California Court of Appeal Mar 3, 1926 No. Docket No. 5323.Published
Before: Cashin
CASHIN, J.
An action upon an order for the payment of money which was accepted by respondents.
Judgment was entered for plaintiffs, who appeal therefrom upon the judgment-roll with a bill of exceptions to the conclusions of law and judgment as not being supported by the findings of fact.
The facts found were as follows: On December 20, 1918, appellants leased lands owned by them in Lower California to certain Chinese for the term commencing on that day and ending on December 31, 1922, the rent reserved being payable in installments.
The lease, which was written in the Spanish language, was executed and recorded according to the formalities and requirements of the laws of Mexico, and contained the provision that the lessee should not have power to alienate or encumber in any manner the crops which might be produced upon the premises described while any of-the rent should remain unpaid, the crops being considered as security therefor.'
On November 24, 1920, there was due and unpaid installments of rent aggregating the sum of $12,000. During the year 1920 and previous to the date last mentioned the lessees had picked and removed from the land and delivered to re-' spondents, to be sold for the account of the former, 146. bales of cotton, 100 bales of which had been brought within
[730]
the United States. Respondents had advanced to the lessees during that year the sum of $12,000 “for financing the crop grown on the premises,” and on the date mentioned no part of the crop had been sold arid there remained thereof unpicked 214 bales. Appellants, at the suggestion of one of the respondents, had procured from the lessees a writing signed by the latter, which was on the above date delivered to respondents, the writing, being in words and figures as follows:
“Calexico, California, November 24th, 1920.
“Tomlin, Tomlin & Company’s ranch consisting of 732 acres situated in the Northern District of Lower California, Republic of Mexico.
“You will please pay to the order of Tomlin, Tomlin & Co. at Calexico, California, out of the Chick Mow Co. and Lee Wing, Manager, the sum of twelve thousand dollars ($12,000) to come out of my cotton returns from the above ranch.
“(signed) Chick Mow. Lee Wing.”
Upon the delivery of the instrument it was agreed that appellants should not demand payment thereof for sixty days, at the end of which period payment was demanded and refused, following which a request was made for the return of the writing to appellants, which request was not complied with.
Subsequent to the delivery of the instrument respondents 'took possession of that portion of the crop which was then unpicked and expended for its picking, ginning, and hauling and for customs duties and expenses of marketing the sum of $13,478.50, and thereafter sold the 100 bales first mentioned for the sum of $6,595.98, and the balance of the crop for $15,757.58.
In addition to the facts expressly found it was alleged in the complaint and admitted by the answer that it was the understanding of the parties that the instrument mentioned was an order for the defendants to pay the sum of $12,000 from money to come into the hands of respondents from the sale of cotton grown on the leased premises. No finding was required as to this allegation, which may be treated as a part of the findings
(San Diego Realty Co.
[731]
v.
Hill,
168 Cal. 637 [143 Pac. 1021];
Sacre v. Chalupnik,
188 Cal. 386 [205 Pac. 449];
First Nat. Bank
v.
Maxwell,
123 Cal. 360 [69 Am. St. Rep. 64, 55 Pac. 980];
Mondine v. Labaig,
44 Cal. App. 781 [186 Pac. 1047].)
From the foregoing the conclusions were drawn upon which judgment was entered for appellants in the sum of $2,279.99.
As stated, appellants except to the judgment, the conclusions of law as a whole, and in particular to the following conclusions: (1) That the instrument was not a bill of exchange, but an order to pay money; (2) that plaintiffs had no lien upon the 100 bales of cotton first mentioned in the findings after its importation; (3) that defendants were entitled to the proceeds from the sale of these bales of cotton free of claims of plaintiffs; (4) that defendants were entitled to deduct the sums advanced for the production and marketing of the balance of the crops from the proceeds of its sale; (5) that plaintiffs were not entitled to judgment for the full amount of the order. '
No exception was taken to the further conclusion that “the defendants by retaining the instrument after the demand for its return accepted it.”
In the instant case the amount directed to be paid was, according to the terms of the instrument, “to come out of my cotton returns from the above ranch,” it being the intention of the parties, as found, that this sum should be paid from money to come into the hands of respondents from the cotton grown on the leased premises. As the rule has been stated, in determining the legal effect of instruments of this character the true test in every case is, does the instrument carry the general personal credit of the drawer or only the credit of a particular fund, and this question must be determined according to the circumstances of each case unless the langage of the instrument puts the meaning beyond doubt; and an instrument drawn upon a particular fund, whether the fund has already accrued or is to accrue in the future, is not negotiable, since it does not carry the general personal credit of the drawer and is contingent upon the sufficiency of the fund on which it is drawn (8 Cor. Jur. 121, 123; Civ. Code, sec. 3084, subd. 2).
In addition to the finding as to the intention as stated it was further found that respondents at the time of
[732]
the delivery of the instrument had advanced for the purpose of financing the crop a sum equal to the amount of the order; that no part of the crop then in their possession had been sold; that the rental payments under the lease were in arrears, and the instrument was not then accepted. These facts fairly support the inference that the lessees were then unable to meet their obligations otherwise than from the proceeds from the sale of the crop; and were sufficient to sustain the implied findings that the instrument was drawn not upon the personal credit of the lessees but upon the credit of the fund thereafter to accrue. This conclusion being supported by the findings, no exception having been taken to the conclusion that respondents by retaining the order accepted it, and the action not being one to enforce a lien or to recover the proceeds or value of property subject thereto, but upon an accepted order for the payment of money, whether a lien existed upon the crop or any part of it at the time of the delivery of the instrument was material only on the question as to the consideration for the acceptance, for which the original indebtedness of the lessees to appellant was sufficient
(Barlow
v.
Lande,
26 Cal. App. 424 [147 Pac. 231]); and the conclusion of the trial court that such lien did not exist, if erroneous, was harmless if the other conclusions support the judgment
(Spencer
v.
Duncan,
107 Cal. 423 [40 Pac. 549];
McCormick
v.
Sutton,
78 Cal. 245, 246 [20 Pac. 543].)
The acceptance of an order drawn upon a particular fund binds the drawee to make payment only as to the amount of the fund due or to become due to the drawer (5 Cor. Jur. 927, 928;
Carboy
v.
Polstein Realty etc. Co.,
62 Misc. Rep. 302 [114 N. Y. Supp. 838];
Hall
v.
Jones,
151 N. C. 419 [66 S. E. 350];
Comer
v.
Floore
(Tex. Civ. App.), 88 S. W. 246; 1 Parsons on Bills and Notes, 304); and the question to be determined by the trial court upon such acceptance was the extent of the obligation of respondents under the terms of the order as accepted.
In determining whether the findings support the judgment in which were merged the conclusions of law
(Roberts
v.
Hall,
147 Cal. 434 [82 Pac. 66];
Mentone etc. Co.
v.
Redlands,
155 Cal. 323 [17 Ann. Cas. 1222, 22 L. R. A. (N. S.) 382, 100 Pac. 1082]), the findings must receive such
[733]
construction as will uphold rather than defeat the judgment; and if from the facts found other facts may be inferred which support the judgment, it will be assumed that the trial court made the inference
(Paine
v.
San Bernardino etc. Traction Co.,
143 Cal. 654 [77 Pac. 659];
Lomita Land & Water Co.
v.
Robinson,
154 Cal. 36 [18 L. R. A. (N. S.) 1106, 97 Pac. 10];
Sidney
v.
Wilson,
67 Cal. App. 282, 285 [227 Pac. 672];
Braun
v.
Dallin,
68 Cal. App. 121, 129 [228 Pac. 740]).
The instrument being drawn upon a fund to accrue from the sale of cotton from the ranch, and the order not having by its terms limited the fund to the proceeds from a portion of the crop, the only construction reasonably to be placed thereon, in view of the fact that no part of the cotton had then been sold, is that the fund within the meaning of the instrument should include the whole of the proceeds from the sale of the crop produced.
The agreement between respondents and the lessees under which the former made advances for financing the crop, subsequently took possession of the unpicked portion thereof, and made the expenditures in the amounts and for the purposes found, is not directly disclosed by the findings. It may, however, reasonably be inferred from the facts found, in connection with the language of the order that the advances and expenditures mentioned were as between these parties to be deducted from the gross returns from the sale of the crop; and that the returns to the lessees within the meaning of the order were to be the net returns therefrom which constituted the fund from which the order was payable. Such being the agreement, the rights of appellants were measured by the amount of the fund which accrued and upon which the order was drawn
That our construction of the order is contrary to the conclusion of the trial court as to the rights of appellants in the proceeds from the sale of the 100 bales of cotton first delivered and imported, and that upon such construction judgment should have been entered for respondents, does not affect the judgment rendered, from which the latter have not appealed.
(Larkin
v.
Mullen,
128 Cal. 449, 455
[734]
[60 Pac. 1091];
Blood
v.
Munn,
155 Cal. 228, 236 [100 Pac. 694];
Rauer
v.
Nelson,
53 Cal. App. 695, 700 [200 Pac. 809].) It is our conclusion that the findings were sufficient to support the judgment, which is therefore affirmed.
Tyler, P. J., and Knight, J., concurred. '
A petition by appellants to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court on April 29, 1926.
AI Brief
AI-generated · verify before citing
Holding. The court held that an order for payment from a specific fund is not a negotiable instrument and limits the drawee's liability to the net proceeds of that fund after necessary expenses are deducted. Because the findings supported the conclusion that the order was payable only from the net returns of the crop, the judgment for the plaintiffs was affirmed.
Issues
Whether an instrument payable out of a specific fund is a negotiable instrument or an order for payment from a particular fund.
Whether the drawee of an order payable from a specific fund is entitled to deduct production and marketing expenses from the gross proceeds before payment.
Whether the trial court's findings of fact were sufficient to support the judgment.
Disposition. affirmed
Quotations verified verbatim against the opinion
“an instrument drawn upon a particular fund, whether the fund has already accrued or is to accrue in the future, is not negotiable”
“The acceptance of an order drawn upon a particular fund binds the drawee to make payment only as to the amount of the fund due or to become due to the drawer”
“the returns to the lessees within the meaning of the order were to be the net returns therefrom which constituted the fund from which the order was payable.”