Waugh v. . Seaboard Bank

It is undisputed that the plaintiffs purchased and paid for "regular" oil, that is, oil free from charge for storage. The situation of the several parties when the transaction with the bank occurred was this: The plaintiffs desired to pay for and get delivery of the oil, and to procure the funds with which to make the payment. The firm of Hilton Waugh had failed, or were about to fail, and desired to secure the oil to deliver on their contract. The bank held a large quantity of oil belonging to Hilton Waugh as security for loans to that firm. The bank, at the request of Hilton Waugh, consented to transfer forty-three thousand barrels of the oil in its hands to the plaintiffs to answer their contract of sale, on receiving from the plaintiffs the purchase-price. The bank, at the same time, to put the plaintiffs in funds, agreed to loan them $28,917.24, which, with $5,000 which they agreed to deposit with the bank, would constitute a fund equal to the full purchase-price of the forty-three thousand barrels. The arrangement was consummated in this way. The bank transferred to the plaintiffs, on their books, oil certificates representing forty-three thousand barrels, and loaned the plaintiffs the sum of $28,917.24, holding the certificates so transferred as security for the loan. The plaintiffs deposited with the bank the proceeds of the loan and the additional sum of $5,000, and drew against the deposit the sum of $33,917.24, that being the full purchase-price of the oil, and the check was received by the bank and passed to the credit of Hilton Waugh as payment pro tanto of their debt to the bank.

The question whether the bank, as a part of the arrangement, agreed that the oil to be transferred to the plaintiffs, should be free oil, that is, oil upon which all storage charges shall be paid to the time of the transfer, was sharply litigated on the trial. There was, we think, ample evidence to support the affirmative of this contention. Under the rules of the Petroleum Exchange only such oil was a good delivery upon the contract between the plaintiffs and Hilton Waugh. The bank acted as a clearing-house for the exchange, and was familiar with its rules. There can be no question that the plaintiffs understood that they were to receive a transfer from the bank of "regular" oil. The bank accepted from the plaintiffs the purchase-price of free oil and applied it on its debt against Hilton Waugh. It is clear that the bank understood the nature of the contract between the plaintiffs and Hilton Waugh, and it is contrary to every reasonable intendment that the plaintiffs would have paid for "regular" oil and have accepted oil subject to storage charges of $2,924.35, or that the bank, when it agreed to transfer oil to the plaintiffs on receiving the price of "regular" oil, contemplated at that time a transfer of oil incumbered by storage charges.

It is not pretended that the plaintiffs had knowledge of the particular certificates held by the bank, or the charges for storage against the oil. The question of law presented on this record turns upon the construction of the findings of the referee. It is claimed, on the part of the plaintiffs, that the referee found that the bank undertook and agreed with the plaintiffs to transfer oil free from charges. It is insisted, on the part of the defendant, that the referee put his judgment against the bank on a custom of the trade which the defendant insists was not binding upon the bank, and does not control the transaction in question. The referee found in his fifth finding that Hilton Waugh became obligated by the contract to deliver to the plaintiffs, forty-three thousand barrels of petroleum oil, "represented by certificates known as United Pipe Line certificates, with storage charges thereon paid to the date of such delivery." In the seventh finding he finds that the bank, having certificates representing one hundred and fifty thousand to two hundred thousand barrels of oil pledged to it by Hilton Waugh as security for loans, at the request of the said firm and of the plaintiffs, "undertook and agreed to transfer and deliver to the plaintiffs' firm the certificates so hypothecated with it, or in certificates into which the certificates so hypothecated had been converted, certificates to the amount of, or representing such forty-three thousand barrels of oil, which, under the custom, necessarily would be United Pipe Line certificates, and have storage charges paid to the date of delivery." Reading the two findings together they import that the bank agreed to transfer such oil as Hilton Waugh had obligated themselves to deliver, viz., oil with storage charges paid to date of delivery. The clause commencing, "which under the custom," etc., at the conclusion of the seventh finding, may fairly be construed as meaning that the custom was also in conformity with the agreement, and that the bank was bound by the custom of the trade. The prevailing party is entitled to the most favorable construction of the findings of a referee to uphold the judgment (Hill v. Grant, 46 N.Y. 496.) The circumstances point to such an agreement by the bank as is claimed by the plaintiffs. The justice of the case seems to be on their side of the controversy.

The referee intended, we think, to find that there was an express agreement by the bank to transfer "regular" oil. The General Term reversed the judgment on what appears to us to have been a misconstruction of the referee's report.

We think no error was committed on the trial and the order of the General Term should, therefore, be reversed and the judgment on the report of the referee affirmed.

All concur, except GRAY, J., not voting.

Order reversed and judgment affirmed.