Credit Company v. Howe Machine Co. drafts, the defendant had the right to pay the indebtedness by the acceptance and payment of the drafts, no matter to what purpose the proceeds might be applied. It is further said that the plaintiff, when it discounted these drafts for A. B. Stockwell at his request, did not know that Stockwell had no funds in the hands of the defendant, and had therefore the right to assume from the act of Stockwell in presenting the drafts for discount, that he had funds in the hands of the defendant sufficient for the payment of the drafts, which presumption was enough to constitute the plaintiff a bona fide holder of the drafts for value, although Stockwell at the time was owing the defendant a large amount. I concede that the claims of the plaintiff would be sound if the facts of the case admitted of them. It will be observed that A. B. Stockwell, when he presented the drafts to the plaintiff for discount, made no declaration, in fact, that he had funds in the hands of the defendant on which they were drawn. I fully concede that if the drawer of a draft presents it to a party for discount, an implication arises that the draft is drawn on funds of the drawer in the hands of the drawee, if nothing whatever is said by the drawer on the subject, and the party to whom the draft is so presented knows nothing to the contrary. And I further concede that such presumption, in such circumstances, would be sufficient to make such party a bona fide holder of the draft for value, should he discount the paper. But this is only a presumption of law, which must give way to express declarations to the contrary, made by the drawer at the time he presents the draft for discount. The majority of the court treat this presumption of law, in the present case, as equivalent to a positive declaration of Stockwell that he had funds in the hands of the defendant sufficient to pay the drafts, to the truth of which he pledged his honor and credit as a business man. I cannot so regard the matter in the case we have here on paper to determine. Let the finding of the committee decide the matter. The committee finds on this point as follows:-' In the Credit Company v. Howe Machine Co. spring of 1874 A. B. Stockwell went to London, England. He presented letters of introduction to J. Hume Webster, the managing director of the Credit Company (Limited), and at the same time represented that he was president of the Howe Machine Company; that he was the principal stockholder; that he had the right to pledge the credit of the company, and was their representative in Europe, and that the business was very profitable. The Credit Company, relying on these representations made to its managing director, had the following business transactions with said Stockwell and said Howe Machine Company, the defendant.” Then follows a description of the drafts that were afterwards drawn by A. B. Stockwell on the defendant and discounted by the plaintiff, and among them are the drafts under consideration. Here it appears that Stockwell, on his arrival in London in 1874, applied to the plaintiff's managing director for a line of discounts by the plaintiff, of drafts to be drawn by him on the defendant, from time to time. In order to induce Mr. Webster, acting for the plaintiff, to make the discounts, he represents that he himself is a person of large property, being the principal stockholder of the defendant company; that the defendant was a rich corporation, doing a very prosperous business; that he had the authority to pledge its credit, and was its representative in Europe. And it is to be presumed that he stated all that could be said to induce Mr. Webster, acting for the plaintiff, to make the discounts, and Mr. Webster must so have understood it. If the drafts were to be drawn on funds of Stockwell, would he not have so stated, when he was making a statement of his case? It seems that the representations which were made had the desired effect, for the committee finds that the drafts under consideration, as well as all the others, were discounted by the plaintiff relying upon these representations; that is, were made upon the faith of them and in consequence of them. The plaintiff relied upon the ability of Stockwell to render the defendant liable to pay these drafts, Credit Company v. Howe Machine Co. the proceeds of which, the plaintiff knew, were to be used by Stockwell in stock speculations; which could not be the case without the drafts being accommodation drafts, as they were in fact. How then can it be said that the plaintiff, in discounting the drafts, was induced to do so by the presumption of law that they were drawn by Stockwell upon funds of his in the hands of the defendant? The acts and declarations of Stockwell were equivalent to an express declaration that he pledged the credit of the defendant to accept and pay the drafts at maturity as accommodation paper of his, the plaintiff knowing that the proceeds were to be used by him in stock speculations. Suppose that the drafts in question were the first that were discounted by the plaintiff for Stockwell, and that when Stockwell asked Mr. Webster for the plaintiff's discount, the following conversation on the subject had occurred. Mr. Webster inquires: "What do you propose to do with the proceeds of the drafts?" To which Mr. Stockwell replies: "I intend to use them in my stock speculations here in London." To this Mr. Webster rejoins: "I see by the charter of the drawee that it is limited to such use of mercantile paper as may be necessary in the prosecution of its business. What security have we that the drafts will be paid?" To this Mr. Stockwell replies: "I am president of the company; I am its principal stockholder; I am its representative in Europe; I have authority to pledge the credit of the company to the payment of the drafts." Mr. Webster, not satisfied with this, says: "I see by the by-laws of the company that none of its officers have authority to pledge the company's credit. How is this?" Mr. Stockwell answers: "But I have authority notwithstanding." Mr. Webster then says: "Relying upon your declarations, that you are the president of the company on whom the drafts are drawn, that you are its principal stockholder, that you are its representative in Europe, that you have authority to pledge the credit of the company to pay these drafts, we will discount them." If such dialogue had occurred, and the case finds that it Webster & Co. v. Howe Machine Co. did so substantially, could it be said that a presumption of law existed in the case in favor of the plaintiff, that the drafts were drawn on funds of Stockwell in the hands of the defendant, and could Webster have supposed that the drafts were drawn on the funds of Stockwell? I think not. I think the declarations of Stockwell gave Webster clearly to understand that the drafts were accommodation paper, and that consequently the plaintiff was not a bona fide holder of them. I think judgment should be rendered for the defendant. HUME WEBSTER AND COMPANY vs. THE HOWE MACHINE COMPANY. Fairfield County, March T., 1886. PARK, C. J., Carpenter, ParDEE LOOMIS and GRANGER, Js. The defendant was a manufacturing corporation of this state, having its principal office in the city of New York. S, in London, England, made a draft on the company, which was accepted for the company by the treasurer, payable at its office in New York. The draft was discounted by the plaintiffs, and the proceeds applied to an existing indebtedness of the drawer to them, they not discharging the debt, or relinquishing anything of value. S had at the time no funds in the drawer's hands and the acceptance was wholly for his accommodation, but this fact was not known to the plaintiffs. By its charter the company was limited in the use of mercantile paper to that necessary for the convenient prosecution of its business. In a suit on the acceptance it was held 1. That the contract was governed by the law of the state of New York. 2. That by that law the plaintiffs were not bonâ fide holders for value. 3. That the burden of proof, after the accommodation character of the acceptance was shown, rested on the plaintiffs to show that they were bona fide holders for value. 4. That not being such, the defendant could interpose any defense that it could have availed itself of if the drawer had been the plaintiff. 5. That a provision in the charter that the company should have a lien upon the stock of its members for any indebtedness to the company could not be regarded as a permission to the stockholders to borrow and to the company to lend to them its capital. 6. That the corporation could not acquire the right to accept drafts for ac Webster & Co. v. Howe Machine Co. commodation by assuming and repeatedly exercising the right. Neither the directors nor stockholders, by permission or ratification, could confer the power on any of the officers. 7. That the taking up and paying of the draft by the plaintiffs as indorsers, did not change their position, which was fixed by their first relation to it. Where a party takes such an acceptance without notice that it is for the accommodation of the drawer, and the acceptance is by an officer of the company authorized to accept if the drawer has funds in the company's hands, the holder is not affected by the extrinsic fact of want of funds, and can recover upon the acceptance if he is a bonâ fide holder for value. [Argued May 6th-decided December 17th, 1886.] ACTION upon an acceptance; brought to the Superior Court in Fairfield County. The case, with the next preceding one of The Credit Company v. The Howe Machine Company, was referred to a committee, and heard with that case, and the facts common to both were embodied in a single finding, which is given in full in the report of that case. The finding of the additional facts peculiar to the present case was as follows:: On the 28th day of March, 1877, A. B. Stockwell drew upon the Howe Machine Company two drafts for $10,000 gold each, payable at sixty days' sight, and addressed to the Howe Machine Company, 28 Union Square, New York. The drafts were both accepted by Levi S. Stockwell, as treasurer of the Howe Machine Company. When they were first presented for acceptance on the 11th of April, 1877, acceptance was refused, and the drafts were protested, but afterwards on May 19th, 1877 they were accepted as of April 11th, 1877, the day when they were first presented. Soon afterwards Hume Webster & Co., having indorsed the drafts, sold them for A. B. Stockwell and placed the proceeds to his credit in his account with them. A. B. Stockwell was at that time indebted to Hume Webster & Co. for a much larger amount than these drafts. When these two drafts became due and payable, one of them was paid, and the other one, on which the present suit is brought, was not paid and was duly protested, and |