3 Sandf. 257 | The Superior Court of New York City | 1849
The bill in this cause was filed for the purpose of reaching certain funds received by the defendant, Jauncey, arising from the sale of cotton, delivered to and sold by him, under the circumstances hereinafter mentioned, on which the plaintiff claimed to have an equitable lien.
It appeared, from the pleadings and proofs, that the defendant, John Wood, having in the latter part of June, 1846, purchased at Savannah one hundred and five bales of cotton, which he intended to consign to the defendant, Joseph Wood, at New York, for sale; drew a bill of exchange on Joseph Wood, dated June 29,1846, at sixty days’ sight, in favor of Thomas J. Walsh or order, for three thousand dollars, which was discounted by the plaintiffs, and the proceeds applied by John Wood in payment for the cotton. The property was shipped and consigned to Joseph Wood shortly afterwards; John Wood accompanying it in the vessel in which it was brought. The draft was accepted on the 6th of July, Previous to this, on the 30th of June, Joseph Wood had become insolvent, and had executed an assignment of all his estate to the defendant, Jauncey, in trust for the payment of his debts. Among his assets thus transferred, was a debt due to him from John Wood, of about $2200. The cotton, upon its arrival at New York, was, by the consent of John Wood, placed in the hands of Jauncey, for the purpose of selling the same, and applying the proceeds in payment of the indebtedness of John to his brother Joseph. The latter also transferred the bill of lading to Jauncey. The net proceeds of the cotton received by Jauncey, amounted to $2100 and upwards, leaving a balance in the hands of Jauncey of between five and six hundred dollars beyond the amount of John’s debt to Joseph Wood.
The ground upon which the plaintiffs in their notice claimed this lien was, that they had discounted the bill of exchange on the faith of the consignment to Joseph Wood and that out of the proceeds thereof the bill would be paid; and in their- bill of complaint, they alleged that at the time of the presentment of the bill to them for discount, it was represented to them by John Wood, the drawer, and Thomas J. Walsh, the payee, that the bill was drawn against the consignment, and would be paid out of its proceeds, and that they discounted the bill on the faith of such representation. The evidence, however, does not support the allegations of the bill of complaint in this respect to their full extent.
It abundantly appears from the testimony of all the witnesses, that John Wood had been in the habit of obtaining money from the plaintiffs by the discount of his drafts on Joseph Wood, in favor of and indorsed by Thomas J. Walsh, and that there was a general understanding between John Wood, Walsh, and the plaintiffs, that all bills thus drawn and indorsed, should be drawn on actual shipments of cotton, and should be paid out of the proceeds of the same. With regard to this particular draft, the only positive testimony is that of Elias Reed, the acting-president of the bank, who states that Walsh, the indorser, at the time of offering the bill for discount, represented to him that it was drawn on an actual shipment of cotton; and it was understood” he adds, “ that the proceeds of said shipment should be applied to the payment of the said bill.” It is not pretended that there was any express assigmnent of the proceeds of the shipment to the plaintiffs, or any order on the specific fund, much less an assignment of the bill of lading, which would have been the most obvious method of securing a lien in their favor. There was nothing more in this case than the understanding testified to by the president. He does not say that there was an agreement to that effect with Walsh, nor does he state that there was any
It was next insisted, that the bill or draft, having been drawn against a consignment, was of itself an equitable assignment by the drawer, of the property or its proceeds.
This is certainly carrying the doctrine of equitable assignment very far, and is in our judgment entirely unsupported by authority. In the cases cited by the counsel, and in all the other cases where an order has been held to be an equitable assignment of a particular fund, the fund has been specified in the order, and the party giving the order has thereby divested himself of all right to control the fund purporting to be assigned. The form of the assignment is immaterial, but these two ingredients first named are essential. (Yates v. Grove, 1 Ves. Jr. 280; Watson v. Duke of Wellington, 1 Russ. Mylne 602, 605; Lett v. Morris, 4 Simons 607; Burn v. Carvalho, 4 My. & Cr. 690; Malcolm v. Scott, 3 Hare 39; Rogers v. Hosack's Executors, 18 Wend. 329; Philips v. Stagg, 2 Edw. Ch. R. 108.)
A bill of exchange however, and the instrument in question is nothing more nor less, differs essentially from such an order. It must be payable at all events, and not out of a particular fund. If its payment is contingent, either with regard to the event or the fund out of which it is to be made, it is not a bill of exchange, but an order or assignment of a fund. The converse of this is also true, that if the instrument be a bill of exchange, it is not an assignment of a fund. The plain distinction between
The plaintiffs next contended, that, upon discounting the bill in question, they acquired an equitable vested interest in or lien upon the cotton or its proceeds, which constituted a trust fund in the hands of the defendant Jauncey, applicable to the payment of the bill; and the cases of Moses v. Murgatroyd, (1 J. C. R. 129;) Bank of Auburn v. Throop, (18 J. R. 505;) and Curtis v. Tyler, (9 Paige 432,) were referred to in support of this proposition. The principle on which these cases were decided is, that when a surety, or a person standing in the situation of a surety, for the payment of a debt, receives a security for his indemnity, the principal creditor is entitled to the benefit of that security. Thus, in the case of Moses v. Murgatroyd, the plaintiffs who were holders of Ogden’s notes indorsed by Mur
The bill must be dismissed with costs.
Affirmed in the court of appeals, 3 Comst. 243.
In the case of Winter v. Drury and Clark, decided by the same justices on the same day that the foregoing opinion was pronounced, it was contended, that a bill of exchange is an equitable assignment of the funds of the drawer in the hands of the drawee, in such a sense as to give to the payee a lien "on those funds, to the amount of the draft, if the drawee have so much, or to the whole amount, if it be less than the draft. And that, if not against the drawee, yet the lien on the fond would be maintained, if the money came back into the hands of the drawer. Mason, J. delivered the opinion of the court, and referring to the preceding case, the court held, that there was no such lien effected by drawing a hill of exchange.
E. Sandford, for the complainant.
R. Goodman, J. T. Brady, for the defendants.