Phelps v. Borland

The action was brought to recover the amount of a bill of exchange drawn by the -defendant, resident in the city of New York, upon Samuel Johnston & Co., of Liverpool, for the sum of £1,500, and made payable in London.

The bill was protested for non-acceptance, and upon trial of the *364action the defendant was held liable as ¿he drawer. It was in the following form:

New York, June 6, 1879.

Sixty days after sight of this first of exchange (second and third of same tenor and date being unpaid)- pay to my order the sum of fifteen hundred pounds sterling, value received, and charge to account as advised.

R. B. BORLAND.

To Messrs. Samuel Johnston & Co., Liverpool:

No. 406. Payable in London.

Indorsed : R. B. Borland.

Margin. Advice of draft.

T© Messrs. Sam’l Johnston & Co., Lvoerpool:

No. of draft 406; date, June 6, ’79; amount, £1,500; against shipts. per sch. N. Hand, Balt, to Pern’o.

Please protect the draft as advised above and oblige drawer.

R. B. BORLAND.

New York, Jwne 6, 1879.

The defendant gave evidence showing that he acted in the transaction out of which the bill originated as the agent of the drawees, and tending to show that notice of that fact was given to the plaintiffs before they received it. But the court declined to submit the point to the jury whether the defendant was or was not the agent of the drawees and, in that capacity only, a party to the bill. This ruling was legal and proper, for the fact was not shown upon the face of the instrument or by the signature of the defendant thát he intended only to become a party to the bills in his capacity of agent. While he was in fact the agent of the drawees in the transaction of their business, it was still competent for him to make himself a party to this paper in such a manner as to become personally bound for the payment of the debt. And by omitting to subscribe it as the agent of. the drawee, or in any other manner to state in it that he intended only to contract in that capacity, he did bind himself personally for the payment oí the bill The law upon this subject-has been stated to be “that bills and notes and writings under seal, signed by an agent in his own name, bind him exclusively ” (Whart. on Agency, § 504); “ and that an agent’s contract in order to bind *365the principal must be in the principal’s name, is a conclusion which results from the nature of the transaction itself.” (Id., § 280.) This rule was deemed to be the settled law and was so stated by Parsons (vol. 1) on Bills and Notes, 92, where it was declared that “ if the agent sign the note with his own name alone, and there is nothing on the face of the note to show that he acted as agent, he will be personally liable on the note and the principal will not be liable. And although it could be proved that the agency was disclosed to the payee when the note was made, and that it was the understanding of all the parties that the principal and not the agent should be held, this will not generally be sufficient either to discharge the agent or to render the principal liable on the note.”

In a more general form the same point was considered in Babbett v. Young (51 N. Y., 238), and it was held that parol.proof was not admissible to show that a person who. had become a party to a contract by subscribing it with his own name, to prove that he acted in doing so only as the agent of another person. And the case of Auburn City Bank v. Leonard (40 Barb., 119), afterwards affirmed by the Court of Appeals, is to the same effect. Under the circumstances of this case the court very properly, therefore, refused to submit the point of the defendant’s agency to the jury.

Evidence was given upon the trial, under a supplemental answer, setting up the defense upon which it was assumed that the drawees of the bill had.been discharged as bankrupts by á compromise with their creditors under the bankrupt laws of England. This defense was rather obscurely presented in the case. But assuming it to have been made out that such a discharge had been obtained by the principal debtor, still the defendant in the case could not on that account be relieved from his liability.

The rule upon that subject is that the creditor “ may prove his debt in bankruptcy without surrendering the security of the third person which he holds; and may, notwithstanding such proof, proceed to enforce his security against such third person, provided, however, he does not take under the bankruptcy and the security more than the full amount of his debt.” (Matter of Babcock, 3 Story, 393, 400; Blanchard v. Russell, 13 Mass., 1; Phillips v. Salomon, 42 Ga., 192; Claflin v. Cogan, 48 N. H., 411.) The drawees were discharged from liability upon the paper by no act of the plaintiffs, *366but by a proceeding instituted and carried on by themselves under the authority of the law of their domicil, and for the consequences of their act the plaintiffs can in no legal sense be held to be responsible. In this respect the case is distinguishable from Brown v. Williams (4 Wend., 360); Farmers’ Bank v. Blair (44 Barb., 641); Newcomb v. Raynor (21 Wend., 108); Deck v. Works (18 Hun, 266); and Vose v. Florida Railroad Company (50 N. Y., 369), where the party sustaining the relation of surety to the paper was relieved because of the act of the creditor himself. The extinguishment of the drawee’s liability was from no fault o.f the plaintiffs, and it was a contingency against which the defendant himself had contracted by becoming a party, as he did, to the bill. Upon the facts, as they are made to appear under the most favorable construction which could be given to them for the defendant, he was liable for the payment of the debt. The verdict was properly directed against him and his motion for a new trial should be denied, with costs.

Motion for new trial denied, with costs.