Hannay v. Guaranty Trust Co.

187 F. 686 | U.S. Circuit Court for the District of Southern New York | 1911

NOYES, Circuit Judge

(after stating the facts as above). There is no contention that the defendant in presenting the draft had knowledge of the spurious nature of the bill of lading, and the question presented is: Upon which of the two innocent parties, the plaintiffs or the defendant, should the loss fall? It is further conceded that if the draft in question had been a plain draft — i. e., if it had contained no reference to the cotton which the spurious bill of lading purported to represent — the plaintiffs could not recover. This concession is clearly required by the decisions of the Supreme Court in Hoffman v. Bank of Milwaukee, 12 Wall. 181, 20 L. Ed. 366, and Goetz v. Bank of Kansas City, 119 U. S. 551, 7 Sup. Ct. 318, 30 L. Ed. 515.

On the other hand, it is, in my opinion, settled so far as this court is concerned by the decision of the Circuit Court of Appeals in Guaranty Trust Co. v. Grotrian, 114 Fed. 433, 52 C. C. A. 235, 57 L. R. A. 689, that although the parties were equally innocent, yet if the draft were not a plain draft, but were a conditional one, and were accepted conditionally, a cause of action for money paid by mistake would be presented. The only substantial distinction between the facts in the two cases is that the acceptance in the Grotrian Case was conditional in express terms, while the acceptance in this case was general. In all other respects the rights and equities of acceptor against presenter are quite as strong here as in the Grotrian Case. Consequently the material questions to be determined are these:

(1) Was the draft conditional?

(2) Was the acceptance conditional?

[1] Now, as we have seen, the draft contained the following provision :

“Charge the same to the account of B. S M I 1.00 bales of cotton.”

With respect to almost the identical language in a draft the Supreme Court, in National Bank v. Merchants’ Bank, 91 U. S. 92, 94, 23 L. Ed. 208, said:

“Moreover •* * * the drafts upon their face showed that they had been drawn upon the cotton covered by the bills of lading. Both the plaintiffs and their agents, the defendants, were thus informed that the bills were not drawn upon any funds of the drawers in the hands of Green & Travis, and that they wore expected to be paid out of the proceeds of the cotton.”

And in the Grotrian Case, the Circuit Court of Appeals said in respect of a similar provision:

“The request to pay was conditional upon the delivery.of the Sax seed.”

In view of these authorities, no other conclusion can be reached by this court than that the draft in question was conditional, and was drawn against the cotton.

[2] The next question is whether the acceptance was conditional. It was not so in express terms as in the Grotrian Case. But it is well settled by the authorities that a general acceptance is an agreement to pay according to the tenor of the bill. If the draft is conditional, the acceptance is upon the same conditions.

“If the acceptance be a general acceptance of a conditional order, it binds the acceptor to pay according to the conditions, and not otherwise.” 7 Cyc. 757, citing numerous authorities.

[3] It follows, then, that the draft was in terms conditional, and that the acceptance based thereon was in law conditional. The decision in the Grotrian Case seems applicable and controlling.

But it is pointed out, and it is true, that especial stress is laid in the Grotrian opinion upon the fact that there the acceptance was expressly made conditional. The court, however, in stating the position of the plaintiffs in that case said that they relied “on the direction in the draft to charge the amount to the account of the flax seed, and the acceptance against indorsed bills of lading.” The. court further said, as already shown, that “the request to pay was conditional upon the delivery of the flax seed.” In view of this language, I deem it my duty to assume that the court based its decision upon two grounds: (1) The conditional nature of the draft, from which the conditional character of a general acceptance would follow as a matter of law; (2) the express conditions in the acceptance. Notwithstanding some expressions in the opinion, I cannot conclude that the court intended to draw a distinction between the rights of an acceptor who accepts and pays a conditional draft without repeating in the acceptance the conditions of the draft and one who goes through that formality.

The draft being conditional, and the rights between presenter and acceptor being as already stated, it is unnecessary to consider whether under any circumstances or with respect to any other persons it could be regarded as a negotiable instrument.

The demurrer is overruled, with costs, but with the privilege to answer over, upon the payment of costs, within 20 days.