Markle v. Hatfield — 2 Johns. 455

Majority

p. 455

Markle against Hatfield.

Headnote

M. sold and delivered to H. a number of cattle, and received pay ment in bank notes, which he afterwards paid away to C. who discovered one of the notes to be forged. Neither M. nor H. knew that the note was bad. In an aotinn bro’t by M. against 13. on the original ' contract for cattle soldand delivered, it was held, that a forged note, or a billwhich provesto be of no value, is no payment, and that the party may treat it as a nullity, and resort to the original contract.

This case came before the court on a writ of error, from the court of common pleas, of Dutchess county, founded upon a bill of exceptions.

The suit below was an action of assumpsit. The declaration contained a count for divers, cattle, sold and delivered to the defendant; and counts for money paid, Sec. lent, See,, and for money had and received, to the use of the plaintiff, and an insimul computassent. Plea, nonassumpsit.

Upon the trial, the plaintiff below proved, that in October, 1805, he sold to the defendant, who was a butcher, a number of cattle, for 120 dollars, and that the defendant paid him the said sum in bank bills, which the plaintiff received in full payment. Among1 the bills so received, there was one for fifty dollars, of the Boston branch bank of the United States. The plaintiff, on, the same day on which he sold the cattle and received the bills in payment, paid the same note of 50 dollars to a third person ; and soon afterwards it was discovered to be counterfeit, and was returned to the plaintiff. The same bill was produced, and proved to be counterfeit, upon the trial. No evidence was given that the defendant below knew the bill to be counterfeit, and he was proved to be an illiterate man. The counsel for the defendant, at the trial, insisted, that the plaintiff was not entitled to recover upon the proof; but the court charged the jury that the evidence was sufficient, and that the plaintiff was entitled to recover the fifty dollars, with interest, though there was no evidence of any fraud in the defendant, and the jury found accordingly. The bill of exceptions was taken to this opinion, and the charge of the court below.

Buggies, for the plaintiff in error.

This may be regarded as a contract of sale, or exchange of cattle for bank notes. Bank notes are to be considered as any

p. 456

other property or goods, transferable by delivery. Unless, therefore, there be an express warranty, or deceit, or fraud, in the transaction, the doctrine of caveat envptor will apply.^[11] Where an article is sold or transferred, without.warranty, and there be no fraud, it is considered, as it respects the parties, the same thing in fact as it was-supposed to be at the time of delivery ;^[12] and if it should turn oüt to be different, the vendee, or person receiving the article, can never recover back the price or value paid.^[10] In Price v. Neal,^[4] it was held, that where a forged bill was excepted and paid, under a belief that it was a true one, that the acceptor, on discovering the forgery, afterwards, could not recover back the money. If the holder of a bill send it into the market, without indorsing it, and it turns out, afterwards, to be of no value, he is not bound to refund the money for which he sold it, if he did not know that it was bad-^[5] So where a person accepts a bill in payment, without, an indorsement by the person from whom he receives it, he can never recover back the money, or resort to the original contract, in case the bill proves to be of no value.^[6] The party, in such case, takes the bill at his own risk. He must take care that he gets good bills, or make his objection at thetime, and insist on an indorsment, or warranty. So that bills received.in payment without any objection, are considered as cash. Again, counterfeit money, ifaccept.ed amounts to payment. In Wade’s case,^[7] Lord Colee states a decision, that where a party to whom money was tendered, accepted it, and put it in his purse; but, on examining it before he left the place, discovered some of it to be counterfeit, and refused to carry it away, it was held, that not having objected to it, before ho had accepted it, it was a good performance of a condition, which was for the payment ofmonéy. in the present case, there was a complete acceptance, by the plaintiff, of the bank notes paid by the defendant, which were passed away by him to a third person.

p. 457

J. Tallmadge, contra.

The doctrine of caveat em/ptor, applies only in the sale of property where the party has it in his power to examine and ascertain the truth, and does not use due diligence to protect himself against mistake* It would be extremely hard to apply it in the present case, where the party could have no means of detecting the forgery. The defence set up is, that the defendant has paid for the cattle; to support which, he must show a payment in good money, or some equivalent satisfaction. In Stedman v. Gooch,^[11] Lord Kenyon laid it down, as clear law, that if a bill or note, payable at a future day, and re-eeived in payment for a debt; be of no value, as if, for example, it be drawn on a person who has no effects of the drawer in his hands, and the drawee refuse payment, the holder may consider it as waste paper, and resort to his original demand. So, in Ptickford v. Maxwell,^[12] Lord Kenyon observed, “ that incases of this kind, if the biil given in payment do not turn out to be productive, it is not that which it purports to be, and which the party receiving it expects it to bo, and he may, therefore, consider it as a nullit}7, and act as if no such bill had been given.” In Owensonv. Morse,^[10] it was decided, that unless the party agrees to receive the bills or notes as payment, and to run the risk of their being paid, the mere taking of them would not amount to a payment. And the defendant, who insistson the payment, must prove an agreement, by the plaintiff, to accept them as such, and take them at his own risk. The case of an acceptor ofa bill, which turns out to be forged, was decided on the principle, that the acceptor impliedly undertakes to the person presenting the bill, and who is not presumed to know the hand-writing of the drawer, that the bill is a a true one, and the question is, in whom negligence, or the want of due caution, is to be presumed ? The case of Price v. Neal, therefore, does not apply to the case now before the court. As to the case of Vane v. Bindley,

p. 458

cited from Wade’s case, it may be observed, that it was a mere dictum of Lord Colee. If intended as a general rule of law, it is against every principle of justice and common sense. But the only question was, whether there had been a sufficient tend'er to prevent a forfeiture of the-lease; and the court, with a view to prevent a forfeiture, might be disposed to consider such a tender as sufficient. Will a court of justice sanction the doctrine attempted to be derived from this dictum, that where orie person promises to pay another gold, and tenders him brass, which the other accepts, supposing it to be gold, that it shall be a good payment ? But if bank notes are considered as money, all the cases about sales of property, which have been cited, will be found totally inapplicable, and the plaintiff must recover.' In Miller v- Race,^[11] Lord Mansfield declared, that bank notes were not goods, nor securities, nor documents, for debts, nor were they so esteemed ; but were treated as money and cash, in the ordinary course of business, by the general consent of mankind. He considered bank notes as much moneyas guineas, or the current coin, and, as used in payments, as cash. They are undoubtedly, the circulating medium of the country, and it would be extremely inconvenient’, impolitic and oppressive, to consider them as goods, or to apply to them a dictum, found only in the very ancient report of Lord Colee, and which is recognised by no modern writer.

lluggles, in reply, insisted,

I hat there was no difference between receiving a bank note which proves to be bad? and any other property which turns out to be of no value. Bank notes, he contended, could not be considered in all respects as moneythey were not a legal tend'er in discharge of a debt,^[12] for the party may refuse to receive them, and insist upon cash, or the current coin. In the' case of Owenson v. Morse, he observed, the goods sold were not delivered, nor the contract executed as in the-present case.

The justice of this ease is clearly with the defendant in error. He parted with his goods to the plaintiff, without .receiving the compensation which was intended. It would be matter of regret, if the law obliged us to regard a payment in counterfeit, instead of genuine bank bills, as a valid payment of a debt, merely because the creditor did not perceive and detect the false bills, at the time.of payment. The reasonable doctrine, and one which undoubtedly agrees with the common sense of mankind, is laid down by Paulus in the Digest; and has been incorporated into the French law. He says, that if a creditor receive by mistake any thing in payment, different from what is due, and upon the supposition that it was the thing actually due, as if he receives brass instead of gold, the debtor is not discharged, and the creditor, upon offering to return that which he received, may demand that which is due by the contract. Si quumcturum tibi promisissem, iili ignoranii quasi aurum ces soherim, non iberabor. (Dig. 46. 3. 50. Pothier, Traité, des Obligationes, No. 495.)

But there are some ancient dicta in the English law, which advance a contrary doctrine, in respect to gold and silver coin. It is said, that the creditor must at his peril count and examine the money at the time he receives it. Bank bills are not money, in the strictly legal and technical sense of the term, but as they circulate, and are received as money, in the ordinary transactions of business, it becomes material to examine into the authority and solidity of these positions in the books. In Shepherd’s Touchstone, (p. 140.) it is laid down, and with a reference to the Terms de Ley, that if a payment be made partly with counterfeit coin, and the party accept it, and put it up, it is a good payment. 'Shepherd’s Touchstone is supposed to be the work of Mr. Justice Dr.deridge, and as such, it has always been considered as a book of authority; but it loses some of its character for accuracy, when we

p. 460

consider it as a posthumous and surreptitious publication. The book to which it refers, gives no increased weight to the dictum. The same doctrine is contained in Wade’s case; (5 Co. 114.) but it is supported only on the authority of the case of Vane v. Studley, which is there cited, in which it is said to have been adjudged, that where the lessor demanded rent of his lessee, according to the condition of re-entry, and the lessee paid the rent to the lessor, who received it and put it into his purse, and afterwards discovering a counterfeit piece among the money, he refused to carry it away, and re-entered for the condition broken, the re-entry was held uot to be lawful, because he accepted the money at his peril. This case of Vane v. Studley is cited cautiously, and stated, as said to have been so adjudged. With regard to Meade’s case itself, it did not require the aid of any such decision, because no such question arose in that case, and it was adopted by Lord Coke merely in illustration of his opinion. Perhaps, the question arising upon the forfeiture of the condition, might have induced the judges the more readily to adopt the rule, though in Shepherd the rule is laid down as general, and without any special application.^[1] These loose dicta, and this doubtful case of Vane v. Studley, are then, as far as I have been able to discover, all the authority which we have for this ancient doctrine ; and it is to be remarked, that we find no subsequent sanction of it, through all the accumulated decisions in the English law. On the contrary, the modern decisions are founded on different principles. They apply another and juster rule to cases of payment in negotiable paper. These cases are so very analagous to the one before us, that, it would be very difficult to raise a distinction.

In Stedman v. Gooch, (1 Esp. Cases, 3.) the plaintiff took in payment, for goods sold to the defendant, three promissory notes of one Finlay, payable at the house of

* The rule in the Touchstone, seems also laid down in relation to ■what may he a good performance of a condition.

p. 461

one Brown, and gave the defendant a receipt to that effect. It appeared that Finlay had no effects in the hands of Brown, and the plaintiff sued upon the original demand, before the notes were payable. Lord Kenyon held, and' his opinion was afterwards concurred in, by the other judges of the king’s bench, that if such a bill or note was of no value, the creditor might consider it as waste paper, and resort to his original demand. If the plaintiff’in that case was not bound by the acceptance of the promissory note of Finlay, because it proved afterwards to be of no value,vvhy should the defendant, in the present case* be bound by the acceptance of a pretended promissory note from the Boston Branch Bank, when the note proves, afterwards, to be counterfeit? Whether it be the promissory note of an individual, or of a corporation, can make no difference. The creditor, in both cases, is presumed to have been ignorant of the want of value in the note. He cannot be chargeable with negligence, in not detecting, in the first instance, the want of value, because, the means of ascertaining whether the note was or was not of valúe, may be, and probably were, equally in both cases, absent from the party. The like doctrine was advanced in the case of Owenson v. Morse, 7 Term, 64.) and it has been adopted and applied to a similar transaction of payment, in a negotiable note, in the case of Roget v. Merritt and Clapp, decided in this court, (2 Caines, 117.)

The negotiable note of a third person, and a bank note, are equally promissory notes, for the payment of money; arid if the receiver may be presumed in one case, and not in the other, to have taken upon him the risk of the solvency of the drawer, there is no presumption in either case, that he assumes upon himself the risk of forgery.— In'the case of Goldsmiths’ notes, which formerly were accounted as ready cash, lord Ch. J. Holt did, indeed, once say, (Tassel v. Lewis, 1 Lord Raym.743.) that the receiver gave credit to the goldsmith, and took them at his peril j jjUf; this doctrine has since been exploded by repeated decisions. (Str. 415. 508. 1248.) Even were we to admit, (which I do not,) that there might be some difficulty in surmounting the opinion of lord Colee, as to gold and silver coins, yet, as to bank bills and other promissory notes, we mast conclude, upon the strength of authority, as well as upon the reason and justice of the case, that the charge of the court below was correct, and that the judgment ought to be affirmed.

I have not thought it requisite to pay much attention to the case of Price v. Neale, (3 Burrow, 1354.) which was cited in the argument, because, I consider that case as decided upon principles which have no application to the case before us. It was there held, to be incumbent upon the acceptor of a forged bill of exchange, to satisfy himself of the genuineness of the drawer’s hand, before he accepts and pays it, as he must be presumed to know his correspondent’s hand; and that it was not incumbent upon the defendant to inquire into that fact. That decision, therefore, turned upon the negligence imputable to the one party, and not to the other. No such imputation alises in the present case. The acceptance of a bill, and the indorsement of a note give a credit to the paper, which, upon commercial principles, the party is not afterwards at liberty to recall.

Judgment affirmed.