Van Wart v. Smith

By the Court,

Woodworth, J.

I think it is well settled that the defendants not having indorsed the bill, are not, by the law merchant, entitled to notice of its dishonor. (5 Maul. & Selw. 52.)

It appears to me the plaintiff did not receive the bill as absolute payment. In Owenson v. Morse, (7 D. & E. 64,) it was held, that if the seller of goods tabes notes' or bills for them, without agreeing to run the risk of the notes being paid, and the notes turn out to be worth nothing, this will not be considered as payment. From the nature of the transaction, no such liability could have been within the contemplation of the parties.. The’ plaintiff was the agent of the defendants; he had purchased goods for them, and they were his debtors. In this state of things, a bill is transmitted, the letter accompanying the bill declares it to be a further remittance on account of the order for hardware, thereby undoubtedly imposing on the plaintiff certain duties ; but among the number, the right of considering the bill a payment, or the right to claim notice as on an indorsed bill, was not included. I have already said that the plaintiff thereby became an agent, and was bound to fulfil that trust with diligence and integrity. The bill was drawn on persons in London, and the plaintiff resided at Birmingham. It could not have been expected that he should present the bill personally; that duty must necessarily devolve on others. The plaintiff employed his bankers, persons accustomed to transact business of this description. They employed their agents in London, who seem to have been guilty of laches, and for. whose conduct Woolley &Co. must be held responsible ; but to whom? The plaintiff it is true, prosecuted them,because, being the payee of the bill and the representative of the defendants, he was entitled to bring the action. Whatever he recovered, would enure to the benefit of the defendants. Had he succeeded in recovering the whole, the claim would have been satisfied. According to the decision in the king’s bench, (5 Dowling & Ryland’s Rep. 374,)- the plaintiff was only enti-. tied to recover damages for his "loss of remedy against Cranston & Co. A new trial in that case was granted, but what were the ulterior proceedings does not appear. If the principle df agency applies, it is apparent that the proceeding against Woolley & Co. in no way affects the claim, against the defendants, except to the extent that the plaintiff has recovered from them.. As yet there does not appear there has been any recovery. If the plaintiff was the agent, I do not perceive any laches on his part; he had no knowledge of the non-acceptance of (he bill previous to September 11. As soon as he received notice of protest for non-payment, he advised the defendants, and demands payment, which was refused. That Lubbock & Co. were guilty of laches, is admitted ; and if the facts in the case had been such as by law to entitle Crapston & Co. to notice, the plaintiff would have recovered the amount in England, and we should probably never have heard of this action. The king’s bench decided, and I think correctly, that they were not entitled to notice. The drawees had no funds or effects of the drawers in their hands when the bill was drawn, or subsequently, nor any expectation of assets; the drawees had never accepted any bills beyond a guaranty of <£10,000, unless they were .covered by other resources. The cases of Rucker v. Hiller, (16 East, 45,) Bickerdike v. Bollmar, (1 D. & S. 408,) and Robinson v. Ames, (20 Johns. R. 146,) very clearly show that notice was unnecessary. The case in Johnson, puts the doctrine on this ground, that where there are any funds of the drawer in the hands of the drawee, or if' at the time the bill is drawn, there are circumstances sufficient to induce a reasonable expectation that the bill will be accepted or paid, the drawer is entitled to notice. Here were no funds, nor any reasonable expectation of funds, for none had been provided, and the uniform practice of the drawees had been, never to accept unless secured. Ho remedy therefore was lost against Cranston & Co. on the ground of want of notice to them. But in answer to any supposed loss that the defendants might sustain against Cranston & Co. in consequence of not sooner receiving notice of the dishonor of the bill, it may be observed that the doctrine of notice as to them must be governed by this: was a faithful agent bound to give earlier notice than the time he first was apprized of the dishonor % It seems to me that no greater diligence could be required. If the defendants had indorsed the bill, the question would not be materially changed. Whether the bill was indorsed to the plaintiff by the defendants, or merely transmitted to him without indorsement, we have already seen it was not a payment; it did not extinguish the original deman<^’ but was a bill sent to be collected with due diligence, and if collected, to apply the proceeds. As between the defendants and the plaintiff in either case the result would have been -the same; but as between the plaintiff the payee or the defendants, (had they been indorsers,) and Woolley & Co. the want of notice might have subjected Woolley & Co. to a recovery of damages, resting on this ground : that although the drawers were not entitled to notice, yet the' indorsers, had they been notified, might, for aught that appears, have obtained security in whole or in part, notwithstanding the insolvency'; for we have no bankrupt law, nor is there any rule that prohibits a debtor;.although insolvent, from securing one bona fide debt, and excluding another. In my view, questions of this kind might have been presented "in the action "commenced by the plaintiff against Woolley & Co. his bankers; but they do not enter into the merits of the question now under consideration. I am of opinion that the plaintiff is entitled to judgment

Case Details

Case Name: Van Wart v. Smith

Court Name: New York Supreme Court

Date Published: Aug 15, 1828

Citation: 1 Wend. 219

Court Abbreviation: N.Y. Sup. Ct.