Kimball v. Donald

• Citation: 20 Mo. 577
• Parties: KIMBALL, v. DONALD & OTHERS, Appellants, and BENOIST & ANOTHER, Respondents.
• Decision Date: 31 March 1855
• Court: Missouri Supreme Court

20 Mo. 577

KIMBALL,

v.DONALD & OTHERS, Appellants, and BENOIST & ANOTHER, Respondents.

Supreme Court of Missouri.

March Term, 1855.

1. A bill of exchange drawn by a merchant upon his factor cannot, before acceptance, take effect as an equitable assignment of the fund, so as to defeat attaching creditors, although there may be a direction at the foot of the bill to charge to a particular account, and although the drawee may have promised to apply any balance in his hands belonging to the drawer, in payment of the bill.

Appeal from St. Louis Court of Common Pleas.

This was a petition in the nature of a bill of interpleader, filed by Kimball, to compel the defendants to litigate among themselves their respective claims to a fund in his hands, as the factor of Stone & Walworth, of New Orleans. The defendants Donald and others claimed as attaching creditors of Stone & Walworth, the plaintiff having been summoned as garnishee in suits brought by them. The defendants Benoist & Co. claimed under a bill of exchange drawn in their favor by Stone & Walworth upon Kimball, prior to the attachments, which, as they contended, amounted to an equitable assignment of the fund. The cause was tried by the court without a jury, and substantially the following facts found:

Stone & Walworth were partners in business in New Orleans, and Kimball was their factor in St. Louis. They were in the habit of making consignments to him, and drawing bills upon him, which he accepted and paid. On the 5th of May, they shipped to him fifty-six tierces of rice on the steamboat John Simonds, and ten hogsheads of sugar on the steamboat Charles Belcher, there being then an unadjusted balance due from him on account of previous consignments. On the 13th of May, they drew upon him a bill of exchange, of which the following is a duplicate:

“Exchange for $2,500.

New Orleans, May 13th, 1853.

Twenty days after sight of this second of exchange (first unpaid,) pay to the order of L. A. Benoist & Co., twenty-five hundred dollars, value received, and charge the same to account sugar, Belcher, rice, Simonds, and account sales.

STONE & WALWORTH.

To Mr. E. B. Kimball, St. Louis.”

On the 14th of May, Stone & Walworth notified Kimball by telegraph of the drawing of the bill, and requested him to pay it to Benoist & Co.

On the same day, Benoist & Co., having been notified by telegraph by their firm in New Orleans of the drawing of the bill, called upon Kimball, who then promised to pay to them on the bill whatever amount might be found in his hands due to Stone & Walworth. Subsequently, Kimball was summoned as garnishee in the attachment suits brought by the other defendants, and when the bill reached St. Louis, he refused to accept it.

Upon these facts, the Court of Common Pleas awarded the fund to Benoist & Co., and from this judgment, the attaching creditors appealed.

Shepley and Kasson, for appellants.

I. The bill of exchange did not operate as an assignment of any funds of the drawers in the hands of Kimball. (3 Sandf. S. C. R. 257; 1.Id. 416; 3 Comstock, 243; 1 Curtis U. S. R. 133; Luff v. Pope, 5 Hill [N. Y.] 413, 417; same case on appeal, 7 Hill; 2 Am. Lead. Cases, [H. & W.'s notes,] ed. 1852, p. 141; 1 Seld. [N. Y.] 525; 2 Id. 412; 15 La. 255; 3 Kent's Com. 76; Story on Bills. §§ 46, 47.)

II. The verbal promise of Kimball to Benoist & Co. cannot defeat the right of the attaching creditors to recover. It was not binding as an acceptance of the bill, which must be in writing, nor as an original undertaking, because it is an undertaking to pay the debt of another and without consideration.

C. C. Whittelsey, for respondents.

I. Benoist & Co. had a direct action against Kimball on his promise to pay them whatever balance might be in his hands. (Chitty on Bills, 8, 9, 350, 351, n. z and a, 14 East, 598, n.; Curtis v. Norris, 8 Pick. 280, 282; 12 Mass. 206, 211; 5 Peters, 580; 1 Wash, C. C. R. 424; 10 Mo. 525-38; Chitty on Contracts, 45; 12 Mo. 430-33; 5 Peters 580.)

II. Benoist & Co. are entitled to the fund in preference to the attaching creditors, as being the assignees of the debt due by Kimball to Stone & Walworth. (Chitty on Bills, 9 and 8, n. 1 and 2; Cutter v. Perkins, 12 Mass. 206, 211; Correr v. Craig. 1 Wash. C. C. R. 424; Stephens v. Stephens, 1 Ashmead, 190; 17 Mass. 327; 11 Mass. 385; 2 Jones, 167; 4 Dallas. 379; Searg. on Attachment, 80-84; Cushing's Trustee Process, 171; Drake on Attachment, §§ 498, 501, 510-13, 611, 615, 617, 621; 20 Pick. 132; 3 Swanst. 392; 4 Mylne & Craig, 690; 21 Eng. Law & Eq. 566; 15 Eng. Law & Eq. 27; 5 Wheat. 277; 1 Peters, 264, 288; 3 Binney, 394.)

LEONARD, Judge, delivered the opinion of the court.

This is a bill of exchange, and not a mere order to pay over a particular fund; and the direction at the foot of the bill, to charge to the particular account there indicated, does not change the character of the instrument, (Story on Bills, § 66;) and we think that, after being refused acceptance, it cannot take effect as an equitable assignment of the fund, even connected as it is with an express promise on the part of the drawee to pay whatever balance may be found in his hands.

It is true that anything amounting to a present transfer of a specific fund for value is a valid assignment in equity which changes the property as against the assignor, and cuts off subsequent attaching creditors. No form is required; it is sufficient that the transaction is, in the contemplation of the parties, a present sale of the subject matter assigned, vesting a present interest in the assignee, and not resting merely in agreement to be executed thereafter. In a word, any thing that shows an intention on the one side to make a present irrevocable transfer of the fund, and from which an assent to receive it may be inferred on the other, will operate in equity as an assignment, if supported by a sufficient consideration.

Upon this principle, courts allow an order payable out of a particular fund belonging to the drawer, and which has been delivered to the payee for value, to take effect as a present transfer of the debt; and Lord Chancellor Truro, in a recent case, 1852, (Rodeck v. Gandell, 15 Eng. Law. and Eq. 30,) stated it as the result of all the cases that “an agreement between a debtor and a creditor that the debt owing should be paid out of a specific fund coming to the debtor, or an order given by a debtor to his creditor, upon a person owing money or holding funds belonging to the giver of the order, directing such person to pay such funds to the creditor, will create a valid, equitable charge upon such fund; in other words will operate as an equitable assignment of the debt or fund to which the order refers.”

This construction of such transactions generally executes the real intention of the parties, and is adopted for that reason, and therefore if there be any thing from which a...