Houghton v. Adams

By the Court, Roosevelt, J. This is a controversy arising out of the failure of the Havre De Grace Bank of Maryland, in August, 1850. The plaintiffs were exchange brokers in Wall street. On the 27th of August, the defendant sold and delivered to them, in the ordinary course of business, §190 of the bills of the bank, allowing a discount, which was the then usual rate, of [548] one per .cent, or one dollar and ninety cents on the whole parcel. The hank, it appears, redeemed its notes regularly throughout the previous day. It did not open on the 27th ; it had failed at or before 10 o’clock of that day, in Maryland. Its bills, those in controversy, were sold by the defendant to the plaintiffs a littM after 3 P. M. of the same day. Heither party knew, or, considering the distance, could well have known, of the failure at the time. And the defendant soon after, upon learning the true state of the ease and that there" had been a mutual mistake, promised, and of course acknowledged the moral obligation, to refund. That promise, he now insists, not having been reduced to writing,- is not legally binding. But although not binding in law as a promise of payment, it is conclusive evidence in law as an: admission of fact. It shows, beyond dispute, that it was no part of the original contract-^a contract which being simultaneaously executed required no writing—that for the small consideration of one dollar and ninety cents, the brokers' were to take, not only the trouble of collecting the notes of a distant bank, but the risk of their being at the time actually “ bad.” “ Broken bank notes,” by a sort of universal understanding, are a different commodity from merely “ uncurrent money.” And when a person pays out, or sells, a bank note as merely uncurrent, and at ..a rate corresponding,- he expects and understands that in ease it turns out that the bank at the time was not only distant but defunct, he is to refund, as in justice and equity he obviously ought, the consideration received. [New-York General Term, November 6, 1854. The understanding of the parties, in this as in other cases, when clearly shown, and when there is no formal' writing and none required, is the1 contract of the parties ; and that contract, there being nothing unlawful in it, is the judicial measure of the parties’ rights. In this view of the case, the report of the referee, in its legal conclusions, against the plaintiff, is erroneous ; and the judgment consequent upon it should therefore be reversed and a new trial ordered, with costs to abide the event: The trial, unless both parties consent to another reference, to be by jury. Mitchell, Roosevelt and Clerke, Justices.]