Court Opinion

ID: 8856123
Source: CourtListenerOpinion
Date Created: 2022-11-26 17:30:47.456153+00
Date Added: 2024-06-11T17:05:39.776333
License: Public Domain

SANBORN, Circuit Judge
(dissenting). I am unable to concur in the view of this case taken by the majority of the court. Tin» instrument on which the action is based wants the indispensable characteristics of negotiable paper. It is not payable to order or bearer, and is, in effect, a inert» voucher for expenditures of the Union Loan & Trust Company for the account of the Cudahy Packing Company. It is true that the voucher hears on its fact; the statement thal when approved, dated, and signed, it shall become a draft on the Cudahy Packing Company, and that it is approved, dated, and signed. Put T dissent from the proposition on which the opinion of the majority rests, that the words “draft on the Cudahy Packing Co.,” in iliis statement, mean “accepted bill of the Cudahy Peeking Co.” It is not an uncommon practice to use vouchers as drafts, on account of the advantage of having the voucher and the draft for its amount, in each *478case, on a single piece of paper. But it does not seem to me to follow from this practice, or from a written agreement to conform to it, that every one who consents that a voucher may be used as a draft upon him thereby contracts that such a draft is his acceptance, and that it will be paid by him, after it is assigned to a stranger, regardless of all the defenses and counterclaims he has against it in the hands of its first holder. The character and extensive commercial transactions of the parties to this paper forbid the supposition that they did not know the radical difference between the liability of a drawee upon a draft and upon an acceptance. There is no claim, no plea, no evidence, that by mutual mistake or fraud, the term “draft on the Cudahy Packing Co.” was written into this instrument in the place of “accepted bill of the Cudahy Packing Co.” The effect of the two expressions is so widely different in. this case that the latter charges the plaintiff in error with more than $12,000 from which the former exonerates it. I am not satisfied that it is the province of the court to change so radically the contract the parties to this instrument deliberately made.
But it is said that the packing company is estopped by the certificates upon this voucher to present its counterclaim against it after its purchase by the bank. At the time the voucher was issued the Union Loan & Trust Company owed the packing company $14,000 on account of moneys deposited with the former by the latter. Conceding that the voucher represented an indebtedness of the packing-company to the trust company for the full amount of its face, the latter company would still have owed the packing company'a balance of more than $400 after the claim represented by the voucher was fully paid, and the trust company could have collected nothing upon it, or upon the account it represented. This was the actual state of the accounts between the trust company and the packing company when the bank bought this vouchor of the former. How is the packing company estopped from offsetting against the claim evidenced by the voucher the money due to it on account from the trust company? An estoppel arises only when one, in ignorance of a material fact, is induced by the willful or careless false representations of another, concerning- that fact, to change his situation to his damage.- The only fact material to the issue in this case was that the-trust company was indebted to the packing company on a current account for. a deposit of $14,000. The certificates upon the voucher contained no representations whatever upon this subject. Their only effect was to prove that live stock to the amount of $13,509.52 had been purchased by the trust company for the packing company, and that the voucher might be used by the former -as a draft upon the latter for the amount. It contained no representation or statement that the trust company did not owe the packing company on other accounts, and no averment that there was no defense to, or counterclaim against, the demand represented by the voucher. It was not addressed to the bank, or to any one but the trust company, and it contained no words of negotiability calculated to induce others to buy or to rely upon it. It was not collectible by the trust company, because that company owed the packing company more on another account than the amount *479of tlie voucher. The bank bought the voucher and the claim upon which it is founded, aud L am unable to reach the conclusion that its purchase freed die voucher or the claim from the counterclaim of the 814,000 deposit, which the packing company could have interposed to them in the hands of the trust company. This seems to be the effect of section 3754 of McClain’s Code of Iowa, which is:
“In case of tlie assignment of a tiling in action, tlie action by tlie assignee shall be without xirejndice to any counter-claim, defense, or cause of action whether matured or not, if matured when plead, existing in favor of the defendant and against the assignor before notice of the assignment; but this section shall not apply to negotiable instruments transferred in good faith and upon valuable consideration before clue.” Bank v. Hewitt, 3 Iowa, 93; Sayre v. Wheeler, 31 Iowa, 112; Downing v. Gibson, 53 Iowa, 517, 5 N. W. 699; Callanan v. Windsor, 78 Iowa, 193. 42 N. W. 652.
Nor am I able to reach any other conclusion, if it be conceded that the certificates ou the face of the voucher amount to an acceptance of ihe draft which tlie voucher became, and a promise by the packing company to pay it according to its terms. If it was this, it was nothing more than a promise in writing, without words of negotiability, lo pay a sum of money to another; and section 3260 of McClain’s Code of Iowa is:
"Bonds, duo-bills and nil instruments in writing, by which the maker promises to pay to another, without words of negotiability, a sum of money, or by which he promises to pay a sum of money in property or labor, or to pay or deliver any properly or labor, or acknowledges any money or labor or xu'ox)erty to be due, are assignable by endorsement thereon or by other writing, and the assignee shall have a right of action in his own name, subject to any defense or counterclaim which the maker or debtor had against any assignor thereof before notice of bis assignment.”
Binee this instrument contained no words of negotiability, it appears to be subject in the hands of the bank to the counterclaim which the packing company had against it before its assignment, by the express terms of this statute. Bee authorities supra.
It was suggested at the hearing of this case that the bank might recover here upon a count for money paid and expended on behalf of (he packing company. The fatal objection to that position, however, is that the packing company never requested the bank to pay or expend any money on its account. It was the debtor of the packing company that made the request. A creditor is not liable to strangers who have paid its obligations at the request of its debtor. One cannot constitute himself a creditor of another by jjaving his debts voluntarily, or at the request of his debtor or of a stranger. King v. Riddle, 7 Cranch, 168, 170; Bailey v. Paullina, 69 Iowa, 463, 29 N. W. 418; Richardson v. Blinkiron, 76 Iowa, 255, 257, 41 N. W. 10; Lindley v. Snell, 80 Iowa, 103, 110, 45 N. W. 726; Keifer v. Summers (Ind. Sup.) 35 N. E. 1103. The action of the hank in the premises does not appear from the record Co be so entirely disinterested as the statement in the opinion of the majority would lead one to infer. When the bank bought this voucher, the account of the Union Loan & Trust Company was overdrawn at this bank $2,6(52.67, and (he bank knew that the trust company was insolvent. It did not notify (lie packing company of that fact, but it bought the voucher, and credited *480the trust company with its amount, — $13,509.52. It then paid tickets of the packing company to the amount of only $11,513.62. The effect of this operation, if the full amount of the voucher could be collected by the hank, would he to reduce the overdraft which the trust company had when the bank made the purchase from $2,662.67 to $1,157.01. It may he that the hope of collecting the full amount of this voucher, and thus reducing this overdraft $1,505:66, was not without persuasive power over the action of the bank in this transaction. It is nevertheless true that a seeming hardship results from, refusing to permit the bank to recover here. ' But the case is not so hard that I am willing to assent to the disregard of the important rulés of law which the maintenance of the recovery seems to me to compel.