Freeland v. Van Campen — 2 Abb. Ct. App. 184

Majority

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FREELAND v. VAN CAMPEN.

March, 1864.

Headnote

Plaintiff and defendant being liable, respectively, as maker and indorser of a note, on which, as between themselves, plaintiff, the maker, was indebted only for a part, plaintiff gave defendant a negotiable draft on a third person and his own note, together equaling his indebtedness; which defendant received, as expressed in their agreement, “ in full payment ” of the note on which both were liable.

■Held, That defendant was not thereby made bailee, or agent of plaintiff, but became the principal debtor, and plaintiff was liable as surety only.

Defendant having negligently failed to collect the draft, the parties agreed each to contribute to pay the note on which they were liable -r and plaintiff, by defendant’s authority, subsequently sued on the draft, and by compromise recovered a part thereof.—Held, That plaintiff could recover of defendant the residue of the sum he had contributed to pay the principal note.

James Freeland sued George Van Campen, in the supreme court, to recover money paid for his use and at his request.

Among the items allowed by the judge at the trial (which, by consent of the parties, was without a jury), was one which the plaintiff claimed under an agreement between himself and the defendant, in which the defendant agreed to pay a certain note for two thousand six hundred and sixty dollars, made by the plaintiff and indorsed by the defendant. The plaintiff alleged that the defendant did not so pay the note, but that afterward the plaintiff, at the request of the defendant, paid a large sum on the note, part of which had been repaid by the defendant, but of which there still remained due a considerable amount, which the plaintiff claimed. In support of his case, the plaintiff proved a receipt made by Van Campen, in substance as follows : “ Deceived from James Freeland the draft of Messrs. Alny & Wilcox, of Cincinnati, on Messrs. Duncan, Sherman & Co., of New York, for one thousand five hundred and ninety-seven dollars and fifteen cents, together with his note for three hundred and eighty-four dollars and ninety cents, which said draft and note are in full payment for a note

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given by said Freeland for two thousand six hundred and sixty dollars. (Signed) Geo. Yah Campeh.”

The plaintiff also proved an ageement between himself and the defendant, stipulating that as the draft mentioned in the former agreement had not been paid at maturity, the plaintiff should, for the present, but without in any respect changing or altering the rights or liabilities of the parties, take care of so much of the note of two thousand six hundred and sixty dollars as was represented by the draft.

The plaintiff then proved that in consequence of this agreement, he had paid on the note one thousand six hundred and twenty dollars and eighty-three cents (which was the sum represented by the draft), only one thousand five hundred and twenty-nine dollars and fifteen cents of which had been repaid by the defendant. He now demanded the balance, with interest from the time of payment. The nature of the defense and the facts in support of it are given in the opinion.

Judgment was given for the plaintiff, and affirmed by the court at general term, and defendant appealed.

C. Tucker, for defendant, appellant.

A. 6r. Rice, for plaintiff, respondent.

By the Court.

The rights of the parties depend upon the true construction to be given to transactions between them at their different dates.

On February 27,1854, the plaintiff purchased of the defendant lumber, the supposed quantity of which entitled the latter to compensation to the amount of two thousand six hundred and sixty dollars, and for this amount the plaintiff gave to the defendant his negotiable note, indorsed by one Blackmore, payable at the Leather Manufacturers’ Bank in New York, on May 31, 1854. This note was shortly thereafter negotiated by the defendant at the Steuben County Bank, and both parties became liable upon it. Before its maturity, and on May 29, 1854, the plaintiff and defendant accounted together in regard to the lumber, and by measurement ascertained a deficiency in the quantity, which entitled the plaintiff to a deduction of six

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hundred and sixty-seven dollars and ninety-five cents from the purchase price; so that the true amount for which he was liable to the defendant on account of the lumber was one thousand nine hundred and eighty-two dollars and five cents, instead of two thousand six hundred and sixty dollars. Some provision, therefore, was to be made for this; especially as the two thousand six hundred and sixty dollar note would mature in a few days. The plaintiff was then in possession of a good and collectible draft drawn by Alny & Wilcox, of Cincinnati, on Duncan,'Sherman & Co., of New York, payable without grace on June 1, then next. This was less than his just indebtedness to the defendant by the sum of three hundred and eighty-four dollars and ninety cents. The plaintiff thereupon executed and delivered to the defendant his note for the last named sum, payable on August 1, thereafter, at the 'Leather Manufacturers’ Bank, in New York, and also indorsed and delivered to him the draft before mentioned, in full payment of the note of two thousand six hundred and sixty dollars. This agreement was reduced to writing at the time. The legal effect of it was, I think, as between the present parties, to make the defendant, and not the plaintiff, liable to pay the two thousand six hundred and sixty dollar note at the Steuben County Bank. The plaintiff had put into the defendant’s hands available paper to pay so much of that note as he was equitably bound to pay. He had, in fact, negotiated or sold to the defendant such available paper in full payment and extinguishment of such liability. The defendant could doubtless have realized the full amount by negotiating it at the Steuben County Bank. If he had done so, and had procured the discount of his own paper for the balance, the two thousand six hundred and sixty dollar note would have been paid, and both parties would, then have remained liable, as between themselves, for precisely what was equitable between them. This was doubtless what was intended. At all events, for a perfectly valid price and consideration, to wit: the plaintiff’s note, payable at a future day, and the Cincinnati draft, also not yet matured, the plaintiff paid so much of the two thousand six hundred and sixty dollar note as he was, as between the parties, bound to pay, and these were received in payment. Such is

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the language of the written contract, and there is nothing in the case to alter or qualify its effect.

The legal effect of the transaction was not, as the defendant’s counsel supposes, to make the defendant the mere bailee or agent of the plaintiff to negotiate and collect the draft and small note, and apply the proceeds to the extinguishment of the two thousand six hundred and sixty dollar note. Even if such was the transaction, the defendant neglected his duty in not promptly transmitting the draft for collection, and if the plaintiff in any way subsequently paid of this amount of two thousand six hundred and sixty dollars more than by this agreement it was intended he should pay, it is not perceived why he ought not to be permitted to recover it as money paid for and on account of the defendant. By reason of the defendant’s negligence in forwarding the draft for collection, it was not seasonably protested, and the" plaintiff was discharged from his liability as indorser.

On August 10, 1854, the parties made a further agreement in writing, reciting'the foregoing facts, and that the two thousand six hundred and sixty dollar note and the one thousand five hundred and ninety-seven dollar and fifteen cent draft were still unpaid, and stipulating that for the present the plaintiff should take care of so much of said note of two thousand six hundred and sixty dollars as equaled the amount of the draft, and that the defendant should take care of the balance; but without in any respect altering existing, or creating new or different, liabilities of the parties to each other or to other persons.

After this explicit "statement and reservation of their rights, I do not see how, hy this arrangement, the position of the parties was in any respect changed. The plaintiff must by this time have paid his three hundred and eighty dollar and ninety cent note, for it had just previously matured, and nothing further is said about it. He was also legally discharged from his liability on the draft because it had not been duly protested. On the same day he performed his part of the agreement of that date by paying one thousand six hundred and twenty dollars and eighty-three cents on the two thousand six hundred and sixty dollar note, the defendant paying the bal

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anee. It being necessary to take measures to collect the draft, the defendant placed it in the plaintiff’s hands for that purpose. It was prosecuted against Duucan, Sherman & Co., by the advice of defendant, and in his name, the defendant giving the plaintiff written authority for that purpose, and authority to receive and control the proceeds when collected. The suit brought against Duncan, Sherman & Go. was ultimately, and on February 26,1857, compromised, with the advise and consent of the defendant, upon payment of the principal of the draft, without interests or costs. The plaintiff’s costs, sixty dollars, and eight dollars for exchange, being deducted by the attorneys from the same. The balance, one thousand five hundred and twenty-nine dollars and fifteen cents, was put into the plaintiff’s hands on February 26, 1857. The difference between this sum and the amount paid him in August, 1854, with interest thereon, was the amount which the plaintiff recovered on the trial, with the exception of one or two small items of claim and set-off which were not disputed.

The plaintiff was entitled to recover this amount. The rights of the parties were fixed by the agreement of Hay 29, 1854, and were not altered by the agreement of August 10 following. The arrangement for taking up the two thousand six hundred and sixty dollar note was temporary one, and the amount then paid by the plaintiff wholly in excess of what was due from him. The debt was the debt of the defendant, and the plaintiff in effect his surety on the note. The draft was subsequently prosecuted for the benefit of the defendant, and the expenses of collection lawfully deducted from the amount with which the plaintiff was otherwise chargeable. By giving effect to this arrangement, the intentions of the parties will be carried out, justice done, and the legal rights of the parties preserved.

I think the judgment should be affirmed.

All the judges concurred.

Judgment affirmed, with costs.