyd Manufacturing Company in favor of the plaintiffs, but the plaintiffs had taken in its stead a new draft at ninety days. -This was notice to the Boyd Manufacturing Company that the plaintiffs held no claim against it which could be presented till the end of ninety days, and it could not till the maturity and presentation of the check lock up the drawer’s debt, and refuse to pay the drawer or its sight drafts the amount due, unless it had accepted the drawer’s time draft, which it was disabled in law to do. It is this which distinguishes this case from Brem v. Covington, 104 N. C., 589. The ninety days draft, unaccepted, was not a lien on the funds of the drawer in the hands of the drawee, but was simply a request to the Boyd Manufacturing Co. to pay the plaintiffs $2,075.29 at the end of that time, and this (in the absence of the uncontradicted evidence that it was not an assignment at all) would have been an assignment of whatever funds the drawer had in the hands of the drawee at the maturity of the draft. The plaintiffs doubtless would 'not have taken such paper, bu.t it is certain that it was relying, not upon an assignment, but upon the acceptance of the Boyd Manufacturing Company, which, unfortunately *814for it, was a nullity. The claim that it is an assignment is a second thought, which was only conceived when the ■bankable paper, the plaiutiffs thought -they were taking, proved worthless as to the drawee, because of the invalidity ■of an acceptance by a member of an extinct partnership to bind it. Even if it had been an assignment, by the terms of the paper itself and on its face, it was an assignment which (in the absence of an acceptance) was not to take effect till ninety days from May 3, at which time there was no debt due the Hermitage Company on which it could take •effect. Though the drawee had notice of the assignment, it had notice too that it was not payable for ninety days, •and in the meantime it had notice also of drafts payable at •sight, or by the creditor’s own demand, which it could not refuse to pay. It could not pay both, and not having accepted the time draft, it had no ground to refuse payment of the sight drafts. Wherein is the advantage or effect of the acceptance of a time draft if mere notice of it to the drawee, without acceptance by him, is a lien on the funds of the drawer in the hands of the drawee so that the latter can not, except at his own peril (as in this case) pay the drawer himself or his sight drafts prior to the date when the unaccepted draft shall fall due.