Kahnweiler v. Anderson

• Decision Date: 31 January 1878
• Citation: 78 N.C. 133
• Court: North Carolina Supreme Court
• Parties: KARL KAHNWEILER v. JAMES ANDERSON.

78 N.C. 133

KARL KAHNWEILER

v.JAMES ANDERSON.

Supreme Court of North Carolina.

January Term, 1878.

CIVIL ACTION, tried at June Special Term, 1877, of NEW HANOVER Superior Court, before Seymour, J.

The demurrer of defendant admits the facts as alleged in the complaint, and they are these:--

On the 30th of July, 1861, David, Daniel and Jacob Kahnweiler were merchants and co-partners in business in the City of Wilmington, North Carolina, under the name of Kahnweiler & Brothers, and on that day were indebted to the plaintiff, Karl Kahnweiler, in the sum of $1900, the said Karl being then a citizen and resident of the City and State of New York. On the said day the defendant, Anderson, applied to Daniel Kahnweiler to know if he desired to purchase exchange on New York, at the same time informing him, that he had to the credit of Anderson & Savage, in the hands of Montel & Bartow in the City of New York, the sum of $1804,57. The said Anderson & Savage had been late co-partners in business in the City of Wilmington. Daniel agreed to take the said exchange at the rate of five per cent. preminm, and accordingly paid Anderson the sum of $1804,57, and the further sum of $90,23 being five per cent. premium on the same, and took from the said Anderson a bill of exchange drawn in the name of Anderson & Savage, and directed to the said Montel & Bartow, and payable to the order of Kahnweiler & Brothers for the sum of $1804,57 at sight. On the same day the said Daniel in the name of Kahnweiler & Brothers endorsed the same to be paid to the said Karl Kahnweiler or his order, and the said bill of exchange was on the same day enclosed in a letter and deposited in the post-office in Wilmington, addressed to the said Karl in the City of New York.

In the month of August, 1865, said Daniel being then in New York, the plaintiff Karl applied to him for payment of the debt due him by Kahnweiler & Brothers, and the said Daniel informed him that Kahnweiler & Brothers had paid the debt by a draft on some house in New York, which had been sent in 1861, but whose draft it was, or on whom drawn, the said Daniel could not then recollect. The said Daniel was then for the first time informed that the draft had never been received, and that the debt remained unpaid.

In the month of January, 1865, on account of the war then prevailing between the North and South, the said Kahnweiler & Brothers had removed all the books of their firm in Wilmington, to Charlotte for greater security, and some were sent from Charlotte to New York in 1865, after the close of the war. The books were removed to Wilmington in the year 1866 or '67. During those years the said Daniel made diligent search for some evidence of the said bill of exchange, but without success. The only memorandum of said bill was made on the margin (commonly called the “stub”) of a check-book, and it was not until the month of March, 1876, that a memorandum of the check which was given in payment of the draft drawn by Anderson & Savage on Montel & Bartow, was found by the said Daniel. Then for the first time was discovered on the margin of the check-book, a memorandum of the check given in payment for the bill of exchange. This check was duly paid on the same day it was given to Anderson & Savage, but the bill of exchange drawn by Anderson & Savage on Montel & Bartow, has not been paid by the said drawer or the said Montel & Bartow.

In the month of March, 1866, James Anderson directed Montel & Bartow to pay over to him the said sum of $1804,-??57 and interest thereon, which sum was accordingly on the 12th of March, 1866, so paid over to James Anderson. On the discovery of the memorandum in the check-book, the said Daniel recollected the fact of obtaining the bill from James Anderson, and on the 18th of May, 1876, as agent of the plaintiff, demanded of the defendant the said sum of money, tendering at the same time a good and sufficient bond of indemnity. &c,

It was contended by the plaintiff that the bill of exchange so made payable to the order of Kahnweiler & Brothers, and by them endorsed to the plaintiff, although not presented to or accepted by the drawees, Montel & Bartow, constituted an equitable lien upon the fund of the drawer in the hands of the drawees, by virtue of which the plaintiff can follow the fund, at least in the hands of the drawer himself.

On the hearing His Honor being of opinion with plaintiff gave judgment that the demurrer be overruled, and defendant have leave to answer over. He also held that the statute of limitations did not bar the action. From which ruling the defendant appealed.

Mr. D. L. Russell, for plaintiff , cited Par. on Bills 461; Danl. Neg. Instr. § § 67, 1073 et seq; Stat. Lim. or lapse of time to avail as defence must be by answer. Privett v. Galloway, 75 N. C. 233; Green v. N. C. R. R. Co., 73 N. C. 524; no bar where relief is based on secret fraud. Angell on Lim. ch. 18; Adams Eq. 176; 11 Wallace 442; nor where equity has jurisdiction. 4 Hawks, 412; 1 D. & B. Eq. 325; 3 Jones Eq. 102. Action did not accrue till discovery of fraud which gives to plaintiff a new right. 2 Dan. Ch. Prac. 762. Bill drawn for whole amount is an equitable assignment. Danl. Neg. Instr. § 451; 5 Wheat. 277; 6 Gratt. 364; 20 Pick. 15.

Messrs. A. T. & J. London, for defendant , cited 46 E. C. L. R. 663; Order expressed on its face to be payable out of a particular fund upon notice to drawee is an equitable assignment, but such an order is a draft and not a bill of exchange. Row v. Dawson, 1 Ves. 331; Story Eq. Juris. 1044; Morse on Banks, &c., 464; 8 Comstock 251; 14 Wall. 69. Defendant discharged of liability by laches of holder. 2 Danl. Neg. Instr. § 1173; 2 Par. on Bill, 260; 2 Jones Eq. 31, 93 U. S. R. 593. Lapse of time in equity may be availed of by demurrer. Story Eq. Pl. § 484, Robinson v. Lewis, Bush. Eq. 58; Williams v. Harrell, 8 Ire. Eq. 123.

BYNUM, J. (After stating the case as above.)

The general question is much discussed by the text writers and the decisions, whether a bill of exchange though drawn upon the whole of a specific fund to the credit of the drawer of itself can operate as an equitable assignment of the fund, unless the drawee accepts to pay the bill; and a distinction is drawn between a draft or order so drawn, which all admit does constitute such an assignment, and a bill of exchange which many deny does so operate. Both instruments being negotiable, the distinction in their effect as applied to the vast dimensions and activity of modern commerce, seems too refined and technical.

We, however, do not enter into that discussion, as our case steers clear of the controversy. The dispute here is not between the holder of the bill and the drawees, but between the holder and the drawer. The rights of the holder against the drawees without or with notice, are out of the question; therefore much of the discussion at bar is inapplicable. For it is entirely clear to the Court, that even admitting that an ordinary bill of exchange, whether payable generally, or out of a specific fund, does not of itself give the holder a lien upon the funds of the creditor in the hands of his debtor, this bill of exchange in connection with the other facts does show an intention on the part of the drawer to assign the fund to the payees, Kahnweiler & Brothers, or to their order. As between these two parties the question of assignment is one of intention. The intention to assign founded on a sufficient consideration operates as an equitable assignment. The principle is thus stated: “If A, having a debt due him from B, should order it to be paid to C, the order would in equity amount to an assignment of the debt, and would be enforced in equity, although the debtor had not assented thereto.” Story Eq. Juris. § 1044, and notes; 1 Daniel on Neg. Instr. § 21.

There can be no manner of doubt as to what the parties meant by their agreement in this case. The defendant approaches Daniel Kahnweiler and informs him that he has the sum of $1804,57 to his credit, in the hands of Montel & Bartow in New York, and asks to know if he wishes to purchase exchange on that City. A bill of exchange for the exact amount in the hands of Montel & Bartow is bought and paid for. It does not appear that the defendant ever had another or different sum to his credit on that firm, no other was alluded to, and the transaction was in reference to this specific fund alone. This occurred in the early period of the war between the States, but before commercial intercourse had been legally terminated between them. 91 U. S. R. 7. Apprehending doubtless the confiscation or loss of this sum to his credit in New York, the defendant desired to withdraw it, and hence himself took the initiative to that end. Kahnweiler & Brothers owed a debt of similar amount in New York, and the purchase of the exchange was to the mutual accommodation of the parties. It was, of course, in the contemplation of both that the bill of exchange would at once be remitted to New York in the usual course of business. Nothing else could be done. It does not lie in the mouth of the defendant therefore now to urge that it was laches in the payee to remit the bill through the post-office, while war was flagrant. It would have been laches to have done otherwise.

On the day the bill was drawn, July the 30th, 1861, it was forwarded to the endorsee in New York through the mail, the regular channel of transmission recognized by commercial usage. It is not necessary to decide whether the deposit of the bill in the post office, addressed to the endorsee whether with or without his consent, was a sufficient delivery so as to throw the loss on him who should have received it. That is a question between the endorser and endorsee. The defendant had parted with the title and possession by the delivery of the bill to the payee, and the only concern he has in the question is to know that the action against him is brought in the name of...