Francia v. Banco — 9 N.Y. Super. Ct. 133

Majority

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John L. Francia, and others v. Leo Del Banco.

Headnote

F. & Go. sold and delivered to D. 100 boxes of raisins at $2 per box at 4 months credit for approved paper, and received in payment a bill of exchange drawn and endorsed by D., and accepted by a house in Philadelphia. D. alleging that

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the raisins were of inferior quality to the sample by which they had been sold, endeavored to rescind the contract, and gave a written notice to F. & Co. that payment of the acceptance would be resisted. The bill at its maturing was not presented to the acceptor for payment, and at the expiration of the term of credit, F. & Co. brought their action against D. for the price of the raisins so sold and delivered to him.

(Before Duer and Bosworth, J.J.)

Feb. 17 & 18;

April 30, 1853.

Held, that the action could not be maintained upon the original consideration, the debt created by the sale having been satisfied by the reception in payment of the bill of exchange, and that the question of' D.’s liability as drawer and / endorser could only be properly raised and determined in an-action upon the bill itself.

This was an appeal from, a judgment entered at Special Term upon the report of a referee. The judgment was in favor of the plaintiffs for $214.56.

The complaint set forth that the plaintiffs, trading under the name and firm of Francia & Co., sold and delivered to the defendant 100 boxes of raisins for which he promised to pay them the sum of $200 in four months from the date of the purchase, and averring that although the term of credit had expired the said sum was still unpaid and owing to the plaintiffs, claimed judgment for the amount with interest.

The answer set up two defences. First: That the raisins were sold by sample, and when delivered were found not to correspond with the sample, but were of an inferior quality, unmerchantable, and of little or no value, and that as soon- as the' fact was discovered the defendant had offered to rescind the contract and return the boxes of raisins.

Second: That the defendant in payment for the raisins delivered to the plaintiffs a bill of' exchange drawn by him on Eldridge & Co. of Philadelphia for the sum of $200 payable to his own order four months after date, which bill, accepted by the drawees and endorsed by him, “ was accepted and received by the plaintiffs as aforesaid.” It was also averred that the bill had not been presented for payment at maturity, nor protested for non-payment.

The reply admitted that the raisins were sold by sample, but averred that those delivered agreed with, and were equal in quality to the sample exhibited. It also admitted that the

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plaintiffs had received the bill of exchange mentioned in the answer, and averred that they, the plaintiffs, “ having received a written notice from the defendant that payment of the said bill would be resisted, and Eldridge & Go. having failed and become insolvent, did not cause the said bill to be presented for payment, and that the same was in their possession unpaid ready to be produced and cancelled",” and insisted that the notice so given by the defendant released them from any obligation to present the bill for payment, or cause the same to be protested.

The testimony of the witnesses examined before the referee related chiefly to the quality and condition of the raisins delivered, but, as the decision of the court was not founded on this evidence, it is omitted. The plaintiffs’ counsel produced before the referee the bill of exchange mentioned in the pleadings, and offered to cancel and deliver up the same.

The defendant proved, by the auctioneer who sold the raisins, that the sale was for approved paper, satisfactory to the seller. He also gave in evidence the following receipt:—

“New York, 7th May, 1850.

“ Received from Leo Del Banco, his note, accepted by Levi Eldridge & Go., at Philadelphia, at 4 months, dated 3d May, 1850, for two hundred dollars, in full for bill of raisins, same date.

“Fraxcia & Co., per James J. Fox.”

It was also proved that the note mentioned in this receipt was the bill of exchange referred to in the pleadings. The authority of Fox to sign the receipt was not denied.

The Referee made the following report:—

“ In pursuance of an order made in the above cause, whereby it was referred to me to hear and determine, and report thereon to this court, I do find and report as follows:—That about the 3d day of May, 1850, the plaintiffs sold and delivered to defendant, through Gerard & Betts, auctioneers, in the city of New York, 100 boxes of raisins, at two dollars per box; that said raisins were sold by sample, at a credit of four months, for paper satisfactory to the sellers; that the raisins, sold and deli

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vered, were equal to samples; that the plaintiffs, at the time of said sale, received from defendant, in compliance with the terms thereof, a draft drawn by defendant on, and accepted by, Levi Eldridge & Co., of Philadelphia, payable four months after date; that before the maturity of said draft, and on or about the 10th day of May, 1850, the defendant gave notice to the, plaintiffs that the same would not be paid; and that the same never was presented by them to the acceptors, for payment ; that such draft was produced before me, by the counsel for the plaintiffs, who offered to deliver up the same.

“I do therefore report, and decide, as matter of law, that the talcing of said draft did not extinguish the liability of defendant on the original consideration; that, in consequence of notice from defendant that said draft would not be paid, the omission of the plaintiffs to present the same for payment did not make the draft their own, and its production and offer to deliver it up, on the trial, entitle the plaintiffs to recover on the original consideration.

“I therefore render judgment for the plaintiffs for $200, with interest from Sept. 6, 1850, making $214 56.

“Dated New York, Sept. 21, 1852.

■» “ L. Hoyt, Referee.”

The cause was now heard upon exceptions to this report. The questions raised and argued upon the evidence, relative to the warranty, and its breach, are omitted.

S. Sanxay, for defendant.

The facts in this case show a special sale of 100 boxes of raisins on specific terms, namely, for “approved paper,” and a full compliance with those terms by the defendant; in other words, a contract fully performed. The defendant paid for the raisins by the delivery of his draft, accepted by Eldridge & Co.; and the plaintiffs having accepted this papér as a payment, can no longer resort to the sale and delivery of the raisins as a cause of action. The liability of the defendant as a vendee being extinguished, the only remedy of the plaintiffs against him (if they have any) is as drawer and endorser of the ac

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cepted draft; and this can only be enforced in an action upon the paper itself. It is, however, clear that the defendant is discharged upon the bill by the omission to demand payment of the acceptor, and no sufficient excuse is shown or existed for not taking the necessary steps to charge the defendant as • drawer and endorser. And it is so far from being proved that the acceptor had no effects, that he- appears to have had the identical raisins, or their proceeds, in his hands. The decision of the referee should be reversed, and judgment ordered for defendant. Upon the point of the defendant’s discharge as drawer, the counsel cited the following authorities, Hill v. Heap, D. & R. N. P. R. 59; Chitty on Bills, 8th ed., p. 486; Dennis v. Morrice, Esp. R. 185.

T. Tucker for plaintiffs.

The receiving by the plaintiffs of the bill of exchange did not extinguish their claim against the defendant to be paid for the raisins, since there was no special agreement that the bill should be accepted as an absolute payment. (Tobey v. Barber, 5 John. R. 68; Porter v. Talcott, 1 Cowen R. 259; New York State Bank v. Fletcher, 5 Wend. 85 ; Coles v. Sackett, 1 Hill, 516 ; Vail v. Foster, 4 Comst. 312.) The written notice from the defendant that payment of the acceptance would be resisted, relieved the plaintiffs from any obligation of presenting it for payment. The object of the rule of law, which requires the holder to notify the drawer of a bill of its dishonor, is to protect the drawer, but has no application where the drawer cannot be prejudiced by the omission; and the same circumstances which are by law a waiver of the necessity of giving notice of non-payment, will dispense with the necessity of presentment. Here the defendant could not be prejudiced by the imputed neglect of the plaintiffs, since a presentment for payment to the acceptor, after notice that payment would be resisted, would have been useless. As he learned that payment would not be made, it was idle to give him notice that it had not been. As bearing upon the second point, the counsel cited Rogers v. Stevenson, 3 Term R. 213; Brett v. Levett, 13 East. 214,1 Wend. R. 219 ; Chitty on Bills, 8th ed., pp. 373, 385, 390.

The referee has found that the raisins sold by the plaintiffs to the defendant, corresponded in quality and condition with the sample exhibited, and we are not prepared to say that this finding is against the weight of evidence. Hence, if the breach of the warranty, implied in the sale, were the sole defence, the motion to set aside the report would necessarily be denied.

But this is not the only defence. The raisins were sold on a credit of four months, for approved paper, and the answer alleges, in substance, that the required payment was made by a bill of exchange drawn on and accepted by the house of Eldridge & Co., of Philadelphia, and endorsed by the defendant and received by plaintiffs, in satisfaction of the purchase,, and these allegations are not only sustained by the proof, but, as not denied, are admitted by the reply.

Whether an existing debt is, in all cases, satisfied by the mere delivery to the creditor of the promissory note or acceptance of a third person, endorsed by the debtor, is a question which we deem it unnecessary to consider, and upon which the English cases and our own are not easy to be reconciled. But all the authorities agree that where such a note or bill, by the understanding and agreement of the parties, is transferred and received in payment of the debt, the prior liability of the debtor is extinguished, and it is only as an endorser that he can then be charged. We think that the pleadings and the evidence show that in this case such was the agreement of the parties.

It has been contended, however, that this objection is fully met by the allegations in the reply, and the proof upon the hearing before the referee, that the acceptors of the bill were insolvent when it reached its maturity, and that the defendant had' previously given notice to the plaintiffs that its payment would be resisted. The facts thus alleged and proved, it was argued, released the plaintiffs from their obligation to demand payment of the acceptors, and by rendering the bill valueless, revived their original demand against the defendants.

To this reasoning, however, we cannot assent. It is not sustained by the cases to which we were referred, nor by any authorities that we have been able to discover. The mere insol

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vency of an acceptor has never been admitted to excuse a regular demand of payment, and notice of protest, as necessary to charge an endorser; and whether - such is the legal effect of the notice given by the defendant that payment of the bill would be resisted, is a question that we must decline to consider, since we are satisfied that it is only in a suit upon the bill itself that it can properly arise and be determined. It is possible that the defendant may still be liable as drawer and endorser, but we can perceive no ground for the assertion that his liability as a purchaser, which was extinguished by his transfer of the bill, has been revived by any subsequent act; such might have been the effect of the notice given by him, had it rendered the acceptance wholly void, by discharging Eldridge & Co. from the legal obligation which it created; but that such was its effect, has not been and cannot be pretended. It cannot, therefore, be said that the notice rendered the bill valueless. It diminished the probability of its payment at maturity, but had no effect whatever upon its value as' a security. Had the acceptors continued solvent, the value of their acceptance was precisely the same after the notice as before.

We are, therefore, of opinion that the referee erred in holding that the taking of the draft, accepted by Eldridge & Co., did not extinguish the liability of the defendant for the original consideration, and that this liability, if extinguished, *was revived by his subsequent conduct.

The report is therefore set aside, and the rule for a reference discharged. Costs to abide the event. The referee ought to have dismissed the complaint, but, according to a recent decision of the Court of Appeals, we have no power io dismiss it now. If the pleadings, however, remain as they are, it must necessarily be dismissed upon the trial.

Cases cited

New-York State Bank v. Fletcher 5 Wend. 85 N.Y. Sup. Ct. 1830-08-05 p. 137