Exchange Bank v. Hubbard

• Decision Date: 29 May 1894
• Docket Number: 112.
• Citation: 62 F. 112
• Parties: EXCHANGE BANK v. HUBBARD et al.
• Court: U.S. Court of Appeals — Second Circuit

62 F. 112

EXCHANGE BANK v. HUBBARD et al.

No. 112.

United States Court of Appeals, Second Circuit.

May 29, 1894

John R Abney (William B. McCam, C. E. Spencer, and J. R. Abney, of counsel), for plaintiff in error.

Sullivan & Cromwell (William J. Curtis and Edward B. Hill, of counsel), for defendants in error.

Before WALLACE, LACOMBE, and SHIPMAN, Circuit Judges.

WALLACE Circuit Judge.

The plaintiff in the court below brings this writ of error to review a judgment for the defendants entered upon the verdict of a jury. The principal question presented by the assignments of error is whether the trial judge erred in instructing the jury to render the verdict.

It appeared upon the trial that the plaintiff, a bank doing business at Yorkville, S.C., cashed certain drafts drawn by the firm of Hope & Co., of that place, upon the defendants the firm of Hubbard, Price & Co., cotton merchants doing business at New York City. The evidence authorized the jury to find that the drafts were cashed under the following circumstances: On the 5th day of October, 1891, Price, one of the defendants, applied at Yorkville, S.C., to Hope, of Hope & Co., to purchase cotton for the defendants. Hope informed Price that a lot of 300 bales was to be sold on the following Wednesday. Price requested Hope to ascertain if the money to pay for the cotton could be raised from the bank at Yorkville, and authorized him to state to the bank that the defendants would remit the currency immediately upon receiving the bills of lading for the cotton, or would honor drafts promptly, whichever the bank preferred, and stated that if the money could be raised in this way he would decide the next day whether to buy the cotton, and would telegraph Hope from Atlanta. Thereupon, Hope consulted with the president of the plaintiff, and told him what Price had said and the plaintiff promised to furnish the money upon the production of a satisfactory authorization from the defendants. The next day, Hope & Co. received a telegram from Atlanta, from Price, making an offer for the cotton; fixing the price, subject to a variation of one-eighth cent per pound, at the discretion of Hope & Co., and directing the cotton to be shipped by bills of lading to a firm at Norfolk, Va., of which Price was a member. The telegram contained also this sentence: 'Drafts on New York, or currency shipment from there, as you prefer. ' Hope thereupon exhibited this telegram to the president of the plaintiff, purchased the cotton, and shipped it, conformably to the instructions, drew drafts for the amount upon the defendants, payable at New York upon presentment, and procured the plaintiff to cash the drafts. One of the drafts was honored and paid by the defendants. Acceptance of the other drafts was refused.

Upon the evidence it was a question of fact, for the jury, whether Price represented the defendants in the transactions mentioned, or the Norfolk firm, of which he was a member, and also whether Hope & Co., in buying the cotton, acted merely as agents. Hop testified that he told Price that Hope & Co. had no money, and could not buy the cotton, but that he would be glad to represent him (meaning Price's firm), and do what he could to secure the cotton for them. The telegram from Price to Hope, giving the latter discretion as to the price, indicates that Price regarded Hope & Co. as agents, and not as purchasers on their own account.

The trial judge ruled that the cause was controlled by the statutes of New York relating to bills of exchange, and that the plaintiff was not entitled to recover, pursuant to the statutory provisions, either as upon a written acceptance by the defendants of the drafts, or as upon a breach of a promise to accept. These statutes provide that no person within this state shall be charged as an acceptor upon a bill of exchange unless his acceptance shall be in writing, signed by himself or his lawful agent; that an unconditional promise in writing to accept a bill before it is drawn shall be deemed an actual acceptance in favor of every person who, upon the faith thereof, shall have received the bill for a valuable consideration; and that these provisions shall not be construed to impair the right of any person to whom a promise to accept a bill may have been made, and who, on the faith of such promise, shall have drawn or negotiated the bill, to recover damages of the party making such promise on this refusal to accept such bill. 3 Rev.St.N.Y. (7th Ed.)pp. 2242, 2243.

We think the ruling of the trial judge was erroneous. The contract having been made in South Carolina, the statutes of New York do not furnish the rule by which to determine its validity, notwithstanding the drafts were to be accepted and made payable there. Matters bearing upon the execution, interpretation, and validity of a contract are determined by the law of the place where it is made. Those connected with its performance are regulated by the law prevailing at the place of performance. Accordingly, where a promise is made in one state to accept a draft which is to be payable in another state, and by the statutes of the latter the promise would be invalid, the law of the state where the promise is made determines the validity of the contract. This was expressly decided in Scudder v. Bank, 91 U.S. 406. Authorities to the like effect are Tilden v. Blair, 21 Wall. 241; Russell v. Wiggin, 2 Story, 213; ^[1] and Brown v. Finance Co., 31 F. 517. If the contract was valid at common law, there being no statutes in South Carolina affecting it, it was valid everywhere; and it is quite immaterial that by the statutes of New York a collateral promise of acceptance is required to be in writing, or that a promise to accept a bill which is not in writing can only be enforced by the person who draws or who negotiates the bill, as was held in Bank v. Gibson, 5 Duer, 574.

Notwithstanding the ruling of the trial judge proceeded upon an erroneous view of the law, the exception taken by the plaintiff is not available if, upon any view of the facts, the plaintiff was not entitled to recover. We are therefor to inquire whether the evidence authorized the jury to find a state of facts giving a good cause of action to the plaintiff.

It is to be observed that the action was not brought to charge the defendants as acceptors of the drafts, nor even to recover for a breach of their promise to accept the...