Kauffman v. PNB, GR No. 16454 September 29, 1921 [Case Digest]

 

Kauffman v. PNB,

GR No. 16454 September 29, 1921

 

Facts:

            George A. Kauffman, was the president of a domestic corporation engaged chiefly in the exportation of hemp from the Philippine Islands and known as the Philippine Fiber and Produce Company (PFPC). On February 5, 1918, the board of directors of said company, declared a dividend of P100, 000.00 from its surplus earnings for the year 1917, of which the plaintiff was entitled to the sum of P98, 000.

George B. Wicks, treasurer of the Philippine Fiber and Produce Company, presented himself in the exchange department of the Philippine National Bank in Manila and requested that a telegraphic transfer of $45,000 should be made to the plaintiff in New York City, upon account of the PFPC. Accordingly, Wicks, as treasurer of the PFPC, thereupon drew and delivered a check for that amount on the PNB; and the same was accepted by the officer selling the exchange in payment of the transfer in question. As evidence of this transaction a document was made out and delivered to Wicks, which is referred to by the bank's assistant cashier as its official receipt. As evidence of this transaction a document was made out and delivered to Wicks, which is referred to by the bank's assistant cashier as its official receipt. This memorandum receipt is in the following language:

October 9th, 1918.

CABLE TRANSFER BOUGHT FROM
            PHILIPPINE NATIONAL BANK,
           Manila, P.I.                       Stamp P18

Foreign             Amount                 Rate
$45,000.            3/8 %             P90,337.50

Payable through Philippine National Bank, New York. To G. A. Kauffman, New York. Total P90,355.50. Account of Philippine Fiber and Produce Company. Sold to Messrs. Philippine Fiber and Produce Company, Manila.

(Sgd.) Y LERMA, Manager, Foreign Department.

Upon receiving the telegraphic message, the bank's representative in New York sent a cable message in reply suggesting the advisability of withholding this money from Kauffman, in view of his reluctance to accept certain bills of the Philippine Fiber and Produce Company. The PNB acquiesced in this and on October 11 dispatched to its New York agency another message to withhold the Kauffman payment as suggested.

Meanwhile Wicks, the treasurer of the PFPC, cabled to Kauffman in New York, advising him that $45,000 had been placed to his credit in the New York agency of the PNB; and in response to this advice Kauffman presented himself at the office of the PNB in New York City on October 15, 1918, and demanded the money. By this time, however, the message from the PNB of October 11, directing the withholding of payment had been received in New York, and payment was therefore refused.

In view of these facts, the plaintiff Kauffman instituted the present action in the Court of First Instance of the city of Manila to recover said sum, with interest and costs; and judgment having been there entered favorably to the plaintiff, the defendant appealed. PNB argued that Kauffman was not a party to the contract with the bank for the transmission of this credit, no right of action can be vested in him for the breach thereof.

 

Issue:

            Whether or not Kauffman is a party to the contract with the bank for the transmission of the said credit.

 

Held:

            Yes.

 

Ratio:

            The provisions of the Negotiable Instruments Law can come into operation there must be a document in existence of the character described in section 1 of the Law; and no rights properly speaking arise in respect to said instrument until it is delivered. In the case before us there was an order, it is true, transmitted by the defendant bank to its New York branch, for the payment of a specified sum of money to George A. Kauffman. But this order was not made payable "to order or "to bearer," as required in subsection (d) of that Act; and inasmuch as it never left the possession of the bank, or its representative in New York City, there was no delivery in the sense intended in section 16 of the same Law. In this connection it is unnecessary to point out that the official receipt delivered by the bank to the purchaser of the telegraphic order, and already set out above, cannot itself be viewed in the light of a negotiable instrument, although it affords complete proof of the obligation actually assumed by the bank.

            The right of the plaintiff to maintain the present action is clear enough; for it is undeniable that the bank's promise to cause a definite sum of money to be paid to the plaintiff in New York City is a stipulation in his favor within the meaning of Art. 1257, par. 2, Civ. Code [Should the contract contain any stipulation in favor of a third person, he may demand its fulfillment, provided he has given notice of his acceptance to the person bound before the stipulation has been revoked. (Art. 1257, par. 2, Civ. Code.)]; and the circumstances under which that promise was given disclose an evident intention on the part of the contracting parties that the plaintiff should have the money upon demand in New York City. The recognition of this unqualified right in the plaintiff to receive the money implies in our opinion the right in him to maintain an action to recover it; and indeed if the provision in question were not applicable to the facts now before us, it would be difficult to conceive of a case arising under it.