133 S.W. 1009 | Tex. App. | 1911
On the 26th day of January, 1907, the Mineral Wells and Lakewood Park Street Railway Company of Mineral Wells, Texas, entered into the following contract with the Block-Pollak Iron Company of Chicago, Illinois:
"Dallas, Texas, 1/26/07.
"Messrs. Dismuke Smith, Mineral Wells, Texas.
"Gentlemen: As per our offer of the 24th and conversation with the writer over the telephone today, we now beg to confirm sale to you of two miles of first quality 35-lb. relaying steel tee rails, including sufficient, necessary angle splice bars weighed in, at $38.75 per gross ton (2240 lbs.) delivered f. o. b. cars Mineral Wells, Texas.
"We guarantee to make delivery within thirty days from date, unless delayed by causes beyond our control; and also to furnish only such rails as will pass Robt. W. Hunt Co.'s inspection — which calls for rails that are straight, free from kinks, curves, laminations or battered ends. All rails to be properly drilled in each end with necessary splice bars to match; 90 per cent of the rails to be 30-foot lengths with the usual, not to exceed 10 per cent of shorter lengths down to 23 feet.
"Terms — sight draft with shipping documents attached.
"This letter of agreement signed in duplicate will constitute a contract between us.
"By J. R. Cohn.
"Accepted:
"Mineral Wells Lakewood Park St. Ry.
"By Marcus M. Bright, Sec. Treas."
When the rails designated in the above memorandum were shipped the Block-Pollak Iron Company drew its sight draft on the Mineral Wells and Lakewood Park Street Railway Company (hereinafter called the railway company) for the sum of $4136.36, the amount of the purchase price, payable to the order of the drawer. The draft, with the bill of lading attached, was endorsed by the Block-Pollak Iron Company *641 and transferred to the First National Bank of Chicago, Illinois. The endorsement was in the following language: "Pay to the order of the First National Bank of Chicago. (Signed) Block-Pollak Iron Co." The First National Bank of Chicago (hereinafter referred to as the Bank of Chicago) placed the amount of the draft, less the usual discount, on its books to the credit of the Block-Pollak Iron Company, subject to be checked against at any time, and forwarded the draft, together with bill of lading, to the First National Bank of Mineral Wells, Texas, for collection. (The last named bank will be hereinafter referred to simply as the Bank of Mineral Wells.) A letter of instruction accompanied the draft, directing the Bank of Mineral Wells not to surrender the bill of lading till the draft was paid. On March 27, 1907, the draft was paid in full by the railway company by means of its check drawn on the Bank of Mineral Wells by Marcus M. Bright, secretary and treasurer of the railway company. On April 3, 1907, the Bank of Mineral Wells remitted by New York exchange to the Bank of Chicago the sum of $2623 of the amount collected by it from the railway company on the draft. This left, after deducting some expenses and charges, a balance of $1500 still in the hands of the Bank of Mineral Wells. In a letter which accompanied the remittance the latter bank gave as a reason for not sending the entire amount, that it had been garnisheed "by the W. M. Co." in a suit pending in the District Court of Palo Pinto County, and it held the $1500 to protect itself and subject to the order of the court. We gather from the briefs of counsel that a short time after paying the draft and securing possession of the bill of lading the railway company filed a suit in the District Court of Palo Pinto County against the Block-Pollak Iron Company for damages on account of the inferior quality of some of the rails shipped, and at the same time procured the issuance of a writ of garnishment against the Bank of Mineral Wells. These proceedings do not appear in the record of the evidence in this case. The following is all that appears in the statement of facts concerning that garnishment: "Plaintiff introduces a garnishment writ which showed that the First National Bank answered that it had $1500, being the remainder left out of the $4136.36 which was paid by the Mineral Wells and Lakewood Park Street Railway Company." It does not appear from the record at whose suit, or for what purpose this garnishment was sued out. At the March term, 1908, of the District Court of Palo Pinto County the Bank of Chicago recovered a judgment against the Bank of Mineral Wells for the sum of $1500, the amount of the collection withheld. We gather from the record that the railway company had occupied in this suit the position of a party defendant, and had been by the court permitted to withdraw therefrom after the parties had announced ready for trial and after the court had heard all of the testimony. On April 15, 1908, more than a year after the payment of the draft, the railway company, appellee in this appeal, filed an amended original petition in the District Court of Palo Pinto County in which it makes the Block-Pollak Iron Company and the First *642 National Bank of Chicago, the appellant in this appeal, parties defendant. From the judgment rendered in that suit this appeal is prosecuted.
It is stated in briefs of counsel that this amended original petition was the means of making the appellant for the first time a party to the original suit of the appellee against the Block-Pollak Iron Company. After the formal allegations stating the incorporation and residences of the Block-Pollak Iron Company and of the Bank of Chicago, the amended petition sets up substantially the following facts: For cause of action it alleges the making of the contract with the Block-Pollak Iron Company of January 26, 1907, and its breach by that company in failing to ship goods up to the standard purchased. It is claimed that fifty-three of the rails were crooked, kinked, curved and laminated so that they were unfit for use, for which damages are claimed in the sum of $340.80; that one-half of the remainder were crooked, curved, kinked and laminated to such an extent as not to be in compliance with the terms of the contract, and damages for this item are placed at $1500. It is further claimed that the rails were not "drilled in" as provided for by the contract, and that 30 per cent of the splice-bars were missing or crooked and broken, for which still other damages are claimed in the sum of $81.50. The payment of the draft drawn by the Block-Pollak Iron Company, and the reasons for making such payment, were set out in minute detail. It is averred that the rails were shipped C. O. D., and that no means of inspection was afforded till after payment of the draft, and not till then was it discovered by the plaintiff that the goods were not up to the grade contracted for; that the payment of the purchase price was obtained by the fraud of both of the defendants, and they are charged with having adopted this particular method of securing payment before breach of the contract could be discovered by the plaintiff. It is also charged that the appellant had notice of the failure of the Block-Pollak Iron Company to comply with its contract at the time it acquired the draft drawn for the purchase price, or that if it did not have such notice then it did have full knowledge of all the circumstances before it came into possession of the funds paid on the sight draft. It is further averred that at all times between the date on which plaintiff paid the draft and the filing of that amended original petition, the appellant had in its hands, as a bank of deposit funds belonging to the Block-Pollak Iron Company in excess of $1500, "which might have been applied by said defendant, and in equity and good conscience should have been applied to the payment on said sight draft." It is argumentatively insisted that by reason of the fact that appellant had in its possession funds belonging to the Block-Pollak Iron Company which it might have appropriated to the satisfaction of the unpaid balance of $1500 withheld by the Bank of Mineral Wells, the plaintiff is now entitled to the latter fund. It is further charged that the method adopted by the defendants was the outgrowth of a conspiracy to defraud plaintiff by a pretended transfer of the draft, and that the collection was in reality for the Block-Pollak Iron Company. The petition concludes as follows: "That the said *643 $1500 now in possession of the First National Bank of Mineral Wells is a part of the $4226 paid by plaintiff on the sight draft aforesaid, and that said $1500 in truth and in fact should belong and does belong to this plaintiff as a part of its debt and damages aforesaid and does not in any sense belong to the defendant the First National Bank of Chicago but is being held by it fraudulently for the defendant, the Block-Pollak Iron Company. That the plaintiff believes that the First National Bank of Mineral Wells is about to pay to the First National Bank of Chicago the said sum of $1500, and plaintiff says that if such payment is made that it will lose its debt against the defendants herein to its damage in the said sum of $1500. It therefore asks that a temporary writ of injunction be granted against the First National Bank of Mineral Wells enjoining it from making the payment aforesaid until the issues of this case can be heard and determined. Wherefore it asks that citation issue to defendants as required by law and upon hearing hereof it have a judgment against them for the sum of $1999.80 and costs of suit. That a temporary writ of injunction be granted staying the First National Bank of Mineral Wells from paying the $1500 to the First National Bank of Chicago, and for general and special relief."
There was also attached to the petition an application for a writ of garnishment against the Bank of Mineral Wells upon an affidavit charging that this bank was indebted to and had in its hands funds belonging to the appellant and the Block-Pollak Iron Company. It does not otherwise appear whether or not the Bank of Mineral Wells was made a party to this suit. It filed no answer, and we can not say from the reading of the petition that an effort was made to make it a party. The Block-Pollak Iron Company filed no answer. The appellant, Bank of Chicago, answered by general and special exceptions, a general denial, and specially alleged the purchase and ownership of the draft drawn by the Block-Pollak Iron Company on the appellee, its collection by the Bank of Mineral Wells, the failure of the latter to remit $1500 of the sum collected, and the subsequent recovery of a judgment for that sum against the Bank of Mineral Wells. A copy of the judgment is attached and referred to as a part of the answer. It is also alleged that the appellee was a party to the suit in which that judgment was rendered, and withdrew from the same when the court announced its judgment.
After the conclusion of the evidence, under a peremptory instruction from the court, the jury returned the following verdict: "We, the jury, find for plaintiff against all of the defendants the $1500 fund held by the First National Bank of Mineral Wells." Upon that verdict the court entered the following judgment: "It is therefore ordered, adjudged and decreed by the court that the Mineral Wells and Lakewood Park Street Railway Company do have and recover jointly and severally of the defendants, Block-Pollak Iron Company and the First National Bank of Chicago, Illinois, the said $1500 fund now held by the First National Bank of Mineral Wells, Texas; for all of which execution may issue." From that judgment the Bank of Chicago alone has appealed. *644
The facts adduced upon the trial were substantially, and in many instances literally as we have stated them in the foregoing summary. There was no evidence offered in support of the charges of fraud and collusion between the appellant and the Block-Pollak Iron Company, or of notice on the part of appellant of any failure of consideration in the contract between the appellee and the Block-Pollak Iron Company, till after the payment of the draft by the appellee.
The unique character of this judgment, when viewed in the light of the pleadings and the evidence, has made the task of determining the proper method of disposing of this appeal somewhat perplexing. On account of its variance from the only relief legitimately authorized by the nature of the action, and the entire absence of any proof to warrant a decree of that kind, we were at first constrained to regard it as an incomplete adjudication of the issues involved, and one over which we could not assume jurisdiction on appeal. But treating the judgment as in effect a denial of all the relief asked for by the plaintiff, except that which was specifically granted, it may be regarded as final, within the meaning of the statute regulating appeals. Whatever doubts we entertained upon this question have been resolved in favor of that course best calculated to settle the controversy and end the litigation; and we therefore set aside the order formerly made dismissing this appeal, and will now dispose of the case upon its merits.
The judgment rendered is susceptible of one of two interpretations: It either merely determines that the appellee is entitled to a particular fund held by the Bank of Mineral Wells, or adjudges that the plaintiff in the suit is entitled to recover that amount of money from the defendants personally. If we treat it as the award of a particular fund, and not as the adjudication of a personal liability against the appellant and its co-defendant, then in order that it may be sustained there must be something in the pleadings and the evidence to establish on the part of the appellee a right, or title, to this fund, or some interest commensurate with the recovery obtained. The facts relied on for this purpose are, that the "fund" held by the Bank of Mineral Wells was a part of the proceeds of what was paid as the purchase price of the goods delivered by the iron company under its contract, and that there had been a partial failure in the consideration. The right to follow this money as proceeds of that payment would depend upon many conditions not present in this case. Whatever may be said of the sufficiency, of the averments in the petition, the facts proved failed to show any fraud chargeable to either of the defendants in the suit. There was nothing more than the simple breach of a contract to furnish steel of a certain standard in quality. Again, the right to follow proceeds as such in cases like that here under consideration would depend upon the right of the complaining party to rescind the contract. "If the vendee of goods, in cases where there is either an express or an implied warranty, would rescind the sale and recover back the purchase money, he must, within a reasonable time return the goods, or offer to return them, unless, indeed, the goods are wholly worthless; in which latter case the *645
vendee is not obliged to return them, or offer to return them, before he can sue and recover back the price, or defend against an action for the price." Brantley v. Thomas,
The appellee having elected to retain the goods and sue for damages for a breach of the warranty, the right to subject that "fund," or, more correctly speaking, the debt due from the Bank of Mineral Wells, would depend upon the personal liability of the owner of the fund, or the one to whom the debt was due and payable. The party who made the warranty is the one who is responsible for the breach. The evidence shows that the appellant bank acquired the ownership of the draft by endorsement in the ordinary course of business, and paid a valuable consideration therefor by giving the endorser credit on its books for the amount of the draft less the usual discount. It is uncontroverted that appellant then had no notice of any non-compliance with the terms of the contract on the part of the iron company. Under those circumstances appellant was an innocent purchaser for value. In accepting the draft with the bill of lading attached, it did not become a warrantor of the quality and quantity of the goods therein described. Blaisdell v. Bank,
The facts of that case are radically different from those involved in this. There the draft had been accepted, but not paid, and the liability of the endorser still existed. Here the draft had been paid and the endorser discharged before the holder acquired notice of the failure of the consideration. If through the transfer of the iron company the appellant acquired the ownership of the draft, that necessarily carried with it the title to whatever was paid on it, and a payment to the Bank of Mineral Wells, its collecting agent, was, in so far as the parties to the instrument were concerned, a payment to the appellant, and operated to discharge the endorser. In the case referred to the Supreme Court rested its holding that the plea of failure of consideration was available against the endorsee, upon the ground that at the time of the dishonor, and of notice of the defense urged, the latter was in an attitude to easily reimburse itself out of funds in its hands belonging to *647 the endorser. It was also apparent that the bank was being used merely as an agent of the party liable for the breach of the contract. It is true that in this case at the time this defense was made known to the appellant it had in its hands funds belonging to the endorser sufficient to satisfy the appellee's demand for damages, but at that time the liability of the endorser had ceased, and the remedy of the endorsee in the case referred to was not available in this. Neither was there any evidence of the charge that appellant acted for the iron company in making this collection.
There is nothing in the record to impeach the bona fides of the transaction between the appellant and the iron company. The record shows that some time prior to being made a party to this suit appellant had recovered a personal judgment against the Bank of Mineral Wells for the failure to pay over the very "fund" referred to in the judgment. The relation of those two banks to each other, then, if not before, became that of creditor and debtor. The attempt to subject this so-called "fund" to the satisfaction of the claim of the appellee for damages for the breach of contract by the iron company was nothing more than an effort to reach a debt due to a party in no way responsible for those damages.
From the evidence contained in the record there was no warrant for either a personal judgment against the appellant bank, or for one against its debtor in any proceeding akin to garnishment. In view of the testimony, in which there appears to be practically no conflict, we think the court should not only have withheld the peremptory instruction given in favor of the appellee, but should have directed a verdict for the appellant. The judgment of the District Court will, therefore, be reversed and judgment here rendered for the First National Bank of Chicago. While the evidence is wholly insufficient to sustain any judgment against the iron company, there being no appeal by it, in so far as that defendant is affected the judgment will be undisturbed.
Reversed and rendered.
Writ of error refused to M. W. L. P. St. Ry. Co.