Thomas H. Allen & Co. v. John S. Hornor & Son

Rogers. J. On the 11th day of December, 18S2, a man representing himself as W. B. Reeves, of W. B. Reeves ,& Bro., entered the banking house of defendants, Hornor & Son, in Helena Ark., and asked the senior member of the house if the bank would discount a draft drawn by him (Reeves) on the house of Thos. H. Allen & Co., of New Orleans, offering a bill of lading for twenty-one boles of cotton as collateral security. The firm of Hornor & Son declined to discount his draft, not knowing Reeves, unless he first obtained authority from said Thos. H. Allen & Co. to do so. Reeves volunteered to obtain authority from either the house of Thos. H. Allen & Co., in Memphis, or the one in New Orleans. He left the bank, and in about the time necessary to send and receive a telegram from New Orleans, returned with the following: “ Will pay draft of $700 against twenty-one bales. (Signed) Thos. H. Allen & Co¡” This being an answer to Reeves’ telegram, which read : “ Thos. H. Allen & Co.: “ Have shipped you twenty-one bales of cotton per steamer Chouteau. “Will you honor our draft for $700? (Signed) W. R. Reeves & Bro.” Hornor «fe Son, recognizing the bill of lading to be property Bigned — as they held at that time other bills of lading signed on that trip by the clerk of the Chouteau, the clerk using a fac-simile stamp — and considering Reeves as a correspondent of Thos. H. Allen <fe Co., with limited authority to draw upon them, took the bill of lading and telegram, discounted the draft in good faith, and forwarded all together to Burbridge & Co., by whom said draft was presented to Thos. H. Allen & Co., and by them paid without hesitation or comment. Some days afterwards, upon the arrival of the Chouteau, it was for the first time discovered that the bill of lading had been altered, the only thing shipped being a box of cotton seed consigned to Thos. H. Allen & Co. — 179 — Demand was then made by Allen & Co. upon Burbridge & Co. for the money paid when the draft was taken up, and said demand was refused; there was no tender by Thos. H. Allen & Co. of the draft, bill of lading, or box of cotton seed at the time said mone\r was demanded, or at any time since. Plaintiffs bring suit against Hornor <fc Son and J. W. Bur-bridge & Co., who endorsed the draft and collected it from plaintifls. The facts disclose, that Reeves & Co. were unknown to either party — that this was the first transaction of any character ever had with them. It is evident that the dispatch of Allen & Co. was induced by no faith whatever in Reeves, but by the shipment to them of twenty-one bales of cotton. Their agreement, therefore, was not properly an acceptance of the draft of Reeves ; it was a promise to pay a drát't against twenty-one bales of cotton shipped by steamer Chouteau, or an authority to Reeves to draw on them on the condition that twenty-one bales of cotton were shipped to them by said steamer. None of the essential elements of negotiability attached to a draft or bill of exchange could be implied, that would bind an acceptor under the rules of commercial law — nothing to indicate that faith in the drawer, which excludes all theory of a claim for indemnity against or recourse to the holder of the instrument. Strictly speaking, therefore, conditional drafts, or conditional acceptances, are not commercial paper, their payment is due upon condition, and not in any event; the general rule of commercial law is not therefore applicable; the very condition they express disposes of the privileges granted in favor of commerce to negotiable instruments, which closes the avenues of defence open to all other and ordinary transactions. The defendants are not third persons, they are primarily the real parties. They received from Reeves the bill of lading, the representative of the twenty-one bales of cotton, knowing .full well that the condition upon which plaintifls would pay the draft discounted by them, was the shipment of the cotton, and besides inserting in the body of the draft a reference to the — 180 — bill of lading and telegrams, attached them to the draft, as evidence that they had seen to the performance of the condition stipulated by the plaintiffs. It will not do, therefore, to say that this holder of the draft is absolved from all responsibility from acts of negligence and indifference, and that responsibility and liability shift to the shoulders of the one who has agreed to pay. It is not a question of equal negligence or a division of responsibility — for one might have refused the discount, it is true— or that the other might have refused payment, is equally true —but a consideration of condition precedent having been assumed and the belief of its performance having been impressed and regarded, does not alter the fact that the condition was not performed and the money paid in error. We have fully discussed and determined our view of the law governing bills of lading in the case of John Phelps & Co. vs. Mechanics’ & Farmers’ Bank, 2 McGloin, 11, and in adhering to those views, do not consider it necessary to determine the proposition; that the delivery of the bill of lading to plaintiffs was a fulfilment of the condition imposed by their dispatch. The law as held by us in Agnel vs. Ellis, 1 McGloin, 61, is applicable to this case, and we must be governed by the laws of Louisiana. The present action is not brought to rescind a contract under Arts. 2045, 2047 C. C. It is based on Arts. 1898, 2302 C. C. The position of the plaintiffs is, that we paid to you seven hundred dollars on the delivery to us of twenty-one bales of cotton; that you transferred to us what purported to represent said, property — a bill of lading; in fact, you transferred to us nothing — neither the cotton specified, nor a bill of lading. The inducement for the payment to you was the supposition that you transferred the property; that was the cause and motive for our payment. You must return to us the money paid you in error. The plea urged by defendants, that this action mu3t be dismissed because no tender was made of the box of cotton seed, or the draft or the bill of lading, is made on erroneous views of the conditions of this controversy. As to the box of — 181 — cotton seed, there is no evidence that it was ever received at this port — certainly nothing to indicate that plaintiffs received it. Defendants certainly placed it beyond the power of plaintiffs to obtain it, as the bill of lading delivered purported to be for entirely different articles, and was a worthless piece of paper as it purported to represent property. The draft was plaintiffs’ voucher for the paj'ment to defendants, and there was no reason to return it, no right in defendants to claim it. The bill of lading, as already stated, was a mere worthless paper and evi" denced nothing but the crime admitted to have been perpetrated and was attached to the draft with the telegram as a part, and setting forth its consideration. The necessity of putting in default, under Arts. 1912, 1913 and 1914 C. C., arises from the principle based upon the benefit derived by the one who has received and the consequent loss or disadvantage to the other who has made the delivery or parted with the thing. That benefit may be insignificant, the loss or disadvantage equally so, but no matter the extent, the equitable rule that parties should be placed in the same position they were at the time of the contract, exacts this pre-requisite On this principle, a person cannot keep the property and claim the price. In a case, however, where the obligation assumed was without a cause, C. C. 1896, or that, a cause, never existed, the principle is entirely different. We find promissory notes and bills of exchange excepted from the rule laid down in Art. 1914 C. C. The obligation, under the rules laid down in the several Articles of the Code, 1893-1S96 was without the cause necessary for its validity, it was without effect. The civilians use the term cause in relation to obligations, in the same sense as the word consideration is used in the jurisprudence of England and the United States. It means the motive, the inducement to the agreement. Articles 1912, 1913, 1914 C. C. refer to contracts of mutual interest, when the cause of the engagement is the thing given, or done, or engaged to be given or done, or the risk incurred by one of the parties; but when an engagement has no cause or consideration, or, what is the same thing, when the cause for which it is contracted is false, the — 182 — engagement is null, and the contract based on it is also null and cannot be enforced by an action. Money paid under such an agreement can be recovered back by the action condictio sine causa. Mouton vs. Noble, 1 La. An. 193; C. N. Art. 1376; 11 La. An. 654. The necessity for default implies, on the part of him who seeks a recovery, a neglect of some duty imposed by law, the performance of some condition precedent, which he should first perform or offer to perform before requiring performance from the defendant. In the present case the plaintiffs occupied the position of holding the condition precedent in their favor. They could not have been required to pay the draft before the delivery to them of the 21 bales of cotton or its representative, the bill of lading. Before defendants could have recovered on the draft, they would have been compelled to tender the property, but the fact that the plaintiffs paid the draft on the inducement or motive that defendants had complied with their agreement, did not require plaintiffs to place defendants in default for a failure to deliver, the cause never existed, there was in law and fact no inducement, and the obligation that existed before the payment of the draft, still existed with defendants as a condition precedent to deliver the property. The plaintiffs having received nothing, secured no benefits of which defendants were deprived; they, plaintiff's, had nothing to restore, the only ones benefitted by the transaction, speaking now of the draft and its payment, were defendants- There is no dispute that timely and proper notice was given defendants of the forgery and failure of the cause of the contract; there are no averments, no proof that the acts of plaintiff's, in this regard, have occasioned loss to defendants. Similar questions have frequently arisen in our courts, where parties have brought suit to recover back money paid in error> e. g., by an acceptor of a bill, who had paid in error to a holder’ who had no right to receive payment. Dick vs. Leverich, 11 La. 576. By an endorser against the holder, who had failed to have note — 183 — protested, so that recovery against a previous endorser was lost. Oakey vs Bank, 17 La. 386; Heath vs. Bank, 7 Rob. 334. Where a payment was made on an account rendered and a receipt given, when the account was false. Massios vs. Gasquet, 4 Rob. 137. In affirmance of the.same principle and on analogous facts; 11 Rob. 102; 2 La. 129; 5 La. An. 15; 14 La. An. 499; 16 La. An. 217; 19 La. An. 328; 15 La. An. 268, 353. The question of putting in moni was not raised, nor is there any intimation in any of the decisions of the propriety or necessity for the plea. Surely from such a chain of decisions the conclusion is irresistible that the principle invoked under the facts of the present case can have no application. Judgment affirmed.