Stark v. Alford & Veal

| Tex. | Jul 1, 1878

Moore, Associate Justice.

On the 26th of April, 1871, the appellant, J. R. Stark, purchased of the Washington Iron Works, a corporation of the State of Hew York, through their agent, E. S. Blizard, machinery for erecting a saw and grist mill, for which he was to pay said Washington Iron Works $3,066. Of this sum, appellant agreed and paid to said Blizard, agent for said corporation, through George F. Alford & Veal, a commission house in the city of Galveston, in accordance with the stipulations of his contract, the sum of §1,650 in cash, on or about the 25th of May, 1871, on the arrival of said machinery at the port of Galveston; and at the same time, in further pursuance of the terms of said contract, appellant drew a draft on said George F. Alford & Veal, payable to his own order, at four months from the arrival of said machinery in Galveston, for the sum of §1,416, which said draft appellant indorsed and delivered to said Blizard for said corporation, in payment of the balance, as agreed by said contract, to be paid for said machinery. Said draft was accepted by said George F. Alford & Veal, for the accommodation of appellant, by letter addressed to said Blizard at the time the agreement for the sale and purchase of the machinery was made. Appellant also, at the same time, executed and delivered to said Washington Iron Works a deed of trust on all of said machinery sold him as aforesaid, with authority to sell the same, or to appoint a trustee to this end, if said draft should not be punctually paid when the same became due according to its tenor and effect.

The machinery appears to have arrived in Galveston about the 25th of May, 1871, and to have been forwarded at once, by said George F. Alford & Veal, to appellant, in Houston county, where, as was well understood by all parties, the proposed mill was to be erected, and where it arrived in the latter part of the following month. On or about the 5th of July, 1871, appellant completed the erection of said mill, and got said machinery in place, ready to commence business, when for the first time he discovered, as he alleges, that said machinery was radically defective in its construction, and entirely insufficient to perform the service for which it was purchased, and was in many essential particulars altogether different from what said Washington Iron Works had by its contract undertaken and bound itself, through its said agent, to furnish and deliver to him. Appellant seems promptly to have informed said Blizard, the agent of said corporation, as well as said George F. Alford & Yeal, of the alleged defects in said machinery, and to have instructed the latter parties, a month or more before said draft fell due, not to pay the same, because of a failure of consideration, by reason of the defective and insufficient character of said machinery. Alford & Yeal claim, however, though they gave no information of the fact to appellant until after the bill fell due, that they purchased said bill from said-Washington Iron Works, for value, on the 3d of June, 1871, long before it was due, and without notice of the supposed defects'in said machinery, or of the alleged failure of the consideration for which it was given; and also that said deed of trust, given by appellant to secure the payment of said draft, as-before stated, was at the same time, for a valuable considération, assigned and transferred to them.

The draft not being paid when it fell due, and appellees threatening to enforce the trust deed by a sale of. the machinery therein conveyed, appellant instituted this suit, for the purpose of enjoining appellees, Alford & Yeal, from enforcing the collection of said draft or bill by the- sale of said machinery under said trust deed; to recover from said Washington Iron Works and its agent, said Blizard, direct and consequential damages for the alleged defects in said machinery, and such as is claimed to have resulted to him therefrom; and also damages from said George F. Alford & Yeal for fraudulent collusion with said Washington Iron Works, and for the alleged wrongful and oppressive conduct on the part of said Alford & Yeal in their efforts to effect a sale of said machinery under said trust deed.

It would be a wearisome as well as bootless task to follow the sinuous tergiversations of this voluminous record. From the inception of the case to its termination, it is marked by obvious and glaring improprieties and irregularities, which must be reprobated, even if they were not calculated to distract attention from the real issues in the case, or to embarrass its correct determination.

The leading and essential issues which the proper determination of the case involve, are neither numerous nor of difficult solution. The first and leading question to be decided, is whether the machinery delivered by the Washington Iron Works to appellant was, in quantity, capacity, and quality, such as stipulated in the contract. If not, appellant is entitled to a judgment against said corporation, if it has been properly brought into court, for the difference in the value of the machinery actually delivered and that contracted for. (Wright v. Davenport, 44 Tex., 164" court="Tex." date_filed="1875-07-01" href="https://app.midpage.ai/document/wright-v-davenport-4892593?utm_source=webapp" opinion_id="4892593">44 Tex., 164.) This difference may be shown by witnesses who are able to state the difference, taking the contract price and expense of delivery as the basis for estimating the difference in value between the machinery actually delivered and that contracted for; or the difference may also be shown by satisfactory proof of the reasonable cost of supplying the deficiencies or removing the defects of the machinery delivered, if this has or could be done. If there was fraud or an express warranty, the measure of damages would of course be different. But we see nothing in the record requiring a discussion of the rule applicable in such cases; and certainly we are at a loss to conceive upon what ground the court held that appellant was entitled to the contingent and speculative damages which the jury were authorized to find. Ho appeal has been prosecuted from the judgment by the Washington Iron Works; but it has been deemed appropriate to make this reference to the judgment against it, to guard against- similar errors on another trial, if it should be a party to the suit ^* It may be well, also, to say, that there was no return by the officer to whom the citation to the Washington Iron Works was issued. "The court, therefore, had no jurisdiction of it when it rendered judgment against it by default..

If there was a fraudulent combination between the Washington Iron Works and Alford & Veal to cheat and defraud appellant, or if Alford & Veal were parties to and interested with said iron works in the contract, then they are equally responsible with it for whatever damage appellant may have sustained from a breach of the contract. But if they had no such interest, appellant has no right óf action against them, unless there has been a failure of consideration, which he can set up against the hill in their hands; or he has a right to enjoin a sale of the machinery under the trust deed. The claim for damages for endeavoring to enforce, the deed of trust and the payment of the bill, which they accepted for appellant’s accommodation, if they were justly entitled to have the property sold under the trust deed for their benefit, seems scarcely worthy of serious notice.

The important question in the casé, so far as Alford & Veal are concerned, depends upon the right acquired by their payment or purchase of the bill before it became due, and without notice, of appellant’s defense. Of course, no one can question, if Alford & "Veal were strangers to the bill, and purchased it for value, without notice óf the failure of consideration, no such defense could be made tó it in their hands. But whether the same can be said in regard to the deed of trust, in view of our statutes relating to assignment of written instruments, admits of mere question ; though the weight of authority seems to hold that the purchaser gets a mortgage, given as collateral security, like the bill, free from the equities of the payee against the indorsee. (1 Banl. on bTeg. Inst., 628, 629.) But as this point, though it may be important in the ultimate determination of the case, has not'been considered or discussed by counsel, and is not essential to its present decision, it will not be definitely determined.

But unless Alford & Veal can shut out appellant from such defenses to the bill as might be made to it in the hands of the Washington Iron Works, unquestionably they cannot deny his right to defend against the deed. How stands the matter, then, upon the bill ? They were the acceptors, and on the face of the paper were primarily responsible. When it was paid, therefore, it had tilled its destiny: its obligation was discharged. It cannot, consequently, be said that the acceptor, when he takes up the bill, is the holder, in the sense of the law merchant. (Ghitty on Bills, 249.) True, when the acceptance is for the accommodation of the drawer, as between themselves the acceptor is a surety for the drawer, and may maintain an action against the drawer for whatever he may be forced to pay for him by reason of his acceptance. But it seems he does not sue in such case on the bill, but for money had and received, of which the bill, in connection with evidence that his acceptance was for accommodation, furnishes proof of the amount so paid. (Planters’ Bank v. Douglass, 2 Head, 699; Danl. on Keg. Inst., 395.)

It is universally admitted, that the consideration of negotiable paper may be inquired into between those with whom there is a privity; “ that is to say, between the intermediate parties to any contract evidenced by the drawing, accepting, making, or indorsing a bill or note, it may be shown that there was no consideration,” &c. (1 Danl. on Keg. Inst, 135.) It may be, if the drawer had permitted his accommodation acceptor to pay the note without notice of failure of consideration, as between him and the payee it would be too late afterwards for him to complain. But the acceptor’s obligation is to pay when the bill is due, and' not before; (Ghitty on Bills, 248, 431; 2 Dahl, on Keg. Inst., 233; Burbridge v. Manners, 3 Campb., 193; 8 Conn., 505" court="Conn." date_filed="1831-07-15" href="https://app.midpage.ai/document/savings-bank-of-new-haven-v-bates-6574522?utm_source=webapp" opinion_id="6574522">8 Conn., 505; 2 McCord, 246;) and he should not be permitted to deprive the drawer of a defense to the bill, by assuming to pay it before he is bound to do so. He cannot, by paying the bill out of due course, change the relationship of the original parties to it and to each other, and thus cut off the drawer from the opportunity of defending himself against the payment of a bill for which he has received no valuable consideration. True, this would have been his condition if the bill had been transferred before due to a stranger, who purchased it for value, without notice; but the rights which a stranger acquires by the transfer of commercial paper are in many respects altogether different from those which the original parties have. It is essential, in order to give credit and circulation to such paper, that this should be so. . '

The court erred in holding that if appellees, Alford & Veal, paid the note before it was due, its consideration could not be impeached. Nor was the real question, touching appellant’s right to enjoin the collection of the bill, or diminish his liability upon it, submitted to the jury by the issue presented to them in the charge. Though Alford & Veal may not have been guilty of fraudulent conduct in their transaction with Blizard and appellant, concerning the sale of the 'machinery or the payment of the draft, yet, by their payment of the draft before it was due, they subjected themselves to such defenses as appellant might be entitled to make to or against the Washington Iron Works. If they claim that they were in fact the sureties of appellant, and by payment of his debt are subrogated to the rights of the payee, it must also be held, that by thrusting themselves between appellant and the payee, by paying the bill otherwise or at 9, different time from that to which their acceptance bound them, they have subjected themselves to the defenses which they could have made to it if it had remained in the hands of the payee.

The judgment is reversed and the cause remanded.

Beversbd and remanded.

* Note.—The jury found a verdict for §6,000 damages against the Washington Iron Works, for which judgment was rendered in favor of Stark.