Atlas S.S. Co. v. Colombian Land Co.

• Decision Date: 24 May 1900
• Docket Number: 166.
• Citation: Atlas S.S. Co. v. Colombian Land Co., 102 F. 358 (2nd Cir. 1900)
• Parties: ATLAS S.S. CO., Limited, v. COLOMBIAN LAND CO.
• Court: U.S. Court of Appeals — Second Circuit

102 F. 358

ATLAS S.S. CO., Limited, v. COLOMBIAN LAND CO.

No. 166.

United States Court of Appeals, Second Circuit.

May 24, 1900

Moses Weinman, for appellant.

Everett P. Wheeler, for appellee.

Chas H. Russell, for trustee.

Before WALLACE, LACOMBE, and SHIPMAN, Circuit Judges.

WALLACE Circuit Judge.

The principal question presented by this appeal is whether the court below correctly adjudged the Colombian Land Company the appellant, to be indebted to the steamship company, the libelant, for the freight on the two cargoes carried by the latter, and which arrived in New York, respectively September 7, 1898, and September 27, 1898. The appellant, a corporation doing business at Santa Marta, South America, was the owner of the cargoes, and, concededly, was indebted to the libelant for the amount, and remains indebted, unless its liability was extinguished by the act of the libelant in receiving the negotiable paper of Hoadley & Co., consignees of the cargoes, upon delivery of the cargoes to them. The paper went to protest, and has never been pad. The consignees were commission merchants at New York City, and were the selling agents there of the appellant; and, as upon previous occasions, the libelant rendered the accounts for its charges to them, and receipted the freight bills on receiving their 60-day paper, payable in London. It is not claimed that there was any express agreement between the libelant and the appellant, or between the libelant and Hoadley & Co., that the paper should be accepted as payment; and the question is whether an implied agreement to that effect can be deduced from the circumstances. It appears that, by the course of business which had prevailed between the libelant and Hoadley & Co. for many years, the former had allowed the latter a line of credit for freight up to $5,000 on consignments to them; making delivery to them in advance of rendering the bills for freight, and requiring them to pay cash when the $5,000 credit was exhausted, but otherwise accepting their drafts. By correspondence in the spring of 1898 between the libelant and the appellant it was arranged that cargoes shipped by the latter should be delivered to Hoadley & Co. and the freight should be paid in cash upon the ship's arrival in New York.

It has long been the settled rule in this state that taking a note, either of the debtor or of a third person, for a pre-existing debt, is no payment, unless it be expressly agreed to take the note as payment, and to run the risk of its being paid, or unless the creditor parts with the note, or is guilty of laches in not presenting it for payment in due time. He is not obliged to sue upon it. He may return it when dishonored, and resort to his original demand. Thornton v. Payne, 5 Johns. 74. This is the rule which generally prevails in this country, although it does not obtain in some of the states. Where the note of a third party is taken at the time of a creation of a debt, as upon a sale of goods, the rule is otherwise; and it is held that the presumption is that it was taken in payment, in the absence of countervailing evidence. Whitbeck v. Van Ness, 11 Johns. 408; Noel v. Murray, 13 N.Y. 167; Youngs v. Stahelin, 34 N.Y. 258; Gibson v. Tobey, 46 N.Y. 637; Shaw v. Insurance Co., 69 N.Y. 286; Hall v. Stevens, 116 N.Y. 201, 22 N.E. 374. In such a case the transaction may be regarded as equivalent to an exchange of property.

In the present case the debt existed before the drafts were taken, and obviously they were taken with a view to accommodate Hoadley & Co., by giving them time instead of repairing them to pay cash. The receipt of the payment of freight bills is a circumstance of little value, and of no more importance than is the balancing of an account upon the books by a creditor when he receives the debtor's note for the amount.

If the libelant had been unaware that Hoadley & Co. were acting as the agents for the appellant in receiving and paying freight upon the cargoes in question, it is entirely clear that the acceptance of the drafts would not have been payment, and that the libelant, upon discovering the relation, could recover the amount of the appellant; the rule being that where an agent acts for an undiscovered principal, the party contracting with him, upon discovering the principal, may sue either the principal or the agent. This rule does not apply, however, when the relation is known by the contracting party at the time of the transaction, and the circumstances indicate an election upon his part to give exclusive credit to the agent. As declared in this state (Coleman v. Bank, 53 N.Y. 388-394), the rule is that 'one who deals with an agent is not concluded from resorting to the principal, unless it appears that, with full knowledge of the facts, he elected to take the sole responsibility of the agent, and that he designed to abandon any claim against the principal. ' Meeker v. Claghorn, 44 N.Y. 349; Foster v. Persch, 68...