American Nat'l Bank v. Harrison Wire Co.

• Decision Date: 21 February 1882
• Citation: 11 Mo.App. 446
• Parties: AMERICAN NATIONAL BANK, Respondent, v. HARRISON WIRE COMPANY, Appellant.
• Court: Missouri Court of Appeals

11 Mo.App. 446

AMERICAN NATIONAL BANK, Respondent,

v.HARRISON WIRE COMPANY, Appellant.

St. Louis Court of Appeals, Missouri.

Feb. 21, 1882.

The purchaser before maturity of a negotiable promissory note, took the check of the indorser for the amount, after protest, under an agreement to sue the maker, and if successful to return the check to the indorser, and if not successful to cash the check in payment of the note. The holder had no notice of any equities between the maker and indorser until after this agreement. The maker set up the fraud of the indorser in obtaining the note and filed a cross-bill for equitable relief. Held, that the holder had a legal right to do what he agreed to do; that the check was not given nor accepted in payment of the note; and that, the indorser being a non-resident and not being a party to the action, the holder was entitled to recover on the note without any condition as to the disposition of the check.

APPEAL from the St. Louis Circuit Court, THAYER, J.

Affirmed.

E. T. ALLEN, for the appellant.

E. T. FARISH, for the respondent.

BAKEWELL, J., delivered the opinion of the court.

This was an action upon three negotiable promissory notes, executed by defendant, a business corporation of St. Louis, to the order of E. S. Wheeler & Co. These notes were each payable ninety days after date, at the Bank of Commerce, St. Louis, were dated respectively April 20, 22, and 24, 1880, and were for the sums of $2,497.66, $5,267.46, and $3,667.51. The notes were transferred by indorsement before maturity, for value, to plaintiff; presentment was duly made, and the notes were protested for non-payment.

There was a finding and judgment for plaintiff. There is no conflict of evidence. It appeared from the admissions and evidence, that the St. Louis Wire Fence Company, of St. Louis, had a contract with E. S. Wheeler & Co., of New Haven, Connecticut, to purchase wire. On April 28, 1880, this company sent the following telegram to Wheeler & Co.: “No orders for our product; absolutely standing still. No room for the wire. You know how difficult trade is to anticipate. You should respect our telegraphic request. We cannot carry the wire. Recall your draft dated after 17th. Have seen Harrison Wire Company, who will relieve us by taking wire on the way, and balance of one thousand tons due on contract, on ninety days' acceptance from date of invoice. Accept this, and let us out. We will stand interest. We prefer contract cancelled. Answer at once, that we may close the matter with the Harrison Wire Company.”

To this, Wheeler & Co. answered, on the same day: “Drafts have gone forward; arrange with Harrison to take care of them. Will give Harrison ninety days on balance of contract.”

The notes in suit were forwarded by the Harrison Wire Company to Wheeler & Co., enclosed in a letter dated April 30, 1880, in which the Harrison Wire Company say to Wheeler & Co.:--

“The St. Louis Wire Fence Company have made atrangements with us to assist them in taking care of the balance of No. 12 wire due them on their contract with you, for one thousand tons, and have handed us bills for shipments of 17th, 20th, 22d, and 24th inst., for which bills we enclose our notes.” (The notes in suit are then described, as also a similar note dated April 17th, for $4,974.42.) “Upon notice of arrival of above billed wire here, we will take up the drafts already drawn by you by our checks, to get possession of the bills of lading, and draw on you at sight for a corresponding amount. In making future shipments, you will please consign wire to us, sending bill of lading to us; and we, upon receipt of wire, will mail you our note in settlement of bills, if correct. We will take up draft due to-day, and draw on you as above. * * * Please honor drafts for payment of enclosed notes.”

On May 4th, Wheeler & Co. wrote to Harrison Wire Company, acknowledging receipt of the last letter, and enclosures, and proceed: “The St. Louis Wire Fence Company have treated us very badly in this matter, and much as we dislike to resort to harsh measures, they have compelled us to take such steps in this matter as will protect ourselves. We have paid the first draft that you have drawn, for $4,900; but should prefer not to honor any further drafts until we hear from them in regard to their action touching the remainder of the contract. * * * We are surprised that you made the note payable in St. Louis without exchange, and that you added no interest, and that you draw on us with exchange.”

When this letter was written, Wheeler & Co. had already applied to plaintiff to discount the notes of the Harrison Wire Company, and whilst they failed to take up the drafts drawn for the notes of April 20th, 22d, and 24th, in suit, they discounted all four of the notes on May 5th, in plaintiff's bank. Plaintiff had no notice whatever of the manner in which Wheeler & Co. obtained these notes, until after their maturity. The first of the four notes, that of April 17th, was duly paid. The other notes were protested; and all proper steps were taken by plaintiff to hold Wheeler & Co. as indorsers.

Wheeler & Co. then represented to plaintiff that the notes were due by the Harrison Wire Company to Wheeler & Co.; that it would be a great hardship on Wheeler & Co. that they should be sued; that the Harrison Wire Company was responsible, and would pay the notes; and gave to plaintiff certified checks of the confidential agent of the firm, upon a perfectly solvent bank, for the sum of $11,500, to hold as collateral security, upon the understanding that plaintiff would sue the Harrison Wire Company upon the notes; that, if they failed to recover in that action, the checks should be applied to pay the notes, interest, costs, and attorneys' fees; otherwise to be returned to Wheeler & Co.

Thereupon, plaintiff, through a mercantile agency, employed counsel in this city, and this action was commenced.

These facts are set up in the answer of defendants: (1) As payment; (2) as showing that plaintiffs are not the real party in interest; that the holders of the notes are Wheeler & Co.; and that defendants are merely accommodation makers of the notes; and (3), as matter of equitable defence, these matters are set up in a cross-bill, in which defendant claims that if by decree of court it pays these notes, it is entitled to have the certified checks, or so much thereof as will reimburse it for the moneys thus paid on account of Wheeler & Co. Defendant prays an order for the surrender of the checks, and for general relief, etc.

It is admitted that the checks are drawn against funds of Wheeler & Co. There is nothing to show that Wheeler & Co. are not perfectly solvent and responsible.

The trial court refused the following...