Munroe v. Bonanno — 16 A.D. 421

Majority

p. 421

John Munroe and Others, Respondents, v. Domenico Bonanno, Appellant.

Headnote

Mistake in drawing a draft upon the wrong party —right of such party paying it by mistake, to recover the money.

"Where a foreign agent of two New York importing houses purchases goods for one of the houses, and sends the bills of lading and consular invoices therefor to the Paris house of a banking firm, upon which the agent holds letters of credit for both the importing houses, and the Paris house, although sending advices as to the marks and numbers necessary to identify the goods to the proper consignee thereof, by mistake draws its draft in recoupment upon the other firm, which, supposing the goods to be its own, obtains the marks and numbers from the consignee and, although the goods prove worthless, takes up the bills of lading and pays the drafts, the firm so paying is entitled, to recover from the bankers the money thus paid by mistake, and cannot be said to have been negligent in relying upon the significant representation of the bankers in drawing the drafts upon it, and in paying such draft before receiving from its foreign agent the marks and numbers.

Semble, that even upon the theory that the payer of the draft had purchased the goods from the banker, it might recover the money paid, on the ground that the purchase was made under a mistake induced and brought about by the banker, and that as the goods had proved to be worthless there was no consideration for its payment of the draft.

Appeal by the defendant, Domenico Bonanno, from a judgment of the Supreme Court in favor of the plaintiffs, entered in the'"*' office of the clerk of the county of N<=w York on the 20th day°f June, 1896, upon the verdict of a jm'y rendered by direvt;011 0f the court, and also from an order entered in said clerk’s office on the 15th day of June, 1896, denying the defendant’s motion for a new trial made upon the min nibs.

Gilbert P. Colemmn, for the appellant.

Charles P. Eu^hmore, for the respondents.

The action was brought on five drafts, four of which were paid before the trial, and liability upon the other was admitted upon the trial. The defendant interposed counterclaims for money had and /'

p. 422

received. The court dismissed the • counterclaims, and directed a verdict for the plaintiffs for .the amount of the draft upon which liability was conceded. The questions here arise upon the dismissal of the counterclaims. The defendant accepted and paid the plaintiffs’ two drafts. He claimed on the trial that , these drafts were so accepted and paid under a mistake of fact; that there was no-consideration for the acceptances or payments ; that the. money was, therefore, had and received to his use, and that he was entitled to recover the same back. In order to correctly determine this appeal we must understand the facts in detail. The plaintiffs were bankers, with a house in Paris under the name of Munroe & Co., and a house in Hew York under the name of John Munroe & Co. The defendant was a fruit commission merchant in Hew York city, and an importer of foreign fruits. One of his correspondents was C„ Falamo Rossi, of Messina, Italy. The defendant had done his bank- ■ ing business through plaintiffs’ houses for many years, and a definite course of business had grown up between the parties and the correspondent of defendant in Europe. The correspondent was authorized to draw on the Paris house, under letters of credit, at such times and in such amounts, not exceeding the limit- of the letters, as he might see fit. All drafts were accompanied by bills of lading and ---1 consular invoices for fruit, which, at a valuation fixed' by the letter |^of credit, equaled the faces of the drafts. At the time of drawing tiuch drafts the correspondent advised the defendant of the drawing an^, sent him a memorancl-«m of the numbers and marks of the boxég ine]-»-deh in the shipment^ So that the defendant could identify tiie property when it arrived in Hew York. Upon receipt of the drafts, the Paris house drew tflyafts upon the defendant in favor of the Hew York house for the sanae amounts and forwarded the latter drafts to the Hew York house, with the bills of lading and consular invoices received from the correspondent. The drafts were presented to defendant in Hew York ancJ accepted by him, and the defendant received the bills of lading and' consular invoices and gave back trust receipts when the vessel arrived on which the goods were shipped. "When the drafts and acceptances came due they were paid by the defendant. When the vessel on wtaich the goods were shipped arrived in Hew York, the defendant, hjaving received the advice and marks and numbers from the correspondent, identi

p. 423

fied and took possession ■ of the property. This was the general course of business that had grown up, and under which the parties were acting in reference to the transactions involved in this action.

May 17, 1893, the defendant procured from the plaintiffs a letter of credit in favor of Bossi for 25,000 francs, to be drawn upon by him against shipments of lemons and oranges. The number of the letter was 7217, and the Paris house gave Bossi information of this letter of credit by letter of May 30, 1893. This same Bossi held another letter of credit upon plaintiffs’ Paris house for 10,000 francs, procured by Hirsel,. Feltman &'Co., of New York city, to be used in substantially the same way as the one procured by the defendant. These New York parties had nothing to do with each other, but the two letters of credit were held by Bossi as correspondent for each of the two parties. The Paris house notified Bossi of the Hirsel, Feltman & Co. letter of credit by cable June 2,1893. Holding these two letters of credit, one numbered 7217, and the other known as cable credit of June second, Bossi on the fifth of June bought as correspondent for Hirzel, Feltman & Co. two separate bills of goods and took separate bills of lading and consular invoices therefor, and drew two drafts on plaintiffs’ Paris house, one for 7,200 francs and the other for 2,800 francs, and forwarded these two drafts with the bills of lading and consular invoices annexed, to the Paris house, inclosed each in a letter, wherein he stated the drafts respectively were drawn according to cable credit of June second, which was the Hirzel, Feltman & Co.’s, and not the defendant’s, letter of credit. The Paris house thereupon drew the two drafts in question here, not upon the firm of Hirzel,. Feltman & Co., as they should have done, but upon this defendant. This was the first mistake made in the transaction, and if this mistake had not been made there would have been no trouble about the matter. These drafts were directed to defendant, and expressly stated that they were drawn against letter of credit No. 7217, which was the defendant’s, and not Hirzel, Feltman &' Co.’s, letter. These drafts, with the accompanying bills of lading and consular invoices, were forwarded to plaintiffs’ New York house, and were presented to and accepted by defendant June 23, 1893.

The bills of lading showed that the property was shipped by the James Turjpie, and the vessel arrived in New York July 8, or 10,

p. 424

' 1893. The defendant did not receive from Rossi any advices as to these purchases and shipments or drafts, or marks or numbers of the boxes. These were evidently sent to Hirzel, Feltman & Co. They had the marks and numbers at all events. The first the defendant saw of the bills of lading and the consular invoices was after the goods arrived in Mew York. It often occurred that the drafts came and were accepted by the defendant a week before the advices were received from Rossi, so that there was nothing surprising in the advices not - having been received before the drafts were accepted in these particular cases. The first notice the defendant had as to what vessel the property Was shipped upon was through his clerk> Freund. This clerk was in plaintiffs’ Mew York house on other business when he was informed that the ship had arrived with the goods on board for defendant, and that defendant had accepted the drafts for these goods, and he was asked if the defendant was not ■ going to take up the bills of - lading. The bills of' lading were thereupon taken by the defendant. .The defendant did not have the marks or numbers and could not identify the goods. Freund, the agent, learned that ITirzel, Feltman & Co. had them, and he went to their office and'got them. They told the defendant’s agent that they had received the marks and numbers, but no invoices. Freund told him that the defendant had the drafts, and so they gave him the marks and numbers, supposing, as Freund says, that the goods were for the defendant because he had the drafts. Hirzel, Feltman & Go. said nothing to Freund about the goods having been consigned to them. The goods were then identified and examined, were found to.be worthless, and were abandoned on the dock. The acceptances by defendant became due, and were paid to plaintiffs, one on July 13, .1893, and the other on July 21, 1893. Subsequently Rossi informed defendant that the goods were not shipped for him, but were bought and shipped for Hirzel, Feltman & Oo. This was thirty days after the goods arrived in Mew York, about the 8th or 10th of August, 1893.

The motion to dismiss was made and granted at the close of defendant’s evidence,, and no evidence was given in contradiction by the plaintiffs. "The question is, therefore, whether, upon the view of the- evidence most favorable to the defendant, he was entitled to recover the money paid upon the two drafts. There seems cu

p. 425

be no dispute but that the acceptancfe and payment of the drafts were made under a mistake ■ of fact. The plaintiffs’ Paris house made a mistake. It was not claimed that they intentionally drew the drafts upon the wrong person. They had no right to draw the drafts upon defendant, and we are unable to see how, having made the mistake and having secured the defendant’s money by misleading him, they should be allowed to retain the money to which they never had any right whatever. The defendant never misled the plaintiffs in any way. He supposed the drafts were properly drawn, that Rossi had bought the goods and shipped them for him and had drawn his drafts therefor upon the plaintiffs’ Paris house, and it would be a great injustice to allow the plaintiffs to retain money which they obtained from defendant through a mistake about which he was not at fault, but which was caused solely by the plaintiffs’ own mistake and neglect and unauthorized act. It is suggested that the defendant was negligent and careless in accepting the drafts and paying them, when the advices and marks and numbers had not been sent up to him; but under the evidence we cannot say that he was bound to rely upon a failure to get the advices, marks and numbers from Rossi, rather than upon the fact that the drafts had been drawn upon him; and certainly the plaintiffs ought not to be heard to allege carelessness against the defendant by reason of his reliance upon their significant representations to him by drawing the drafts and procuring their acceptance and payment by him. There is no ground for saying.that the defendant should be defeated in his claim to recover back the money paid the plaintiffs upon any theory that he assumed to purchase the property from the plaintiffs. Even if such a construction could be given to the transaction, the purchase was made under a mistake of fact, induced and brought about by the plaintiffs, and the property was entirely worthless and there was no consideration for the acceptance and payment of the drafts.

Hpon any view of the case we comé back to the proposition that the money was received by the plaintiffs from the defendant under a mistake of fact induced by the plaintiffs and without any consideration in fact.

We think the verdict was erroneously directed by the court, and

p. 426

that the judgment, and order appealed from should be reversed and a new trial ordered, with costs to the appellant to abide event.

Tab Brubt, P. J., Rumset, Pattersob and Parker, Jj., concurred.

Judgment and order reversed, new trial ordered, costs to appellant to abide event.