Baring v. Clark

Putnam J.

delivered the opinion of the Court. It is very clear, that the plaintiffs cannot recover on the special counts. The party who pays a bill for the honor of the drawer, must pay supra protest. There must be proof of presentation to the drawee, non-acceptance or non-payment by him, and notice to the drawer. But no such evidence exists in this case.

We have decided the cause upon the general count for money had and received.

And the right of the plaintiff to recover depends essentially upon the true intent and meaning of the letter of credit of T. W. Ward, the attorney of the plaintiffs, to the defendant, dated December 6th, 1833. The plaintiffs contend, that this was a close, limited or conditional credit, and that the money, which the defendant received upon or in virtue of the same, not having been applied to the purchase of a cargo for the account of the Messrs. Flint, and consigned to the order of the plaintiffs, but on the contrary, having been applied to the general credit of Messrs. Flint, in violation of the agreement, the plaintiffs have a right to recover back the money which the defendant received upon the sale of his bills of exchange upon them.

*225This is one of the most common mercantile negotiations ; and we can hardly conceive that any difference of opinion can exist as to its true construction. It is, we think, manifest, that the credit which was given for the accommodation of Messrs. Flint, was, upon strict terms, that the money to be raised by the plaintiffs’ acceptances, should be invested by the defendant, (who as to that matter was the agent of the plaintiffs as well as of Messrs. Flint,) in a cargo which should be shipped to the order of the plaintiffs. The plaintiffs did not intend to give an open credit to Messrs. Flint, or to the defendant. They gave no authority to Messrs. Flint, to draw upon the plaintiffs. They engaged to accept bills to be drawn by the defendant, for the purposes set forth in the letter of credit, and not otherwise.

But the defendant has violated the agreement, and he contends that, inasmuch as Messrs. Flint have failed and become bankrupts, he has a right to appropriate the money by giving Messrs. Flint credit for it, to the end that it shall be distributed among their creditors in the settlement of their insolvent estate. A mere statement of the case seems to us to present a strong refutation of the claim of the defendant.

It is contended for the defendant, that he had a right to credit the money to the account of Messrs. Flint, that it was received upon their account, and that it was his duty to credit their account for the same. This may be admitted to be true in some sense. It should have been credited to the particular account of this adventure, and not to their general account, so as to give them an unlimited control over the money, and enable them to take it to pay their old debts, instead of investing it in a cargo to be consigned to the order of the plaintiffs. The defendant should have inserted the letter of credit in his books ; and the money received and the investments made according to its provisions, should have been referred by some appropriate title to that contract. But it is very clear, that the defendant had no right to pay over the money to Messrs. Flint, or, which would be the same thing so far as relates to the plaintiffs, to give the Flints a credit in their general account with the defendant. Such a disposition of the money would be a misappropriation of it ; and upon proof of such misap*226propriation, an action would lie for the plaintiffs to recover it back, without any special demand. And such misappropriation is sufficiently proved by the evidence in the case, particularly by the deposition of Fesser, and the confessions of Norman, the accredited agent of the defendant.

It has been contended, however, that the deposition of Fesser was not competent to show the confessions of Norman, the defendant’s agent. It is said for the defendant, that Norman, himself, might be called as a witness, and that his declarations could not be given in evidence against the defendant. The relative situation of the parties should be stated in order to the right understanding and determining of these objections. The plaintiffs are bankers and commission merchants of London, having Ward their accredited agent and attorney in Boston. The defendant was a commission merchant, at Havana, having an accredited agent there, (while he, the defendant, was absent,) whose confessions were attempted to be proved by the evidence of Fesser. Fesser was at Havana, and, on behalf of the plaintiffs, inquired of Norman whether he would apply the proceeds which he acknowledged to have received, of the drafts on the plaintiffs, according to the terms of the letter of credit, so as to cover the claim of the plaintiffs ; which Norman refused to do, for the reason that Messrs. Flint had failed, and that the defendant (as Norman said) had given credit to them for the money received upon the drafts. It is proved that Ward approved of the conduct of Fesser, after he was made acquainted with it, and thanked him for what he had done. So the acts and doings of Fesser are good by adoption. And the plaintiffs were under no necessity to put Norman upon the stand as a witness ; for he was acting and speaking for the defendant under and within the general scope of his authority ; and his confessions and declarations were to be taken as if they had been made by the defendant himself. The drafts which the plaintiffs produce, were drawn by Norman, by procuration of the defendant ; and he sold the bills at an advance, and received the money for the same, as appears by his letter of advice in February 1834. The facts before stated are thus legally proved.

There is one other objection which has been raised, though *227not much relied upon, which it is proper to notice. It was contended for the defendant, that the plaintiffs do not prove that they have paid the bills, that the presumption is, that the acceptor pays from the funds of the drawer in his hands. Now if such be the presumption of the law, it is rebutted by the evidence in the case ; for Norman, the agent of the defendant, acknowledges in his letter of advice, that the bills were drawn against the letter of credit. But the proof is, that these bills have been put in circulation, that the defendant has received the proceeds of them. The possession of them by the plaintiffs is surely prima facie evidence that they have paid the contents. We think this objection, in the absence of any evidence to rebut the presumption of payment, from the plaintiffs’ being in possession of a bill which has been in circulation, cannot prevail.

The plaintiffs’ right of action accrued at the time when the defendant misapplied the money received for the plaintiffs’ acceptances. The plaintiffs became liable to pay any boná fide holder the amount of the bills drawn by the defendant. The money was received for a particular purpose, but applied to another wrongfully. The plaintiffs furnished the money, or the means of raising it, to the defendant; and their right to recover it back was perfect, when thé defendant declared his intent to Fesser, not to apply it according to the terms of the letter of credit, but to give credit for the same to the account of Messrs. Flint.

We are all of opinion, that the plaintiffs are entitled to recover on the general count for money had and received ; and that the damages should be the amount which the defendant received for the bills in February 1834, including the principal and the premium of exchange, with interest from the time when the defendant misappropriated the funds by crediting the same to the account of Messrs. Flint.