« AnteriorContinuar »
Opinion of the Court.
the purchaser is entitled to recover back the price he has paid for it, not on the ground of a breach of warranty, but because he has paid for the thing sold, and what he has received is not the thing sold, but of a different kind."
In Gurney v. Womersley, 4 El. & Bl. 133, (1854,) an action was brought by a firm of bill brokers to recover the amount paid on the discount of a bill transferred by mere delivery, where the signatures, with one exception, were forgeries. It was held that, though there was no indorsement or guaranty, and, therefore, no warranty, of the solvency of the parties to the bill, there was a total failure of consideration, and plaintiffs were entitled to recover back the money paid for the bill from the party with whom the transaction was had. Coleridge, J., observed (p. 141):
'The vendor of a specific chattel, it is not disputed, is responsible if the article be not a genuine article of that kind of which the seller represents it to be. And the question raised really is, what is the extent of the want of genuineness for which he is responsible? Without laying down the limits, it is clear to me that this case fell much within them. In effect here the defendants said to the plaintiffs, will you take, without recourse to us, this bill which purports to bear the acceptance of P. & C. Van Notten? By doing so they represented it to be their acceptance, as it purported to be, and sold it, as answering that description."
Wightman, J., said (p. 142):
"In considering whether a defect in an article renders it not an article of the kind of which it was represented to be on the sale, or is merely a breach of a collateral warranty, much must depend upon the special circumstances and terms of the rule. Here I think that the bill, not being an acceptance of P. & C. Van Notten, fails in what was the substance of the description by which it was held."
Lord Campbell, C. J., said (p. 143):
"I am of opinion that though the defendants, by not endorsing or guaranteeing the bill, preserved themselves from warranting the solvency of any of the parties, yet they did undertake that the instrument was what it purported to be.
Opinion of the Court.
It is not disputed that in fact the discount of their bill by the plaintiffs was solely on the faith of its being an acceptance of P. & C. Van Notten, which it was not; and in consequence of its being so it was valueless. The possibility of recourse against the estate of Anderson, a convict and a bankrupt, did not prevent there being a total failure of consideration."
The cases in the American courts, whilst declaring the same rule as that recognized in England, place it upon a theoretical basis differing somewhat from that announced by the English courts; that is, instead of pronouncing it a condition of the principal contract that the thing sold, in its essence and substance, must be delivered, declare that there is an implied warranty of identity, or, in other words, that the thing sold is what it purports to be. Daniels, in his treatise on Negotiable Paper, § 733a, calls attention to the different definitions given to the same obligation by the American and English courts, and indicates the view that the form of expression used by Benjamin in the passage already quoted is the more accurate one.
Aside, however, from the mere garb in which the thought is clothed, the American and English courts are in full accord. This is shown by the case of Utley v. Donaldson, 94 U. S. 29, 45, where Benjamin on Sales is approvingly referred to, as also Flynn v. Allen, 57 Penn. St. 482, and Webb v. Odell, 49 N. Y. 583, both of which cases, as also the line of American adjudications which enforce the same doctrine, are noted in the margin of this opinion.'
1 Thrall v. Newell, 19 Vt. 202, 206, (1847); Lyons v. Miller, 6 Grat. 427, 439, (1849); Aldrich v. Jackson, 5 R. T. 218, (1858); Barton v. Trent, 8 Head, 167, 169, (1859); Delaware Bank v. Jarvis, 20 N. Y. 226, 229, (1859); Merriam v. Wolcott, 3 Allen, 258, (1861); Bell v. Cafferty, 21 Ind. 411, 418, (1863); Swanzey v. Parker, 50 Penn. St. 441, 450, (1865); Morrison v. Lovell, 4 W. Va. 346, 350; Webb v. Odell, 49 N. Y. 588, (1872); Worthington v. Cowles, 112 Mass. 30, (1873); Snyder v. Reno, 38 Iowa, 329, 333, (1874); Giffert v. West, 33 Wis. 617, (1873); 37 Wis. 115, 117, (1875); Hannum v. Richardson, 48 Vt. 508, (1875); Hussey v. Sibley, 66 Maine, 192, (1876); Hurst v. Chambers, 12 Bush. (Ky.) 155, 158, (1876); Allen v. Clark, 49 Vt. 890, (1877); Bankhead v. Owen, 60 Ala. 457, 461, (1877); Smith v. McNair, 19 Kan. 830, (1877); Challiss v. McCrum, 22 Kan. 157, 161, (1879); Rogers v. Walsh, 12 Neb. 28, (1881); Milliken v. Chapman, 75 Maine, 306, 317,
Opinion of the Court.
Many of the controversies covered by the cases referred to arose in consequence of the sale of a forged note, but the principles upon which all the authorities proceed do not confine the right of recovery to such a case, but rest upon the general doctrine to which we have already referred. In fact, no case is reported wherein the obligation, as between vendor and vendee, in the sale of negotiable paper, is claimed to be controlled other than by the general principles of the common law, though in three cases, Baxter v. Duren, 29 Maine, 434, Fisher v. Rieman, 12 Maryland, 497, and Ellis v. Wild, 6 Mass. 321, the deduction was made from the law respecting the sale of goods that on a sale of negotiable paper there was under the principle of caveat emptor no implied warranty even that the signatures to the paper were not forged. Ellis v. Wild was, however, expressly overruled in Merriam v. Wol cott, 3 Allen, 258, 260; and from the allusions to Baxter v. Duren, contained in the later Maine decisions previously noted in the margin, it is doubtful whether the early ruling in Maine would now be followed there. The three cases referred to, it is needless to say, are practically disregarded by the entire current of American and English authority, and stand alone. They are disavowed by the defendant in error here, since his argument admits that there is a warranty of the genuineness of the signatures, to an apparent negotiable instrument, thereby conceding the subsistence of the obligation to warrant the existence or identity of the thing sold, and yet seeking to avoid its consequences by limiting it to non-existence resulting from a particular nullity. There is an exceptional case, Littauer v. Goldman, 72 N. Y. 506, (1878,) which holds that the common law obligation, as to the implied warranty of identity in the thing sold, in the case of 'commercial paper, extends only to the genuineness of the instrument. The case was one involving the nullity of a usurious note, and, if correctly decided, would be authority for the proposition that there was a peculiar species of warranty in the sale of commercial paper,
(1883); Daskam v. Ullman, 74 Wis. 474, 476, (1889); Palmer v. Courtney, 32 Neb. 778, (1891); Ware v. McCormack, (Ky.) 28 S. W. 157, (1894); Brown ▼. Ames, (Minn.) 61 N. W. 448, (1894).
Opinion of the Court.
differing from all others; in other words, that there was a law merchant of warranty where there was no commercial contract. The opinion in this case illustrates the same contradictory position presented here by the argument of the defendant in error, to which we have just called attention, that is, that it admits the common law rule and then denies its essential result by eliminating conditions of non-existence which are necessarily embraced by it. It follows that this New York decision leads logically to the view expressed in the Maine and Maryland cases just referred to, for either the principle of warranty of identity must be accepted or rejected; it cannot be accepted and its legitimate and inevitable results be denied. The rule there announced was in conflict with previous decisions in New York, and the decision is strongly criticised by the Court of Errors and Appeals of New Jersey in Wood v. Sheldon, 42 N. J. Law, 421, 425.
In Giffert v. West, 33 Wisconsin, 617, (1873,) where a note was sold which was void for usury, the vendee was allowed to recover the consideration paid by him, and his right to do so was based upon the general doctrine that one making a sale is bound as a condition of the principal contract to an implied warranty of the existence of the thing sold.
In Hannum v. Richardson, 48 Vermont, 508, (1875,) a very clear statement of the doctrine is found. There an indorser sold a negotiable promissory note without recourse. The note had been given for intoxicating liquors sold in Vermont in violation of law, and on that account was void at its inception. It was claimed that the defendant knew of the invalidity of the note when he transferred it. The court, however, held that knowledge on the part of the seller was not necessary to fix his liability, saying (p. 510):
"By indorsing the note without recourse,' the defendant refused to assume the responsibility and liability which the law attaches to an unqualified indorsement, so that, in respect to such liability, it may perhaps be regarded as standing without an indorsement. If it be so regarded, then in what position do these parties stand in respect to the transaction? The principle is well settled, that where personal property of any
Opinion of the Court.
kind is sold, there is on the part of the seller an implied warranty that he has title to the property, and that it is what it purports to be, and is that for which it was sold, as understood by the parties at the time, and in such case knowledge on the part of the seller is not necessary to his liability.” On p. 511 the court further observed:
"The note in question was not a note, it was not what it purported to be, or what it was sold and purchased for; it is of no more effect than if it had been a blank piece of paper for which the plaintiff had paid his fifty dollars. In this view of the case we think the defendant is liable upon a warranty that the thing sold was a valid note of hand."
Nor is there any foundation for the assertion that Otis v. Cullum, 92 U. S. 447, and the cases of Orleans v. Platt, 99 U. S. 676, and Ætna Life Ins. Co. v. Middleport, 124 U. S. 534, both of which cite Otis v. Cullum, support the doctrine that a sale of commercial paper without recourse is not, as between the vendor and vendee, governed by the ordinary rule of the common law. On the contrary, that case expressly rested its conclusion on the decision in Lamert v. Heath, supra, which latter case, as we have seen, whilst enforcing the principles of the common law, considered that under the particular facts there presented it was a question for the jury to determine whether the scrip delivered was the kind of scrip which the defendant had ordered purchased. That case not only, as has already been stated, concerned non-negotiable paper, but its decision involved no question of the scope of the warranty, but solely what was the thing bought. Nor does the case of Otis v. Cullum justify the assumption that this court laid down the rule that a mere sale of commercial paper, as between vendor and vendee, when the sale was made without recourse, created some peculiar and exceptional warranty to be considered in this particular as the law merchant. It is true that in expressing the general doctrine, Mr. Justice Swayne said: "The seller is liable ex delicto for bad faith, and ex contractu there is an implied warranty on his part that they belong to him and are not forgeries. Where there is no express stipulation there is no liability beyond this." But in