Court Opinion

ID: 3605878
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:51:21.316825+00
Date Added: 2024-06-11T09:36:06.181190
License: Public Domain

The trial court did not find as a fact that the defendant agreed to receive, or did receive, the acceptances of Coates 
Co. in payment for the goods purchased by Caffe  Cutter. The acceptances were given and received in pursuance of an arrangement by which it was intended that the defendant should ultimately receive payment, but in fact, the object of the arrangement was defeated by the failure of Coates  Co. before the maturity of their acceptances, and the defendant was not paid.
It is, therefore, a question of law, on the facts found, whether the defendant took the acceptances in payment of the indebtedness of Caffe  Cutter, either absolutely or sub modo,
or whether he held them as mere collateral security.
As the goods were sold and delivered, and the acceptances were received in pursuance of a prior agreement to that effect, they should be regarded as having been received contemporaneously with the contracting of the debt. In general, when the obligation of a third person is received from the debtor by the creditor at the time when the debt is contracted, the presumption is that it was agreed to be taken in payment (Noel v. Murray, 3 Kern., 167), otherwise, however, when it is received on a precedent debt. (Id.) In either case, the presumption may be overcome by evidence of an agreement to the contrary. (Id.)
It is apparent from the course of dealing between the parties, the terms of their arrangement, and their subsequent conduct, that neither of them intended that the receipt of the acceptances of Coates  Co. by the defendant should have the effect to extinguish the indebtedness of Caffe  Cutter. The most that can be said is, that it suspended the right of action against them until the maturity and non-payment of the acceptances, but the creditor could thereafter *Page 266 
recover upon the original cause of action, on producing the acceptances and delivering them up. The parties themselves have given a practical construction to the arrangement, which accords with these views, for long after the maturity of these acceptances (they being unpaid and the acceptors insolvent), Caffe  Cutter paid the defendant for the goods on his promising to deliver to them the acceptances, which he afterwards did. The original indebtedness of Caffe  Cutter, therefore, remained in full force after the maturity of the acceptances, and the latter were held by the defendant as collateral security merely.
He had a right to use all ordinary and legal means to collect the collaterals, and by doing so, he did not release Caffe 
Cutter from their original liability. He did no more than that when he presented the acceptances to the English court of bankruptcy, and received a dividend on them. There was nothing in the act prejudicial to Caffe  Cutter. The dividend paid the debtpro tanto, and to that extent Caffe  Cutter were benefited by it. It was the same as if Coates  Co. had paid the amount of the dividend voluntarily. Coates  Co. were discharged from their liability as acceptors, not by reason of the fact that the acceptances were proved and a dividend was paid on them, but by force of the decree in bankruptcy. The certificate discharged them from all demands provable under the fact as well as from those proved. (Chitty on Cont., 175.) Again, the discharge of Coates  Co. from their liability as acceptors, did not release them from their liability to Caffe  Cutter for moneys advanced to cover the acceptances. It is clear that Caffe  Cutter were not deprived of any remedy against Coates  Co. by the acts of the defendant.
It is argued, however, on the part of the plaintiff, that his assignors bargained for the acceptances unpaid and unmutilated, and on default by the other party, they are entitled to recover back the consideration paid. But the alleged consideration advanced by them was money, which they were under a preëxisting obligation to pay, on the acceptances being delivered to them, and as the holder of the acceptances *Page 267 
had a right to collect them, the only effect of his having received a partial payment, was to reduce to that extent the amount which the plaintiff's assignors were liable to pay. The amount thus collected having been tendered to them, and paid into court for their use, they have sustained no damage.
The judgment should be affirmed.
All the judges concurring,
Judgment affirmed. *Page 268