Fowler v. McPhee
Fowler v. McPhee
Opinion of the Court
The brevity of the testimony occasions ns some difficulty in stating the controversy. We can find enough to state the
MePhee & McGinnity were lumber dealers in Denver. McAlpine had a contract with the Maxwell Land Grant Company to cut annually a certain number of trees on the grant, paying that corporation for the timber according to the stumpage. There was no specified time within which any part of the amount other than the annual limit should be cut. McAlpine had some arrangement with MePhee & McGinnity by which they were guarantors of his performance. The agreement as to this land grant contract is not at all conclusive on the rights of the parties, though it may have had some bearing on one matter of controversy between them which was the alleged condition attached to an agreement which we shall ultimately state. After McAlpine made his arrangements with MePhee & McGinnity he went to Catskill and put up several sawmills for the production of lumber. He built these mills with his own funds, and then made an agreement with MePhee & McGinnity with reference to the sale and delivery of lumber. Exactly how much he was to deliver each month was not shown, but what was not delivered was to be stored and piled at the mills, either for seasoning purposes, or to await the demands of the market in Denver, and was to be shipped on the firm’s orders. Under this contract McAlpine cut a large amount of lumber. He was paid a specified price out of which came the freight which was settled by MePhee & McGinnity. The balance covered the stumpag’e, the expenses of operation, and McAlpine’s profit for the work. The lumber shipped during any one month was to be paid for on the 15th of the next calendar month. A good deal of lumber was cut and shipped. In the month of June, 1898, McAlpine got into some financial difficulties and owed his men considerable money. On June 19, he came to Denver to adjust the account for May, and received from MePhee & McGinnity f845.40. This covered what was due him for the May shipments. It would seem from questions put to the witness as well as from what crept out dur
The present suit was brought by Fowler & Underwood as the purchasers and holders of some of these orders by transfer from the payees. Fowler & Underwood established their copartnership, the purchase of the orders and that they were
As we view it, the court misconceived the relation of the parties and their rights under this agreement. The case has been argued here and was treated by the court below as one involving an inland bill of exchange, and since the promise to accept was prior to the creation of the bill and was coupled with a condition, the condition became one precedent and the defendants could refuse payment and prove the nonperformance in bar of a recovery. We are cited to no case which has laid down this principle and applied it to circumstances like the present, which, as the proof is, shows an agreement to accept by one who would suffer no loss by the breach of the condition. In the case of Mason v. Hunt, 1 Douglas, 296, the firm which was sued for nonacceptance proved that their agreement to accept was based on a contract to ship a certain amount of tobacco of a definite quality. A shipment of a less amount of an inferior quality followed by the acceptance would necessarily involve a loss to the firm which had agreed to take care of the bill.
Proctor v. Hartiyan, 143 Mass. 462, was the case of an order drawn by a contractor in favor of one of his creditors which was accepted with the condition that it was to be paid out of the last payment due on the contract. This was not an agreement to accept .before the bill was drawn, but was an acceptance with the condition expressed on the face of it. Manifestly, this is fairly removed from the present controversy, which was an agreement to accept a nonexisting bill on an ample consideration, and, as is ultimately decided, the plaintiffs may show, if they can, that the acceptors would suffer no loss from the enforcement of the contract. There is a wide distinction between the present case and that.
The case of Winter v. Drury, 5 N. Y. 515, is of a similar description and only holds that a draft gives the holder no lien on the funds of a creditor until he accepts it. The distinction between a bill drawn generally and one drawn in
It was long a mooted question whether there could be a valid agreement to accept a bill nonexistent when the contract was made and the drawee be held to his promise to accept. While the earlier cases in England were not in harmony, the law there, now is that the drawee may not be held to his promise to accept a nonexistent bill unless it be shown the holder took it on the faith and strength of the promise. We are not at all clear nor have we taken the trouble to find out whether even in the latter case one who promises to accept can be held on his promise. Except as an interesting phase of the question it is. profitless to discuss or determine it. The matter has been set at rest in this country, and since the case of Collidge v. Payson, 2 Wheat. *66, was decided, it has been the law of the United States that one who promises to accept a nonexisting bill may be held on his promise as may one who promises to accept a bill which has already been drawn and is referred to and described and identified in the contract. There is a wide distinction noticed in most of the cases between the liability of one who promises to accept a nonexisting bill where the holder has been informed of the promise to accept before he buys the bill, and the liability of the drawee where the promise to accept has not been communicated. When and how far, and under what circumstances in the latter event, the drawee would be bound we do not decide. The present is not that case. We shall assume Fowler & Underwood could have proven McAlpine stated to them that McPhee & McGinnity promised to accept before they bought the orders. Thse question was put to one of the firm and the court would not permit it to be answered. Presumably the answer would have shown the fact of the communication of the promise and the court erred in shutting out that testimony. If the proof should be that McPhee & McGinnity agreed to accept the orders on a sufficient consideration and this promise was communicated to Fowler & Underwood before they bought the
The rule was recognized although not directly commented on in the supreme court of this state. Hughes v. Fisher, 10 Colo. 383.
As the case now stands there would seem to be little doubt about McPhee & McGinnity’s liability. They held $845.40 of McAlpine’s money. Much lumber had been shipped in June and prior to the 19th when the promise was made. The extent of the shipments is not stated, nor can we tell in what sum the firm was indebted to McAlpine for the June lumber. They were undoubtedly indebted to him for whatever lumber had been shipped up to that date and received by them. We put this statement on the precise ground that McPhee & Mc-Ginnity took $125 of McAlpine’s money or made the charge against his account on the books, and they thereby, to the extent of the lumber then shipped, agreed that the debt had matured and was due as of that date for the antecedent shipments. It therefore follows on the 19th of June, McPhee & McGinnity were indebted to McAlpine in the sum of $845.40 plus the agreed price for the lumber shipped during that month. To’ this extent they held McAlpine’s funds which they were bound to apply to the payment of orders which he might draw, and unless they were able to show that prior to the purchase of the orders by Fowler & Underwood, or prior to the acceptance by the promisors of enough orders to exhaust the funds, the fund was exhausted, they were bound to pay the Fowler & Underwood orders. There were three considerations. First, the holding of $845.40 of McAlpine’s
All these conditions concur. McAlpine became McPhee & McGinnity’s agent to draw these drafts. McPhee & Mc-Ginnity were debtors by the terms of their promise on the 19th of June because they had matured the debt as to all lumber antecedently shipped in that month, to which sum must be added the $845.40 of Me Alpine’s money which they concededly had. Here are ample considerations, ample proof of authority to draw and facts and circumstances which are sufficient to charge them. We are therefore quite of the opinion that this account should have been opened up and proven to the jury, the jury told the law respecting it, and if they found with the plaintiffs on the proof respecting these facts there was a consideration for the promise and authority to draw.
The condition annexed to the agreement would not relieve them, even conceding its existence. What the rule would have been had McPhee & McGinnity been advancing their own money, or what the rule would have been if it was demonstrated they would suffer loss by the acceptance and payment, we do not determine. The drafts were really drawn by an authorized agent on his own funds and were a specific appropriation of these funds to the payment of the bills or orders which he drew. McPhee & McGinnity had no right to stop the payment of the checks which they had sent to pay these orders. The orders were drawn with authority and under the promise of the drawees; they had been bought
On rebuttal the plaintiffs offered to prove what passed between McPhee & McGinnity and McAlpine when the December account was rendered. This proof was first offered when the plaintiffs were making out their case. It was objected to because it was not a part of their case and was only legitimate on rebuttal. The court so ruled. The plaintiffs then waited until rebuttal when this testimony was again tendered and excluded. In this we think the court erred because McGinnity’s declarations about these orders at any time after the month of June, and especially at the time the December account was given to McAlpine which contained many items embraced in the account of June, would certainly "tend to establish the plaintiffs’ theory respecting the terms and conditions of the June contract. It tended to contradict the defendants’ testimony and was clearly admissible on that basis.
A good many other errors are assigned and questions suggested in the arguments of the appellants’ counsel, but the condition of the record admonishes us that it would be wiser not to discuss them. The record is not full enough nor the-evidence definite enough to enable us to pass on them satisfactorily or clearly. The case must be reversed for the errors which we have indicated, and we think the opinion contains enough to advise the court of the theory on which this case must be tried. If thus tried there will be no trouble in so submitting the case to the jury that it can fully determine the rights of the parties. Whether the instructions complained of were or were not correct is not important because when the case is presentee! on a different hypothesis other instructions will be requisite and proper, and the principles we have expressed will enable the court to determine what ought and what ought not to be given.
For these errors which we deem material this cause must be reversed and sent back for a new trial.
Reversed.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.