Beruflich Dokumente
Kultur Dokumente
April 4, 1923]
STREET, J.:
781
Fairchild & Co. subscribed for 325 shares of the par value of P100
each.
As La Compañía Naviera was an entirely new enterprise in the
shipping world, it was necessary for it to acquire a proper
complement of vessels and adequate equipment, and as shipping
values in those days were high,.the company did not have sufficient
ready capital to meet all its requirements. Its officials therefore in
May, 1918, applied to the Philippine National Bank f or a loan of
$125,000, with which to purchase a boat called Benito Juarez, which
had been found on the market in the United States. The necessary
credit appears to have been extended by the bank in the form of a
loan for $125,000, to run for one year from May 17, 1918.
Nevertheless, owing to delay in the delivery of the vessel, the money
was not then delivered and was not actually advanced by the bank
until several months later, as will presently appear.
It appears that Welch, Fairchild & Co. was not numbered among
the original promoters of La Compañía Naviera, but its interests are
to a considerable extent involved in the general shipping conditions
in the Islands and it looked with a friendly eye upon the new
enterprise. Moreover, the mercantile ramifications of Welch,
Fairchild & Co. appear to be extensive; and its friendly offices were
f reely exerted in behalf of La Compañía Naviera, not only through
Welch & Co., the correspondent of the defendant in San Francisco,
but also through Mr. Geo. H. Fairchild, the president of Welch,
Fairchild & Co., who left Manila for the United States in March of
the year 1918 and remained in that country for more than a year.
Upon this visit to the United States Mr. Fairchild was kept advised
as to certain needs of La Compañía Naviera, and he acted for it in
important matters requiring attention in the United States. In
particular it was through the efforts of himself and of Judge James
Ross, as attorney, that the consent of the proper authorities in
Washington, D. C
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that Welch, Fairchild & Co. had acted throughout merely in the
capacity of agent for La Compañía Naviera, and he therefore
insisted that Welch, Fairchild & Co. was not legally bound by the
promise made by it in the letter of August 8, 1918, to the effect that
the policy of insurance would be delivered to the bank in Manila by
La Compañía Naviera; and this contention was urged with such
force that the president of the bank—who was not a lawyer—
acknowledged himself vanquished, and in the end said that he must
have been mistaken in his contention and that the attorney was right.
Shortly af ter this incident the bank which had permitted La
Compañía Naviera to become indebted to it upon inadequate
security to the extent of nearly a million pesos began to take steps
looking to the betterment of its position in relation with said
company. To this end, on August 28, 1919, it went through the
barren formality of making demand upon La Compañía Naviera for
the delivery of the insurance policies on the Benito Juarez, but was
informed by La Compañía Naviera that it had never received any
policy of insurance upon the Benito Juarez as the vessel had been
insured in San Francisco by Welch. Fairchild & Co. in behalf of La
Compañía Naviera. A little later the bank caused La Compañía
Naviera to execute pledges to the bank upon three steamers
belonging to said company as security for its indebtedness to the
bank. Thereafter matters were permitted to drift until it became
apparent that La Compañía Naviera was insolvent; and on December
9, 1919, the bank made formal demand upon Welch, Fairchild & Co.
for the delivery of the insurance policy for $125,000 on the Benito
Juarez, basing its demand on the letter of Welch, Fairchild & Co. of
August 8, 1918, already mentioned.
As the bank officials already knew that the insurance had been
collected many months previously by Welch, Fairchild & Co., it is
evident that the making of demand for delivery of a policy for
$125,000 was a mere formula by which the
786
786 PHILIPPINE REPORTS ANNOTATED
National Bank vs. Welch, Fairchild & Co.
787
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790
doned its previous position with regard to this remittance and passed
the money to the credit of the defendant, with interest upon the same
during the time payment had been withheld. The most, we think, that
can fairly be said about that incident is that the bank president
admitted himself to be a convert to the proposition advanced by the
attorney for the defendant to the effect that as the defendant had
merely acted as agent for La Compañía Naviera in the matter, the
bank must look exclusively to La Compañía Naviera for the
fulfilment of the promise about the insurance money. As a statement
of legal doctrine that proposition was, as we have already shown, a
mistake; but of course it would have been a matter of indifference if
La Compañía Naviera had remained solvent. One consideration that
must have operated on the mind of the president of the bank in
releasing this money was that it had been remitted in ordinary course
of exchange through the bank to the defendant, which was an
entirely responsible party; and even though the bank may have had
the power to intercept the remittance, the president may have
considered that the commercial integrity of the institution in matters
of exchange was perhaps worth more than could be gained by an
obstinate insistence on its right to this money. There is no evidence
whatever that the president of the bank assumed to release the
defendant from any obligation which might have been incurred by
virtue of the letter of August 8, 1918.
From intimations contained in the testimony of some of the
witnesses presented by the defendant it might be inferred that at
some time or another an understanding had been reached between
the bank and the defendant company by which it was agreed that the
defendant should make advances of money to La Compañía Naviera
and that it might look to the proceeds of the insurance on the Benito
Juarez to reimburse itself for those outlays. No such agreement with
the bank or any official of the bank is alleged in the defendant's
answer; and as one reads the
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Mr. Justice Johns voted for reversal but he was absent at the time
of the promulgation of the decision, and his signature therefore does
not appear signed to the opinion of the court.
(Sgd.) MANUEL ARAULLO
Chief Justice
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