Allenberg v. Rapken Co., Ltd.

THE COURT.

An action by an assignee against the acceptor of a draft to recover the amount thereof. A judgment was entered for the plaintiff, from which the defendant appealed.

A draft for $1800 was drawn upon defendant by Caroni Products Company, a New York corporation. It was accepted by defendant on January 3, 1928, and was payable on March 10, 1928, at the Anglo & London-Paris National Bank in San Francisco. The evidence shows that the drawer, after acceptance and before maturity, indorsed the draft for value to Aetna Finance Company, a corporation. It is not claimed that the acceptance was without consideration or was induced by fraud, but at the time the draft was presented for payment the defendant claimed a set-off as against the drawer in the sum of $108.12. This amount represented the freight charges paid by defendant upon the purchase price of certain merchandise for which the acceptance was given, and which it was alleged the drawer agreed to pay: The instrument before its maturity was sent to the Federal Reserve Bank at San Francisco for collection, and about March 1, 1928, the evidence shows that defendant was so notified by the bank. Defendant thereupon offered to pay the draft less the freight charges, which offer the bank refused. The defendant then communicated with the drawer and made the same offer to it. The drawer accepted the offer and, according to defendant’s witnesses, agreed to procure the return of the draft, at the same time requesting that the amount be remitted to it by telegraph. The defendant, however, mailed a check for the amount to the drawer, but on the receipt of a second request by the latter to remit by telegraph this was done on March 16, 1928, and payment of the check was stopped.

[102]

It appears that this amount was retained by the drawer and not paid to the indorsee. In the meantime the draft was presented for payment, which was refused, and the instrument was duly protested. Defendant alleged collusion between the drawer and the indorsee in this transaction, and that the amount remitted constituted payment of the draft. The trial court found in accordance with the allegations of the complaint and. against the defenses set up by the defendant. As grounds for the appeal it is contended that the decision is unsupported.

While defendant claimed that it was not advised of the indorsement to Aetna Finance Company before remitting the amount to the drawer, it made no request for an inspection of the instrument, which would have disclosed the facts. It further appears that the remittance by telegraph was made on March 16, 1928, although a notice of protest showing the name of the indorsee of the draft was mailed to defendant by a notary in San Francisco on March 13, 1928. It is a fair inference from the evidence that the notice was received by defendant before the date of the telegraph remittance and this was not denied. The indorsement by the Finance Company to the collecting bank was made by means of a rubber stamp, which defendant contends was insufficient. This method of indorsement has been sustained in several cases.