Fahy v. Fargo — 43 N.Y. St. Rep. 589

Majority

p. 589

John Fahy et al., App’lts, v. James Fargo, Prest., etc., of the American Express Co., Resp’t.

(Supreme Court, General Term, Fifth Department,

Filed January 22, 1892.)

Headnote

INegligence—Collecting agents.

Plaintiffs, on the 15 th of November, delivered to defendant a draft for collection, with instructions to h Id for one day if not paid on presentation, and then if not pil'd to return it. Defendant sent it to another company, by which it was presented on the 18th and again on the 25th, but was not pa d, and it was returned on the 30th. The drawees during this time had property sufficient to pay said draft, but on the 29th made an assignment wiih preferences. Reid, that defendant was negligent in not

p. 590

returning the draft as directed, and'that from, the fact that the drawees had ample property before the assignment to pay the draft, "a presumption, arose that such claim would have been paid or could have been collected*, had defendant discharged its duty (Lewis, J., dissents.)

Appeal from a judgment entered in Monroe county on the 7th day of August, 1890, on the report of a referee, awarding to-the plaintiff nominal damages only.

Irving Paine, for app’ltsNathaniel Foote, for resp’t.

This action is brought to recover damages for the negligence of the defendant in failing to return, promptly, as draft entrusted to it for collection of Seaver & Hall, debtors of the-plaintiffs, doing business at Byron, N. Y.

On the 15th day of November, 1886, the firm of Seaver &. Hall were indebted to the plaintiffs in the sum of $187.36, lor goods sold by the plaintiffs to that firm. On the 15th day of November in that year the plaintiffs delivered to the defendant, a draft in the usual form, requesting the defendant to present ther same to Seaver & Hall, and collect it, with instructions in writing that if the same was not paid on presentation to hold it for one day, and, if not.able to collect it on the expiration of that time, to return it to the plaintiffs: All of this the defendant undertook to do.

The defendant, however, having no office at Byron, did, on ther 16th day of November, 1886, employ the National Express Company to perform this service, and the draft which was handed to-the National 'Express Company was, by the latter, on the 18th day of November, 1886, presented to the debtors, who requested, time to examine the account of the plaintiffs. The agent of the-National Express Company retained the draft in his possession,, and again, on or about the 25th day of November, presented the same to a member of the firm of Seaver & Hall, who still neglected! to pay it, rendering as an excuse therefor that they had not had time to examine such account. The draft was then held until the 30th day of November, when the same was returned to the office of the National Express Company at Rochester, and by the latter returned to the plaintiffs on the 1st day of December, 1886. On this day, namely, the 1st day of December, 1886, on receiving the draft back, the plaintiffs were first notified that the draft had not been paid. When' the draft was delivered to the defendant for collection, and until the 29th day of November, 1886, the firm of Seaver & Hall were carrying on business at Byron, owned and had in their possession property of the value of several thousand dollars, and each of - the two members of the firm owned individual property, not exempt from levy and sale on execution, exceeding in value the amount of the draft. On the 29th day of November Seaver & Hall made a general assignment of their copartnership and individual property in trust for the benefit of creditors, with preferences therein to various creditors, but not any preference to the plaintiffs. In fact, for several days previous to the making of the,assignment, the firm had,.as subsequent events showed, been insolvent, being unable to pay its debts in full. An action had

p. 591

been begun against the firm in the supreme court sometime prior ito the making of the assignment by one of its creditors, and if no ■defense had been interposed judgment could have been taken ■therein three or four days after the date of the assignment. The referee found that for several days before making the assignment Seaver & Hall contemplated making the same, but for how many days prior thereto such intention was uppermost in their minds ■does not distinctly appear.

The referee further found as a matter of fact that the defendant -could have complied with the directions as to the presentment, demand and return of the draft, and have returned the same to 'the plaintiffs and notified them of the non-payment on the 20th ■day of November, 1886; and that in failing so to return the draft with such notification, the defendant was guilty of negligence. But he has also found as a matter of fact “that it is not reasonably probable that the plaintiffs could have collected or secured their said claim against said Seaver & Hall had said draft been returned to them on the 20th day of November, 1886;” consequently he decides, as a matter of law, that the plaintiffs are entitled to maintain their action, but can recover nominal damages only, namely, one dollar. From the judgment entered upon that report this appeal is taken.

The general question of fact, therefore, is whether it appeared that it was reasonably probable that with such means of prosecuting 'their rights as were open to the plaintiffs, they could have secured their claim against the debtors had the defendant performed its duty and returned the draft upon the 20th day of November. The learned referee has apparently placed his decision npon the authority of two cases. Lienau v. Dinsmore, 41 How. Pr., 97 , and Failing v. Fargo. 12 W. Dig., 121. In both of these cases, as well as in the one at bar, no question of the duty to charge an endorser or other party to the draft is .involved. Those cases hold that the rule applicable was that, if it is reasonably probable that the draft would have been accepted and paid by the drawee, if the defendant’s agent had done its duty, the defendant is prima -facie liable for the whole amount of the draft, unless he is able to show that the whole amount of the draft has not been actually lost tq the drawer in consequence of the defendant’s negligence.

The referee, in the case before us, has found, as stated above, that the firm, as well as the individual members of it, had real estate and personal property of more than sufficient value to meet the claim made upon it by the plaintiffs. In this respect the facts are materially different from those disclosed in the two cases cited. Yet he finds also as a fact that it is not reasonably probable that ■had the draft been returned the same might have been collected.

In this last finding we are not able to concur with the learned referee under the proofs as they stand in the record. A presumption would arise, under the findings, that the plaintiffs bv availing themselves of the ordinary .modes of judicial prosecution of ■the claims might, and probably would, have secured their debt had they been apprised on the 20th day of November that their debtors refused to honor their draft. In what particular ■ mode

p. 592

they would have prosecuted their claim it is not incumbent upon, us to point out. It is quite clear, that an action in a court of a, justice of the peace might have been begun and prosecuted to-judgment between the time when the draft ought to have been returned and the time of .the assignment. But if, as intimated in the case, the debtors had a pre-conceived purpose of making a general assignment for the benefit of creditors with certain preferences-in case their creditors crowded them in the courts, there might have been placed in the hands of the plaintiffs the more summary process of attachment upon the ground of a fraudulent purpose-of making an assignment to escape payment of debts. But whether or not the facts would have justified the plaintiffs in. pursuing either remedy, it is sufficient to say, under the findings, that both the firm and individual members had ample property,, both real and personal, out of which to satisfy the plaintiffs’ claim. From that fact a presumption of law arose that such claim would, have been paid had the defendant discharged its duty and had not neglected the plaintiffs’ interests. It is not sufficient to show,, by a mere suggestion of evidence which wholly lacks conclusiveness in its details, that it was the purpose of the debtors at any time when pressed by creditors to make a general assignment so> as to escape the payment of any claim which might be prosecuted in the courts against them.

We are of the opinion, therefore, that upon the question of fact-the learned referee was in error, and that, consequently, the judgment should be reversed and a new trial granted.

Judgment reversed and a new trial granted, with costs to abide the event.

Childs, J., concurs; Lewis, J., dissents.