Foreign Trade Banking Corp. v. Cosmopolitan Trust Co., 240 Mass. 413

Foreign Trade Banking Corp. v. Cosmopolitan Trust Co.

240 Mass. 413 | Mass. | 1922

Rugg, C. J.

This is an action of contract brought against the Cosmopolitan Trust Company after disallowance by the commissioner of banks in possession of its business and property of a claim presented by the plaintiff. G. L. c. 167, §§ 22 to 36. The plaintiff at various times, beginning with August 28, 1920, and ending with September 17, 1920, paid to the trust company a total of $177,051.60 for checks or foreign bills of exchange drawn by the trust company upon the Crédito Italiano, a bank in Italy, payable without specification of date to the order of the plaintiff or to the order of that bank for the plaintiff’s account. On September 25, 1920, which was before any of these were presented for payment, the commissioner of banks closed the defendant trust company by virtue of authority conferred upon him by the statute, and payment of the checks was countermanded. From time to time thereafter these checks or foreign bills were presented in due course for payment at the bank on which they were drawn, payment was refused and they were protested for nonpayment. The current rate of exchange was substantially lower at the time of presentment and protest than when the trust company was closed.

The several transactions between the parties constituted a sale of credit by the trust company to the plaintiff, the checks or *415bills of exchange issued being a means of establishing or transmitting the credit. They were completed contracts. The dishonor of the checks or bills of exchange constituted a breach of the obligation, for which the plaintiff is entitled to such damages as the law allows, and it cannot recover the amount paid in an action for money had and received, because the consideration has not failed.

It was provided by R. L. c. 73, § 9, in force when these checks or bills of exchange were issued, now G. L. c. 107, § 9, “When a bill of exchange, drawn or indorsed within this Commonwealth and payable beyond the limits of the United States, is duly protested for non-acceptance or non-payment, the party liable on such bill shall, on due notice and demand, pay it at the current rate of exchange on the date of the demand, with interest from the date of the protest and damages at the rate of five per cent upon the principal thereof; and the amount of principal, interest and damages, shall be in satisfaction of all charges, expenses and damages.” The original of which this section is the present form was St. 1825,- c. 177, § 1. The state of the law mérchant as established by the usage in this Commonwealth prior to that time is described in Grimshaw v. Bender, 6 Mass. 157. See also Suse v. Pompe, 8 C. B. (N. S.) 538, and Bank of United States v. United States, 2 How. 711, 737. In some form the customs of international transactions have given the holder of a dishonored foreign bill of exchange damages for the breach of contract. Cost of protest and the price of re-exchange, or a flat percentage of the face of the bill, have prevailed in different jurisdictions. Williams v. Avers, 3 App. Cas. 133. Adams v. Cordis, 8 Pick. 260. Tastet v. Baring, 11 East, 265. In re Commercial Bank of South Australia, 36 Ch. D. 522.

The subject is set at rest for this Commonwealth by the statute. Its words are clear. The damages are fixed by the specified rate of five per cent on the principal. These damages are recoverable only in one way and upon a single essential condition precedent, namely, when liability is established by demand, protest and notice. There is no provision in the statute for damages upon any other footing. No exception is made for cases where, according to principles of the law merchant or terms of the statute applicable to other facts, demand, protest and notice might be *416excused. Therefore, the principal cannot be determined until the time and circumstances have conjoined so that the right to damages has occurred. That principal is fixed by the very terms of the statute at the-current rate of exchange “on the date of the demand.” It follows that the plaintiff is entitled to recover that amount together with damages at five per cent thereof.

The point is in substance covered by the decision in American Express Co. v. Cosmopolitan Trust Co. 239 Mass. 249, where it was said, "We see no reason why the plaintiff is not entitled to a judgment which shall measure its damages in strict conformity to the statute. Kittredge v. Osgood, 161 Mass. 384.” In that case the date of demand and protest was taken as the basis for judgment and not September 25, 1920, the date when the commissioner took possession of the trust company and closed it for business. It follows from what has been said that White v. Knox, 111 U. S. 784, Richmond v. Irons, 121 U. S. 27, 64, and Usher v. A. S. Tucker Co. 217 Mass. 441, are not apposite to the facts and statute here controlling.

A further question arises because “the current rate of exchange on the date of the demand” fluctuated. The record does not show the moment during the day when demand on each of the checks or bills of exchange was made. Under these circumstances, the fair and equitable rule is to calculate the principal on each check at the average rate of exchange on the date when the demand was made. This amount in the aggregate is agreed to be $157,803.31. On this sum the damages are to be computed at five per cent. '

‘ Judgment accordingly.