Barney et al. v. Worthington

Barney et al. v. Worthington. Bills of exchange. Where a person authorizes another to draw on him, for the purpose of getting the draft discounted, and remitting the proceeds to the drawee, he becomes-primarily liable, independently of the question of acceptance. , Appeal from the general term of the Superior Court of the city of Buffalo, where a judgment rendered in favor of the plaintiffs, in a case tried before the court, without a jury, had been affirmed. This was an action by Preeland T. Barney, Lucius P. Hubbard and William Durbin against Samuel K. Worthington, upon a draft for $3000, drawn by Burton & Hubbard upon the defendant, which the plaintiffs had discounted, as they alleged, upon the faith of a letter written by the drawee, who received the proceeds, but refused to accept. The complaint contained three counts: two of them upon a promise to accept and pay the draft; and the third, for money lent and advanced, at the defendant’s request. On the trial of the cause, before Verplanck, J., without a jury, it appeared, that the firm of Burton & Hubbard was composed of Marshall Burton and Lucius P. Hubbard, who were in the produce and shipping business, in the state of Ohio. They were in the habit of consigning their produce to the defendant, a commission-merchant at Buffalo, and of drawing bills against it, which he had always accepted. He had made advances to them, prior to the date of the draft in question, to an amount several thousand dollars in excess of the estimated value of the property,'which he had received as their consignee; but that fact was unknown to the plaintiffs. On the 14th November 1860, two days before the date of the draft, Lucius F. Hubbard, one of the firm, was at the defendant’s office in Buffalo; the defendant wished them (Burton & Hubbard) to furnish him some money ; he *wanted them to raise some money for him, to help meet his acceptances. Hubbard replied, that it would be impossible, without his assistance; the defendant asked him, if he could raise some money at the West; Hubbard said, they probably could, by making drafts on him, payable in New York; and, if the defendant thought it best, he would write to his partner to make such drafts; the defendant told him, he had better do so. Hubbard said, that, in order to raise money in that way, it might be necessary to have his acceptances, or letter of credit, to show that he would accept the paper; the defendant replied, that this would not be necessary; that he would write to Mr. Burton, and arrange all that. Hubbard suggested, that the paper should be made payable at Ketchum, Son & Co.’s, or at the Union Bank; the defendant left it to their preference, and remarked that he might be glad to have them raise in that way $8000 or $10,000j if they could do so; and he directed them to make the drafts for $2500 or $3000 at first, and to send the proceeds to him. The defendant afterwards told Hubbard, that he had written to Burton to make drafts on him, payable in New York, and raise money on them. That letter was as follows: " Buffalo, Nov. 14,1860, M. Burton, Esq.: Dear Sir—Mr. H. has written you the state of things here. We have shipped all we could and sold the balance. Now, in order to get along, and put up the necessary margins here, which New York houses will require, it will be necessarj^ to have more ready funds. Our banks are tightening up, and throw off all the customers they can. I have given them the canal bills without consignees as yet, and am waiting to hear from W. and B. H. & Co. You will make your draft for $3000, or two drafts for $2500 each, on as long time as you can, and forward the fwnds, as early as you can, as I must, °n arrange a portion-of the drafts here. *1 hope markets will improve, and pay well for the expense and trouble we are to, in .getting this grain forward. Don’t delay in arranging and remitting. Yours, truly, S. K. Worthington.” It was shown, that the drafts or acceptances referred to in the letter, which the defendant had to meet, were personal paper of his own, with, which Burton & Hubbard had nothing to do; and that there were no outstanding drafts by them, the last of his acceptances for them having been paid by him, twelve days before this letter was written. The defendant, who was sworn on the trial, admitted that his dealings were with the firm; that he had never any individual transactions with. Burton, and that there was no arrangement for his making an individual draft upon him. On receiving the letter of the defendant, with one from Hubbard, Burton went, oh the 16th of November, to the plaintiffs, who were bankers at Sandusky; made a draft in the name of his firm, on the defendant, for $3000, payable sixty days after date, at the office of Ketchum, Son & Co., New York; communicated to them the contents of the defendant’s letter, and the fact that the proceeds were to be remitted to him ; and they, thereupon, discounted the draft, on the faith of the defendant’s responsibility. The defendant admitted that he received the proceeds, and that he supposed them to be the avails of this draft, at the time he received them. Specific objections were taken to the introduction of the letter and the draft, and to the admission of parol proof of the antecedent and surrounding circumstances, and exceptions were duly taken to the several rulings of the court. The learned judge found as matter of fact, that on the 14th November 1860, the defendant, in writing, directed and empowered Burton & Hubbard to draw upon him the draft in question, and such direction and authority were intended by him as a letter of credit, to enable them to procure the draft to be discounted. On the 16th of November, *Burton & Hubbard procured it to be discounted; and the discount was made on the faith of such direction, authority and letter of credit. The proceeds were paid to the drawers, and remitted by them to the defendant. On due presentation of the draft, he refused to accept it, and he afterwards refused to pay it at maturity. The judge gave judgment in favor of the plaintiffs for $3113.75, the amount of the draft, with interest; which having been affirmed at general term, the defendant took an appeal to this court. Ganson, for the appellant. Talcott, for the respondents. Also reported in 4 Trans. App. 105. [MAJORITY — Porter, J.] Porter, J. The letter of the defendant, though addressed to the partner who happened to be at home, was evidently intended to authorize a draft by the firm. It is to be read in the light of the surrounding circumstances; proof of which was properly admitted, to aid the court in ascertaining the purpose of the paper, and in applying and interpreting, its language. (Hutchins v. Hebbard, 34 N. Y. 24; Agawam Bank v. Strever, 18 Id. 509; Blossom v. Griffin, 13 Id. 569; French v. Carhart, 1 Id. 102.) The defendant was substantially the borrower. Burton & Hubbard were indebted to him on an open and current account, but they had no available means of payment. His own paper was maturing, and he wished them to borrow in Ohio for his use, what he could not obtain at home, in the then stringent condition of the money market. They told him, they could not obtain the loan, without the aid of his credit; and he accordingly furnished them with a written authority to make the draft, for the precise purpose of giving credit to the paper of which he was to receive the proceeds. The judge seems to have been of opinion, that, as there was no' agreement, in terms, to honor the draft, the transaction did not amount to an unconditional promise of acceptance, within the meaning of the statute. He held, however, that the defendant was resPons^e’ as upon a letter of credit, on the *faith of which the plaintiffs made the discount. In a rigid and technical sense, that, name may not be strictly appropriate; and yet, in view of the intention with which the letter was written, and the purpose for which it was to be used, the designation can scarcely be called a misnomer. In its substantial office, the writing was really a letter of credit, but it was also something more. In view of the circumstances under which it was given, the defendant’s unqualified authority to draw on him for the amount, was equivalent to an unconditional promise to pay the draft. The absence of technical promissory words is of no practical moment, where the language employed is such as to raise an imperative legal obligation. (Bank of Michigan v. Ely, 17 Wend. 508, 512; Ulster County Bank v. McFarlan, 5 Hill 432.) The objection that the complaint is insufficient to uphold the judgment, is one which we cannot sustain. It is based on the statutory provision, that a written and unconditional promise to accept a bill, before it is drawn, shall be deemed an actual acceptance, in favor of a party purchasing on the faith of such an engagement. (1 R. S. 768, § 10.) This enactment was not designed to prescribe a form of pleading, but to furnish a rule of judgment. Under our present system, a party is at liberty, in his complaint, to state the actual facts which raise a cause of action in his favor. In the present cause, the plaintiffs alleged the promise made by the defendant, and his refusal to perform it. They proved the truth of what they averred ; and they deduce their title to judgment, through a statute, which makes these facts conclusive in support of their legal right. The judgment should be affirmed. Judgment affirmed.