Allen v. Suydam — 17 Wend. 368

Majority

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S. and M. Allen vs. Suydam and Boyd.

Headnote

Although as between the payee and the drawer of a bill of exchange, the remedy of tb e former against the latter is not altee ted by the omission to make presentment for acceptance of a bill payable a given number of days after date provided it be made at the maturity of the bill; the same rule does not prevail as between the payee and a broker or agent with whom the bill is left for collection. The agent is bound to present the bill for acceptance forthwith, and if not accepted, to give notice thereof to his principal, and if he neglect to do so, he becomes responsible in damages.

Where an agent had neglected to make presentment for 17 days, it was held that he was liable in damages to the full amount of the bill, although it appeared that the drawees had no funds, that they were directed by the drawer not to accept, and that the lateness of the presentment had no influence upon the non-acceptance; it appearing in proof that subsequent to the drawing of the bill in question, other bills of the same drawer had been accepted by the same drawees and paid or secured to be paid.

It seems, however, that facts and circumstances tending to reduce the amount of recovery, or to mitigate damages, may properly be submitted to the consideration of the jury.

Error from the superior court of the city of New York. This was an action on the case by Suydam & Boyd against S. & M. Allen, for negligence

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in omitting, within a reasonable time, to present a draft for acceptance. On the 16th August, 1833, the plaintiffs received from one John Eastabrook at New York, a draft for $8l6-89, drawn by him on W. W. & J. E. Eastabrook, a mercantile firm transacting business at Concord in New [369] Hampshire, dated 21st July, 1833, payable two months after date, to the order of the plaintiffs; who, on the same day that they received the draft, placed it in the hands of the defendants, who were to be allowed a commission of one per cent for collection. On the 2d September, and not before, the defendants enclosed the draft in a letter to the cashier of a bank at Concord, which was received by him, through the post office, on the sixth day of the Name month. On the seventh he called upon the drawees, and asked if they were ready to accept, and was told they were not; that they did not accept tor tne drawer without instructions, and had not received any instructions in respect ro tnis draft, but expected to hear from the drawer in a short time. The casniei called again on the tenth day of September, and was then told by the drawers that they had been instructed by the drawer not to accept the draft, and mar tney accordingly should not accept; whereupon it was protested on the same day for non-acceptance, and returned to the defendants. The draft, on its return, was received on the sixteenth day of September by the defendants, who on tne same day sent it to the plaintiffs and demanded the receipt given by them on receiving the note; but the plaintiffs refused to give up the receipt and take back the draft. On the nineteenth of September the defendants applied to the plaintiffs to know whether they wished the draft sent back to be protested l'oi non-payment, and were told that they had received it for collection, ana if by any want of attention any accident should occur to the draft, they would be neid responsible. On the 9th October, 1833, the drawer died insolvent. When ihe a raft was drawn, he had funds in the hands of the drawees, the amount of which, however, was not shown; but when it was presented for acceptance be had no funds in their hands. The drawees testified that the lateness of the day oí the presentment of the draft for acceptance made no difference in regard to its acceptance, as it was an invariable rule with them not to accept for the drawer without previous advice. It appeared that subsequent to the sixteentn any of August, 1833, [370] drafts drawn by John Eastabrook on the same drawees, amounting together to the sum of $2000, were accepted by them, and paid or secured to be paid. The presiding judge charged the jury, that the defendants were bound to transmit the draft with all reasonable diligence after irs i sceipt, for acceptance, and not having done so, were guilty of negligence and liable to the plaintiffs for the amount of damages they had sustained. Tnav the court and jury having no knowledge of what the amount of the damage was, except from the proof of the amount of the draft, the jury would find a verdict for the plaintiffs for the amount of the draft, and the interest thereon. The jury found accordingly. The defendants having excepted to the charge of the judge, sued out a writ of error.

S. A. Foot, for plaintiff in error.

D. Lord, jun. and J. Prescott Hall, for defendants in error.

By the Court,

The drawees were not in funds when the hill was presented; they would not have accepted without instructions to that effect; and the instructions were by letter not to accept. It was a hopeless bill, therefore, as to the drawees, in every sense; and the only ground o\i which tlie plaintiffs can claim is on the failure to present for acceptance with reasonable diligence,'i. e. immediately with a view to the plaintiff’s remedy over against the drawer.

To save the remedy by action against the drawer, it was enough as between the payees and him, that the bill should be presented for acceptance at any time before the 25th of September, which was the third day of grace (Chitty

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on Bills, 299, Am. ed. of 1836, and the cases there cited). It was protested for non-acceptance as early as the 10th September, and notice given to the drawer and the holders, with a request that they would discharge the defendants, or give instructions whether the presentment should be repeated. They declined to do either, and indicated the intention of holding the defendants to their strict duty. Was that discharged ? On the protest for [371] non-acceptance, and notice to the drawer, the plaintiffs might have proceeded immediately against him. They were not bound to w’ait and demand payment (Chitty on Bills, 370, 371, 372, 299, and the cases there cited). Clearly, nothing has been lost by the defendant’s laches, as against the drawees. Was their duty discharged in respect to the remedy against the drawer ? By a transmission through the next post, more time would have been obtained. The defendants received the bill on the 16th of August, and waited till the 2d of September before it was transmitted; in all 17 days. Yet the bill was presented for acceptance even earlier than was strictly necessary to charge the drawer as between the holders and him This step, although not necessary, imposed the duty of giving immediate notice to the drawer (id. 355, 6, and the cases there cited), which it is not denied was done. Is any thing more necessary as a matter of common diligence between the agent and the holder? No special request is shown that extraordinary diligence should be exercised; no special contract to exercise it has been shown, and no more than ordinary diligence is necessary. Was the locking up of the bill for weeks a course even of ordinary diligence in the agent ? It is stated in Chitty on Bills, 299, 300, see id. 40, S. P., as having been said in several books, that it is the duty of one holding a bill as agent, to present it for acceptance as soon as possible; several reasons are given, one of which is, that if the affairs of the drawer should be deranged, an agent who has neglected to do that, might be answerable in damages and interest to the person who employed him; and he states that to have been adjudged in Van Wart v. Woolley, Mood. & Malk. 526; 3 Barn. & Cress. 439; 5 Dowl. & Ryl. 374. Such, too, seems to be the Scottish law, according to Dunlop v. Hamilton, cited by Chitty from 1 Bell, 320, n.

I have examined Van Wart v. Woolley, as reported in the different books referred to by Chitty. In 5 Dowl. & Ryl. and 3 Barn. & Cress., Lord Tenter den, C. J., delivers the opinion of the court that mere delay of the agent to give notice to his principal, though the drawer were not therefore discharged, would subject him to damages. In Mood. & Malk., N. P. [372] reporters, the damages were assessed, before the same judge, at one shilling. The smallness of the sum was because, in the meantime the plaintiff had recovered the full amount, with damages and costs, by an action in this state against Irving & Co., who transmitted the bill to England. Campbell for the defence, strenuously contended that the mere delay of the remedy,against an insolvent drawer who never had funds, and that too where the amount of the whole bill had been recovered from another, would not maintain an action. Lord Tenterden, however, was clearly of a contrary opinion.

We may certainly assume, upon such authority, that the object of notice is not confined to the saving of the ultimate legal remedy. Such a view, too, is justified by the nature of business. An immediate presentment not only determines the question whether the security of the drawees, or an acceptance supra protest is to be added; but, on protest, it leads directly to inquiry and explanation, and enables the holder to take such prudential measures against all other parties as their character, circumstances, or the general state of the times may demand. In the case at bar, there was not only a want of funds in the hands of the drawees, but a positive fraud by the drawer, who countermanded the acceptance; neither of which was known to the plaintiffs below, nor could be, till the demand made at Concord. A demand

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before maturity, almost certainly leading to discoveries very important to the principal, is not so unusual as to leave agents in ignorance that an acceptance should be sought for, through the earliest practicable means of communication. A knowledge of the truth, a few days or even a few hours earlier or later, is many times decisive. On the whole, we think the court below were right in holding, as a matter of law, that the delay of the defendants was unreasonable, and that they were, therefore, liable in this action.

The next question respects the amount of damages. The court below observed, “ that the court and jury having no knowledge what the amount of the damage was, except from the proof of the amount of the draft, the jury would find the amount of the draft.” Certainly, if there were [373] any thing appearing in mitigation, it should have been put to the jury Chittyon Bills, 300, note k., citing Dunlop v. Hamilton, 1 Bell, 320, n.; Van Wart v. Woolley, before cited). The difficulty lies in discovering any such ground. The jury must have been left to reach it by the merest conjecture. The fault had been committed, and both parties had awoke to the consequences. The drawer, on the 9th of October, died insolvent; at that time, the whole was irrevocably gone, as far as we can see. The plaintiffs below, as well as the defendants, might have'proceeded against the drawer’s estate to obtain a dividend, if any had been in prospect. It is not pretended that any chance of that kind was left. The case seems to have been prima facie one of simple, total loss, by the fault of the defendants below. It is said there were some slight funds in the drawees’ hands when the bill was drawn, and that several drafts from this same drawer were accepted and paid by the drawees, bearing a date subsequent to the 16th of August; yet we are positively assured by the drawees, that under no circumstances in this case could their acceptance have been expected; and I confess I have been unable to discover any thing on which the jury could have said there was any chance of partial recovery left in any quarter. The case seems to have been given up by both parties as hopeless, on receiving notice of the non-acceptance. We think that in the phrase imputed by counsel to the court below, “ the defendants had made the bill their own, and must pay the nominal amount.” The argument for this measure of damages lies in a narrow compass; the plaintiffs deposited the bill with the defendants as their agents, with a view to save it; they neglected the steps which ordinarily lead to safety, and the common result, a total loss to every appearance, followed as a consequence. See Chitty on Bills, 300, note k.

We are of opinion that the judgment below should be affirmed.