Beal & Co. v. Stevens

44 N.W. 212, 79 Iowa 28, 1890 Iowa Sup. LEXIS 6

• Court: Supreme Court of Iowa
• Decided: January 22, 1890
• Status: Published

Opinion

Granger, J.

The defendant was evidently made payee of the draft in question, because the note was made payable at the bank of which he was then a proprietor. After the making of the note, but without knowledge to the makers, he had dissolved his connections with the bank, and was not at the bank when the draft was left there, and was under no obligation to assume any duties in reference to it. He did, however, indorse the draft, to enable the bank to convert it into money, and assumed control of the money. Under such circumstances, he could do one of two things: First, apply the money in payment of the note; or, second, return it to the person whom he had a legal duty to believe owned it. This proposition will hardly be questioned. The money was not applied in payment of the note, and was paid to Hunter; and the query is thus presented, had he a legal right to believe Hunter was the owner of the draft? Appellant attaches much importance to the fact that the draft was drawn by plaintiff to defendant, and that Hunter was not a party to it, in the sense of his name being on the paper. Hunter’s only connection with the draft is the fact that he was the custodian for its delivery to defendant. He was also a co-obligor for the payment of the note. His co-obligor was not the plaintiff company, but a member of it, — L. G. Beal. The draft is in these words:

“$S8. L. G. Beal & Bros., Dealers in Grain and Live-Stock:

“Pay to the order of Chauncey Stevens eighty-eight dollars. N. S. Beal & Co.

“Per L. G. Beal.

“To L. Everingham & Co., Chicago, III.”

Prom these facts, what was there to indicate to defendant that L. G. Beal owned or sent the draft to him? His name is there only as having acted for the firm in its issuance, just as it might have appeared if Hunter had bought and paid for the draft. It may aid our reasoning if we slightly change the facts. Suppose Hunter had' obtained the draft from a bank entirely disconnected from the note transaction, and, in so doing, had caused the name of the defendant to be inserted as payee, and had himself delivered it, as in this case, for the payment of the note of which he is a joint maker. Who would defendant have a legal right to assume owned the draft ? There seems hardly room for a difference of opinion. He certainly might assume that the parties making the draft had received pay for it. Such is the usual course of business. In what respect do the facts of this case differ? Only to the extent that L. G. Beal, who is a joint maker of the note, and a surety, is a member of the firm who issued the draft. There’ is nothing to indicate that L. G. Beal sent the draft, or had any interest therein other than as a member of the firm that drew it and was responsible for its payment. Hunter had the custody of a draft drawn by the firm not a maker of the note, and was seeking to apply it for the discharge of a debt, for which he was primarily liable. The defendant knew of this primary liability; and, in view of the facts, was he not better justified in the belief that Hunter procured the draft to ■ pay his debt than that he held it for Beal, whose obligation was secondary? We think so, and that he violated no trust in paying the money to Hunter.

Affirmed.