Edward Knapp & Co. v. Tidewater Coal Co.
| Decision Date | 05 January 1912 |
| Parties | EDWARD KNAPP & CO. v. TIDEWATER COAL CO. et al. |
| Court | Connecticut Supreme Court |
Appeal from Superior Court, Fairfield County; Milton A. Shumway Judge.
Action by Edward Knapp & Company against the Tidewater Coal Company and others on two notes. Judgment for plaintiffs for $3,492 against the defendant Stamford Tidewater Coal Company, from which it appeals. Affirmed.
The plaintiffs, as copartners, are wholesale dealers in coal. The Tidewater Coal Company, a New York corporation, buys and sells coal at wholesale. Among its customers is the Stamford Tidewater Coal Company, a Connecticut corporation engaged in selling coal at retail. All of its coal is bought from the New York company. Its capital stock is all owned by four persons, who are its directors. Of these four one Bayard N. Cole is a stockholder in and director and president of the New York company. Another, R. V. Matthew, is a stockholder in and director of the New York company. Cole is president of the Stamford Company. About December 15 1909, the plaintiffs sold to the New York company certain coal, which they, upon its direction, shipped direct to the Stamford Company. The purchase price was charged to the New York company, and the same was paid for with the note of that company. This note was paid in part by cash, leaving a balance of $995.57 unpaid. August 15, 1910, this balance being still due, the New York company made its 30-day note for that sum payable to the order of the plaintiffs, which note, having first been indorsed by Matthew and the Stamford company, was delivered to the plaintiffs in payment therefor. Under said date the Stamford Company advised the plaintiffs in writing that its indorsement was in consideration of its receipt of the coal. Upon the maturity of this latter note it was paid or replaced by another for the same amount and of the same tenor, but bearing the indorsement of one Pinkerton in addition to that of Matthew and the Stamford Company. The latter indorsement was made by Cole as its president. This note is that set out in the first count. On or about June 30, 1910, the New York company purchased of the plaintiffs other coal, and ordered it shipped to the Stamford Company, which received it as the customer of the New York company. Through this purchase the New York company became indebted to the plaintiffs in the sum of $2,410.17. In payment of this indebtedness, the New York company delivered to the plaintiffs its two months' note for said sum, dated June 30, 1910, payable to the plaintiffs' order, and indorsed by Matthew and the Stamford company. Under the same date the latter company wrote the plaintiffs that its indorsement was in consideration of the receipt of the coal. September 26, 1910, after the maturity of this note, it was paid or replaced by the second note in suit, which is one payable October 30, 1910, for the like sum and of the same tenor as the former note. When delivered, it bore the indorsements, in the order named, of Matthew, Pinkerton, and the Stamford Company, whose name was placed thereon by its president, Cole. Nearly all of the business done by the plaintiffs with the two Tidewater Companies was done with or through Cole, and the plaintiffs knew no other person in connection therewith. Coal ordered from the plaintiffs by Cole for the account of the New York company and shipped to the Stamford Company was paid for sometimes by check of the former company, sometimes by that of the latter, and sometimes by Cole's personal check.
Homer S. Cummings, Charles D. Lockwood, and Albert Phillips, for appellant.
Robert A. Fosdick, for appellees.
PRENTICE, J. (after stating the facts as above).
Copies of the two negotiable promissory notes upon which this action, in two counts, was brought, are annexed to the complaint. They show that the Tidewater Coal Company, a New York corporation, hereinafter referred to as the New York company, was the maker, and Edward Knapp & Co., the plaintiffs, the payees, and that the notes bore the indorsement, in order, of the two individual defendants, and of the defendant the Stamford Tidewater Coal Company, hereinafter referred to as the Stamford Company, which last indorsement was made in the name of the company " by Bayard N. Cole, president." The complaint alleges the execution of the notes by the New York company that " on or before" their negotiation they were indorsed by the three defendants whose names appear thereon, that due presentment was made and notice given, that the plaintiffs still own them, and that they have not been paid. Upon the face of the notes and the strength of the averments of the complaint, all of which are admitted by the answer, the plaintiffs would be entitled to the judgment rendered. General Statutes 1902, § § 4233, 4234. To defeat this result, the Stamford Company, which alone of the defendants appeared, sets up by way of special defense: First, that its indorsements were for the accommodation of the plaintiffs; and, second, that they were made by Cole without authority from the corporation. Upon the trial an additional claim was made, apparently without objection that the pleadings furnished no basis for it, to the effect that the indorsements were ultra vires of the corporation.
An " accommodation indorser" is one who indorses without receiving value therefor, and for the purpose of lending his name to some other person. General Statutes, § 4199. His status as to such other person accommodated, and his liability to him, is very different from that which he enters into and assumes as to the other parties to the instrument. He is exempt from suit at the hands of the accommodated party, whatever their relative positions upon the paper may be. His liability, on the other hand, to other parties, is the same as though he was an indorser for value, and that liability is unaffected by notice to such parties of the accommodation character of his indorsement. General Statutes, § § 4199, 4234; Daniels on Negotiable Instruments, § 790; Joyce on Defenses to Commercial Paper, § 279.
So in the present case if the appellant put its name upon the paper for the accommodation of the plaintiffs, as charged, the judgment is erroneous. If it did not, it would be none the less liable to the plaintiffs for the reason that it indorsed for the accommodation of the maker, and they had full knowledge of that fact, save as the accommodation character of the indorsement would bear upon the question of corporate authority, with which we are not now concerned. If the appellant indorsed at the request and for the benefit of the plaintiffs, its act, upon the facts found, was beyond question without consideration, and the indorsement one for their accommodation. The question here at issue thus becomes resolved into one of fact as to whether or not it was so made.
Both notes in controversy were given in renewal of prior notes of like amount and tenor, and bearing the names of the same indorsers save Pinkerton, whose name was not upon the notes taken up. These latter notes were indorsed before delivery, and by the procurement of the maker. They were delivered by the New York company in payment for coal sold by the plaintiffs to it, and by it ordered shipped to the Stamford Company as its customer. In view of the circumstances, it certainly could not be claimed with any semblance of plausibility that they were indorsed by the Stamford Company for the accommodation of the plaintiffs with whom it had never dealt, and to whom it owed nothing, and not for the benefit of the New York company, with which it was closely affiliated in ownership, direction, and business, with whom it had regular business dealings, from whom it had the very coal for which the notes were given in payment, to whom, for aught that appears, it was then indebted therefor, and which procured the signatures. The officers of the appellant confessedly empowered to conduct its business advised the plaintiffs in writing at the time these notes were taken that the company's indorsements were in consideration of its receipt of the coal, and one of the individual indorsers was one of the directors of the two Tidewater Companies.
The appellant relies upon what it conceives to have been a changed situation when the present notes were given by reason of the lapse of time, the circumstances surrounding the renewals, and especially the order of those circumstances, for the maintenance of its position that the party accommodated in these instances was the plaintiffs.
The finding is that both the earlier notes were " paid or replaced" by new notes of the same tenor, and having the same maker and payee. With respect to the note set out in the first count, the finding clearly imports that when it was delivered it bore the indorsements now upon it, and that fact is unquestioned. With respect to the other, it is unequivocally found that when the replacement was made it was indorsed as now. The appellant asks that the finding in relation to this subject be corrected, so that it shall appear that this renewal note was offered for discount before indorsement by it, that,...
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