Waugh v. Seaboard Bank — 23 N.Y. St. Rep. 736

Majority

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John H. Waugh et al., App’lts, v. Seaboard Bank, Resp’t.^[1]

(Court of Appeals,

Filed June 4, 1889.)

Headnote

1. Contract—Construction on contract nor sale of oil—Petroleum oil certificates.

The plaintiff, desiring to pay for and get delivery of certain oil, and to procure the funds with which to make the payments, arranged with the defendant bank, who, at the request of H. and W. transferred 43,000 barrels of oil in its hand belonging to H. and W , to the plaintiffs, to answer their contract of sale, on receiving from plaintiffs the purchase price. The bank, at the same time, loaned the plaintiff certain moneys which with others deposited constituted a fund equal to the full price of the 43,000 barrels. H. and W. were insolvent at the time The bank carried out its agreement, transferring to the plaintiffs on their book oil certificates representing 43,000 barrels, holding the certificate so transferred as security for the loan to the plaintiffs Held, that the bank’s agreement was to deliver regular” oil. that is oil free from charges for storage.

'2. Practice—Finding on referee—Construction on

The prevailing party is entitled to the most favorable construction of the findings of a referee to uphold the judgment

Appeal from a judgment of the general term of the superior court of New York, reversing a judgment in favor of plaintiff entered upon the report of a referee.

Henry C. Wilcox, for app’lts; Frederick S. Parker, for resp’t.

It is undisputed that the plaintiffs purchased and paid for uregular” oil, that is, for oil free from charge for storage.

The situation of the several parties when the transaction with the bank occurred, was this: The plaintiffs desired to pay for and get delivery of the oil, and to procure the funds with which to make the payment. The firm of Hilton & Waugh had failed, or were about to fail, and desired to secure the oil to deliver on their contract.

The bank held a large quantity ot oil belonging to Hilton .& Waugh as security for loans to that firm. The bank at

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the request of Hilton & Waugh consented to transfer 43,-000 barrels of the oil in its hands to the plaintiffs to answer their contract of sale, on receiving from the plaintiffs the purchase price. The bank, at the same time, to put the plaintiffs in funds, agreed to loan them $28,917.24, which with $5,000, which they agreed to deposit with the bank, would constitute a fund equal to the full purchase price or the $43,000 barrels.

The arrangement was consummated in this way: The bank transferred to the plaintiffs, on their books, oil certificates representing 43,000 barrels,.and loaned the plaintiffs the sum of $28,917.24, holding the certificates so transferred as security for. the loan. The plaintiffs deposited with the bank the proceeds of the loan and the additional sum of $5,000, and drew against the deposit the sum of $33,917.24, that being the full purchase price of the oil, and the check was received by the bank and passed to the credit of Hilton & Waugh as payment pro tanto of their debt to the bank.

The question whether the bank, as a part of the arrangement, agreed that the oil to be transferred to the plaintiff should be free oil, that is oil upon which all storage charges shall be paid to the time of the transfer, was sharply litigated on the trial. There was, we think, ample evidence to support the affirmative of this contention. Under the rules of the petroleum exchange, only such oil was a good delivery upon the contract between the plaintiffs and Hilton & Waugh.

The bank acted as a clearing house for the exchange, and was familiar with its rules. There can be no question that the plaintiffs, Hilton & Waugh, understood that the plaintiffs were to receive a transfer from the bank of “ regular” oil. The bank accepted from the plaintiffs the purchase price of free oil, and applied it on its debt against Hilton & Waugh.

It is clear that the bank understood the nature of the contract between the plaintiffs and Hilton & Waugh, and it is contrary to every reasonable intendment that the plaintiffs would have paid for “regular” oil, and have accepted oil subject to storage charges of $2,924.35, or that the bank when it agreed to transfer oil to the plaintiffs on receiving the price of “ regular” oil, contemplated at that time a transfer of oil encumbered by storage charges.

It is not pretended that the plaintiffs had knowledge of the particular certificates held by the bank, or the charges for storage against the oil. <

The question of law presented on this record turns upon the construction of the finding of the referee. It is

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claimed, on the part of the plaintiffs, that the referee found that the bank undertook and agreed with the plaintiffs to transfer oil free from charges. It is insisted, on the part of the defendant, that the referee put his judgment against the bank on a custom of the trade which the defendant insists was not binding, upon the bank and does not control the transaction in question.

The. referee found, in his fifth finding, that Hilton & Waugh became obligated by the contract to deliver to the plaintiffs 43,000 barrels of petroleum oil, "represented by certificates, known as United Pipe Line Certificates, with storage charges thereon paid to the date of such delivery.” In the seventh finding, he finds that the bank having certificates representing 100,000 to 200,000 barrels of oil pledged to it by Hilton & Waugh as security for loans, at the request of said firm and of the plaintiffs, undertook and agreed to transfer and deliver to the plaintiffs’ firm the certificates so hypothecated with it, or in certificates into, which the certificates so hypothecated had been converted, certificates to the amount of, or representing such 43,000 barrels of oil, which, under the custom, necessarily would be United Pipe Line Certificates, and have storage charges paid to the date of delivery.”

Reading the two findings together, they import that the bank agreed to transfer such oil as Hilton & Waugh had obligated themselves to deliver, viz., oil with storage charges paid to date of delivery. The clause commencing, "which under the custom,” etc., at the conclusion of the seventh finding, may fairly be construed as meaning that the custom was also in conformity with the agreement, and not that the bank was bound by the custom of trade.

The prevailing party is entitled to the most favorable construction of the findings of the referee to uphold the judgment. Hill v. Grant, 46 N. Y., 496 . The circumstances point to such an agreement by the bank, as is. claimed by the plaintiffs. The justice of the case seems to be on their side of the controversy. The referee intended, we think, to find that there was an express agreement by the bank to transfer " regular ” oil.

The general term reversed the judgment on what appears to us to have been a misconstruction of the referee’s report.

We think no error was committed on the trial, and the order of the general term should, therefore, be reversed and the judgment on the report of the referee affirmed.

All concur, except Gray, J., not voting.