Opinion
[Syllabus Material] Rehearing Denied 8 Cal. 102 at 107.
Appeal from the District Court of the Twelfth Judicial District Court, County of San Francisco.
Messrs. Carsen & Vance drew their order upon Messrs. Simpson & Jackson.
" Messrs. Simpson & Jackson, please pay the balance due on the bark New World's cargo, to Edwin Tomlinson, or order, and this shall be your receipt.
" Carsen & Vance.
" Eureka, March 5, 1856."
On the 15th day of April, 1856, Tomlinson presented the order to Simpson, one of the firm of S. & J., who made this endorsement upon it:
" San Francisco, April 15, 1856.
" Balance due on the cargo named in this order, twelve hundred and ninety-three dollars and seventy-five cents.
" A. M. Simpson."
On the same day, Tomlinson assigned the order to the plaintiff, for a valuable consideration. On the 14th day of April, one day before the presentation of the order, the amount due to Tomlinson was garnisheed by Mills & Vantine, in the hands of Simpson & Jackson. There was no evidence to show that Simpson, at the time he made the endorsement, informed Tomlinson of the garnishment, or that plaintiff had any knowledge of it, at the time he purchased the order. Payment of the sum mentioned in the order was duly demanded by plaintiff, and refused by defendant, and suit was then brought by plaintiff to enforce it. The complaint contains a simple statement of the facts, setting out the order and endorsement in full. Judgment was given for the defendant, and the plaintiff appealed to this Court.
COUNSEL:
Simpson accepted the order. A blank endorsement of the drawee on an order is an absolute acceptance of the order. (9 Mass. 57, Woodbury Storer v. Crawford, Logan, et als. )
An acceptance may be in writing or by parol. (3 Kent's Com. 100; 2 Greenl. Ev. 161.)
The drawee's name alone on any part of the bill, is a sufficient acceptance. (Byles on Bill of Ex. 164.)
Simpson having accepted the order, in his own name, cannot now say that it is not his acceptance, although the order was directed to Simpson & Jackson.
When a bill is drawn upon several individuals and accepted by one only, the acceptance is good against the one who accepts. (3 Kent' Com. 85, in note.)
The general rule is, that if a bill be drawn upon or endorsed in the name of A., and the partnership firm is that of A. and B., then, although the contract, in respect of which the bill is given, may in fact be a joint contract, still the firm will not be liable on the bill, because the bill, on the face of it, imports a several contract.
In this case, the names of the other partners cannot be supplied by intendment. (Collyer on Partnership, 376.)
A defendant cannot plead to the merits, and put the plaintiff to the trouble and delay of a trial, and then set up a plea not founded in the merits of the case. (Collyer on Partnership, p. 630.)
When the drawee accepted the bill, and fixed the amount in money, which he undertook and promised to pay to the payee or endorsee, the bill became negotiable paper.
The drawing of the bill, the presenting of it for acceptance, the fixing the amount, one thousand two hundred and ninetythree dollars and seventy-five cents, upon the bill, and the accepting for that amount, and the transfer of the bill by the payee to the endorsee, Garwood, was all done in good faith, and now, when Garwood calls for the money, it is unjust, as well as too late, for Simpson to attempt to avoid the payment.
When Simpson fixed the amount, one thousand two hundred and ninety-threedollars and seventy-five cents, as being the amount drawn for, he promised to pay that amount. The drawee received the acceptance for that amount, and Garwood, the endorsee, having paid the money to Tomlinson, relies upon the acceptance, and has the right to recover that amount.
C. Burbank, for Appellants.
E. B. Mastick, for Respondents.
The instrument in question is not negotiable; it is not a draft, or bill of exchange, and a recovery cannot be had on it as such.
" An order drawn for a particular fund, will operate as an assignment of the fund, but it will not be negotiable, and is not a bill of exchange." (Copperthwaite v. Sheffield, 1 Sand. 416.)
A note payable on a contingency, or out of a particular fund, is not negotiable. (Coate v. Buck, 7 Met. 589; Cushman v. Haynes, 20 Pick. 132; Fiske v. Hill, 22 Pick. 83; Atkinson v. Manks, 1 Cow. 69, 107.)
The paper not being negotiable, the rules governing commercial paper are not applicable, and the writing on the back cannot be construed into a contract different from what it clearly purports; that is to say a mere acknowledgment by Simpson, one member of the firm, that such a balance was due on the cargo, not toTomlinson, or any other person in particular.
It is clearly not an agreement by Simpson to pay that sum to anybody, but an admission that there was in the hands of Simpson & Jackson such a balance remaining unpaid to Carsen & Vance.
If it could be construed into a contract, on paper not negotiable, and he be made liable, he would only be liable for the fund actually in his hands, and the plaintiff must aver and prove the amount. (Atkinson v. Manks, 1 Cow. 691, 707.)
He does not acknowledge that he had anything in his hands. Nor is there any evidence showing that he had. Nor is there anything in the statute declaring that a person may be charged as acceptor, by merely writing his name on paper not negotiable.
The proceeds of the cargo having been transferred to Tomlinson, was subject to the attachment of the intervenors, and they, having attached the same and recovered judgment before the endorsement to the plaintiff, were intitled to such proceeds.
The instrument not being negotiable, the plaintiff took it subject to any liens or claims that attached while in the hands of Tomlinson; and he occupies the same position Tomlinson would if he was the plaintiffprosecuting the action. (Chamberlain v. Day, 3 Cow. 353; Fahnestock v. Schoyer, 9 Watts, 102; 17 Ves. Jr. 245; Willis v. Tevambly , 13 Mass. 204.)
If it was not a bill of exchange on its creation, it could not become so afterwards, so as to predicate an action on it against an acceptor, or to charge him as such. (Kingston v. Long, 26 Com. Law, abbreviated, 193; Banbury v. Lissett, Stra. 1211; Chitty, J., 310; Haydock v. Lynch, Lord Ray. 1563; Dawks v. Lord De Loraine, 2 Wils. 207; Chitty on Bills, 11 American edition, 144.)
JUDGES: Burnett, J., after stating the facts, delivered the opinion of the Court. Terry, J., concurring. Murray, C. J., dissenting.
OPINION
BURNETT, Judge
The first question arising under the state of facts in this case, is, whether the order was a negotiable instrument at the time it was executed by Carsen & Vance. It is objected that it was not a bill of exchange, because there was no sum certain stated, and it was payable out of a particular fund, and not generally.
It is well settled by all the authorities, that the first and principal requisite of a bill of exchange, is, that it must be for the payment of money only, and for a named sum certain. (Chitty on Bills, 132, 133.) And it would seem clear in this case, that although the order was drawn payable to Tomlinson or order, still, before he presented it for acceptance, he could not have transferred it as a negotiable instrument. If it had been a bill of exchange, then, upon presentation and refusal to accept, a protest and notice would have been necessary to fix the liability of the drawers.
It is true that a promissory note, or a bill of exchange, will be good when a blank is left for the sum, and that blank is filled up by the party to whom it is given. But this order is a very different instrument. Here the holder was not authorized, before negotiation, to state the sum for which the bill was drawn.
This was not left discretionary with him, and yet it was not settled by the order itself. When a bill is executed and delivered by the drawer with a blank left for the sum, or time when payable, these matters are not certain, but the power to make them certain, is given to the holder. In this case, Tomlinson could not assign the order before it was accepted, and the sum ascertained. (4 Doug. 9; 26 Eng. C. L. 193; 22 Pick. 83.) The legal effect of this order was an assignment of the particular fund mentioned to Tomlinson. (5 Paige, 632; 6 Barb. 182.)
But conceding that the order was not negotiable when drawn, was the conduct of the defendant such as to make a transfer of the instrument by Tomlinson to an innocent purchaser, without notice, binding upon the defendant?
The legal effect of the order being an assignment by Carsen & Vance of the particular fund to Tomlinson, the moment the order was accepted, and a certain sum was endorsed upon the order, that moment the debt became one from Simpson to Tomlinson, and the condition of Carsen & Vance, in respect to Tomlinson, was the same as if Simpson & Jackson had actually paid over the money to Tomlinson. Carsen & Vance had, doubtless, drawn this order in favor of Tomlinson, either as a conditional payment, or loan, and when Tomlinson accepted the endorsement of Simpson, in lieu of the money he necessarily released Carsen & Vance from any obligation to him. The debt then became a debt for a sum certain, due from Simpson to Tomlinson, or order payable on demand. The legal effects of the endorsement of Simpson upon the order, was to incorporate the terms of the order with the endorsement, and upon the delivery of both to Tomlinson, the instrument became a direct and original undertaking on the part of Simpson to pay to Tomlinson, or order, the sum of money stated.
It must be conceded that had no process of garnishment been served, the assignment to plaintiff would have been good, and he would have been able, under our statute, to maintain a suit in his own name. And if assignable at all, then an innocent holder had the right to take it for what it purported to be. By the endorsement, the amount stated was then admitted to be due to Tomlinson; and having put this paper in circulation, the defendant Simpson is estopped from setting up any antecedent matter. Suppose Simpson had actually paid the money to Tomlinson, and then returned him this order thus endorsed, and Tomlinson had afterwards on the same day, sold it to an innocent purchaser for value, would not Simpson have been liable to the holder? If Simpson intended to secure himself from liability to third parties, he should have stated the fact in the endorsement, that the debt had been garnisheed. But no one looking at the order and endorsement would ever suppose that such a thing had occurred. The endorsement contained nothing to put the purchaser even upon inquiry. Upon the face of the order and endorsement there was due at the time stated, a certain sum which was admitted to be payable to Tomlinson or order, on demand. Having made this admission, and a third party having acted upon it, the defendant cannot be permitted to say that this sum was not then due to Tomlinson, but was due to his creditors.
The cases, cited by the learned counsel for the respondent, differ in their circumstances from the present case. In the case of Fiske v. Witt, principal, and Moore, trustee, 22 Pick. 83, certain negotiable notes had been placed in the hands of Moore for collection, for which Moore gave an accountable receipt, promising to account for the proceeds to Witt or bearer. Moore collected a portion of the notes, when a trustee process was served upon him, and afterwards his receipt was presented by a third party, who claimed to be the bearer. It was held that the receipt was not a negotiable security, because not a promise to pay a sum certain. In this case, the bearer had taken the receipt without any endorsement by the trustee, stating the sum due. (22 Pick. p. 83.)
Another case referred to by the counsel of respondent, is that of Cushman v. Haynes, principal, and Allen and others, trustees, 20 Pick. 132. The language of the Chief Justice, in delivering the opinion of the Court, would seem to sustain the view we have taken, though it must be conceded that the circumstances of the case itself were quite different from those of the case now under consideration. Haynes had consigned to the trustees certain goods to be sold on commission, and at the same time drew an order on them, payable to his order in thirty days, for the sum of one thousand dollars, on what might be due, after deducting all advances and expenses, which order was accepted by them. After this acceptance, and before the goods were sold, the trustees were summoned in a process of foreign attachment, and it was held that the accepted order was not a negotiable security, and that the order and acceptance could not operate as an assignment, not being made to a third person. In this case, the accepted order had not been assigned to a third person, and was for no definite amount, even after acceptance. The acceptance specified no certain sum, and the Chief Justice said: " But we are of opinion that the acceptance, not being for a sum certain, but for an uncertain amount--to wit, the balance of the proceeds of goods not then sold--was not negotiable." " It not being a negotiable security, the trustees would not be liable to an action upon it by an endorsee, and it did not amount to payment or an advance." If the acceptance had been for a sum certain, it is apprehended the decision of the Court would have been different.
For these reasons, it is my opinion that the judgment of the Court below should be reversed, and judgment rendered in that Court for plaintiff.
DISSENT:
MURRAY
Murray, C. J. I am compelled to dissent from the opinion of my brethren in this case, because I think that the certificate made by Simpson of the amount due upon the order sued on, was not intended by him as an acceptance of the order, but merely as a statement of the amount due, on account of Carsen & Vance.
The money had been garnisheed in the hands of Simpson & Jackson, in a suit against Tomlinson, the holder of the order, before it had been presented for payment or acceptance; and the endorsement might be, and doubtless was, made for the purpose of informing Tomlinsonof the amount due, without any intention, upon the part of the defendants, to become legally liable therefor. There is nothing in the endorsement which would warrant the Court in presuming that the defendants intended, unconditionally, to accept the order. In fact, when we take into consideration that the money had been previously garnisheed in the hands of the defendants, of which fact Tomlinson was doubtless informed, and that the defendant, Simpson, in making said endorsement upon the order, has carefully abstained from the use of any words which would tend to show an acceptance on his part, we are led to the conclusion that the endorsement was only intended as a memorandum of the amount due upon the account, and not as an acceptance of the order.
The majority of the Court, in deciding this case, have passed upon several intricate questions of commercial law, which I do not think involved, and therefore express no opinion upon the conclusions to which my brethren have arrived.