U.S. Supreme Court INGRAHAM v. GIBBS, 2 U.S. 134 (1791)
2 U.S. 134 (Dall.)
Gibbs, et. al.
Supreme Court of Pennsylvania
September Term, 1791
This was an action brought on two Bills of Exchange; and upon the trial the following facts appeared:-The defendants were the consignees of Cornelius Schenkhouse of Amsterdam, who had sent a considerable quantity of goods to them, to be sold on his own risque and account, with orders 'to remit the proceeds in good bills of exchange, or in merchandize, as they should think best.' The consignment being sold, and the defendants having remittances to make on account of other agencies, purchased a bill from Basse & Soyer, (a commercial house of Philadelphia, at that time in perfect credit) drawn on Van Breinien & Sons of Amsterdam, for 7,500 guilders, which they transmitted to R. H. Portener, their correspondent at that place, and appropriated the amount in the following manner:
To Portener, 2190 16
Wondenburg, 510 10
Schenkhouse, 1544 10
being the balance,
At the same time the defendants transmitted to each of their correspondents, separate sets of bills drawn on Portener, for the sums respectively due to them, to be accepted and paid when Basse & Soyer's bill was paid. That bill, however, which still remains in the hands of Portener, was protested for non-acceptance and non-payment; and, of course, the other bills, that depended on it, shared the same fate. Schenkhouse then returned the first bill of his set and the protest for non-payment to the defendants, desiring them to give him credit for the amount, and to make a remittance on account of the goods sold; but this the defendants refused, because they alledged that Basse & Soyer's bill had been bona fide purchased by them, as authorized factors for Schenkhouse and others; and that those interested in the bill must suffer the damages, resulting from its non-payment, according to their respective proportions. Upon this, Schenkhouse indorsed and sent the second bill of his set, together with a protest for non-acceptance upon the second bill, to the plaintiff, who, it was admitted, was the agent of Schenkhouse, and that the indorsement was made merely for the purpose of bringing this action. Another action was, likewise, depending against the defendants in the name of Schenkhouse, to recover the balance due on the consignment account.
After a defence on the merits, Dallas, for the defendant, stated, that the present action was not maintainable in point of law; and moved for a non-suit, on this ground, that the first bill and protest for non- payment being returned to the defendants, the second bill could not afterwards be negociated. He contended, that, abstracted from the question by whom the loss should be borne, it was sufficient to destroy all remedy on the bill itself, that Schenkhouse had refused to accept it in payment; denied credit for the amount; and expressly resorted to the original account for the goods. Besides, it will admit of some doubt, whether an action can be maintained on a protest for non-acceptance. Esp. 47. Marius 64. 73. 1 H. Black. Rep. 89.
Ingersoll and Coxe replied to the motion for a non-suit, that no authority could be shewn to prove that a second bill may not be negociated, though the first has been delivered up. In this case the bill was only sent to the defendants, as it might have been to any other person, with a desire that credit might be given for it; but if the credit was not given, the bill ought to have been returned to Schenkhouse; and the drawer's wrongfully withholding it can never be allowed to destroy its obligation. As to the doubt, whether the action is maintainable on a protest for non- acceptance, Doug. 55 will effectually remove it; and we do not claim damages under the act of Assembly (1 vol. Dall. Edit. p. 23) but only the principal and interest.
By the Court: The objection is, in our opinion, fatal to the action. The act of Schenkhouse, in re-delivering the bill to the drawer, and desiring a remittance for the goods, must operate as a legal extinguishment of the bill. It was sent by the defendants as payment; Schenkhouse refused to receive it in that light; and, accordingly, returned it to the drawer. From that moment the bill was, in effect, cancelled; and Schenkhouse could not afterwards negociate the second bill, so as to subject the defendants to an action upon it. The remedy of the real plaintiff, must, therefore, be founded on the original contract; and as we understand that an action in that form is now depending, the principal point of the controversy may be decided in that, without any expence or inconvenience.
On this opinion the plaintiff suffered a non-suit.* Footnotes
[ Footnote * ] Schenkhouse v. Gibbs, et al. The action referred to in the Report, was afterwards tried in January Term 1794, before the Judges of the Supreme Court; and the only question agitated was, whether the defendants were liable for the amount of the bill remitted to the plaintiff, under the circumstances above stated?
Coxe and Ingersoll insisted, that the defendants, by mingling the interest of Schenkhouse with the interest of others, so as to deprive him of the possession and immediate remedy on Basse & Soyer's bill, had rendered themselves liable for the loss, that had happened, notwithstanding the general authority given to them, to make remittances in good bills of exchange. 1 Alk. 172. 234. Bull. N.P. 42. 3. Cowp. 480. 227. 8. 10. Mod. 109.
Rawle and Dallas contended, that the defendants had acted bona fide, within the spirit of their authority; and had done for Schenkhouse precisely as they did for themselves. Nothing more ought to be exacted from a factor than reasonable vigilance and strict fidelity. It is usual that there should be one factor, for several merchants; and if the vendee of all their goods fail, they must bear the loss. 10 Mod. 109. Molloy 493. 494. Cowp. 479. 496. Vir. Abr. 7. Price v. Ralston ant. p. 60. Portener would always be regarded as a trustee for the parties, according to their proportions, and Schenkhouse might make him account.
The Court left the cause to the Jury, who found a Verdict for the defendants.