Throop Grain Cleaner Co. v. Smith

Barker, J. If Allis & Co. sold and transferred the debt in. suit to the Farrell Company before the attachment was levied303 thereon, then this action cannot be maintained, although such sale was void in law as against the attaching creditor. We all concur in this proposition, on the authority of Anthony agt. Wood (96 N. Y., 180), Pinchey agt. Striker (28 id., 45). The attachment could become a lien only upon such choses in action as belonged to the debtor at the time of the levy. Whether or not there was such a transfer of' the title to the demand in question as the defendant now sets up was a mixed questiou'of fact and law. The sheriff sought to make a levy on.the 21st of May, 1881, by leaving a proper notice with the defendant Allis & Co., being non-residents. ' Up to this time, all the negotiations relating to a sale and transfer had been carried on by correspondence between Allis & Co. and the Farrell Company. From their letters, and the attending circumstances, tlpe fact in issue is to be'determined. It may be conceded that Allis & Co. were-desirous to divest themselves of all title to their demand against the defendant, with a view of placing it beyond the reach of the attachment proceedings. But this they could not accomplish without the assent of the Farrell Company to become a. purchaser and to take the title. On this question, in my judgment, the evidence is not conclusive, and the case should have been submitted to the jury for their determination. The acts of Allip & Co., standing alone, could not affect a transfer. They never executed any paper which in form constituted a sale and assignment of the debt to the Farrell Company. The negotiations relative to the • sale were commenced by Allis & Go.] and at most was a proposition on their part to sell and transfer the debt to the Farrell Company. Therefore, at the time of the levj7', the title was still in Allis & Co., unless prior to that their proposition had been accepted by the Farrell Company, and became the purchaser and assignee of the demand. In terms, the'latter company never consented to purchase the demand and take the title thereto. Neither did they do any act on their part which the court can say as a matter of ’ — 304 — law was an agreement to purchase the demand against the defendant Smith. In their first letter, under date of May 10th, inclosing the two drafts, Allis & Co. made the request of the Farrell Company to credit their account with the amount of the drafts. In a reply written three days thereafter, the Farrell Company acknowledged the receipt of the drafts and stated that they had been forwarded “for collection,” and that they “will report when drafts are paid.” The'letter of Allis & Co. does not intimate a desire to sell the debt against which the drafts were drawn. In the usual and ordinary course of business between merchants and traders, the drafts would be regarded as sent for collection, and as a mearis, when paid by the ■drawee, of placing funds in the hands of the payee for the purindicated letter of instruction. It also appears That on the same day their first letter was dated, Allis & Oof sent another letter to the Farrell Company relative to the drafts which were inclosed in the first, in which they say: “Our people to-day send drafts on Smith for amount due from him. We charge the amount to you in general account, and want you to credit the same and collect it. Please have no error in receiving and treating the drafts as belonging to -you.” It does not clearly appear from the evidence that this letter had been received by the Farrell Company when •they sent their letter of the 13th, to which reference has been made. If it was in hand at that time, the fact that in their reply they wholly omitted to refer to the contents of the last letter written by Allis & Co., has much significance as indicating that they did not assent to the proposition to treat the drafts as their own, and this is the more so when considered in ■connection with the fact that they never did credit Allis & Go. with the drafts, and the evidence tends to show that they did not treat them as their own until the drawee had accepted and paid the same, which was after the levy made by the sheriff. If in fact the last letter was received by the Farrell Company, after they had sent the one under the date of the 13th of May, then the same significance may be given to their omission to — 305 — acknowledge its receipt, or reply to tbe same in any manner until after the attachment was served. It was for the jury to say whether the omission on the part of the Farrell Company to reply to the letter amounted to an assent upon their part to accept the proposition of Allis & Co. to become the purchaser of the debt against the defendant Smith. The letter of the 19th of May, written by the Farrell Company to the defendant, in which they stated that they have credited Allis & Co. with the drafts, and that they were the owners of the same, is not conclusive evidence in the face of the other circumstances, that they had assented to become purchasers before the levy of the attachment. It was not addressed to Allis & Co., and whether it was received by Smith before the attachment was levied, does not appear. As a matter of fact, the account of Allis & Co. had not been credited with the amount of the drafts. As against the evidence on which the defendant relies for the purpose of showing title in the Farrell Company, at the time of the levy, there are many facts and circumstances which would have justified the jury in reaching the conclusion that the latter never assented to the proposed sale and did not become a purchaser of the claim prior to the levy. The defendant Smith was not a debtor to Allis & Co. at the time the drafts were •drawn and forwarded to the Farrell Company. The contract to supply machinery was then unexecuted in part, and the defendant was under no obligation to make any payment until it was fully performed, and he assumed that .position on refusing to accept the drafts. There is another circumstance indicating that Allis & Co. did not regard that they tad surrendered all control over the contract with the defendant, for as late as the 17th of May they agreed with Smith to abáte from the contract the sum of $385, against which their draft was drawn. After the levy was made, and in a letter dated May 30th, the Farrell Company assent to that arrangement There is also evidence which, I think, tends to show that after the levy was made, and before the defendant paid the — 306 — drafts, Allis & Co. gave their notes to the Farrell Company for balances found due from them without deducting therefrom, or claiming the right to do so, the amount of the drafts, and thus indicating that it was not the intention of the Farrell Company to treat the drafts as so much paid on their account against Allis & Co. If the Farrell Company consented to accept the proposition made to them by Allis & Co. to purchase the drafts, and the minds of the parties met on the terms of the bargain, and the drafts were sent and delivered to the payee, as a mode of effecting the transfer, the title, doubtless, did pass as between those parties, although the drawee refused to accept the same. But sending forward of the drafts alone, without any further arrangement between the parties relative to a bargain and sale of the debt, would not be' sufficient to transfer either the legal or equitable title thereto. A check or inland bill of exchange, drawn in the ordinary form, not describing any particular fund, or using any words of transfer of the whole or any part of any amount, standing fi> the credit of the drawer, does not operate as an ’ assignment, either actual or equitable, of the funds of the drawer in the hands of the drawee. Such check or draft to have the effect of an equitable assignment must be drawn on a particular specified fund (Attorney- General agt. The Continental Life Ins. Co., 71 N. Y., 325). At the time these drafts were drawn, and until after the levy was made, Smith was not a debtor to the drawer in any sum whatever, for the contract between him and Allis & Co. was unexecuted in part, and in a legal sense he was not indebted to the drawer, nor were there any funds in his hands belonging to Allis & Co. A chose in action may be assigned by parol, yet, to constitute such an assignment, there must be a surrender of all control over the demand by the creditor, and it must be shown that the appropriation of it was absolute and unqualified. If the case had been submitted to the jury, and they had found, as I think — 307 — they would have been justified in finding, from the evidence that at the time the drafts were sent forward the Farrell Company parted with no value on receiving the same and did not reliquish any right which they had against Allis & Co., then there was no transfer of the demand, nor an equitable assignment of the same (Rupp agt. Blackford, 34 Barb., 629; Kissell agt. Albertus, 56 id., 365). The general rule is, as established by all the authorities, that an ordinary draft, unaccepted, does not work a transfer to the payee of the debt drawn against. "What will amount to the present appropriation of the debt or demand so as to constitute a legal or equitable assignment, where there is no formal transfer, is a question of intention, to be gathered from all the language used by the parties, written or verbal, construed in the light of the surrounding circumstances. If there was a failure to make an actual transfer of the debt-in presentí, then the Farrell Company was not bound by any contract valid as against it, for the reason that none of its-officers or agents subscribed any note or memorandum in writing agreeing to purchase the debt. The statute of frauds applies to a sale of a thing in action, when the contract price is fifty dollars or more. An account for goods sold and delivered is a chose in action (Armstrong agt. Cushing, 43 Barb., 340). As we have seen, the draft standing alone did not operate as a transfer even in form, so the court could not say as a matter of law that the buyer did accept and receive the thing in action, or some evidence of it, so as to satisfy .the second subdivision of third section of the statute. Nor did the Farrell Company pay any part of the purchase price. An agreement that the price shall be applied to a precedent debt, owing by the seller to the buyer, does not amount to a payment of the .purchase money as required by the statute, unless actually applied by giving a receipt or otherwise (Bly agt. Ormsby, 12 Barb., 570). It is not well settled how much must be done to make an effectual assignment of an account But it was said by the court in Truax agt. Stater (86 N. Y., 630): “The better opinion — 308 — seems to be that an account may be sold like any chattel, and that an agreement which will pass the title to a chattel will pass the title to an account There must be a valid agreement of sale, based upon a sufficient consideration, and if the price be fifty dollars or over the statute of frauds must be complied with.” If, at the time of the levy, the Farrell Company had assumed the position as against Allis & Co., that it was not bound by any valid contract to allow the face of the drafts on its account against them the court could not hold, as I think, in a suit between those parties involving the validity of the sale, that as a matter of law the title to the account had in form passed to the Farrell Company, and Allis & Co. were entitled to a credit ■on their account for the face of the drafts. Upon the whole evidence, I think a case was made for the jury. Some of the facts essential to resting a title to the account in the Farrell Company, even as against Allis & Co., were not so clearly settled by the evidence, that the court could dispose of the case as matter of law. Nonsuit set aside. New trial ordered. Costs to abide event Smith, P. J., concurs; Bradley, J., dissents and reads an opinion for affirmance; Haight, J., does not vote.