Bank of Plant City v. Canal-Commercial Trust & Savings Bank

• Citation: 270 F. 477
• Decision Date: 10 February 1921
• Docket Number: 3622.
• Parties: BANK OF PLANT CITY v. CANAL-COMMERCIAL TRUST & SAVINGS BANK.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

270 F. 477

BANK OF PLANT CITY v. CANAL-COMMERCIAL TRUST & SAVINGS BANK.

No. 3622.

United States Court of Appeals, Fifth Circuit.

February 10, 1921

Harry McCall, of New Orleans, La., for plaintiff in error.

Edwin T. Merrick and Henry P. Dart, Jr., both of New Orleans, La for defendant in error.

Before BRYAN and KING, Circuit Judges, and ESTES, District Judge.

KING Circuit Judge.

On May 21, 1919, S. Segari & Co., of New Orleans, La., purchased from W. J. Hawkins, of Plant City, Fla., a carload of tomatoes. The sale was effected by telegrams. Hawkins on May 20th quoting a car of tomatoes, good stock, fancies $3 choice $2.75 per crate. On May 21st S. Segari & Co. accepted the offer, asking Hawkins to 'wire confirmation with car number and manifest,' to which on the same day Hawkins replied:

'Confirm order (is) wire money bank of Plant City. A.C.L. 38797. Heavy to fancies manifest not complete.'

On May 21, 1919, bill of lading for car A.C.L. 38797 containing 534 crates of tomatoes consigned to S. Segari & Co. was issued.

On May 22, 1919, the Commercial Trust & Savings Bank telegraphed the Bank of Plant City, the plaintiff in error, as follows:

'We guarantee payment sight draft W. J. Hawkins on S. Segari Company bill of lading attached to draft covering one car tomatoes shipped yesterday fancy three dollars crate choice two seventy five.'

This telegram was followed by a letter from the Commercial Bank to the plaintiff in error dated May 22, 1919, which confirmed and quoted the telegram as above and concluded:

' * * * We trust that it has been convenient for you to accept our guaranty and that you will allow this draft to come to us direct for collection, we guaranteeing prompt payment.'

On May 23, 1919, the Bank of Plant City cashed a sight draft drawn by Hawkins on S. Segari & Co. for $1,502 to which said bill of lading was attached, also a bill made out by Hawkins against S. Segari & Co, for 534 crates of tomatoes in car A.C.L. 38797, showing 365 crates fancies at $3 per crate, $1,095, and 148 crates choice at $2.75 per crate, $407, total $1,502, and 21 crates XX at $2 per crate (this last sum not being included in said draft), and credited Hawkins' bank account with said $1,502.

On May 23d Hawkins offered S. Segari & Co. another car of tomatoes, and on May 24th they wired accepting car, and stated they were wiring funds, asking a confirmation, with car numbers, by wire. Later in this day they telegraphed:

'Wired guaranty early this morning. Be sure ship today. Wire numbers.'

Hawkins wired:

'Shipped today. Seaboard 22538. Five thirty one tomatoes.'

On the same day the Canal Bank & Trust Company wired the Bank of Plant City as follows:

'We will honor sight draft of W. J. Hawkins bill lading attached covering car tomatoes on S. Segari & Company.' On May 26, 1919, the plaintiff in error received from Hawkins sight draft for $1,566 drawn by him on S. Segari & Co., to which was attached a bill of lading issued May 23, 1919, for 531 crates of tomatoes in car S.A.L. 22538 to S. Segari & Co. and a bill from Hawkins to S. Segari & Co. for $1,566, the price of said tomatoes, and credited Hawkins' bank account with said amount. The evidence is to the effect that these sums were immediately subject to Hawkins' check; that they were not applied to any debt then due by Hawkins to the plaintiff.

Both drafts were forwarded to the Commercial Bank, which turned over the second draft and papers attached to it to the Canal Bank.

The carloads of tomatoes, on arrival at New Orleans, were rejected by S. Segari & Co. as unmerchantable and not according to order and they refused to pay the drafts. The New Orleans banks declined to pay the same on the ground that the tomatoes shipped were not such as the contract of purchase called for; also that Segari & Co. had brought two suits in which injunctions had been issued restraining them from paying said drafts. The Bank of Plant City was not a party to either suit.

The Canal Bank & Trust Company having been consolidated with the Commercial Trust & Savings Bank under the name of Canal-Commercial Trust & Savings Bank, which became responsible for all liabilities of said Canal Bank & Trust Company and said Commercial Trust & Savings Bank, this suit was brought against it by the Bank of Plant City in the United States District Court for the Eastern District of Louisiana for the sum of $3,068, the principal of said drafts.

The plaintiff's testimony showed the shipment of the carloads of tomatoes, the cashing of the drafts as above stated, that it was done entirely on the faith of said guaranties, and that the plaintiff had never been repaid. At its conclusion the defendant moved for the direction of a verdict in its favor which motion was overruled.

The defendant introduced testimony as to the failure of the tomatoes to comply with the contract, and at the conclusion of the entire testimony the plaintiff moved for the direction of a verdict in its favor.

The court denied this motion and directed a verdict in favor of the defendant, and judgment accordingly was rendered.

The plaintiff sued out a writ of error to this court to review this judgment.

Error is assigned to the direction of the verdict in favor of the defendant and also to the admission of certain evidence.

In an opinion overruling a motion for a new trial the court stated the ground of his ruling as follows:

'In my conception of the case the guaranty was given by the defendant to Hawkins to guarantee Segari's debt to him. It was intended to guarantee the solvency of Segari and protect Hawkins against any unfair and arbitrary rejection of the tomatoes, provided they came up to specifications. It is a collateral engagement on the part of the bank for the benefit of Hawkins, and not an independent contract with the Bank of Plant City guaranteeing payments of Hawkins' drafts at all events. As Hawkins did not comply with his contract with Segari, no debt was created. There being no liability on Segari's part there can be none on the part of the defendant bank.' In our opinion the court erred in directing a verdict for the defendant. The guaranty in this case was not a guaranty to the seller Hawkins of the solvency of the purchaser Segari & Co. to induce the extension of credit by Hawkins to Segari & Co.

It was a guaranty made by each New Orleans bank to the plaintiff, Bank of Plant City, of the respective sight drafts which were to be drawn by Hawkins on Segari & Co. It is manifest that these guaranties were made to the Bank of Plant City to induce it to cash these drafts.

It was an independent guaranty to a third party made of two certain sight drafts to be drawn by Hawkins on Segari & Co. with a view to have the Bank of Plant City, on the strength thereof, cash such drafts and thus furnish to Hawkins the money which Segari & Co. were to wire him.

The consideration of the guaranty was not the sale of the tomatoes, but the payment by the Bank of Plant City of the money on the drafts.

That the guaranty made by the telegram of ...