Bank of British Columbia v. Frese

Citations

• 116 Cal. 9
• 47 P. 783
• 1897 Cal. LEXIS 499

Syllabus

<p>Collateral Security — Note to Secure Drafts for Value of Merchandise—Insolvency of Principal Maker—Defense of Sureties —Application of Proceeds of Merchandise—Burden of Proof.— In an action upon a note given to a bank as collateral security for the repayment to it of the amount of drafts drawn upon it for the value of merchandise shipped to the principal makers of the note, which were to be paid by the bank when accompanied by invoices and bills of lading o£ the merchandise, where it appears that the principal makers had become insolvent, and accommodation makers of the note, who signed it as sureties for the principal makers, pleaded as a defense that the bank held the invoices and bills of lading of the merchandise as security for the payment of the drafts, and had received from the proceeds of the merchandise on account o£ said drafts a sum in excess of their aggregate amount, the burden of proof is upon them to show that the bank had been repaid from those proceeds, and to establish improper debit items in the account of the bank, as rendered, sufficient to equal a balance shown by its account to be due to the bank.</p> <p>Id.—Deduction of Charges from Proceeds—Expenses of Bank.—Reasonable charges paid by the bank for storage of the cargo, insurance upon it while stored, cartage, brokerage, etc., properly incurred in caring for, preserving, and selling it, are to be deducted from the gross proceeds realized by the bank from the sale of the cargo.</p> <p>Id.—Marine Insurance — Drayage Paid by Check.—Payment by the bank for -marine insurance upon the cargo, made upon the arrival of the vessel, cannot be allowed as a deduction from the proceeds of the cargo; nor is the bank entitled to charge for drayage which had been paid for by the check upon it of the principal makers of the note.</p>