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Thomas v. Todd

6 Hill & Den. 340 Court N.Y. Sup. Ct. English

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p. 340
Thomas vs. Todd.

Headnote

A payment in counterfeit bank bills is a nullity, and will not discharge the debt?, though both parties suppose them to be genuine.
So of payment in the genuine bills of a bank which has failed, neither party being aware of the fact. Per Bronson, J.
But in these cases the party receiving the bills must return them within a reasonable time after discovering their worthlessness, or he will be obliged to sustain the loss.
Where a bank bill was delivered in payment on the 5th of May, both parties supposing it to be genuine, and the creditor learned that it was counterfeit about the same time, but made no offer to return it until the 4th of July following; helt, that he had lost his remedy.
Error to the Oneida C. P. Thomas sued Todd before a justice, and declared for rent due from the defendant. The defence was, payment of a part, and tender of the residue. On the 5th of May, 1842, the defendant paid the plaintiff $23 towards the rent in bank bills, and took a receipt. The whole controversy arose out of the fact that one of the bills, which was for five dollars, turned out to be counterfeit. Both parties, as may be inferred from the case, lived in Utica. On the same day that the bill was received by the plaintiff, he sent it to one Gates, in the adjoining town of Frankfort, who in a short time sent it back to the plaintiff as counterfeit. On the 4th of July the plaintiff asked the defendant to take back the bill, but the defendant said the plaintiff did not have it of him. The plaintiff said he did, and that he at the same time gave it to a boy to take to Frankfort ; that in a short time it was brought back, and said to be counterfeit; that the plaintiff took it agahi, and gave it to a man in Westmoreland; and that it then came back again. The justice gave judgment for the plaintiff for a sum which included the counterfeit bill. On, certiorari, the common pleas reversed the judgment, on the ground that the plaintiff did not return nor offer to return the bill, nor notify the defendant that it was counterfeit, within a reasonable time. The plaintiff brought error.
p. 341
Garvin & Coburn, for the plaintiff in error.
W. Allen, for the defendant in error.

This is a case of mistake by both parties—the one paying and the other receiving a bank bill supposing it to be genuine, when in truth it was counterfeit. As the bill was worthless, it did not make a good payment towards the rent, unless the plaintiff was in fault for not returning it sooner. (Markle v. Hatfield, 2 John. 455 ; Jones v. Hyde, 5 Taunt. 488; Young v. Adams, 6 Mass. R. 182 .) And the rule is the same where, although the bill is genuine, the bank had broken before the payment was made, but the knowledge of that fact had not reached the place of payment. (Lightbody v. Ontario Bank, 11 Wend. 9 , and S. C. in error, 13 id. 101 . And see U. S. Bank v. Bank of Georgia, 10 Wheat. 333 .)[1] In all of these cases there was an offer to return the bill immediately after discovering that it was worthless, and I think such an offer essential to the right of recovery. Pothier says, the creditor may recover in such a case, on offering to return what he has received. (1 Poth. Ob. 495, Evans’ ed.) This doctrine was cited with approbation in Markle v. Hatfield ; and the principle is a just one. Both parties have agreed that the thing should be received in payment, and although they were acting under a mistake as to the nature or value of the thing paid, yet as the debtor has acted honestly, he can only be put in the wrong by an offer to correct the error. Although the bill has no intrinsic value, it should be returned to the debtor, so as to enable him to trace out and fall back upon the person from whom he received it. And for the same reason the bill should be returned without any unnecessary delay. That %vas not done in this case.

Judgment affirmed.

(a) (a) But see Bayard v. Shunk, ( 1 Watts & Serg. 92 ;) Scruggs v. Gass, ( 8 Yerg. 175 ;) Camidge v. Alenby, (6 Barn. & Cress. 373;) Young v. Adams, ( 6 Mass. Rep. 182 , 185.)

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