Kelly v. Lynch

Crocker, J. delivered the opinion of the Court—Cope, C. J. and Norton, J. concurring. The plaintiffs, who are merchants at Mazatlan, advanced a sum of money to one Goldbaum, on a draft and bill of lading, signed by the master of a vessel, representing a shipment by Goldbaum of eight hundred and ninety-six hides and a quantity of bones and horns, deliverable at San Francisco. Goldbaum drew the draft for $2,100 on Moore & Folger, of San Francisco, payable at three days’ sight, to the plaintiffs or order, and indorsed the bill of lading, directing the hides, etc., to be delivered to Moore & Folger upon payment of the draft. Goldbaum being indebted to the house of Alsua, Dorn & Co., of Mazatlan, gave them also a draft on Moore & Folger for $1,000, payable to their order at three days’ sight, and with plaintiffs’ consent made another indorsement on the bill of lading, directing that “ after payment of the above mentioned draft of $2,100,” the draft for $1,000 was to be paid before the delivery of the contents of the bill of lading. Alsua, Dorn & Co. indorsed their draft over to the plaintiffs, with instructions to pay the proceeds, when collected, to the defendants, who were their correspondents in San Francisco. The plaintiffs then indorsed over both drafts for collection, and forwarded them, with the bill of lading, to Barron & Co., of San Francisco. When the vessel arrived, Barron & Co. applied to Moore & Folger to accept the drafts and receive the consignment. They were willing to receive the con [665] signment, accept the draft for $2,100, and pay over the surplus on the draft for $1,000, but were not willing to accept the latter draft. Barron & Co. then went to the defendants, showed them the papers and the letter of Moore & Folger, and after some hesitation, they accepted the draft of $2,100 for the interest of their correspondents, Alsua, Dorn & Co., and not for the honor or on the credit of Goldbaum. Moore & Folger indorsed their refusal to accept on the drafts, and Barron & Co. indorsed and assigned the bill of lading and the draft for $1,000 to the defendants. When the hatches of the vessel were opened, it was discovered that there were only about thirty-one hides, and the balance of the cargo consisted of bones and horns, of no value—showing a gross fraud perpetrated by Goldbaum and the master of the vessel. The vessel and cargo were sold, and the net proceeds realized therefrom, which came to the hands of the defendants, was the sum of four hundred and sixty-six dollars and sixty-three cents, which they tendered to Barron & Co. for the plaintiffs, in payment of the draft, who refused to receive it. This action is brought against the defendants as acceptors, to recover the amount of the draft of $2,100 with interest and costs. The Court below rendered judgment in favor of the plaintiffs, from which the defendants appeal. The appellants contend that their acceptance was without consideration, and therefore they are not liable. In this we do not agree with them. By means of their acceptance they obtained the assignment and possession of the bill of lading, and the plaintiffs were also thereby induced to dispense with the acceptance of Moore & Folger, which would have been as beneficial to them as that of the defendants. Here is a benefit resulting to the defendants, and a loss sustained by the plaintiffs, either of which forms a sufficient consideration to support the promise. The fact that the bill of lading was not of as great value as was supposed affects the adequacy of the consideration, but not its sufficiency in point of law. It is not necessary that the consideration be adequate in value to support the contract. But the loss of the acceptance of Moore & Folger is not only a sufficient consideration, but one adequate in value. [666] These rules apply to cases where there is no admixture of fraud. In the present case, there is -no pretense of any fraud on the part of the plaintiffs or them agents. The plaintiffs and the defendants, as well as their correspondents in Mazatlan and San Francisco, are all equally innocent parties. It is an unfortunate case for the defendants, but we see no just grounds for releasing them from their liability as acceptors of the draft. The case of Robinson v. Reynolds (2 Adolphus & Ellis, N. S. 196) is fully in point. In that case Keegan obtained an advance from the Kational Bank of Ireland, upon a bill of lading, for butter purporting to have been shipped from Ireland to Liverpool, he giving to the bank his draft or bill of exchange for the amount of money advanced. The defendants, who were the drawees, accepted the bill, and received a transfer of the bill of lading from the bank. They soon ascertained that the bill of lading was a forgery, and then refusing to pay the draft, a suit was brought on their acceptance. The Court held that these facts constituted no defense to the action; that the bank were the indorsees and indorsees for value, and the failure or want of consideration between them and the acceptors constituted no defense ; that the acceptance binds the defendants conclusively, as between them and every bona fide indorsee for value ; and that it did not matter whether the bill was accepted before or .after such indorsement. But the appellants contend that that case is not in point, because they are not the drawees or in any manner parties to the bill. We do not see that that fact affects the principle. They made themselves parties to the bill by accepting, and thereby assumed all the liabilities and responsibilities of acceptors. There is one point in the present case in which it differs from the one cited. Here, there was a consideration for the acceptance, as we have shown; in that there was none, unless the transfer of a forged bill of lading could be considered one. We see no ground for claiming that the plaintiffs by their acts • induced the defendants to enter into the contract; in the absence of fraud, that would not enable the defendants to avoid the contract. Hor is therfe any just ground for asserting that the plaintiffs made the defendants their agents and trustees, to dispose of the [667] consignment and apply the proceeds to the payment of the drafts. The liability of the defendants is as acceptors of the draft. We see no error in the action of the Court below. The judgment is therefore affirmed.