Frontier Bank v. Morse

The opinion of the Court was drawn up by Whitman C. J. — It is a well established principle of law, that, if money be wrongfully paid under a mistake of the facts it may be recovered back, in an action for money had and received ; it being considered unconscionable, that money, so paid, should be detained from the payer. That the case here presented for our consideration is of that class seems incontrovertible. The plaintiff's were desirous of obtaining from the defendant that, which could be regarded as in the nature of money, with which to pay a debt due, where nothing but that, which was regarded as tantamount to the lawful currency, would be accepted in satisfaction. The plaintiff's delivered to the defendant the bills of banks of that description. In consideration thereof the defendant delivered to them an equal amount of bank bills, believed by both parties to be what the plaintiff’s were known to be in pursuit of, but which, unfortunately, the day before, had, in fact, ceased to be current as money; and had become mere merchandize, capable, as .the case shows, of being sold at only sixty-nine per centum of its nominal value. The question now is, who shall bear the loss of the residue. The defendant contends, that he was the innocent vendor of the bills, at the request of the plaintiffs, and for their accommodation ; and at what was then, at the place where they were sold, their current value; likening it to the traffic in merchandize, in which the principle of caveat emplor take place. And his counsel have argued ingeniously, and cited numerous authorities in support of his positions. On the other hand many cases are cited, and urged with great force upon our attention, supposed to be of an opposite tendency. The case relied upon by the defendant, as most directly in point, is to be found in the Law Reporter, Vol. 4, p. 214, purporting to be a decision by the Supreme Court of Pennsylvania, — 96 — in which it would seem to have been held, that “ a bona fide payment of the notes of a broken bank discharges the debt.” Mr. Chief Justice Gibson, in that case, as reported, would seem to have deemed it proper to go into an elaborate course of reasoning to sustain the decision. And well he might, for two important reasons: first — because the Supreme Court of the State of New York, and the court for the correction of errors of the same State, had decided otherwise, — Lightbody v. The Ontario Bank, 11 & 13 Wend.; — and secondly — because, independently of any adverse decision, he was probably aware, that doubts might be entertained of its soundness. And moreover, he has found it necessary to urge, to quote his own language, that “ the civil law principles of equity, however practicable in an age, when the operations of commerce were simple, slow and deliberate, would be utterly unfit for the rapid transactions of modern times.” It may be admitted, that there is some difficulty in extracting from the decisions in analogous cases, which are not, at all points, in perfect harmony with each other, the rule which ought to be applied in such cases. The New York rule is unquestionably more conformable, “ to the civil law principles of equity.” If not, however, in correspondence with the principles of the common law we should not be at liberty to adopt it. And if it be inapplicable to the state of things in this commercial age, as ■ the common law is founded on principles of practical utility, we might well hesitate before yielding to it our sanction as a rule of action. But we are very much inclined to consider equity and utility, in reference to rules of action, as nearly, if not quite, synonymous terms. That which is not equitable is not just, and that which is not just ought not to be law, and can scarcely be of practical utility. The Chief Justice seems to entertain great veneration for the principles of the common law, and in this we fully concur with him. And without intending to make any invidious comparisons between the decisions of the Courts of Pennsylvania and New York, in this particular, we are free to confess, that we entertain great respect for the decisions of the Supreme — 97 — Court of the latter State; and, especially, When accompanied by the almost unanimous concurrence of their court for the correction of errors. The fountains of the venerated common law are no where in America more copiously drawn upon for the correct rule of decision than in that State. To fortify his decision the Chief Justice relies mainly upon the dictum of Lord Mansfield, in Miller v. Race, 1 Burr. 452, that bank notes are treated as money, “ as much so as guineas themselves,’* which no one at this day will question, so long as banks maintain their credit, and it cannot be believed that Lord Mansfield had reference to bills of banks of any other description ; and upon the cases of Cambridge v. Allenby, 6 B. & C. 373; and Young v. Adams, 6 Mass. R. 182. In the case of Cambridge v. Allenby, the vendor of goods had received in payment the notes of a banking house, which had, a few hours before, stopped payment, neither' party, at the time, having any knowledge of it. The vendor kept the notes seven days without demanding payment of the bankers, or giving notice to the vendee to receive them back. The Court held, that by this delay, the vendor had made the notes his own. It is true that the Judges do remark, in giving their opinions, that, if the notes had been received as cash, the plaintiff must also have failed; but this was not the ground of their decision. And it is believed that there is no English de-cision to be found directly to that effect. In the case of Young v. Adams the decision was, that payment made in a counterfeit bill was a nullity; and that the amount of it was recoverable in an action for money had and received. Nothing more was decided in that case. The residue of the opinion of the Court, drawn up by Mr. Justice Sewall, contains some loose obiter dicta, in a style somewhat obscure, from which it would seem, the Chief Justice must have gathered, what he denominates, as tending to support his conclusion, the “decree of the Supreme Court of Massachusetts.” No decision of that Court can be found directly in support of any such doctrine. We think that neither the principles of the common law or of common honesty should — 98 — uphold it. And we do not believe that there is to be apprehended any embarrassment “ to the rapid transactions of modern times” from the adoption of the opposite doctrine. Our numerous banks, of small capitals, or of almost no capital, issuing and pressing into circulation their notes, and gaining for them in numerous instances an ephemeral credit and currency, cannot be considered as cash, if at all, longer than their credit is maintained. To hold otherwise would open a door to frauds innumerable. The holder of the notes of a broken bank, living in its vicinity, would be tempted to hasten into remote and obscure places; and before the news of the discredit of the bills had reached there, pass them off to the simple and unwary, who would be utterly unable to prove knowledge oí their discredit on the part of him, who had passed them off; and be therefore compelled to pocket the loss; whereas if the loss is made to fall upon him, in whose hands they might happen to be, at the time of the failure, no such result could happen. • Mr. Chief Justice Savage, in delivering the opinion of the Court, in Lightbody v. Ontario Bank, recognizes one rule, which we think cannot be questioned. It is, that, what can be ascertained to have been the intention of the parties, as to the import of their contracts, shall be conclusive upon them. If it could be inferred, from what took place between the parties, that the party accepting bank bills in payment or exchange’ was to run the risk of their genuineness and value, he should be required to abide, by the consequences. But. if it should be apparent, from the nature of the transaction or otherwise, that no such risk was in the contemplation of the parties, a different result should follow. If goods were offered for cash, and the buyer should take them with a full understanding, that he was to pay cash for them, and, in making payment, should, inadvertently, pay for them, in what had the semblance of cash, but which was not, in effect, its equivalent,' nothing would seem to be more reasonable than that he should make good the payment. — 99 — In the negotiation between the parties, in the case at bar, there does not seem to be any difficulty in ascertaining what must have been the understanding between them. On the one hand the plaintiffs wanted to avail themselves of that, which was, at the moment, equivalent to cash, and convenient for remittance by mail. Of this there is no reason to doubt, that the defendant was fully aware. The plaintiffs had an equivalent to offer him for it in bills of small denominations, not convenient for remittance by mail, which he accepted. At 4he time of making the exchange the defendant had, what, to a reasonable intent, he supposed was cash, and precisely that which the plaintiffs wanted, and passed it off to them accordingly. It does not seem that there could have been any misunderstanding as to the real intention of the parties. It was, however, afterwards discovered, that what the defendant let the plaintiffs have was not what he intended, nor what he well knew they expected they had received from him. What shall the defendant be holden to do in such case ? Certainly to reimburse the plaintiffs the amount of^ the loss originating from the disappointment. In doing so he would but conform to what must be believed to have been the intention of the parties. As to the rule, that, where both parties are equally innocent or equally guilty, potior est conditio defendentis, it can no more apply to this case than to every other case of money wrongfully paid by mistake. Both parties, in all such cases, are, or may be presumed to be, equally innocent, yet no such objection to a recovery could be interposed. This simple, and to us seemingly obvious view of the transaction, between these parties, will supersede the necessity of going into a review of all the numerous cases cited by the counsel for the parties, and in their elaborate arguments, urged upon our attention. The defendant, however, contends, that the plaintiff should have presented the bills in question to the bank, from which they had been issued, for payment. The answer "to this is, that they were not received for any such purpose. The plain — 100 — tiffs received them as currency, and to be paid as such. Not finding they would answer any such purpose the defendant was notified, as soon as was practicable, of their inefficiency; and that the bills would be returned to him as soon as practicable. The defendant further objects, that they should have been returned to him by the return of the mail, after they had been received at Boston, or as soon as practicable by mail; and that the plaintiffs should not have delayed their offer to return the bills, by waiting for their return by private conveyance from Boston. But it appears that he was notified by the plaintiffs of the failure of the bank, which had issued the bills, as soon as it became known to them, which was on the third day after they were remitted.to Boston, and that he would be looked to for reimbursement; and that he replied, he would have nothing to do with the bills. After this it would not seem reasonable, that he should complain, that the bills were not returned to him ¡n due season. And a similar reply might be made to his allegation, that, if the bills had been seasonably returned to him, he could have obtained specie for them of the person, who remitted them to him, After the defendant had declared, in peremptory terms, that he would have nothing to do with the bills, the plaintiffs were surely excusable in not taking the trouble to tender them to him. Judgment on the verdict.