#### Edmunds v. Diggs.

February, 1845,

Richmond.

[42 Am. Dec. 561.]

(Absent Stanabd,* J.)

1. Warranty—Bank Notes—Value of—There is no warranty ot value on the sale or exchange, or the paying away genuine bank notes.

2. Same—Same—Genuineness of.—It seems that there is a warranty oí the genuineness of a bank note, which is paid away or exchanged.

This was an action on the case by Diggs against Edmunds, in which the declaration charged in substance, that the defendant exchanged with the plaintiff 400 dollars of the notes of the Mechanics Bank of Alexandria, for other bank notes; and undertook, and promised that the Mechanics .Bank notes were, at the time of the exchange, sound and current; and were worth 400 dollars in value; whereas they were at that time utterly worthless.

On the trial of the cause, it appeared that the plaintiff, who was one of the deputy sheriffs for the county of Eauquier, had received from the other deputy sheriffs the amount of the public revenue due from that county, *in notes of the Virginia banks, and was about to start to Richmond to pay it into the treasury, when the defendant applied to him to let him have 400 dollars in large notes for that sum in smaller notes of the Mechanics Bank of Alexandria, stating that he wished to remit the monejT by mail to his brother, who was in Baltimore, and that there was great danger in remitting small notes by that conveyance. The plaintiff objected to making the exchange, as he had procured Virginia bank notes for the purpose of making his payment into the treasury, a purpose which the Mechanics Bank notes would not answer; but upon the defendant’s urging his request, and telling the plaintiff that he could exchange the notes again in Fredericksburg for Virginia notes, and they would suit his purpose as well as Virginia notes, the plaintiff complied with his request, and gave him 400 dollars in Virginia bank notes, for that sum in the notes of the Mechanics Bank of Alexandria. At the time this exchange was made, the notes of the Mechanics Bank were passing currently at par in the county of Eauquier, but on the same day, the bank stopped payment, though it did not appear that the defendant had any notice or suspicion of an intention to stop payment, nor could he have heard of the actual stoppage of payment by the bank at the time the exchange was made. The plaintiff having heard of the failure of the bank on the day after the exchange when on his way to Richmond, on the next day wrote to the defendant, stating the fact, and offering to return the bank notes, which were presented with the letter to the defendant, who declined to receive them. The bank never resumed payment, and the notes immediately fell below par, and continued to decline until they became nearly or quite worthless.

After the evidence had been introduced, the defendant moved the court for two instructions to the jury, the second of which was, that if they believed that the defendant did, at the time of making the exchange of *the bank notes, make the representations and declarations stated by the witnesses, they do not in law constitute a warranty; which instruction, the court refused to give, and the defendant excepted.

The jury having found a verdict for the plaintiff, for 400 dollars, with interest from the time of the exchange, the defendant applied to the court for a new trial, but the court overruled the motion, and entered judgment upon the verdict, whereupon the defendant applied for and obtained an appeal to this court.

Stanard, for the appellant.

C. & G. N. Johnson and R. G. Scott, for the appellees.*

*

I-Ie baa been counsel in the cause.

*

The cause was elaborately argued in writing, but tbe reporter has not been able to get the opening argument of the appellant's counsel.

BALDWIN, J.,

delivered the opinion of the court.

The court is of opinion that there is no implied warranty of the value of current money of the country, passing from hand to hand, in the course of trade, commerce and other business. This is true, not only of the money made by law a good tender in the payment of debts and performance of contracts, but is equally so in regard to the notes of banks and bankers, payable to bearer, and circulated by delivery. These are not merely the representative of money, but in the course of business, and by common usage, are substantially employed and treated, for most purposes, as actual money or cash. The circulation of them depends, not upon the responsibility of those who pass them, but upon the opinion and estimate of those who receive them. Those who circulate them are not understood as thereby giving any assurance of the credit, punctuality or solvency of the makers; in regard to all which the receiver exercises his own judgment, or relies upon that of others in whom *he has confidence. There is but a single guarantee which those who circulate the money of' that, or *144any other kind, can be understood to give, to wit, that it is what it purports to be, genuine and not counterfeit. Beyond that, in the absence of express warranty, or •fraudulent misrepresentation or concealment, the receiver takes it at his own risk. There is no implied warranty, whether of title or value, in the circulation of bank notes, any more than of other money. The title to them can never be questioned in the .hands of a bona fide holder; and on his part he takes them as money, for whatever they may be worth. Both parties are equally innocent, and there is no reason or justice in throwing the loss sustained by one upon the shoulders of the other, and sending him against a third in the like predicament, and so continuing the pursuit ■through various stages of transitory ownership, to fix the burthen at last upon some innocent person. This would occasion much harassing litigation, arising out of inabilities of banks to meet their engagements, and embracing cases of partial as well as total insolvency, and even of mere depreciation from temporary suspensions of .specie payments. It is not the condition but the credit of the banks which affects the circulation of their paper; and it matters not whether that credit be destroyed or impaired before or after their notes have passed from one person to another, in the course of business, if there be no want of good faith between the parties to the transaction. That credit still exists as between them; and there is no principle of law, founded upon a mutual mistake of the parties, or a failure of the consideration, which can reach such cases; because, from. the nature of the subject, the character of the transaction, and well founded considerations of policy, the law refuses to raise a promise of indemnity before the loss has occurred, or of compensation for it after-wards. The reason and policy of the law are different in respect to the passing of counterfeit money, which in case of loss, presents the ^question not of value but validity, the forged coin or paper being under all circumstances a mere nullity : while the vigilance of all engaged in dealing with the currency is enlisted in the detection of counterfeits, by the guarantee of their genuineness from those who pass them. The court is, therefore, of opinion, that in the present case, in the absence of an express contract of warranty, substantially such as set forth in the special counts of the declaration, the defendant in the action incurred no legal liability to the plaintiff therein, on account of the exchange of bank notes in the second bill of exceptions mentioned; by which the defendant, in consideration of certain notes on one or more of the Virginia banks then received of the plaintiff, then passed to him other notes of equal amount, on the Mechanics Bank of Alexandria; though the last mentioned bank had recently stopped payment at the time of said exchange; thougn the plaintiff shortly thereafter offered to return said notes of the Mechanics Bank to the defendant, which the latter refused to receive; and though said Mechanics Bank afterwards proved to be wholly, or to a great extent, insolvent. And the court is further of opinion that upon the proofs stated in the said second bill of exceptions, the representations and declarations therein set forth, as made by the defendant at the time of said exchange, did not in point of law constitute an express warranty as aforesaid. Wherefore the court is of opinion that the said circuit court erred in refusing to give to the jury the instruction moved for by the defendant’s counsel, as stated in said second bill of exceptions; and moreover erred in refusing to grant the defendant a new trial, as stated in the entry directed bjr the said court to be made upon the record. It is, therefore, considered by the court that the said judgment of the said circuit court be reversed and annulled, with costs to the appellant, and that the verdict be set aside, and the cause remanded for a new trial.

(See appendix, 1 Graft. 549, for dissenting opinion of Judge Cabell in this case.)