Planter's Bank v. Richardson

By the Court.

Starnes, J.,

delivering the opinion,

[1,] By the plea of the defendant in the Court below, it iyaé: insisted, that the plaintiff had taken, as collateral -security for the draft, which had been discounted by its agent, and oh which -this suit was brought, a lot of cotton which had been purchased by the defendant, in the city of Macon, where this'né-’ gotiation took place, and was tob'e shipped to Savannah. That by virtue of the agreement made at the time, the' railroad receipts for the cotton, wore to be delivered to plaintiff, who was to take charge of the cotton, so far as to see that its proceeds, when it w-as sold in Savannah, were applied specially to the payment of this draft. That, if the cotton had been sold, tho proceeds misapplied, and the draft had not been paid, it was not the fault of the defendant; and he was not now liable for the payment of this draft.

It was urged for the plaintiff, that the cotton was not taken on the terms, and upon the conditions stated by the defendant, but that the same was consigned to Godfrey, Ousley & Co., of Savannah; and the receipts taken and held by the plaintiff, for the purpose of ensuring the acceptance of the draft, by these persons.

. Such was the issue, to which testimony was hoard, and which Was determined by the verdict in this case.

We deem it unnecessary to decide, whether or not parol proof of an agreement, between the defendant and the plaintiff’s agent, that the cotton was to be taken by the . plaintiff, and held as collateral security, and its sale looked after, and its proceeds specially applied, by the plaintiff, to this draft, would alter and vary the written evidence of the contract, as it appears in the draft itself. We are not entirely agreed on this point; and, as there is another ground upon which it becomes necessary to send this case back to the Jury, we prefer to dispose of the case on that ground only.

Speaking for myself alone, I fool very well satisfied, that such testimony would be utterly inconsistent with the legal effect of the contract, as manifested by this draft, in tho light of the law merchant, and of customary commerce. To me, it seems plain, that this was a shipment of cotton to the consignees, Godfrey, Ousley & Co., (the draft specifies that it was to their care,) who were to accept the bill, to receive and dis.pose of the cotton, and see that its proceeds were applied to the payment of that bill; and that the bank took the cotton receipts, as a guarantee or security for the acceptance.

It is a common transaction among merchants and banks.— The consignee accepts, on the strength, and in consideration of the shipment to hirm—the bank discounts, on the strength, and in consideration of the acceptance—taking charge of the receipts for the goods shipped, meantime, in order that it may have protection until it gets the acceptance. It would be a very inexpedient and unwise method of doing business, for any respectable bank to receive cotton as a security, upon paper discounted, so as to make itself responsible, 'to follow up the cotton, attend to its sales, and so go into the cotton market, as a part of its banking operations.

Such, in my opinion, is not the character of the transaction we are considering, and so, I think, the draft itself shows.

As I have said,- however, we are not, as a Court, agreed, that the parol evidence which was offered to sustain the plea, contradicts or varies the terms of the draft. We accordingly assume, that the Jury had the right to ■ consider this testimony, and to determine accordingly.

But we think that this testimony wTas not fairly .submitted to the Jury by the Court. It should have been left to that Jury to determine, from the evidence, whether or not, according to the contract, the hank was responsible, after it had taken the receipts, holding the same as collateral security, with the un, derstanding that it or its agents, were to see to its sales, and the application of its proceeds; or whether, simply, it took the receipts as security for the acceptance. This was not properly done, we think; because, when requested to charge that the draft could not be altered by parol proof, his Honor instructed the Jury that “ this law did not apply to this case, and that it was competent for defendant to prove that there was an agreement with the bank to take the railroad receipts for the cotton, for its security, in addition to the draft” ; (if the Court had stopped here, admitting, as we do, for this case, that the parol proof did not alter or vary the draft, no well-founded complaint could be made; but the Court added): “and if it did require the receipts, it is responsible for the cotton to the defendant; and this fact may be given in evidence, in discharge of the draft”. It is plain that such a charge did not draw the attention of the Jury to the' issue, nor leave it to them to decide whether or not, in taking these receipts, the bank took the security of the cotton, or only security for the acceptance; but asserted, in such terms as seemed to close the avenues to this inquiry, that “ if the bank did require the receipts, it became responsible for the .cotton”. .

.. Whether the Court below designed to be so understood or not, such is the effect of the decision, as it reaches us; and we reverse .the judgment.