Levy & Cohn Mule Co. v. Kauffman

• Decision Date: 25 February 1902
• Docket Number: 1,097.
• Citation: 114 F. 170
• Parties: LEVY & COHN MULE CO. v. KAUFFMAN. KAUFFMAN v. LEVY & COHN MULE CO.
• Court: U.S. Court of Appeals — Fifth Circuit

114 F. 170

LEVY & COHN MULE CO. v. KAUFFMAN.

KAUFFMAN v. LEVY & COHN MULE CO.

No. 1,097.

United States Court of Appeals, Fifth Circuit.

February 25, 1902

This is an action at law by the indorsee against the acceptor of three bills of exchange. It was brought in the court below by the Levy & Cohn Mule Company, a corporation under the laws of Missouri, against Henry Kauffman, a citizen of Texas. The drafts in suit were for $5,000 each, drawn March 10, 1899, by Joseph Weill & Co., of New Orleans, on the defendant, and by him accepted. They were payable to the order of Jacques Levy and were by him indorsed to the plaintiff before maturity. The petition described the drafts, and was in due form. The answer of the defendant presented three defenses: (1) That the acceptance of the drafts was procured by fraud, and that they were fraudulently used. As no ruling of the court below is before us on this plea, and no evidence of fraud on the part of the plaintiff, no further attention will be given to this defense. (2) Failure or want of consideration. (3) The third defense pleads an oral contract made contemporaneously with the acceptance of the drafts. It will be stated with immaterial abbreviations in the language of the answer:

'That at the time he accepted the said bills in the month of March 1899, Joseph Weill, Armand Levy, and Daniel Weill were copartners in a business carried on in New Orleans, under the style of Joseph Weill & Company. That Joseph Weill was the son-in-law of this defendant, and Armand Levy the nephew of Jacques Levy. That the said firm were greatly embarrassed financially,--had reached such a point that as a firm they could no longer go on with their business unless some help was obtained from some outside source, as their credit in New Orleans had been exhausted,-- and that, being in this condition financially, Armand Levy applied to his uncle Jacques Levy, the president of the Levy & Cohn Mule Company, for some financial assistance; and that the firm of Joseph Weill & Company at that time was indebted to the Levy & Cohn Mule Company (the plaintiffs), and Jacques Levy replied (all of which the said Levy & Cohn Mule Company, the plaintiffs, were fully advised) that he would advance Joseph Weill & Company fifteen thousand dollars in addition to what Joseph Weill & Company then owed the Levy & Cohn Mule Company, provided that Henry Kauffman, this defendant, would advance an equal amount, thereby enabling Joseph Weill & Company to have an amount of thirty thousand dollars to be put into their business, to be used in making a crop of sugar on certain plantations which they were then operating in Louisiana. This defendant replied that if the said Jacques Levy, acting for himself and for the said Levy & Cohn Mule Company, would advance the firm of Joseph Weill & Company fifteen thousand dollars, that he would accept three drafts of five thousand dollars each, in favor of Jacques Levy, to be drawn by Joseph Weill & Company, payable at a certain time, as is stated in the three bills of acceptance declared on in this action, provided the said Jacques Levy would discount or have discounted the three certain acceptances, and turn over the proceeds of said acceptances in cash to Joseph Weill & Co., with the fifteen thousand dollars additional money to be advanced to the said firm by the said Jacques Levy for himself and the said Levy & Cohn Mule Company, all of which was fully agreed to; it being understood, not only by this defendant, but by the said Jacques Levy and the Levy & Cohn Mule Company, that the said sum of thirty thousand dollars was absolutely necessary to be used in the business of Joseph Weill & Company in cash, in order that they might live through the financial difficulties which surrounded them and make and gather the crop on the several sugar plantations operated by them. That the sole inducement to this defendant to enter into these transactions and to accept these drafts, which he honestly proposed and intended to do when such acceptances matured, had the said Jacques Levy and the Levy & Cohn Mule Company carried out their contract and agreement to advance Joseph Weill & Company fifteen thousand dollars as well as the proceeds of the three bills of acceptance of this defendant which Jacques Levy and plaintiffs were to have discounted, was not only to aid his son-in-law, but also the firm of Joseph Weill & Company, through the financial difficulties which then threatened to wreck them, because this defendant was a large creditor of the firm of Joseph Weill & Company, and because he well knew that the failure of Joseph Weill & Company would involve him in much loss. That after the said three drafts of Joseph Weill & Company, in favor of Jacques Levy, for five thousand dollars each, had been accepted, the same was turned over to Joseph Weill & Company, to be by them transmitted in due course of mail to Jacques Levy to be discounted, and the proceeds thereof to be paid to Joseph Weill & Company, together with the fifteen thousand dollars additional. That said three acceptances were received by the said Jacques Levy within a few days after their execution. That instead of being discounted, as was agreed upon, and the proceeds remitted or paid over to Joseph Weill & Company, the said Jacques Levy indorsed and transferred said three bills of acceptance over to the Levy & Cohn Mule Company as a credit, and passed the same to the credit of Joseph Weill & Company with the Levy & Cohn Mule Company in part settlement and satisfaction of an antecedent debt due by Joseph Weill & Company to the Levy & Cohn Mule Company.'

The case was tried on these issues. The plaintiff offered in evidence the accepted drafts and rested; and thereupon it was proven by defendant, examined as a witness in his own behalf, and by Joseph Weill, a member of the firm of Joseph Weill & Co., also examined as a witness for defendant, that the said accepted drafts were drawn by Joseph Weill & Co., accepted by defendant, indorsed by Jacques Levy, and before maturity negotiated with plaintiff for account of Joseph Weill & Co., and the proceeds thereof paid and applied by plaintiff as directed by Weill & Co., and for their account, as follows:

To take up a draft of plaintiff on Joseph Weill & Co. (drawn to reimburse plaintiff for that amount paid out by it for accommodation of Joseph Weill & Co.), and recalled by plaintiff at request of Joseph Weill & Co...................... $5,500 00 To pay a draft of Joseph Weill & Co. drawn on plaintiff for ...... 2,000 00 To pay another draft drawn by Joseph Weill & Co. on plaintiff for ............................................................ 2,500 00 To pay another draft of Joseph Weill & Co., on plaintiff in favor of defendant, H. Kauffman (and used by Kauffman to take up and pay a draft for $5,000.00 drawn by Joseph Weill & Co. on and accepted by him, H. Kauffman, for accommodation of Joseph Weill & Co.) ........................... 5,000 00 ---------- Aggregating the entire amount of the acceptances .......... $15,000 00

All of these payments were made before maturity of any of the acceptances sued on. It was also proved that plaintiff advanced to Joseph Weill & Co. $3,175 in addition to these payments, about the same time that these sums were paid. The defendant then offered evidence tending to prove the facts averred in his third defense. When evidence was offered of the oral agreement therein alleged, the plaintiff objected on several grounds stated, among them the following: 'The acceptances sued upon are written contracts of defendant to pay the sums of money therein mentioned, absolutely and without condition, and it is not competent by oral testimony to show any agreement, condition, or understanding, contemporaneous or previous, whereby such written absolute contracts may be varied or qualified, so as to make their performance depend upon either the making or performance of such oral agreement, condition, or understanding. ' The objections were overruled, and the plaintiff excepted. Evidence was offered in rebuttal by the plaintiff, tending to show that no such agreement was made as that alleged by the defendant in the third defense. It is unnecessary to state this evidence.

On the question of the consideration of the drafts and on the alleged agreement, the court charged the jury as follows 'In this case the evidence shows that the Levy & Cohn Mule Co. paid $15,000 on the acceptances, and it is also shown that the Levy & Cohn Mule Co. paid $3,175 additional. The view I take of the law in this case is different from that argued by either side. I do not agree with either of them. One of them contends that the defendant has no defense whatever, and the other contends that it is a complete defense. I don't agree with the contention of either one of them. Under the pleadings and proof in this case, if it means anything, it means that Mr. Jacques Levy and Mr. Kauffman-- that is, according to Mr. Kauffman's contention-- were to advance $15,000 each. The proof unquestionably shows that the Levy & Cohn Mule Co. and Jacques Levy advanced $18,175. Now, under the contention of Mr. Kauffman, he would have been owing to the Levy & Cohn Mule Co. $15,000, conditioned that the full $15,000 had been advanced in addition to his acceptances. I cannot take any other view of this case than this: In view of the fact that the proof shows that Mr. Kauffman received $5,000 of the money, in that the draft was drawn in his favor, and he applied it to a debt that he was the indorser of Jos. Weill & Co. on, I cannot look upon it as anything more than a partial failure of consideration. If you find from the evidence that this agreement was not authorized by Jacques Levy, return a verdict for the plaintiff in the full...