Rathbun v. Citizens' Steamboat Co. — 57 How. Pr. 191

Majority

p. 191

COURT OF APPEALS.

Joseph R. Rathbun et al., plaintiffs and appellants, agt. The Citizens’ Steamboat Company of Troy, defendant and respondent.

Headnote

Duty of common ca/rri&r v/nd&r “ O. O. D.” contract.

The consignee’s check is not payment, and the carrier is liable if the check is not paid. But if the consignor receives the check from the carrier, without objection, he ratifies the unauthorized act of the carrier, who is in consequence relieved from liability.

Decided March, 1879.

This action was commenced in the ISTew York marine court, to recover ninety-four dollars and twenty-eight cents, which the defendant, as common carrier, agreed to collect

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from one Van Alstyne, upon a “ O. O. D.” consignment to Troy.

The defendant took Yan AMyne’s check upon delivering the goods, and, upon the arrival of the defendant’s boat at New York city, their agent delivered the cheek (which was payable to the plaintiffs’ order) to said plaintiffs, who accepted the same, without objection, deposited it in their bank for collection, and, upon its return protested for non-payment, the plaintiffs commenced this action, in and by which they sought to hold the defendant as carrier and collecting agent, agent, liable for the amount.

Judge McAdam, before whom the case was tried without a jury, filed an opinion (which is reported im, the 1st Weekly Digest, 366), holding that the plaintiffs were under no obligation to accept the consignee’s check, and that they might, by declining to have received it, have held the carrier .for the money, but having voluntarily elected to receive the check, they thereby ratified the unauthorized act of their agent, the earner, and made the transaction their own (citing Collander agt. Dinsmore, 55 N. Y., 200 ; Commercial Bank agt. Warren, 15 N. Y., 577 ; Dunlap’s Paley’s Agency [4th Am. ed. of 1856], notes on p. 171; Story on Agency [8th ed.], secs. 254, to 256). This decision was reversed by the marine court, general term, and upon further appeal to the New York common pleas, the order of the marine court, general term, was reversed. A further appeal was thereupon taken by leave of ■ the latter court, to the court of appeals, which court has sustained the common pleas and Mr. justice McAdam, in and by the following opinion.

B. Rush Stoddard, for appellants.

A. H. H. Damson, for respondent.

The transaction developed in this case is not an uncommon one. The plaintiffs, in New York, con

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signed to one Van Alstyne articles of personal property, and forwarded the same by defendant, marked O. O. D. $94.28. It was in effect evidently intended as a sale by plaintiffs to Van Alstyne of the property, the price payable on delivery. The defendant undertook to deliver the property and collect the money and return it to the plaintiffs. The defendant accepted a check of Van Alstyne on a Troy bank, payable to the order of the plaintiffs and delivered it to the plaintiffs, who accepted it and transmitted it for collection, and it was returned protested. There is no dispute but that the defendant would have been liable if the plaintiffs had refused to accept the check, or had accepted it in a qualified manner, but the question is, whether the unconditional acceptance- of the check did not amount to a waiver of the requirement to collect the money or a ratification of the act of receiving the check in lieu of the money. The learned counsel for the plaintiffs rely mainly upon two positions. First. That this is the case of receiving a note or check of a third person for an antecedent debt or obligation, the rule being that such note or check is not to be deemed a payment unless an agreement to that effect is made. Second. That it is not a ratification because the principal was ignorant of the fact that there were no funds.

As to the first proposition the answer, is, that there was no pre-existing debt, the payment over of the collection was but the consummation of a single transaction. The defendant received this check as money; it was optional with the plaintiffs to receive it as such or not. It was delivered to them as such. The only rational construction of the transaction, if put in language, is that the defendant said, I delivered your property and took this check instead of money; will you receive it as such ? To which the plaintiffs assented and accepted it. It would be unnatural to construe it as an offer to turn out the check of a third person, upon a pre-existing debt. True, the defendant had done an act which would fix a liability upon it for the amount, if the plaintiffs had so

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elected, but it was competent for them to waive the strict performance of this part of the contract.

As to the second point, it is insisted that the acceptance of the check is not a ratification, because the principal did not have knowledge of all the facts. It is a general rule, that knowledge of all material facts is indispensable, in order to bind the principal -by a ratification (Story on Agency, sec. 243; Nixon agt. Palmer, 8 N. Y., 401 ; Seymour agt. Wyckoff, 10 N. Y., 224 ). But a ratification, when fairly made, is equal to an original authority (Story on Agency, sec. 244, and cases cited). What facts were unknown to the plaintiffs .at the time they received the check % The check was genuine in its execution; it was made by the person to whom the property was delivered, and it is significant that it was made payable to the order of the plaintiffs, implying that it was intended to be delivered to them. It does not appear whether the drawer had funds in the bank at the time it was drawn, or not. It is presumed that he did not at the time it was presented, and this was not known to the plaintiffs, and from the nature of the case could not be known. A depositor may withdraw funds, although there are outstanding checks.. It seems to me that whether there were funds in the bank at the time of accepting the check, or not, or whether they had been withdrawn intermediate the drawing and acceptance of the check is not material upon this question, and that the plaintiffs, by accepting the check, took that risk. The question presented to them was, whether they would adopt the act of the carrier by taking a check instead of money. The risk of non-payment when presented was necessarily assumed. There was no suppression on the part of the carrier, nor does it appear that any fact had occurred between the making and acceptance of the check. It is argued that the plaintiffs were merely aiding the earner to get the money. If that was their intention, they should have made a qualified acceptance. ;If they had done this, or had refused the check, the carrier might have returned it and procured the money. By an

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unqualified acceptance they gave the carrier to understand that they adopted his act (Brooks agt. Express Co., 21 N. Y. S. C. [14 Hun], 364).

The case of Walker agt. Walker (5 Heiskell's R., 425), gives some countenance to the contention of the plaintiffs.

There an agent in one state collected money for his principal in another, under instructions to remit by express. Instead of doing so, he purchased a check on Hew York from a firm in good standing, and sent it by mail to the principal. It was sent the sixth of February, but was delayed, so that it was not received until the seventeenth of April, and the principal forwarded it to Hew York for payment. On the thirteenth of April the maker failed, and the check was not ]?aid, and it was held that taking and transmitting it to Hew York was not a ratification, because the failure of the drawer was unknown to the principal at the timé he received it.

In this case there was no such intervening fact. There was an apparent necessity for forwarding the check to prevent a discharge of the maker by laches, and hence the act was not entirely inconsistent with the continued liability of the agent. Some stress, too, was laid upon a letter written by the agent the day before the receipt of the check, from which an inference was drawn that he regarded himself liable if the check was not paid, and the check was drawn by a person entirely unknown to the principal, who necessarily relied upon the representations of the agent as to his credit and solvency. Under these circumstances, it was held, by a divided court, that the act of transmitting was not a ratification. Whether the decision in that case was right or not, I do not think it controlling in this case. The circumstances here are capable of but one construction, according to the mode and habits of business, and that is, that the plaintiffs adopted and ratified the act of the carrier, by the unqualified acceptance of the check.

The judgment must be affirmed.

All concur. Abdbews, J., not voting.