Equitable Trust Co. of New York v. Keene

• Decision Date: 10 January 1922
• Parties: EQUITABLE TRUST CO. OF NEW YORK v. KEENE.
• Court: New York Court of Appeals Court of Appeals

232 N.Y. 290

133 N.E. 894

EQUITABLE TRUST CO. OF NEW YORK

v.KEENE.

Court of Appeals of New York.

Jan. 10, 1922.

Action by Equitable Trust Company of New York against Charles A. Keene. From an order of the Appellate Division (195 App. Div. 384,186 N. Y. Supp. 468) affirming an order of the Special Term (111 Misc. Rep. 544,183 N. Y. Supp. 699) in so far as it overruled a demurrer to the first separate defense, plaintiff appeals by permission.

Reversed, demurrer to first and second defense sustained, and question certified answered in the negative.

See, also, 187 N. Y. Supp. 933.

Appeal from Supreme Court, Appellate Division, First Department.

Winthrop W. Aldrich, and Hugh L. M. Cole, both of New York City, for appellant.

R. Hunter McQuistion, James Lewis Malcolm, and Henry S. Goodspeed, all of New York City, for respondent.

HISCOCK, C. J.

This appeal involves the question whether an agreement to deliver or make a cable transfer of exchange on London is a contract to sell an existing credit for the amount involved, or is an executory contract to place to the credit of the person named the amount in question at the time and place specified. The distinction between these two views of an agreement for a cable transfer of exchange is narrow and somewhat obscure. The technical and legal consideration involved is the one that, if the agreement be regarded as a sale of, or a contract to sell, an existing credit it comes within the statute of frauds, and the practical consideration is that, if it comes within the provision of that statute, the contract must be evidenced by a memorandum in writing, whereas, if it is an agreement to create for the person named a credit for a certain amount of foreign money it is a contract which does not come within the requirements of such statute, and may be made by word of mouth, and without written memorandum. We are informed by the briefs that the latter is the common method of conducting transactions for foreign exchange by cable transfer, and that a decision holding that an agreement for any such transfer must be evidenced by written memorandum will be productive of much inconvenience.

The question is presented to us by an answer setting up failure to comply with the statute of frauds as a defense to this action brought to enforce an agreement for the transfer by cable of a large amount of foreign exchange. The complaint defines with much preciseness not only the terms of the agreement, but the nature of a transaction in foreign exchange by a cable transfer. We are limited in our views and decision by this statement and definition, and it is, therefore, possible that such a transaction might be somewhat different in its nature and details than is alleged in this particular complaint, although we are inclined to believe that the definition of the transaction as here given cannot be much different than that which would ordinarily be given to such a transfer of exchange.

Turning to the complaint, we find it alleged that--

The parties ‘entered into an agreement wherein and whereby plaintiff agreed to deliver to defendant and defendant agreed to take from plaintiff a cable transfer of exchange on London, England, in the amount of £ 20, 000 sterling. * * * In banking and commercial usage and custom a cable transfer of exchange is a term used to describe the transfer of credits between different points by cable, the person contracting to deliver such exchange contracting that he will make available by cable to the person contracting to take such exchange a credit of the amount specified at the point specified and at the time specified. In entering into the agreement above referred to plaintiff and defendant contracted with reference to such exchange and usage.’

As has been said, in determining the question at issue, whether the transaction be a sale of a present credit or a contract to create such credit in the future, we must be controlled by the language which has been quoted. We are not considering checks, drafts, bills of exchange, or letters of credit or the principles applicable to any one of these instruments. The fact that the transaction is to be effectuated by cable is, of course, immaterial; the principles defining the nature of the transaction are not any different than they would be if the transaction was to be accomplished by letter or special messenger. The cable gives needed speed to the operation, but does not change its nature.

When we give to this descriptive language of the complaint a natural interpretation which avoids technicalities and rather finely spun shades of...