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182 PHILIPPINE REPORTS ANNOTATED

Kauffman vs. National Bank

In the light of these requirements it is really difficult to see

any practical necessity for the additional requirement that
the attesting clause shall state the number of sheets or
pages used. Nevertheless, it cannot be denied that the last
mentioned requirement affords additional security against
the danger that the will may be tampered with; and as the
Legislature has seen fit to prescribe this requirement, it
must be considered material.
In two cases we have held that the failure to comply
with the strict requirements of this law does not invalidate
the instrument, but the irregularities presented in those
cases were entirely trivial, the defect in one case being that
a will in which the dispositive part consisted of a single
sheet was not signed in the margin in addition to being
signed at the bottom (In re will of Abangan, 40 Phil., 476) ;
in the other, that the pages comprising the body of the will
were signed by the testator and witnesses on the right
margin instead of the left (Avera vs. Garcia and Rodriguez,
p. 145 ante). In the case now before us the defect is, in our
opinion, of more significance; and the rule here applicable
is that enunciated in Caraig vs. Tatlonghari, R. G. No.
12558, decided March 23, 1918, not reported, and In re
estate of Saguinsin, 41 Phil., 875), in each of which the will
was held to be invalid.
It results that the trial judge did not err in refusing
probate of the will, and the judgment must be affirmed. It
is so ordered, with costs against the appellant.

Johnson, Araullo, Avanceña, and Villamor, JJ., concur.

Judgment affirmed.

——————————
 

[No. 16454. September 29, 1921]

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GEORGE A. KAUFFMAN, plaintiff and appellee, vs. THE PHIL-

IPPINE NATIONAL BANK, defendant and appellant.

1.BANKS AND BANKING; TELEGRAPHIC EXCHANGE; ACTION BY THE PAYEE.—A

person in whose favor a bank sells telegraphic exchange on a foreign
country may, in case payment is refused

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VOL. 42, SEPTEMBER 29, 1921 183

Kauffman vs. National Bank

    by the bank of destination, maintain an action against the bank selling
the exchange, without regard to whether such payee was an
immediate party to the purchase of the exchange or not.
2.CONTRACT; STIPULATION IN FAVOR OF THIRD PERSON; REVOCATION OF SUCH
STIPULATION.—A stipulation in favor of a third person cannot be
revoked by the obligated party alone, without the conformity of the
other contracting party.

APPEAL from a judgment of the Court of First Instance of

Manila. Ostrand, J.
The facts are stated in the opinion of the court.
Roman J. Lacson for appellant.
Ross & Lawrence for appellee.

STREET, J.:
At the time of the transaction which gave rise to this
litigation the plaintiff, George A. Kauffman, was the presi-
dent of a domestic corporation engaged chiefly in the ex-
portation of hemp from the Philippine Islands and known
as the Philippine Fiber and Produce Company, of which
company the plaintiff apparently held in his own right
nearly the entire issue of capital stock. On February 5,
1918, the board of directors of said company, declared a
dividend of P100,000 from its surplus earnings for the year
1917, of which the plaintiff was entitled to the sum of
P98,000. This amount was accordingly placed to his credit
on the book.s of the company, and so remained until in
October of the same year when an unsuccessful effort was
made to transmit the whole, or a greater part thereof, to
the plaintiff in New York City.
In this connection it appears that on October 9, 1918,
George B. Wicks, treasurer of the Philippine Fiber and
Produce Company, presented himself in the exchange de-
partment of the Philippine National Bank in Manila and
requested that a telegraphic transfer of $45,000 should be
made to the plaintiff in New York City, upon account of the

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Philippine Fiber and Produce Company. He was informed

that the total cost of said transfer, including
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184 PHILIPPINE REPORTS ANNOTATED

Kauffman vs. National Bank

exchange and cost of message, would be P90,355.50. Ac-

cordingly, Wicks, as treasurer of the Philippine Fiber and
Produce Company, thereupon drew and delivered a check
for that amount on the Philippine National Bank; and the
same was accepted by the officer selling the exchange in
payment of the transfer in question. As evidence of this
transaction a document was made out and delivered to
Wicks, which is referred to by the bank's assistant cashier
as its official receipt. This memorandum receipt is in the
following language:

"October 9th, 1918.

"CABLE TRANSFER BOUGHT FROM
"PHILIPPINE NATIONAL BANK,

  "Manila, P. I.  Stamp P18.

 "Foreign Amount  Rate  
 $45,000.  3/8%  P90,337.50
 

"Payable through Philippine National Bank, New York. To G.

A. Kauffman, New York. Total P90,355.50. Account of Philippine
Fiber and Produce Company. Sold to Messrs. Philippine Fiber and
Produce Company, Manila.
(Sgd.) "Y. LERMA,
"Manager, Foreign Department."

On the same day the Philippine National Bank dis-

patched to its New York agency a cablegram to the fol-
lowing effect:

"Pay George A. Kauffman, New York, account Philippine Fiber

Produce Co., $45,000. (Sgd.) PHILIPPINE NATIONAL BANK, Manila."

Upon receiving this telegraphic message, the bank's rep-

resentative in New York sent a cable message in reply
suggesting the advisability of withholding this money from
Kauffman, in view of his reluctance to accept certain bills
of the Philippine Fiber and Produce Company. The Phil-
ippine National Bank acquiesced in this and on October 11

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dispatched to its New York agency another message to

withhold the Kauffman payment as suggested.

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Kauffman vs. National Bank

Meanwhile Wicks, the treasurer of the Philippine Fiber

and Produce Company, cabled to Kauffman in New York,
advising him that $45,000 had been placed to his credit in
the New York agency of the Philippine National Bank; and
in response to this advice Kauffman presented himself at
the office of the Philippine National Bank in New York City
on October 15, 1918, and demanded the money. By this
time, however, the message from the Philippine National
Bank of October 11, directing the withholding of payment
had been received in New York, and payment was therefore
refused.
In view of these facts, the plaintiff Kauffman instituted
the present action in the Court of First Instance of the city
of Manila to recover said sum, with interest and costs; and
judgment having been there entered favorably to the
plaintiff, the defendant appealed.
Among additional facts pertinent to the case we note the
circumstance that at the time of the transaction above-
mentioned, the Philippine Fiber and Produce Company did
not have on deposit in the Philippine National Bank money
adequate to pay the check for P90,355.50, which was de-
livered in payment of the telegraphic order; but the
company did have credit to that extent, or more, for
overdraft in current account, and the check in question was
charged as an overdraft against the Philippine Fiber and
Produce Company and has remained on the books of the
bank as an interest-bearing item in the account of said
company.
It is furthermore noteworthy that no evidence has been
introduced tending to show failure of consideration with
respect to the amount paid for said telegraphic order. It is
true that in the defendant's answer it, is suggested that the
failure of the bank to pay over the amount of this
remittance to the plaintiff in New York City, pursuant to
its agreement, was due to a desire to protect the bank in its
relations with the Philippine Fiber and Produce Company,
whose credit was secured at the bank by warehouse
receipts on Philippine products; and it is alleged that after
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Kauffman vs. National Bank

the exchange in question was sold the bank found that it

did not have sufficient security to warrant payment of the
remittance. In view, however, of the failure of the bank to
substantiate these allegations, or to offer any other proof
showing failure of consideration, it must be assumed that
the obligation of the bank was supported by adequate con-
sideration.
In this court the defense is mainly, if not exclusively,
based upon the proposition that, inasmuch as the plaintiff
Kauffman was not a party to the contract with the bank for
the transmission of this credit, no right of action can be
vested in him for the breach thereof. "In this situation,"—
we here quote the words of the appellant's brief,— "if there
exists a cause of action against the defendant, it would not
be in favor of the plaintiff who had taken no part at all in
the transaction nor had entered into any contract with the
plaintiff, but in favor of the Philippine Fiber and Produce
Company, the party which contracted in its own name with
the defendant."
The question thus placed before us is one purely of law;
and at the very threshold of the discussion it can be stated
that the provisions of the Negotiable Instruments Law (Act
No. 2031) are not relevant to the case. The reason for this
is that before the Negotiable Instruments Law can come
into operation there must be a document in existence of the
character described in section 1 of that Law; and no rights
properly speaking arise in respect to said instrument until
it is delivered. In the case before us there was an order, it
is true, transmitted by the defendant bank to its New York
branch, for the payment of a specified sum of money to
George A. Kauffman. But this order was not made payable
"to order" or "to bearer," as required in subsection (d) of
that Act;'and 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
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

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out above, cannot itself be viewed in the light of a nego-

tiable instrument, although it affords complete proof of the
obligation actually assumed by the bank.
Stated in bare simplicity the admitted facts show that
the defendant bank for a valuable consideration paid by the
Philippine Fiber and Produce Company agreed on October
9, 1918, to cause a sum of money to be paid to the plaintiff
in New York City; and the question is whether the plaintiff
can maintain an action against the bank for the
nonperformance of said undertaking. In other words, is the
lack of privity with the contract on the part of the plaintiff
fatal to the maintenance of an action by him ?
The only express provision of law that has been cited as
bearing directly on this question is the second paragraph of
article 1257 of the Civil Code; and unless the present action
can be maintained under that provision, the plaintiff
admittedly has no case. This provision states an exception
to the more general rule expressed in the first paragraph of
the same article to the effect that contracts are productive
of effects only between the parties who execute them; and
in harmony with this general rule are numerous decisions
of this court (Wolfson vs. Estate of Martinez, 20 Phil., 340;
Ibanez de Aldecoa vs. Hongkong and Shanghai Banking
Corporation, 22 Phil., 572, 584; Manila Railroad Co. vs.
Compañia Transanlantic, and Atlantic, Gulf & Pacific Co.,
38 Phil., 875, 894.)
The paragraph introducing the exception which we are
now to consider is in these words:

"Should the contract contain any stipulation in favor of a third

person, he may demand its fulfillment, provided he has given
notice of his acceptance to the person bound before the stipulation
has been revoked." (Art. 1257, par. 2, Civ. Code.)

In the case of Uy Tam and Uy Yet vs. Leonard (30 Phil.,

471), is found an elaborate dissertation upon the history
and interpretation of the paragraph above quoted and so
complete is the discussion contained in that opinion that it
would be idle for us here to go over the same matter.

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Kauffman vs. National Bank

Suffice it to say that Justice Trent, speaking for the

court in that case, sums up its conclusions upon the
conditions governing the right of the person for whose

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benefit a contract is made to maintain an action for the

breach thereof in the following words:

"So, we believe the fairest test, in this jurisdiction at least,

whereby to determine whether the interest of a third person in a
contract is a stipulation pour autrui, or merely an incidental
interest, is to rely upon the intention of the parties as disclosed by
their contract.
"If a third person claims an enforcible interest in the contract,
that question must be settled by determining whether the
contracting parties desired to tender him such an interest. Did
they deliberately insert terms in their agreement with the avowed
purpose of conferring a favor upon such third person? In resolving
this question, of course, the ordinary rules of construction and
interpretation of writings must be observed." (Uy Tam and Uy Yet
vs. Leonard, supra.)

Further on in the same opinion he adds: "In applying

this test to a stipulation pour autrui, it matters not
whether the stipulation is in the nature of a gift or whether
there is an obligation owing from the promisee to the third
person. That no such obligation exists may in some degree
assist in determining whether the parties intended to
benefit a third person, whether they stipulated for him."
(Uy Tam and Uy Yet vs. Leonard, supra.)
In the light of the conclusions thus stated, the right of
the plaintiff to maintain the present action is clear enough;
for it is undeniable that the bank's promise to cause a de-
finite sum of money to be paid to the plaintiff in New York
City is a stipulation in his favor within the meaning of the
paragraph above quoted; and,the circumstances under
which that promise was given disclose an evident intention
on the part of the contracting parties that the plaintiff
should have that money upon demand in New York City.
The recognition of this unqualified right in the plaintiff to
receive the money implies in our opinion the right in him

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Kauffman vs. National Bank

to maintain an action to recover it; and indeed if the provi-

sion in question were not applicable to the facts now before
us, it would be difficult to conceive of a case arising under
it.
It will be noted that under the paragraph cited a third
person seeking to enforce compliance with a stipulation in

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his favor must signify his acceptance before it has been

revoked. In this case the plaintiff clearly signified his ac-
ceptance to the bank by demanding payment; and although
the Philippine National Bank had already directed its New
York agency to withhold payment when this demand was
made, the rights of the plaintiff cannot be considered to
have been prejudiced by that fact. The word "revoked," 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 the exchange.
In the course of the argument attention was directed to
the case of Legniti vs. Mechanics, etc. Bank (130 N. E.
Rep., 597), decided by the Court of Appeals of the State of
New York on March 1, 1921, wherein it is held that, by
selling a cable transfer of funds on a foreign country in
ordinary course, a bank incurs a simple contractual obli-
gation, and cannot be considered as holding the money
which was paid for the transfer in the character of a
specific trust. Thus, it was said, "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 transactions are matters of purchase and
sale create no trust relationship."
As we view it there is nothing in the decision referred to
decisive of the question now before us, which is merely that
of the right of the beneficiary to maintain an action against
the bank selling the transfer.
Upon the considerations already stated, we are of the
opinion that the right of action exists, and the judgment
must be affirmed. It is so ordered, with costs against the

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