G.R. No. 19278; March 24, 1923
CHARLES A. FOSSUM, plaintiff-appellee, vs. FERNANDEZ HERMANOS, et al., defendants-appellants.

FACTS

Plaintiff Charles A. Fossum, as endorsee, sued the defendant partnership Fernandez Hermanos and its members to recover on a bill of exchange drawn by the American Iron Products Co., Inc., and accepted by the defendants. The bill was for the price of a shipment of iron chain links ordered by the defendants. In their answer, the defendants alleged as a special defense that the chain did not meet the conditions of their purchase contract and refused payment. They also filed a counterclaim for damages. The case was submitted on a stipulation of facts. The trial court rendered judgment in favor of Fossum.

ISSUE

Whether the defendants, as acceptors of the bill of exchange, are liable to pay the plaintiff-holder despite their claim that the underlying merchandise (the chain) was non-conforming.

RULING

Yes. The defendants are liable. The Court found that the defendants, having accepted the draft, became at least primarily liable for its payment. The burden was on them to prove by preponderance of evidence that the chain was defective and did not comply with the contract specifications. The Court agreed with the trial court’s finding of a failure of proof. The defendants’ answer did not specify the defects, and the evidence showed the shipment was accompanied by a certificate from Lloyd’s Register of Shipping, confirming the chain was made according to the required rules and stamped with test marks, as specified in the order. This certificate was conclusive on the matter. The judgment of the lower court was affirmed.