14 Cal. 450 | Cal. | 1859
Lead Opinion
delivered the opinion of the Court—Cope, J. concurring.
In 1854, the defendant gave Clifford & Co. of San Francisco, a letter of credit, authorizing them to draw upon him at Boston or ¡New York, at sixty or ninety days’ sight, for any sums not exceeding twenty thousand dollars. The object of the credit was to énable Clifford & Co. to raise funds at San Francisco, and to remit the same to the defendant. They had, in fact, no interest in the transaction, the proceeding being a mere device on the part of the defendant to raise money on the time drafts of Clifford & Co. for his own use. Upon receiving the letter, Clifford & Co. applied to Page, Bacon & Co. to cash their bills on the defendant for the amount of the credit, payable sixty days after sight. Page, Bacon & Co. refused to do this, as the bills had too long to run, but after some negotiation sold their own sight bills on Boston, for the amount, to Clifford & Co. upon the promise of the latter to pay for the same within three or four weeks, retaining, by agreement, the letter of credit as collateral security for the payment. Soon afterward the costs of the bills were paid to Page, Bacon & Co. but through inadvertence the letter of credit was not withdrawn from their possession. Previous to this letter, Clifford & Co. were indebted on their own note to Page, Bacon & Co. in the sum of fifteen thousand dollars, of which amount ten thousand remained unpaid in February, 1855, when the latter firm suspended payment. For this balance security was demanded 5 and upon the suggestion of one of the firm of Page, Bacon & Co. a bill for the amount was drawn by Clifford & Co. upon the defendant at Boston, based upon the letter of credit, payable in sixty days after sight to the order of Page, Bacon & Co. and delivered to them. The bill was taken as collateral security merely, and not in payment of the note. Upon presentation of the bill at Boston, acceptance and payment were refused, and the bill was accordingly returned under protest. The plaintiffs were appointed receivers of the effects of Page, Bacon & Co. by order of the District Court, and authorized to institute suit for the collection of demands of that firm, in their hands as such receivers. They recovered judgment and defendant appeals.
Some attempt was made to show that the credit was revoked
The point, then, for determination is this: Did Page, Bacon & Co. receive the bill in suit for a valuable consideration ? For its solution it is unnecessary to pass upon the much mooted question, whether negotiable paper, taken before maturity, as collateral security for an antecedent debt, without any change in the rights of the creditor in relation to such debt, is subject to the equities existing between the original parties, if such question can be considered as an open one after the decision of this Court in Robinson v. Smith, at the last term, (ante, 94.) In Payne v. Bensley, (8 Cal. 266,) the Court only intimated its opinion; the decision was placed on another ground. All the authorities, however conflicting in other respects, concur in the rule that where there is any change in the legal rights of the parties in relation to the antecedent debt, the creditor taking the collateral security is considered as a holder for value, and the paper not subject to equities existing between the original parties. Judged
Judgment affirmed.
Concurrence Opinion
On petition for rehearing, the following opinion was delivered by Field, C. J.—Cope, J. concurring.
The points made by the Appellant, on the rehearing, are as follows: 1st. That the plaintiffs are not authorized to maintain the action by virtue of their appointment as receivers. 2d. That the letter of credit was exhausted before the bill in suit was drawn; and, 3d. That Page, Bacon & Co. were not innocent holders of the bill.
The first point we noticed in our former opinion. We there stated that the finding of the Court furnished an answer to the objection, and that we must presume, in the absence of anything to the contrary in the record, that the finding was based upon proper evidence. There is in fact nothing in the statement embodied in the transcript which calls its correctness in question; and there is nothing in the complaint disclosing anything in the relation which the plaintiffs bear to the assets of Page, Bacon & Co. different from that held by the receivers of an insolvent ap
The second point is without support from the evidence. Page, Bacon & Co. expressly refused to cash bills drawn upon the letter of credit, assigning as a reason, that the bills authorized by it had too long to run. They, however, after some negotiation, sold their own sight bills on Boston, to Clifford & Co. upon the promise of the latter to pay the same within three or four weeks, retaining the letter of credit as collateral security. This letter constituted in fact no security at all, though, as it would appear, Page, Bacon & Co. thought otherwise. Its possession conferred no right to any claim against the defendant, either in law or equity. It remained in the bank unrevoked and unused, until the bill in suit was drawn against it.
The third point- made by the Appellants is answered by the finding of the Court. The case was tried without a jury, and
Judgment affirmed.