" FEDERAL REPORTER.
UNITED STATES V. NATIONAL PARK BANK OF NEW YORK.
(District Court, S. D. New York. January, 1881.)
1. MONEY PAro UNDER A MUTUAL MISTAKE OF FACT-FORGERY OF
Where the defendant collect'ed from the plaintiff the amount of 8 draft received by it from another bank for coilection, crediting the payment in its account with the latter, which draft was drawn by a paymaster for bounty money, to the order of one D., upon the assist. ant treasurer of the United States at New York, purporting to be indorsed by him, and was indorsed by the other bank, but not by the defendant, and it was claimed that the fact that D.'s name was forgery was not discovered by the plaintiff until 10 years afterwards: and not communicated to the defendant until, another year had elapsed,IIi an action to recover the money: ;.;: Held, that the case is clearly one of payment of money nnder It m'\1tU!\1 rnistakeo! fact, and the plaintiff i$ entitled to recover, there " allegation or proof of any 19ss or damage tothe defendant, " l . or of any loss of remedy by the defendant against tlie bliilkfroIii .:!' *hich the draft was received; by realJl>n.'0F the delay in disco"'eriilgoJ.l j; ,information of the :tnistake. · ! ',., unattended, with, )Qssor damage, ", 'iiot'ifnpair the equitj of the paying money iindera mutlJ81 ::;, 'take'of'fact, to rliMJieriffrl:5JIi the other-party R"Mthj theiefor. ' 1) iQ'\ < '.I;lte rule ,Price,;v.;Nelll, 3 Burr, ,to ;tlle : , Acceptance or pll-yment of a draft, the drawer's signature being ',";forged, 'and follJwiirg it, are no'w regin-ded to the :gJn(iralrl1le: The. cases of counterfeit rq(lIley rest on a different ,principle, the reJD,edies over of ',theory being that delay must necessarily impair thepariy from whom the money was received. " . 'tn this case the defcndant has'lf complete remedy against the tither bank upon the plaintiff's recovery in this action. ,It is immaterial what the plaintiff may do with the money, or what is its duty. towardsD; . ,
O. P. L. Butler, Ass't Dist. Att'y, for plaintiff. Barlow d; Olney, for defendant. CHOATE, D. J. This is a suit brought to recover the sum of $100, paid under a mistake of fact. A jury trial has been waived. There is no dispute as to the facts. One Dunlap made application for bounty money; and in settlement of the claim a paymaster of the United States drew a draft on the
UNITED STATES, V. NATIONAL PARK BANK OF N. Y.
assistant treasurer at New York for· the sum of $100, payable. to the order of Dunlap. , The defendant received the draft from another bank for collection, indorsed in the name of Dunlap, and also indorsed by suoh other bank. Without indorsing the draft, the defendant presented it to the aseist.. ant treasurer in New York, and received the $100, on the sixteenth of March, 1869, and immediately thereafter allowed it asa credit in its account with the bank from which it was receiyed. The indorsement of Dunlap's name was a forgery. a clear case of payment under ·a Inutual mistake of fa.ct. ,It' is claimed, however, fortha defendant that the plaiI;ltiff cannot recover on account of its negligence ih',.'i'n4 fp.rmingihe defendant of the forgery after its discoverYithat t.b.eindorsement was forged. It is claimed:fthat the plaintiff the fprgery when Dunlap made anothe»:applica. tjQ1kf91: the bounty, which he did:'OIi the of, Jrebru:a:ry, :1879, and that no infol'.Iti8.tion of the forgery waS'communicated· by ·the plaintiff' to tl1e defendant, till .Februa.ry". a,1-880, Ris .not alleged. iritbe auswer, nor is there.any.> that: has.sutr.ered.any loss 'or datna:ge--:.by' rell!Son of this or lost' any remedy overaga.insidha.; party-from whomi't received the draft and to whom it,:pai,d.' the ,money,. But it is contended that buch delay is' of such a,. character. that loss or damage will )be: pi:esu:tned to have resulted from it. . I think. this ,point is not' susta.ined,eithel' :byauthority or the reason of the. thing., Money thus paidlinder a mistake of fact 'is recoverable, be..' cause it is paid without any actual consideration, and not equitablybe retained. The rule is equitable, and may be defeated where to allow the recovery would be inequitable. Negligenoe in the transaction, unattended with any loss or harm resulting from such negligence to the other party, surely does not impair .the equity of the claim against him. Such negligence does not touch the reason of the rule allowing the recovery. If that negligence consists in .delay in making the reclamation, with. what justice can the party to whom the payment was made say that though he received the money under a mistake of fact, and was bound to return
ago, and could not justly or equitably keep it then, beoa.use it did not belong to him; yet, now that the party paying has neglected to let him know of his claim after discovery of the mistake, he can justly and properly keep it? This would be absurd. The authorities are to this effect: that negligence in giving information of the mistake to the· other party, with resulting loss of remedy over, is a defence, but otherwise not. The doctrine rests on the duty which the party paying owes to the other to shield him, as far as possible, from loss or damage resulting from the mistake, when he discovers that it is such. If the failure to perform that duty results in loss or damage to the other party, then it is inequitable that he should be obliged to refund. But if that' negligence has made no difference to him then it is immaterial. 8eeKingston Bank v. EUinge, 4-0 N. Y. 891; Meyer v. The Mayor, 68 N. Y. 455; Pardee v. Fisk, 60 N. Y.271; Union Bank v. Leath Nat. Bank, 43 N. Y. 456; Allen v. Fourth Nat. Bank, 59 N. 19; Bank of Commerce v. Mechanics' Banking Ass'n, 55 N. Y. 213; Continental Nat. &nk v. Nat. Bank Com. 50 N. Y. 575. These cases, it is true. are mostly cases where the negligence imputed was in mak. ing the payment or in not discovering the mistake, but I think the reasoning on which they proceed applies with equal f,orce to cases where the imputed negligence is in giving informa:tion after discovery of the mistake. U. S. v. Union Nat. Bank, D. C., 8. D. N. Y., April 24, 1879; 2 Parsons' Notes and Bills, 597. The rule declared in Price v. Neal, 3Burr. 1354, which precludes recovery the mistake consists in the erroneous admission as genuine, by acceptance orpayment, of a draft where the signature of the drawer was forged, and the cases following it, are now regarded as exceptions to the general rule that negligence in making the payment, even where the matter mistaken was peculiarly within the plaintiff's knowledge, or one as to which he had a duty of . inquiry; unattended with damage, does not defeat the action. Allen v. Fourth, Nat. Bank. ut supra; and see Welch v; Goodwin, 123 Mass. 71. The eases cited by the defendant's couDsel, where delay in giving notice that money
UNITED STATES V. NATIONAL PARK BANK OF N. Y.
received was counterfeit was held fatal to the recovery without actual proof of damage, are quite different in principle from this case. They proceed upon the theory that such delay, from the nature of the case, must necessarily.impair the over of the party from whom the money was received, and make it more difficult, if not impossible, for him to trace out the source from which he himself received it, or to find the guilty patty and obtain restitution from him. Pindall's EX'1'S v. N. W. Bank, 7 Leigh, (Va.) 617, and cases cited; Gloucester Bank v. Salem Bank, 17 Mass. 22. In the present case the defendant's answer shows that it received the draft from another bank, and its remedy over will be complete upon the plaintiff's recovery in this action. Merchants' Nat. Bank v. First Nat. Bank of Baltimore, a'FED. REP. 66. I think there was no obligation on the part of the plaintiff to surrender or tender to the defendant, upon the trial, this draft. The possession of it was not necessary to a recovery over. I see no force in the argument, urged by defendant's that the plaintiff has no just claim" ex requo et bono, because Dunlap cannot sue the government if. the plaintiff recovers; nor is there any force in the suggestion that the suit is virtually one for the benefit of Dunlap, a,ml that he has been grossly negligent. What the government may do with the money, or what .its duty is towards Dunlap, are matters immaterial. The defendant has received the plaintiff's money, for which it gave no actual consideration, and is bound in law ,and ex cequo et bono to return it. It is unnecessary to consider the point made for the plaintiff that there was no such negligence in this case as the ant's arguments have assumed, or that, if there was, it 'Would not operate to defeat the action on the general ground that laches is not imputed to the government by reason of the neg. ligence of its. officers. Judgm:e'nt for plaintiff, 'With interest and cOfltS.
CO. 'lJ. PEEBLES' SONS.'
(Circuit Oourt,8. D. Ohio.
SPECIAL CONTRACT-PLEADING ON COMMON COUNTS.
WHEN PLAINTIFF MAY DECLARE
Where the contract has been peIformed, or where it has been ahandoned by the parties, or put an end to by the defendant, or where it has been only partly fulfilled by the plaintiff and the defendant has accepted and enjoyed the benefit thereof, the plaintiff may elect to bring his action either upon the special contract, or in. general assumpst"t, declaring upon the common counts.
GENERAl. ISSUE TO COMMON COUNTS IN ASSUMPSIT-DEFENCES UJ;DER -FAILURE OF CONSIDERATION.
Under the general issue in assumpsit upon the common counts, the defendant may show that he was under no legal obligation to the plaintiff for the cause of action set out in the petition, and may also show a total or partial failure of consideration. 3.
WHEN DUTY OF COURT TO CONSTRUE CoNTRACT-VERBAL CONTRACT -CONFLICT AS TO ITS TERMS.
If the conti act between the parties was in writing, it would be the duty of the court to construe it; but if it was a verbal contract, and there is a conflict in the testimony as to its terms, the court cannot construe it, but the matter must be left to the jury, to determine from all the evidence what the contract was. 4. IMPLIED WARRANTY OF MANUFACTURED ARTICLE-FIT FOR USE INTENDED.
Where a vendor agreed to supply or manufacture for a vendee a chattel, without the vendee having an opportunity of examination, the law implies that the vendor undertook that it should reasonably answer the purpose for which it was intended by the parties. Failure in this respect authorizes the vendee to reject within the time specifitJd for its trial. 5.
SALE OF MANUFACTURED ARTICLE-A.CCEPTANCE.
If, before the expiration of the time fixed by the agreement for its trial, the vendee notified the vendor that he would not accept it, and requested the vendor to take it down and remove it, which he refused to do, the fact of its remaining in the position in which the vendor placed it, and its use by the vendee for a few days thereafter, while waiting for the vendor to take it down and remove it, would not be an acceptance by the vendee.
Action for Goods Sold and Delivered·
· Reported by Messrs. Florien Giauque and J. C. Harper, of the Cincinnati liar.