Kauffman v. PNB

G.R. No.
16454 September 29, 1921 was not made payable "to order or "to bearer” and inasmuch as it never left the
possession of the bank, or its representative in New York City, there was no
GEORGE A. KAUFFMAN, plaintiff-appellee, delivery in the sense intended in section 16 of the NIL.
vs.
THE PHILIPPINE NATIONAL BANK, defendant-appellant. 2. YES.
If a third person claims an enforceable interest in the contract, the question must
FACTS:
be settled by determining whether the contracting parties desired to tender him
such an interest.
On February 5, 1918, the board of directors of Philippine Fiber and Produce Company,
declared a dividend of P100,000 from its surplus earnings for the year 1917, of which The right of Kauffman to maintain the present action is clear enough; for it is
George A. Kauffman, was entitled to the sum of P98,000. 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
On October 9, 1918, George B. Wicks, treasurer of the Philippine Fiber, presented himself the paragraph above quoted; and the circumstances under which that promise was
in the exchange department of the Philippine National Bank in Manila and requested that a given disclose an evident intention on the part of the contracting parties that the
telegraphic transfer of $45,000 should be made to Kauffman in New York City, upon plaintiff should have the money upon demand in New York City. The recognition
account of the Philippine Fiber. 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.
On the same day the Philippine National Bank dispatched to its New York agency a
cablegram to the following effect: Pay George A. Kauffman, New York, account 3. YES.
Philippine Fiber Produce Co., $45,000. (Sgd.) PHILIPPINE NATIONAL BANK, Manila.
Should the contract contain any stipulation in favor of a third person, he may
Upon receiving this telegraphic message, the PNB's representative in New York sent a demand its fulfillment, provided he has given notice of his acceptance to the
cable message in reply suggesting the advisability of withholding this money from person bound before the stipulation has been revoked.
Kauffman, in view of his reluctance to accept certain bills of the Philippine Fiber, which
the PNB acquiesced. Wicks cabled to Kauffman in New York advising him that $45,000 Kauffman clearly signified his acceptance to the bank by demanding payment and
had been placed to his credit in the New York agency of the PNB. In response, Kauffman although the Philippine National Bank had already directed its New York agency
presented himself to PNB NYC and demanded payment. However, as directed, the bank to withhold payment when this demand was made, the rights of the plaintiff
refused payment. cannot be considered to as there used, must be understood to imply revocation by
the mutual consent of the contracting parties, or at least by direction of the party
purchasing he exchange.
ISSUES:
4. NO.
1. WON the cablegram transmitted by PNB to its NYC Branch is negotiable.
2. WON the contract between Philippine Fiber and PNB is in favor of Kauffman The provisions of the Negotiable Instruments Law can come into operation there
3. WON Kauffman has a cause of action against PNB for non-performance. must be a document in existence of the character described in section 1 of the
4. WON Kauffman has a right of action in light of the Negotiable Instruments Law Law; and no rights properly speaking arise in respect to said instrument until it is
5. WON cable transfers create trust relationship. delivered.
HELD: 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
1. NO. 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
There was an order transmitted by the defendant bank to its New York branch, for above, cannot itself be viewed in the light of a negotiable instrument, although it
the payment of a specified sum of money to George A. Kauffman. But this order affords complete proof of the obligation actually assumed by the bank.
5. NO.
By selling a cable transfer of funds on a foreign country in ordinary course, a

bank incurs a simple contractual obligation, and cannot be considered as holding
the money which was paid for the transfer in the character of a specific trust.
Thus, Cable transfers, therefore, mean a method of transmitting money by cable
wherein the seller engages that he has the balance at the point on which the
payment is ordered and that on receipt of the cable directing the transfer his
correspondent at such point will make payment to the beneficiary described in the
cable. All these transaction are matters of purchase and sale create no trust
relationship.

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G.R. No.

By selling a cable transfer of funds on a foreign country in ordinary course, a

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