Pacific Finance Corp. v. First National Bank

PRESTON, J. Plaintiff, as the payee of a draft or hill of exchange drawn by the defendant, presented it to the drawee for payment but was refused and, after protest, this action was begun for its face value. The amount of the draft was $9,702.28 but the parties stipulated that in the event of judgment for the plaintiff the true amount should be $4,902, with interest and costs. The court made findings in favor of plaintiff and gave judgment for the stipulated amount. Defendant has appealed upon a full record.

The facts necessary to a determination of the dispute are without conflict. They are to the effect that plaintiff held a chattel mortgage upon the dairy herd of one Houston and [48]wife. Defendant, intending to take a mortgage upon said chattels, and as the agent of the mortgagor, on October 8, 1930, wrote the plaintiff requesting that the note and mortgage and a proper release thereof be sent to it for collection. On October 9, 1930, plaintiff responded advising defendant it would not send the instruments “before they are paid in full”, further stating the amount due and the rate of interest, and then saying, “upon the payment of this amount we will immediately send you all necessary papers, together with releases”. On October 17, 1930, defendant replied enclosing the above-mentioned draft or bill of exchange and requesting plaintiff to forward the releases and other papers to it. Within less than an hour after mailing this draft defendant experienced a change of mind for some undisclosed reason, and sought eagerly to procure the letter and its contents from the post office but failed in this effort. It immediately phoned plaintiff and asked it to return the bill of exchange to which request plaintiff responded over the phone as follows: “In reply I said I would look into it, that I saw no reason why it should not be returned.” On arrival of the draft plaintiff did not return it but instead proceeded to execute a release and to transmit it and the other- incidental papers to defendant, who returned them by the next mail in a letter recounting its position. Contemporaneously with .the execution of said release plaintiff attempted to collect the proceeds of the bill of exchange or draft and ascertained at. that time that defendant had stopped payment thereon; hence this suit.

Plaintiff seeks to sustain the judgment upon the ground that the letter of October 9th constituted a counter offer which was accepted by defendant’s letter and draft of October 17th and became a binding contract between the parties when the documents were placed in the course of transmission by the defendant and as a result the acceptance became irrevocable. (Secs. 1582, 1583, Civ. Code.) Appellant’s position seems to be that the letter of October 9th was not an offer but that the letter of October 17th was an offer, not an acceptance, and being an offer could be revoked at any time before acceptance by plaintiff. Its further contention is that if the letter of October 9th be treated as an offer and the letter of October 17th as an acceptance, nevertheless the right of revocation existed be