The plaintiff sues to recover the sum of $18,437.10 which it paid to the defendant bank on November 28, 1941, when it procured from the defendant bank two documents in the form of a draft "in first and second exchange" drawn by The Chartered Bank of India, Australia and China in New York upon The Chartered Bank of India, Australia and China in Manila and payable there on demand to the order of Roosevelt Steamship Agency, Inc. Claiming that war with Japan and the invasion of the Philippine Islands by Japan has made it impossible for the defendant bank to carry out its obligation in accordance with the intent of the parties, the plaintiff gave notice to the defendant that it elected to rescind the transaction and demanded the return of the moneys it paid to the bank. The bank refused to return the money, and the plaintiff then brought this action to recover the money paid. After the defendant had interposed an answer, both parties moved for summary judgment. The court at Special Term granted the motion of the defendant to dismiss the complaint. The order was reversed by the Appellate Division and the motion of the plaintiff was granted.
The facts are not in dispute. Plaintiff's treasurer alleges in his affidavit that on November 28, 1941, the plaintiff "desired *Page 258 to make three remittances" — one to its agent in Calcutta, another to its agent in Manila and the third to its agent in London. He asked the defendant bank for its "rates fortelegraphic transfers to Calcutta and for drafts on Manila andEngland." He "desired to make telegraphic transfer to Calcutta because at that time mail communication to India, it being a British possession, was greatly impeded * * *. On the other hand, mail communication with the Philippines was open and in regular operation by both air mail and ordinary mail and hence remittances through the transmittal of documents for the paymentof money could be rapidly made by air mail." Having received the defendant's "rates for Calcutta rupees, Philippine pesos andBritish sterling," plaintiff's treasurer requested the defendant bank "to issue drafts in first and second of exchange to Roosevelt Steamship Agency, Inc. for the Philippine pesos * * *" and to another payee in London for British sterling. The defendant was informed that the plaintiff "intended to send the first of exchange of the draft payable to Roosevelt Steamship Agency, Inc. by air mail and the second of exchange by ordinary mail." Plaintiff paid the defendant its charges "for the issuance of the drafts in pesos" and in British sterling, and at the same time paid in addition the defendant's usual charge of fifty cents for "transmittal by air mail of advices to its foreign agencies" and the person procuring the draft for the plaintiff informed the defendant that he intended to transmit the draft by air mail. (Italics throughout this opinion are ours.)
The intention of the plaintiff to make "remittances" of pesos to Manila rapidly by air mail through "transmittal of documents for the payment of money" has been frustrated. Though the documents were promptly mailed to Manila, the outbreak of war made delivery there impossible and they were returned to the sender. The defendant bank cannot do business in Manila so long as the Japanese are in possession of the islands. The Appellate Division has held that due to these conditions there has been a complete failure of consideration, entitling the plaintiff to rescind the transaction.
The plaintiff alleges in its complaint that the defendant in consideration of the moneys paid to it, "promised and agreed *Page 259 to and with the plaintiff that the defendant would pay to Roosevelt Steamship Agency Inc. * * * the sum of 37,000 Philippine pesos. To evidence the defendant's aforesaid agreement and to specify the manner of its performance and at its direction to its representatives in Manila to make payment as aforesaid, the defendant delivered to the plaintiff two documents * * *." The defendant's alleged promise that it would pay to the Roosevelt Steamship Company in Manila the sum of 37,000 pesos is a unilateral primary promise to pay a sum of money. The plaintiff has given to the defendant the full stipulated consideration for that alleged promise. "The manner of its performance" is formulated in the documents delivered to the plaintiff. Payment is to be made only in Manila upon demand there and presentation of one of the "drafts", the other being unpaid. During the continuance of a state of war a presentment of the draft at a point across the line of hostilities is impossible, and delay in presentment is excused. (Negotiable Instruments Law, § 141.) Performance of the contract in Manila would indeed be illegal during the continuance of hostilities. (Restatement of the Law of Contracts, § 596.) There has been, it is claimed, "supervening impossibility" in the performance of an executory contract made as alleged in the complaint between the plaintiff and the defendant for the payment of foreign money in a foreign country which entitles the plaintiff to restitution of the consideration paid in accordance with the rules formulated in the Restatement of the Law of Restitution, section 108.
We think that upon the undisputed facts — conceded or stipulated by the parties or established by the affidavits of both parties — it appears conclusively that the defendant did not, as alleged in the complaint, assume for a stipulated consideration a primary executory obligation to pay pesos in Manila in accordance with a contract "evidenced" by the documents delivered to plaintiff. The affidavit of plaintiff's treasurer accurately describes the transaction. The plaintiff paid the defendant the agreed rate for "drafts" in Manila in order to make a "remittance" to Manila through "transmittal of documents for the payment of money". In return it received from the defendant documents executed by the plaintiff as the "first and second of exchange" of a draft drawn by the defendant on itself at Manila. Those documents did more than *Page 260 "evidence" the agreement. The agreement was integrated in the instruments. They were the documents "for the payment of money" which the plaintiff desired to procure and by which the remittance could be rapidly made. The question which we must decide is whether that exchange, in which the plaintiff paid its money and received in return an instrument in the form of a draft or foreign bill of exchange, may be rescinded by the plaintiff because payment in accordance with the terms of the instrument cannot be demanded or made during the continuance of a state of war. We do not decide whether war supervening after the creation of a simple contract for the payment of money in Manila or a contract for a credit in foreign exchange there would give rise to a right of rescission and restitution of the consideration paid or whether the war would merely suspend enforcement of the obligation. (See Neumond v. Farmers' Feed Co., 244 N.Y. 202,206; Restatement of the Law of Contracts, § 596; Trotter, Law of Contract During and After War, 4th ed., London, 1940, 55 and 56.)
The distinction is clearly drawn in the opinion of this court in Gravenhorst v. Zimmerman (236 N.Y. 22, 31): "One who secures a draft obtains a written order by the drawer upon the drawee which by commercial usage and even by statutory enactment in some jurisdictions has come to be recognized as the symbol and equivalent of money and which enables the one who has obtained it without further action by the drawer to secure from the drawee the moneys which it represents. In consideration of the money paid by him he has actually obtained an instrument for the payment of money and which is regarded as its equivalent, and it is perfectly natural to speak of such a transaction as resulting in the executed purchase of a draft. A person who makes a contract for a credit in foreign exchange accomplishes no such result. He has secured nothing which will pass for money or which will enable him except through the action of the banker to obtain the exchange which he desires. It gives him no control whatever over the course of events which will lead to the establishment of the credit. The banker retains entire control of this and by his future actions causes to be set up the credit which will eventually enable the customer to obtain the exchange in money which he desires."
The rule is authoritatively established and universally recognized that the transfer of a draft in exchange for moneys paid *Page 261 for the delivery of the draft is an executed transaction characterized generally as a "purchase and sale" of the draft. Such a transaction may not be rescinded by the purchaser when "supervening war" delays indefinitely presentment and payment of the draft. (American Ex. Co. v. Cosmopolitan Trust Co.,239 Mass. 249; Gravenhorst v. Zimmerman, supra; Schweitzer v.Fargo, 255 N.Y. 60.) Upon such a "purchase" or exchange the purchaser obtains exactly what he sought — a completed instrument for the transmission of foreign exchange. The price fixed for the transfer of such an instrument depends upon the demand for "foreign exchange", and foreign exchange is treated as "a commodity bought and sold in the market". (Richard v. AmericaUnion Bank, 253 N.Y. 166, 174; see, also, Nussbaum, "Money in the Law," p. 113.) The "seller" of the draft enters into a binding engagement that "on due presentment the instrument will be accepted and paid * * * according to its tenor, and that if it be dishonored * * * he will pay the amount thereof to the holder". (Negotiable Instruments Law, § 111.) The transfer or delivery of the instrument to "the purchaser" even though the purchaser is not the payee, completes the contract, integrated in the instrument and the contract is no longer revocable. (Meeker v. Shanks, 112 Ind. 207, 210.) The "price" paid to procure that engagement is the stipulated consideration both for the creation of the engagement and for its simultaneous transfer.
We are told that these rules do not apply where the bill of exchange is drawn by a bank upon its branch in a foreign country. "Where in a bill the drawer and drawee are the same person * * * the holder may treat the instrument, at his option, either as a bill of exchange or a promissory note." (Negotiable Instruments Law, § 214.) The question whether that section applies where a bank, engaged in the business of selling foreign exchange, sells a bill of exchange drawn upon its branch in a foreign country is important and is not free from doubt. We do not decide that question here nor do we decide whether a "purchaser" of such a bill who is not the payee is a "holder" within the meaning of the statute, who may exercise such an option. We assume for the purposes of this appeal that he may treat the bill as a promissory note. *Page 262 It still remains true that he has received the instrument for which he bargained and for which he paid the stipulated price, and that instrument, like a draft drawn by a bank upon a correspondent bank not its own branch, is the chosen means for the transfer of a foreign credit. There has been no breach of the engagement integrated in the instrument whether treated as a draft or as a promissory note.
We have pointed out in a recent case that even upon "the purchase of cashiers' checks for remittances to payees where it is desirable to use the credit standing of the bank in making payment by check * * * the remitter is a purchaser for value of the bank's promise to pay" (citing Armstrong v. AmericanExchange Bank, 133 U.S. 433, 453; Vander Ploeg v. Van Zuuk,135 Iowa, 350, 355; Munn v. Boasberg, 292 N.Y. 5, 9, decided January 13, 1944). The documents delivered by the defendant constitute, in the aspect most favorable to the plaintiff, negotiable paper "drawn" by the bank upon itself and accepted by the bank when it delivered the instrument as its obligation to the remitter for an agreed price. The analogy to a cashier's check is in all material respects complete. (See 6 Michie, Banks and Banking, 250.) The transfer of a cashier's check for "remittances" to payees where it is desirable to use the credit of the maker in making payment is as truly a completed purchase and sale as the transfer for similar use of a draft drawn by the maker upon a correspondent bank. (Montana-Wyoming Assn. v.Commercial Bk., 80 Montana 174, 177; Powell B. L. Assn. v.Larabie Bros., 100 Montana 183, 194, 202.)
Until title to the instrument is transferred to the payee the "remitter" or "purchaser" remains its owner and in some circumstances may sue upon the instrument as if named as payee. No case has been found where such a person has been permitted to rescind the transaction and recover the purchase price on the ground of supervening impossibility in making presentment to the drawee in accordance with the terms of the instrument. (See Underhill Moore, The Right of a Remitter of a Bill or Note, 20 Columbia L.R., 749; Beutel, Rights of Remitters and Other Owners not within the Tenor of Negotiable Instruments, 12 Minn. L.R. 584.) The plaintiff having paid to the defendant the stipulated consideration for an instrument through which it could use the credit standing of the defendant in Manila in making a payment there, received and accepted *Page 263 the instrument, delivered to it, and became its owner. It cannot rescind the transfer to it because it is impossible to use it now for the purpose for which it was acquired.
The judgment of the Appellate Division should be reversed and that of the Special Term affirmed, with costs in this court and in the Appellate Division.