Fossum v. Fernandez
REITERATIONFacts
The Antecedents: Charles A. Fossum, as endorsee, sued Fernandez Hermanos, a commercial partnership, and its members, for the sum of $4,716.14, representing an accepted bill of exchange drawn by American Iron Products Co., Inc. The bill was payable ninety days after sight and was accepted by Fernandez Hermanos on November 17, 1920. Procedural History: The plaintiff alleged that the bill of exchange was overdue, demand for payment was made and refused, and prayed for judgment. The defendants denied the allegations and counterclaimed, asserting that the bill of exchange was accepted based on a contract with American Iron Products Co., Inc., for a chain. They claimed the chain delivered did not conform to the contract specifications, causing them damages. The Appeal: The lower court rendered judgment in favor of the plaintiff. The defendants appealed, arguing that the lower court erred in finding sufficient evidence to support the action, in holding that a specific exhibit was a certificate from Lloyd's Register of Shipping, in rendering judgment for the plaintiff, and in not rendering judgment for the defendants.
Issue(s)
Whether the defendants sufficiently alleged and proved that the chain delivered by American Iron Products Co., Inc. did not conform to the contract specifications. Whether the defendants are liable for the payment of the accepted bill of exchange.
Ruling
The Supreme Court affirmed the judgment of the lower court in favor of the plaintiff. The Court held that the defendants failed to sufficiently allege and prove that the chain delivered did not conform to the contract specifications and that they were therefore liable for the payment of the accepted bill of exchange.
Ratio Decidendi
On Issue 1: The Court found that the defendants' answer, which alleged that "the chain sent by the American Iron Products Co., Inc., does not meet the conditions imposed by the aforesaid contract, nor were the terms of the said contract complied with," was insufficient to raise the question of defects. The answer did not specify any particular defect or how the chain failed to comply with the contract. Furthermore, the Court noted that the contract required the chain to be made according to Lloyd's rules, stamped with test marks, and accompanied by a certificate of origin. The evidence showed that a certificate from the "Surveyor to Lloyd's Register of Shipping" was provided, stating that the material was made according to Lloyd's rule and stamped with proper test marks, and that this certificate was in the defendants' possession and introduced as evidence. This certificate was considered conclusive evidence of compliance. The defendants failed to allege or prove that the chain did not fit into the gipsy wheel or that its size was not exact, which were crucial specifications. Therefore, the defendants failed to prove by a preponderance of the evidence that the chain was defective. On Issue 2: Having failed to prove that the chain was defective and did not conform to the contract, the defendants, who had accepted the draft, became primarily liable for its payment. The Court reiterated that the defendants had the burden of proving the defects, and their failure to do so meant that the plaintiff, as the endorsee of the bill of exchange, was entitled to payment. The Court also noted that the assignment of the claim to Asia Banking Corporation occurred after the case was submitted to the Supreme Court, thus judgment would be entered in the name of Fossum.
Main Doctrine
In an action to recover on a bill of exchange accepted by the defendant, where the defendant's defense is that the goods for which the bill was drawn do not conform to the contract, the defendant bears the burden of proving the specific defects and how the goods failed to meet the contractual specifications. A general allegation of non-compliance is insufficient, especially when documentary evidence, such as a certificate of conformity, is presented and not effectively refuted.