Ainis v. Ayres

The question here is, whether the right of stoppage m transitu was lost by the plaintiff’s receipt of acceptances given by the vendee’s agent.. The facts are simple and undisputed. In July and August, 1890, the plaintiff, who 'is a merchant at Messina, in Sicily, sold (in two lots of 200 tonseach)-400 tons of brimstone to the firm of Sawyer, Wallace & Co., of this city, at agreed prices. The terms of sale were embodied in a letter from Sawyer, Wallace & Go. to the plaintiff, which reads as follows:

“ Concerning the terms under which we purchase brimstone, we beg to say that we open credit in reimbursement of purchases with Messrs. Fred Huth & Co., London, Credit Lyonnais, London Branch, our house, Mr. L.W. Sawyer, London, and, finally, if the reimbursement should be on Paris, with Messrs. Marcuard, Krauss & Go., the Credit Lyonnais of that city, instructing them to honor your draft at 90d. sight, documents attached.”

The brimstone was duly shipped to New York, and the plaintiff drew his drafts upon Sawyer, of London, the person referred to in the above letter as “ our house, Mr. L. W. Sawyer, London,” for the agreed prices. These drafts were .forwarded to Sawyer, in London (together with the bills of lading), and were duly accepted by him.

We may premise by saying that if these acceptances defeated the plaintiff’s right of stoppage m transitu, it was certainly not because of the rule, misapplied by the appellant, that such right is lost where bills of lading have been indorsed by the vendee to a bona fide transferree for a valuable consideration (as laid down in Becker v. Hallgarten, 86 N. Y., 167 , and all the earlier cases), but solely because the plaintiff’s acceptance of Sawyer’s draft was an absolute payment for the goods. We may further premise that if the latter contention should be sustained, as matter of fact, then the vendees were wholly discharged from all liability and the plaintiff has not only no case as to the goods, but no claim against the assigned estate. The defendant would thus have us presume that, in accepting Sawyer’s draft, the plaintiff intended to discharge the vendees, to abandon his lien upon the goods and to rely solely upon the credit of the vendee’s agent. This would be a violent presumption especially in view of the fact that Sawyer is spoken of in the letter above quoted as “our house,” that is, our, Sawyer, Wallace & Co’s.

“ It is settled by the case of Feise v. Wray, that by an acceptance of bills the vendor’s right to stop in transitu is not taken away.” In Miles v. Gorton (2 Cr. & Mees., 504), the rule was extended to a case where the vendor had not only accepted the vendee’s bill, but had negotiated it. The English rule has been generally followed in this country. Thus in Clapp v. Sohmer ( 55 Iowa, 273 ), the vendor had accepted the vendee’s note. It was held that the vendor was not concluded, the court • saying that a “ promissory note cannot be regarded as payment unless it has l>een expressly reeewed as such.”' The case of Newhall v. Vargas (13 Maine [Shepley, vol. 1], 103), goes still further and is entirely analogous to the case at bar. There the master of the vessel upon which the goods were shipped was the agent of the vendee. He drew bills on the vendee payable to the vendor for the amount due on the purchase. It was held that the acceptance of these bills by the vendor did not defeat his right as against the vendee. “The master,” says Chief Justice Weston, “ in drawing the bills on the owner, was acting on account of the latter. * * * It was the usual mode of doing business of this sort. And although, by the form of the bills, the master may have made himself personally liable, there is no reason to suppose that his security was relied upon by Yargas (the vendor) or that bv accepting it he .waived other remedies (citing Descadillas v. Harris, supra). The master was not acting for himself. He was the mere agent of the owner.”

In the case there cited (Descadillas v. Harris) it was held that the presumption of payment in receiving a negotiable note “ is liable

Bell v. Moss ( 5 Whar., 203 ), is still nearer in point to the present case. There the vendor received drafts on third persons. It is true that these drafts were not accepted by the third persons, but the liability of the third persons was fully discussed and the rule laid down that such acceptances wrere naturally, and, in the absence of an express agreement to the contrary, nothing more than collateral security for the primary debtor’s obligation. “ Here,” said Chief Justice Gibson, “ the consignees were the vendees and primary debtors, and what did they pledge as a guaranty ? The acceptances of De Lizardi & Co.; and no principle is surer than that a creditor may press all his securities at the same time.” This learned judge also stated that “ the giving of the buyer’s own note or bill, which though it operates an extension of the credit, extinguishes not the original contract; as well as by payment in the bills of a third person which is not absolute satisfaction, unless it were declared so by the terms of the bargavnP He summed up this branch of the case with these suggestive remarks: “ It would, indeed, startle the commercial community to say, that where the consignor has collateral means of payment, uncertain as it must be in its results, he shall not press a lien growing incidentally out of the consignee’s direct liability.”

That the acceptance of Sawyer was a mere collateral security for the primary obligation of the vendees is apparent from all the circumstances of this case. There is not a suggestion in the correspondence or documents that the unsecured acceptance of this agent was to be taken as a substitute for the primary obligation of his principals, secured as that was by the vendor’s lien. Everything, in fact, points the other way. Not only is Sawyer spoken of as the vendee’s London house, but the arrangement with him and others is spoken of as a “ credit.” This is a term perfectly well understood in commercial circles. It implies security for the meeting of his

Here, however, Sawyer was not even a banker, but a merchant representing the vendees and accepting for them and as their agent, though not specifying the agency in terms upon the face of the drafts. The distinction between the facts of this case and those under consideration in Gibson v. Tobey ( 46 N. Y., 637 ); Hall v. Stevens (116 id., 201) and Whitbeck v. Van Ness ( 11 Johns., 410 ) is so wide as to call for but a passing comment. These were cases of executed sales, and the notes or drafts of third persons were taken iii payment for the goods sold and delivered, and were so taken at the time of delivery. The distinction between such cases and the cases of executory contracts, where the goods have not yet reached the vendee and the right of stoppage in transitu is asserted, is pointed out by Spencer, J., in Whitbeck v. Van Ness (supra). That learned judge comments upon Owenson v. Morse (7 Term R., 60) and says that that case will be found, on examination, to turn “ on the right to stop goods in transitu. Owenson purchased from Morse some plate and paid for it in the notes of a third person. Morse retained the plate to have Owenson’s arms engraved at Morse’s expense. In the interim the maker of the notes failed • and on refusal to deliver the plate, Owenson brought trover, and failed; the court holding that the bargain was not so perfected but that the seller might stop the goods in transitu, ” That learned judge also referred to Roget v. Merritt (2 Caines, 120), where he says: “Ve adopted the same principle that, in an executory contract, the consideration having failed, the vendor had a right to withhold a delivery of the goods.”

The delivery of the bills of lading to Sawyer did not affect this question. The general rule is not disputed, that the delivery of the indicia of title is equivalent to the delivery of goods. “ But,” as Mr. Benjamin says, at section 1211 (we are still quoting from the fourth American edition of his work on Sales), “ though the vendor’s lien is thus divested by reason of the complete delivery of the indicia

In the case at bar there' was no transfer of the bills of lading from the buyers, and no third person ever acquired any right of transfer from them. The transfer to Sawyer was simply a transfer to his principals, the buyers, and from that point on there was no further transfer. The question of payment as between Sawyer, Wallace & Co., and their agent is entirely immaterial. That is simply a question of debit and credit on the agency books. Such cases, therefore, as Crocker v. Whitney ( 11 N. Y. 161 ). and Briggs v. The Central National Bank (89 id., 182 ) have no application to the underlying question here, and it is idle to talk of payment for the brimstone having been made by Sawyer, Wallace & Co , to Sawyer before the execution of their assignment. That firm received the bills of lading, but never paid the plaintiffs, and failed before the actual arrival of the goods.

We think it entirely clear that thus the plaintiff’s equitable right to stoppage in transitu, a right so favored in the law (Northey v. Field, 2 Esp., 613), was not lost, and that he is entitled to recover upon two distinct grounds: First, that the acceptances of Sawyer were, in substance, the acceptances of the vendees; second, that even if such acceptances were treated as the acceptances of a third person, they were not, as matter of fact, taken in absolute payment for the goods.

The judgment should, therefore, be affirmed, with costs.

Yan Brunt, P. J., and Andrews J., concurred.

Judgment affirmed, with costs.