Sebastian May Co. v. Codd

• Decision Date: 15 March 1893
• Citation: 26 A. 316,77 Md. 293
• Parties: SEBASTIAN MAY CO. v. CODD.
• Court: Maryland Court of Appeals

26 A. 316

77 Md. 293

SEBASTIAN MAY CO. v. CODD.

Court of Appeals of Maryland

March 15, 1893

Appeal from Baltimore city court.

Action by the Sebastian May Company against William C. Codd to recover for goods sold and delivered.From a judgment in favor of defendant, plaintiff appeals.Reversed.

Argued before ALVEY, C.J., and ROBINSON, BRYAN, IRVING, McSHERRYFOWLER, PAGE, and ROBERTS, JJ.

Wm Reynolds, for appellant.

F. C Cook, for appellee.

FOWLER J.

This controversy grows out of a transaction which took place in October, 1891, between the appellant company, doing business in Ohio, and the appellee, who resides in this state.On the 21st of October the appellee, who was defendant below, wrote from Baltimore to the appellant the following letter: "If I would purchase a small stock of your lathes, say to the value of about $800, would you take a four-months note in settlement?The note I propose to give you is given by the Theo.C. Knauff Company, manufacturers of church organs, 238 Dean St., Philadelphia; factory is at Newark, Delaware.It is indorsed by the following individuals."The names of the indorsers are then given, and, promising to inclose the note in a subsequent letter, the appellee requests an answer by telegraph.Two days after the date of the foregoing letter the appellant telegraphed the appellee: "We will accept your offer.Send in your order."Accordingly, on the next day, the appellee wrote the appellant, inclosing the note above mentioned, and ordered a number of lathes; closing his letter with these words: "The balance over the amount you can remit to me as soon as the note is paid."A few days after,--on the 26th October,--the appellant acknowledged receipt of the note and order for lathes, and informed the appellee the note had been placed to his credit.Goods to the amount of $974.83 were subsequently shipped by the appellant to the appellee, and received by the latter in Baltimore.The note was protested for nonpayment, and the appellant brought an action of assumpsit against the appellee on the common counts to recover the value of the goods so sold and delivered.There was a verdict for the plaintiff for $29.83,--the difference between the value of the goods and the face value of the note.Judgment of non pros. was entered, and the plaintiff appealed.

During the course of the trial below three exceptions were taken to the ruling of the court,--one upon the rulings on the prayers, and two in reference to the rulings on the testimony.It was very earnestly contended on the part of the appellee, and the court below so held, that the transaction or contract between the parties to this suit, the entire evidence of which, so far as now disclosed, is in writing, and is contained in the letters which passed between them, was an exchange or barter of the goods of the appellant for the note of a third party, passed by delivery merely, and without indorsement; and that, therefore, the appellant assumed all risk of nonpayment of the note.On the contrary, the contention of the appellant is that by the true construction of the contract the transaction is a sale, and the note was taken not as absolute, but only as conditional, payment.What is the rule of law regulating the rights and liabilities of parties in the case of an exchange or barter of the goods for the note of a third partywe need not now consider, for we have concluded that the contract in this case is one of sale.The negotiation was commenced by the appellee, who in his letter of October 21st, said."If I would purchase a small stock of your lathes. * * * would you take a four-months note in settlement?"It seems to us that the plain import of this language indicates that it was the desire and intention of the appellee to buy the goods in contra distinction to giving something in exchange for them, for otherwise why use the word "purchase?"If he intended to make an exchange he should have said so But when we look at the concluding sentence of appellee's letter of the 24th October, in which the note was transmitted it appears to us there can be no doubt what was the appellee's understanding at that time.He said: "The balance over the amount you can remit to me as soon as the note is paid."It will be remembered that at that time it was not known to either party exactly how many or what kind of lathes would be ordered, or what the prices for the same would be.The appellee had limited his order to "about the value of $800," and therefore when he sent the note for $945, and asked for the difference to be remitted to him when the note was paid, he could not have understood he was parting with the note in exchange for the goods.This certainly has not the appearance of an exchange, but, on the contrary, would indicate what we have already said, that the transaction we are considering was a sale.

Was the note given and received in full payment?As the case now stands, the answer to this question must be found in the same written evidence which establishes the contract, for there is no other proof on the subject before us.If nothing appeared or could be ascertained from the contract except that the note in question was received in payment for the goods, it might well be conclusively presumed that such was the intention of the parties to the contract.Tobey v Barber, 2 Amer. Lead. Cas. 299;Noel v. Murray, 1 Duer, 385;18 Amer. & Eng. Enc.Law, 182.But here we have a different case presented.It appears that the appellant was to keep the note until maturity, then collect the proceeds thereof, and, having paid itself for the goods, the balance was to be remitted to the appellee.This part of the transaction, it seems to us, is very significant, and would seem to be a conclusive indication that the note was not intended to be at the risk of the appellant; for, according to all authority, and reason as well, if the vendor takes the note as absolute payment, it is his property, and he may dispose of it as he would any other property owned by him.But here it appears that, so far from accepting the note absolutely, the agreement was that the appellant was to collect the proceeds, retain a portion thereof, and the balance was to be the property of the appellee.But it was also urged that the note was offered and accepted "in settlement" for the goods purchased by the appellee, and that it was placed to his credit by the appellant; but we do not think that the use of the word "settlement," nor the fact of the credit, are together sufficient to overcome the force of the fact on which we have based the inference already drawn.It will be noticed that the note was not given or received in payment, but the appellee offers it in settlement, and the offer is accepted in general terms, without saying whether it is accepted in payment or in settlement.But, assuming that the note was accepted as offered,--that is, "in settlement,"--the use of this term in lieu of "payment" may be considered as another indication of the intention of the parties, especially in view of the arrangement we have already mentioned, that the appellant was to retain only a part, and remit the balance of the proceeds of the note to the appellee.Nor do we think that the fact of crediting the amount of the note to the account of the appellee can have any controlling effect, under the circumstances of this case.The case of Phelan v. Crosby, 2 Gill, 470, was cited to show that when an unindorsed note of a third person is placed to the credit of the consignee of the goods sued for, and the balance receipted for as paid in cash, the note must be considered as having been taken in payment, in the same sense that the cash was payment.There is no cash payment in the case before us, and, of course, there can be no argument based upon the combined effect of the cash payment and the credit of the note.The language quoted to support the view of the appellee is not that of the court of appeals, but will be found in the dissenting opinion of the late Judge Magruder, who thought the judgment in that case should be reversed; but the majority of the court, while filing no opinion, affirmed the judgment, and therefore held in accordance with the ruling of the trial court in granting the defendant's first prayer,--that there must be...