Fisher v. Rieman

.Eccleston, J., delivered the opinion of this court. This is an action of assumpsit, in which the nar contains the four common money counts only. The plea is nan assumpsit. At the trial, the plaintiffs gave in evidence a promissory note with the protest thereof attached. The following is a copy of the note: “.$681. Baltimore, Feb’y 1st, 1854. Eleven months after date, I promise to pay to the order of — 508 — J. F. Kridler six hundred and eighty-one TW dollars, value received. Edwd. Dunn.” On said note ¡lie following names appear as endorsers: “Jacob F. Kridler, • Henry Shirk, Jacob F. Kridler.” Black, a witness for the plaintiffs, testified that they purchased said note from the defendant, who was a public bill and note broker in the city of Baltimore, for the sum of six hundred and fifty-one dollars and eight cents. Upon cross-examination, this witness stated that the defendant was generally known in the city of Baltimore as a public bill and note broker, largely engaged in the business of selling bills and notes, and that the plaintiffs had frequently bought the promissory notes of other persons from said defendant, before the purchase by the plaintiffs of the note offered in evidence. That the defendant was in the habit of bringing to the counting-room of the plaintiffs a large number of notes at a time, for the purpose of selling them, or some of them, to the plaintiffs, before the sale to them of the note in question. It was proved by the plaintiffs that the name of Dunn, as maker, and that of Shirk, as endorser of the note, were forged. But the plaintiffs’ witnesses, who proved this, testified that each of the two signatures of Jacob F. Kridler upon the note was the genuine signature of said Kridler; and that he was in excellent credit in the city of Baltimore down to the 27th day of November 1854, when he ran away from Baltimore, having committed other forgeries; and that he left some property behind him in the city on which there were “mechanics’ liens.” It was admitted, that before the suit was brought, the plaintiffs offered to return the said note to the defendant, and he refused to take it. The defendant’s witness, Patterson, testified that he was then in the employment of the defendant, and was so before and at the time of the sale of the note by the defendant to the plaintiffs; that Jacob F. Kridler was in the habit, before said sale, of putting into the hands of the defendant, as a bill and note broker, for the purpose of sale on account of said Kridler, — 509 — various notes held by him, and with his name on them, but that the witness could not recollect, particularly the note in question as one amongst those so put into defendant’s hands; that the defendant, is a public bill and note broker in the city of Baltimore, for all persons who may employ him for that purpose, handing over to such persons the proceeds of sale of such notes as are so sold, less the usual commission charged upon such sales; and that the proceeds of sale of the note given in evidence in this case, were paid by the defendant to his principal, who employed him to sell it, less the usual commission aforesaid, before the alleged forgery of the names of Dunn and Shirk upon said note was suspected, either by the plaintiffs or the defendant. The plaintiffs then prayed the court to instruct the jury, “that if they find from the evidence that the defendant sold to plaintiffs the paper given in evidence by the plaintiffs, purporting to be the promissory note of Edward Dunn, in favor of, and endorsed by Jacob E. Kridler, and also purporting to be endorsed by Henry Shirk, and if they further find that the names of Edward Dunn and Henry Shirk, as drawer and endorser of said note, were forgeries, that then the plaintiffs are entitled to recover such sum as the jury may find was paid by them to the defendant for said paper, notwithstanding the jury rnay find that the defendant acted as agent in said sale, unless they also find that the defendant, at the time of such sale, disclosed the name of the person or persons for whom he acted as agent, in such transaction.” The defendant submitted three prayers. The court granted that of the, plaintiffs, but rejected all those of the defendant; to which ruling of the court the defendant excepted; and by this appeal he seeks to have the judgment below reversed. In Story on Prom. Notes, sec. 118, (New Ed.,) when speaking with reference to the responsibility of a party who transfers a note by delivery merely, it is said, he warrants the instrument to be genuine, and not forged or fictitious, “unless where the note is sold as other goods and effects, by delivery merely, without indorsement,, in which case it has been decided — 510 — that the law respecting the sale of goods is applicable, and that there is no implied warranty.” See, also, the cases cited in note 1 to this section. In Chitty on Bills, ch. 6, page 246, he states the Jaw to be, that the assignee of a bill has, in general, no right of action whatever against the assignor, in case the bill turns out to be of no value, “when a transfer by mere delivery, without indorsement, is made by way of sale of the bill or note, as sometimes occurs, or exchange of it for other bills.” Of course neither of these authors has reference to any case in which the assignor has been guilty of any fraud in the transaction. In Baxter vs. Duren, 29 Maine, 434, the plaintiff instituted an action of assumpsit, relying upon a supposed warranty of the genuineness of the signatures of two endorsers upon a promissory note. The signature of C. & J. S. Bedlow, as makers of the note, payable to J. P. Wheeler, or order, was genuine. The names of J. P. Wheeler and William Demiog, as endorsers, were forged. The defendant handed the note to Wood, a broker, for discount or sale, without endorsing it. The note was sold to the plaintiff by the broker at a discount, in which transaction he acted in his ordinary course of business. The plaintiff, the defendant, and the broker, were all entirely ignorant that the names of the endorsers were forged. Before the note became due, the makers failed. The broker knew that the defendant was acting as agent of the makers. There was no proof that the broker informed the plaintiff that he was acting for the defendant, or that the defendant was acting for the makers. One of the questions involved in the case was, whether Wood, the broker, who was examined as a witness by the plaintiff, and objected to by the defendant, was not incompetent, on the ground of interest? His interest being supposed to consist in a liability on his part to refund the money to the plaintiff; and if, by his testimony, he could enable the plaintiff to recover the amount from the defendant, as the principal for — 511 — whom tile witness had acted as agent, he, the agent, would be relieved from liability. The court thought the plaintiff might be presumed to have known, from the nature of the broker’s business, that he was acting as an agent, of some person unknown; and that, therefore, the broker was to be regarded as one dealing with the plaintiff as an agent, without disclosing his principal. And that the defendant was in a like position, dealing with the plaintiff by an agent, and yet dealing with him as an agent, without disclosing his principal. After speaking in relation to the rule of law applicable to an agent under such circumstances, the court say: “It becomes, therefore, necessary to inquire whether Wood, by making sale of the note by delivery merely, without indorsement, and without making, as of his own knowledge, any representations respecting it, and without disclosing his principal, became liable to refund the money which he obtained by the sale of it.” It is then said: “When an innocent holder of negotiable paper parts with it by delivery, without indorsing it, in payment of a debt, due, or then created, as for example, in pay ment for goods then purchased, or by way of discount for money then loaned by a bank, banker, or individual, and the paper proves to have been forged, the debt or loan, not being paid by it, may be recovered. In such case there is a warranty implied by law, that the paper is genuine, as there is that, coin or bank notes, used for like purposes, are genuine. Jones vs. Ryde, 5 Taunt., 488. Fuller vs. Smith, 1 C. & P., 197. Camidge vs. Allenby, 6 B. & C., 373, per Littledale, J. Coolidge vs. Brigham, 1 Metc., 547. “When no debt is due or created at the time, and the paper is sold as other goods and effects are, the purchaser cannot recover from the seller the purchase money. There is in such case no implied warranty of the genuineness of the paper. The law respecting the sale of goods is applicable. The only implied warranty is, that the seller owns or is lawfully entitled to dispose of the paper or goods. Bank of England vs. Newman, 1 Ld. Raym., 442. Fenn vs. Harrison, 3 Term Rep., — 512 — 757. Fydell vs. Clark, 1 Esp. Rep., 447. Emly vs. Lye, 15 East., 6. Ex-parte Shuttleworth, 3 Ves., 368. Ex-parte Blackburne, 10 Ves., 204. Ellis vs. Wild, 6 Mass., 321.” It was held, that Wood was not liable to refund the amount received for the note, and was, therefore, a competent witness. Upon the application of the same principle which prevented Wood from being liable, the court decided that the defendant was not liable, without proof of an express warranty, because “he had a right to dispose of the note as a piece of property, deriving his authority from the makers, who were liable.” We have been induced to examine that case with much care, because we think it was correctly decided, and is, in most respects, very similar to the one before us. ' There, in deciding against the plaintiff’s right to recover, much stress is laid upon the facts, that the transaction was a sale, when no debt was due to the plaintiff, or created at the time; and the note was parted with by mere delivery, without indorsement, or any express warranty. These important facts existing, the defendant was held not to be responsible for the return of the money paid for the note, although the names of the indorsers were forged, (this fact not being known to the plaintiff, defendant, or broker,) and notwithstanding the makers failed before the note became due. The court express the opinion, that the cases which had been decided on this subject, were rather apparently in conflict than really so, and that this apparent conflict had arisen from a failure to notice the important difference between a case. where an innocent holder of negotiable paper parts with it by delivery, without indorsing it, in payment of a debt due, or then created, and a case where the paper is so parted with, by a sale, when no debt is due, or created at the time. The evidence before us shows clearly that the name of Dunn as maker, and Shirk’s name as indorser, were forged; but that the plaintiffs and the defendant knew nothing of this until after the sale, and the money had been paid over by the defendant to Kridler, less the usual commissions. Kridler is the payee in the note, and his two signatures on the back of it, are in his handwriting. The plaintiffs’ own witness proves that the — 513 — note was purchased by the plaintiffs from the defendant, who was a public bill and note broker, and generally known and largely engaged as such; the plaintiff having frequently bought other notes from the defendant, previously to the purchase of the note in question. (Decided January 13th, 1859.) The note is dated February 1st, 1854, payable eleven months after date. It is in proof that Kridler was in excellent eredit down to the 27th of November 1854. That he left some property behind him, on which there were mechanics’ liens. In addition to proof of a sale by the plaintiffs’ witness, the defendant’s also speaks of the transaction as a sale. And the prayer of the plaintiffs asked the court to instruct the jury, “that if they find from the evidence that the defendant sold the paper given in evidence by the plaintiffs,” <fcc. There was no endorsement on the note by the defendant, no evidence of any express warranty given, or representation made by him, amounting to a warranty, that the forged signatures were genuine; nor was there any proof of a previously existing debt, or of one created at the time by a loan. And considering this to be a sale, as other goods and effects are sold, we think that, according to the principles announced in Baxter vs. Duren, the plaintiffs are not entitled to recover, and that the court were wrong in granting the prayer of the plaintiffs. We have carefully examined the cases relied upon by the appellees’ counsel, and, in our opinion, there are features in each which distinguish them, materially, from the case before us. This judgment will be reversed, without ordering a procedendo, and therefore we need not decide whether the defendant’s prayers were properly refused or not. Judgment reversed, and no procedendo ordered.