Charnley v. Dulles

The opinion of the Court was delivered by Sergeant, J. The decisions in this and other courts seem to have established the rule that a party selling as his own, personal property of which he is in possession, warrants the title to the thing sold; and that if, by reason of defect of title, nothing passes, the purchaser may recover back his money, though there be no fraud or warranty on the part of the vendor. This doctrine is held to apply to choses in action, as well as other descriptions of personal property; and therefore if one innocently sell or transfer for value a bank note, negotiable note, bond, or other instrument, and it turns out that the instrument is forged, so that it is worthless in the hands of the transferee, the latter may recover back again the value given for it on the implied warranty of genuineness. This being the general principle, the question arises, what is the effect of a special or modified endorsement of a note by the vendor, “ pay without recourse ?” Ordinarily, the effect of such endorsement of a negotiable instrument is, that the endorser is not to be liable for the payment of the note, in case of its dishonour at maturity, as he would be, by the law merchant, on an unqualified endorsement: but it goes no further; it does not exempt him if the note be forged. Where, however, the note is not a negotiable instrument, the endorser is not responsible as such, though his endorsement be absolute and unqualified. And that is the case before us; for an instrument of the kind in question was decided by this court, in Patterson v. Poindexter, (6 Watts & Serg. 227), to be merely a certificate of deposit, transferable by endorsement which did not render the endorser liable for its payment. The words “ without recourse,” therefore, in the present case, have of themselves no legal meaning or operation, since the position of these parties is the same with or without them. In a [362] case of this description we must look to the understanding of the parties as to the design with which they were used; and where there is parol evidence of what passed at the time, it must be considered in connection with the writing, to explain the transaction. Evidence was given at the trial that the defendants informed the plaintiff of the imperfection of the endorsement, and of the difference between the name of the payee, J. S. Skinner, and the endorsement, J. F. Skinner. It was for the jury to say, on all the evidence, what was the understanding of the parties as to the liability of the defendants; whether the plaintiff took the note subject to every risk, as well of the solvency of the parties as of the genuineness of the signature of the payee to the endorsement. If he did, the defendants are not responsible: but if, on the other hand, there was no such understanding, the words “ without recourse” alone do not, in law, exempt the defendants from responsibility. On the other points we are not satisfied there was any error. It was the case of a fund deposited in a distant bank, bearing interest at the rate of 6 per cent, per annum, and a variety of parol evidence was given, on which the question of laches in presenting the certificate to the bank for payment, was a mixed question of law and fact, which the jury was to decide under the instruction of the court; and it cannot be said that the time merely was unreasonable. So, on the question of giving notice to the defendants after the plaintiff was informed of the forgery, it was for the jury to say how long it was before such notice was given, it being alleged by the .plaintiff that the demand made by Mr Law, on the 31st May 1839, was not the first notice; and also whether the plaintiff, under all the circumstances, had been guilty of such neglect as to forfeit his right. We do not think the time, about two months, of itself sufficient for the court to say he is barred by it. Other circumstances in the case must be considered in connection with it. Judgment reversed, and venire facias de novo awarded.