Mechanics' Bank v. Valley Packing Co.

• Decision Date: 12 June 1877
• Citation: 4 Mo.App. 200
• Parties: MECHANICS' BANK, Appellant, v. VALLEY PACKING COMPANY, Respondent.
• Court: Missouri Court of Appeals

4 Mo.App. 200

MECHANICS' BANK, Appellant,

v.VALLEY PACKING COMPANY, Respondent.

St. Louis Court of Appeals, Missouri.

Jun. 12, 1877.

A., of St. Louis, being indebted to B., of St. Joseph, requested B. to draw upon him, upon which draft he would raise the money and remit the proceeds to B. on account of his indebtedness. B. accordingly drew a draft to the order of C., his banker at St. Joseph, upon which C. endorsed, “Pay to D., or order, for collection for my account.” Upon receipt of the draft at St. Louis, A. accepted it, and offered it for discount to plaintiff. By consent of A. and plaintiff, the endorsement was stricken off, and plaintiff then discounted the draft, and A. received and remitted the amount to B. In an action on the draft against B., the drawer, held, (1) that plaintiff could not, by parol evidence, show a contract between A. and B. by which the latter was to have the draft discounted on the faith of his name as drawer; (2) that the endorsement, being restrictive, destroyed the negotiability of the draft, and operated as a mere power of attorney to the banker at St. Louis to receive the proceeds of the draft for the use of the drawer; (3) that the erasure of the endorsement, without the knowledge or assent of B., destroyed the validity of the draft as to him, and plaintiff, having knowledge of the alteration, was bound to know that such was its effect when he took the draft.

APPEAL from St. Louis Circuit Court.

Affirmed.

CLINE, JAMISON & DAY, for appellant: The title to this bill passed to the Mechanics' Bank by delivery, and it had a right to sue in its own name, without resorting to a court of equity or suing in the name of the payee, to its own use, as at common law. Boeka v. Nuella, 28 Mo. 180; Willard v. Moies, 30 Mo. 142; Savage v. Bevere, 11 Barb. 620; Dugan v. United States, 3 Wheat. 172; Bank of United States v. United States, 2 How. 711. An endorsement “for my use,” or “for collection,” not being an actual transfer of the amount, may be recalled at pleasure.-- Potts v. Read, 6 Esp. 57; Trattel v. Baronda, 8 Taun. 100; Palmer v. Gardner, 77 Ill. 143; Naglee v. Lyman, 14 Cal. 450; Chatauqua Bank v. Davis, 21 Wend. 584; Dallfus v. Frosch, 1 Denio, 367. The parol evidence offered was competent.--1 Dan. on Neg. Ins. 536, sec. 721; Lawrence v. Stonington Bank, 6 Conn. 521; Dale v. Gear, 38 Conn. 15; Dale v. Gear, 39 Conn. 89; Rickets v. Pendleton, 14 Md. 320; Hill v. Ely, 5 Serg. & R. 363; McWirt v. McKee, 6 Kan. 412.

GLOVER & SHEPLEY, for respondent: The holder of an unendorsed note holds it as any other chose in action or commodity, and it has none of the attributes of negotiable paper.-- Patterson v. Cave, 61 Mo. 439; Hedges v. Seeley,9 Barb. 218; Elliott v. _______, Blackf. 212; Fenn v. Harrison, 3 Term Rep. 757; Scott v. McDougal, 14 La. An. 307; White v. Foster, 14 C. B. 258; Haskell v. Mitchell, 53 Me. 468. The words “for collection” make the endorsement restrictive.-- Marine Bank v. Vail, 6 Bosw. 428; Sigourney v. Lloyd, 8 Barn. & Cress. 622; Lloyd v. Sigourney, 5 Bing. 525; Drew's Assignee v. Jacobs, 2 Murph. 139; Murrow v. Stuart, 8 Moo. P. C. 271. No evidence can be admitted to vary or control, by parol, the effect of the restrictive endorsement upon a bill.-- Hightower v. Ivy, 2 Port. 308; Holt v. Moore, 5 Ala. 521; Baillot v. Lee, 33 Ga. 491; Campbell v. Robbins, 29 Ind. 271; Crocker v. Getchell, 33 Me. 392; Forsyth v. Kimball, 1 Otto, 294; Kerr v. Von Phul, 7 Me. 426; Bouk v. Smith, 27 Barb. 489; Buckley v. Bentley, 48 Barb. 283; Bank v. Hooper, 5 Gray, 567. The effect of the alteration.-- Evans v. Foreman, 60 Mo. 449; German Bank v. Dunn, 62 Mo. 79; Holland v. Locke, 8 C. L. N. 397; 1 Greenl. on Ev., secs. 564, 566, and note, p. 605; Ivory v. Michael, 33 Mo. 398; Briggs v. Glenn, 7 Mo. 572; Haskell v. Champion, 30 Mo. 136.

HAYDEN, J., delivered the opinion of the court.

This is a suit upon a draft, brought originally against the respondent and the members of the firm of Levi L. Ashbrook & Co., but which has been dismissed as to the latter. The petition alleges that the respondent drew a bill of exchange at St. Joseph, Missouri, dated December 11, 1875, directed to Ashbrook & Co., by which it requested them to pay, ninety days after said date, to the order of Joseph C. Hull, cashier of a St. Joseph bank, $40,000, for value received, and to charge the same to respondent's account; that before the maturity of the bill it was delivered to Ashbrook & Co. by the respondent and by said Hull, cashier, with the request and authority by them respectively given to Ashbrook & Co. that the latter should accept the bill and negotiate and procure the same to be discounted, and to pay the proceeds of the same, thus negotiated and discounted, to the Valley National Bank of St. Louis, for the account of the St. Joseph bank, for the use of the respondent; that the said Hull, in accordance with the arrangement, endorsed the bill of exchange, directing it to be paid to James T. Howenstein, cashier of the Valley National Bank, for the account of the St. Joseph bank; that under the instructions aforesaid Ashbrook & Co., before the maturity of the bill, received and accepted it, and negotiated and delivered it to the appellant for value, and that the appellant discounted it, and paid the proceeds to Ashbrook & Co., who thereupon paid the proceeds, as they were instructed to do, to the Valley National Bank, for account of the St. Joseph bank. The petition then alleges presentment to the acceptors for payment, refusal, protest, and notice to the respondent and to Hull, cashier, and asks judgment for the amount of the bill, etc. The answer of the respondent admits that it drew the bill, but denies that it was delivered to Ashbrook & Co. by the respondent and by Hull, cashier, with any such request or authority as alleged in the petition; admits that Hull, as such cashier, endorsed the bill to Howenstein, cashier of the Valley National Bank, for the account of the St. Joseph bank, but denies that this endorsement was made in accordance with any such arrangement as described in the petition; admits the acceptance, but denies that Ashbrook & Co. accepted under the instructions or authority charged; denies that Ashbrook & Co. delivered the bill to the appellant for value, or that the appellant discounted the bill for value, and alleges that Ashbrook & Co. had no power to do so, as the bill, before it came into the hands of Ashbrook & Co. for acceptance, had been endorsed by Hull, cashier of the St. Joseph bank, to, and made payable to, the Valley National Bank, the cashier of which, Howenstein, never endorsed or delivered the bill to the appellant. The answer then denies that the appellant paid the proceeds of the bill to Ashbrook, or Ashbrook to the Valley National Bank; sets up that the bill did not belong to appellant, and denies protest, or any right in appellant to protest the bill; alleges that Ashbrook & Co., being indebted to respondent in the amount of the bill, and wishing time for payment, prepared the bill, as made payable, and delivered it to Hull, cashier, while unaccepted, and that he, as cashier of the St. Joseph bank, made the restrictive endorsement to the Valley National Bank, the correspondent of his bank in St. Louis, and sent the draft to Ashbrook & Co., to be handed, if accepted by them, to the Valley National Bank, for account of the St. Joseph bank. The answer alleges that neither the respondent nor the St. Joseph bank knew that any use had been made by Ashbrook & Co. of the bill until they received notice of protest, and sets up a material spoliation in erasing the restrictive endorsement without the consent of the respondent. The reply denies the affirmative allegations of the answer.

At the trial a jury was waived, and oral evidence was introduced by the appellant, much of which was admitted against the objection of the respondent, tending to show that there had been business transactions between the respondent and Ashbrook & Co., which had left the latter in debt to the former to more than the amount of the bill; that in December, 1875, one Peake, an agent of Ashbrook & Co., visited the respondent, at St. Joseph, and stated to it that Ashbrook & Co., to facilitate settling the business, wished to have the respondent draw on them at sixty or ninety days, and would pay the excess of the debt in cash; that the proposal made by this agent was that the respondent should draw a draft on Ashbrook & Co. for $40,000, at ninety days; that Ashbrook & Co. were to have the draft discounted, pay the discount, and place the $40,000 entire to respondent's credit; that respondent's secretary, Joseph C. Hull, accordingly said he would make the draft, to be discounted and placed to the respondent's credit; that the draft so drawn is the bill in suit, and was delivered to this

TABULAR OR GRAPHIC MATERIAL SET AT THIS POINT IS NOT DISPLAYABLE

“40,000.

ST. JOSEPH, Dec. 11th, 1875.

Ninety days after date pay to the order of Joseph C. Hull, Cas., forty thousand dollars, STAMP. value received, and charge the same to account of

(

STAMP.

)

VALLEY PACKING CO.

JOS. C. HULL, Sec'y.

To Levi Ashbrook & Co., St. Louis.

No. 26,242.”

Endorsed, “Pay James T. Howenstein, Esq., Cashier, or order, for collection for account of First National Bank, St. Joseph, Mo.

“JOS. C. HULL, Cashier.”

L. L. Ashbrook testified that he drew the lines through the endorsement, at the appellant's bank, after it had been passed on by the discount board and before the draft was entered on his bank-book; that some remark was made by the bank officers about the endorsement, and he said it was immaterial, and run his pen through the lines. They asked if he could get another paper. He said he thought he could, and promised to get it changed. On December 17, 1875, the agent of Ashbrook & Co. wrote to the secretary of the respondent, informing him of the deposit of the $40,000 with the Valley National Bank, stating that the draft given him...