Case Name: Solomon Sturges & Co. v. The Bank of Circleville
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1860-12
Citations: 11 Ohio St. 153
Docket Number: 
Parties: Solomon Sturges & Co. v. The Bank of Circleville.
Judges: Brinkerhoff, C.J., and Scott, J., concurred.
Reporter: Ohio State Reports, New Service
Volume: 11
Pages: 153–173

Head Matter:
Solomon Sturges & Co. v. The Bank of Circleville.
¡Jj., as cashier of defendant, proposed, by letter, to sell plaintiffs a bill of exchange drawn by B. & Co. for $5,000, at the price of principal, interest, and current rate of exchange of the same. S. & Co., by letter, accepted the proposition, and forwarded the money in payment. L. received the money, and gave credit as expressed by letter to plaintiffs, inclosing a bill by F. A Co., strangers to plaintiffs (and indorsed without recourse by M., a stranger, and not indorsed by defendant), for $5,000, charging therefor the same price, informing them the B. A Co. bill was gone, and adding, “but this bill is perfectly safe.” To which the plaintiffs replied by letter — “ Tour favor with stated inclosure is received, and is very satisfactory.” S. & Co. were unable by use of due diligence to collect the bill.- Held)
1. The cashier L. is to be regarded as the agent of the defendant, in the transaction.
'2. The affirmation of the cashier, accompanying the bill sent to the plaintiffs, that the “bill is perfectly safe,” amounted to a warranty, or a representation in the nature of a guaranty, on the part of defendant, that the bill was collectible.
Reserved in the district court of Pickaway county.
The following statement of the case was agreed upon by ■the parties:
The Bank of Circleville, defendant, located at Circleville, 'Ohio, suspended specie payment on the 7th of November, 1854, and never afterward resumed, its charter expiring by' limitation on the 1st of March, 1855.
The plaintiffs, residing at Zanesville, Ohio, wrote to the-defendant, by mail, on the 11th of November, 1854, as follows :
Letter “ E.”
“Zanesville, 0., Nov. 11, 1854.
“ H. K. Lawrence, Esq., Cash.:
'■'■Lear Sir — We have some $3600 of your notes which we can not use as currency. You hold E. Buckingham & Co. on Adams and Buckingham, $5000, maturing early in January. We shall be glad to take E. B, &. Co.’s bill, and send you bal. in Cireleville very early, making the arrangement (interest, exchange, etc.) equitable. Of the $3600, E. B. & Co. yet have about $1400, 'and this arrangement is made with approbation.
“Please answer. Yours, etc.,
“ Solomon Sturges & Co.”
“ P. S. Your suspension, and that of E. & S., and Sturges- & Ellis, was unexpected, and, I think, unnecessary. We are in a bad ‘ storm,’ but I trust shall see calm and bright days yet; be hopeful, all will yet be well.
“ Yours, etc., S. S.”
The defendant, by H. K. Lawrence, its cashier, replied by mail, on the 15th of November, as follows:
Letter “ A.”
“Bank oe Circleville,i “ Cireleville, Nov. 15, 1854. J
(Sept. 21, S3947.) “Solomon Sturges & Co.: . ^00-1’ “m1-)■ ($6088.)
“ Gent. — I have your favor of the 11th inst., and note contents. I should be very willing to malee the arrangement you speak of, were the bill still in my possession, but I have'transferred over 100,m of my bills rec’l in payment of depositors, and that one among the number. I have Buckingham & Co., of Toledo, on B. IL B., N. Y., falling due Nov- 24r-27, $5000, which I will transfer to you for our notes, making exch., etc., equitable. Will that do ?
“ Truly yours, H. K. Lawrence, Cashr.”
“P. S. The storm would not have driven us to the wall had it not been for the simultaneous discrediting of our notes in every quarter. We had thrown home upon us over 100." circulation, which when redeemed we could not use again in any direction, and to crown all, the Cin. b’ks threw out our notes, and thereby created a panic which would have turned our whole circulation into the hands of brokers running it rapidly in for coin. The suspension of E. & S. would not have taken place, I imagine, had it not been for Mr. Ellis’ illness. When I have an opportunity to see you personally, I can convince you of the propriety of our suspension.
“ To S. S. Truly, L.”
On the 21st of November, the plaintiffs sent to the defendant, by express, a package of its notes, and wrote as follows:
Letter “ E.”
“ Solomon Sturges & his Son, Savings Bank oe
Buckingham Sturges. .Solomon Sturges & Co.
“Zanesville, 0., Nov. 21,1854. “H. K. Lawrence, Esq., Cash.,
“ Circleville, O.:
“Lear Sir — We send you pkg. your notes $8947, to be applied on bill on N. York as per your letter of 15th. Will ads. you more particularly by mail.
“ Yours respectfully,
“Solomon Sturges & Co.,
“ By M. Dillon
“ Please acknowledge ret.”
On the 22d of November, the defendant replied, by mail as follows:
Letter “B.”
“Bank oe Circleville, 1 “ Circleville, 0., Nov. 22, 1854. /
“ S. Sturges & Co.:
“Gents. — I have yours of 21st inst., and credit notes inclosed $3947. Truly yours, H. K. Lawrence, Cash.”
On the 4th of December, defendant again wrote to plaintiffs, in reply to their letter of the 1st, which is not produced, ■as follows:
Letter “ C.”
“Bank oe Circleville, 1 “ Circleville, 0., Dec. 4, 1854. J
S. Sturges & Co.:
“ Gents. — I have your favor of the 1st inst., and credit jour acc’t:
“ Notes inclosed,.....$1141
“ I herewith inclose and charge, you, to bal. acc’t:
“ Jefferson Fulton’s bill, Jan’y 27th, . $5000
“ Exchange on do.,.....50
Cash, ........ 38
$5088
“ The Buckingham bills I proposed to give you, are gone, but this bill is perfectly safe. You had as well send it here to the Pickaway Co. Bank for collection, as the party may wish to settle it here.
“ Truly yours, H. K. Lawrence, Cash.”
The plaintiffs replied, December 7th, as follows:
Letter “ Gr.”
“ Solomon Sturges and his Son, I Savings Bank oe Buckingham Sturges. I Solomon Sturges & Co.
“ Zanesville, 0., Dee. 7, 1854.
“ H. K. Lawrence, Esq., Cash.,
“ Circleville:
“ Lear Sir — Your favor of the 4th inst., with stated indo sure is received, and is very satisfactory.
“ Yours respectfully, Solomon Sturges & Co.,
“ B.y M. Dillon.”
Oopy of the Bill of Jefferson Button, marked “ L.”
“$5000. Circleville, 0., Nov. 28,1854.
“ Sixty days after date, or whenever thereafter presented" at the office of the Amer. Exchange Bank, New York, pay to-the order of Samuel Marfield, five thousand dollars, for value-received (second of same tenor and date being unpaid). Acceptance waived. And we dispense with demand of payment, protest, and notice of nonpayment of this bill of exchange, and authorize any attorney at law to appear for us, or either of us, as principal debtors, at any time after the maturity of the same, in any court of record in the State of Ohio, waive the issuing and service of process, and confess judgment in favor of the holder hereof for the amount of the bill and interest, with the damage allowed by law on protested bills of exchange, drawn on any person or persons or body corporate - within the jurisdiction of the United States, and without the jurisdiction of Ohio, together with costs of suit, and to release all errors and writs of error in law or equity, and the right of appeal.
“ Witness our hands and seals this 28th day of Nov. 1854.,-
“Jefferson Fulton, [l. s.]
“ J. W. Blizard, [l. s.]
“ To Chas. A. Meigs, Esq.,
“ New York.
“ No. 11768. Due Jan’y 27 — 30.”
Indorsements.
“ Pay Solomon Sturges or order, without recourse.
“ S. Marfield.”
“ Pay O. Ballard, Esq., Cash’r, or order.”
“ Pay C. W. Rockwell, Cash’r, or order.”
On the 19th of December, the plaintiffs wrote to the de - fendant as follows:
Letter “H.”
“ Zanesville, Dec. 13, 1854.
“ H. K. Lawrence, Esq., Cash.,
“ Circleville, O.:
“ Lear Sir — We have about one thousand dollars of youi. notes, for which, if sent you, can you send us a good short bill on N. York or Philad. We do not like your indorsing bills sent-us, ‘ without recourse,’ and think you ought not to .send us any bills you do not think safe enough to risk your indorsement. Respectfully yours,
“ Solomon Sturges & Co.
“ By M. Dillon.”
On the 15th of December, the defendant replied as follows:
Letter “D.”
“Bank of Circleville, i “ Circleville, 0., Dec. 15, 1854. /
■“ S. Sturges & Co.
“ Gent — I have your favor of 13th inst., and note contents. ■Our bills are most all large that we have left. If you choose, you may send us what you have of our notes for credit, and continue sending as you get 500 or 1000, and when you have 4 or 5000 on hand with us, I will transfer you a good bill. As far as the chance of loss is concerned, I should not have the slightest hesitation in indorsing all our bills given out, but as some of our bills, although perfectly safe, will have to be renewed in whole or in part, I would prefer my name off in case they were protested.
“ Our having discounted the bills is pretty good evidence we believe them to be good.
“ Truly yours, H. K. Lawrence, Cash’r.”
Jefferson Fulton and J. W. Blizard, the drawers of said bill of exchange, resided in Fayette county, Ohio. Plaintiffs had no knowledge, when they took said bill, of them or their circumstances, or in regard to said bill, except from the letter of Lawrence, cashier of defendant, of December 4, 1854, in which said bill was sent to them.
Marfield, the payee and indorser of said bill, had no inter- ■ estinit. It belonged wholly to the defendant. He held it •as the agent of defendant. In indorsing the same, he acted -at the instance of defendant.
At the maturity of said bill, the drawers, Fulton and Bliz •ard were insolvent, and have remained so. The bill was duly protested for nonpayment, and notiee given to the drawers. Eulton being principal, and Blizard his surety.
Suit was brought and judgment rendered on said bill against the drawers, February 20, 1855, in the court of common pleas of Pickaway county, for $5,391 25 and costs. Execution was issued to Fayette county, where Fulton and Blizare both resided, February 28,1855, and duly returned “ nulla bona.”
No objection is to be made by the defendant on the ground •of any want of notice from the plaintiffs.
On the 6th of March, 1855, the plaintiff wrote to defendant as follows:
Letter “ I.”
“ Zanesville, 0., March 6,1855.
“ H. K. Lawrence, Esq., Cash.
“ Lear Sir — You are no doubt aware that the bill of ' Fulton & others/ $5000, that you sent us has been protested. If you are not legally hound to make that paper good to us, we think you should be in equity. It is in the hands of C. N. Olds, Esq., for collection. What do you say? We have some $2000 your notes, what" can you give us for them ?
"We are your friends,
“ Solomon Sturges & Co.”
On the 14th of March, they write again as follows:
Letter ££ K.”
“Zanesville, O., March 14,1855.
“ H. K. Lawrence, Esq.,
“ Circleville:
“ Lear Sir — Yours of 10th and 12th inst. are received.
“ The proposition you make on behalf of D. R. Fulton, we' can not entertain. We will write Mr. Olds, our attorney, and give him ample authority to negotiate in relation to the notes. We are informed that bonds in large amounts of C. W. and Zanesville Railroad Co. have been sold below $70. We should regret to see the notes of the Bank of Circleville depreciated so low. A large portion of the parcel first sent you we received at par. Yours respectfully,
“ Solomon Sturges & Co.,
“ By M. Dillon.”
This suit was brought by the plaintiffs against the defendant, in the court of common pleas of Pickaway county, April 21, 1855, and taken to the district court, and there reserved; and the case is now pending on the foregoing statement of facts, upon the issue joined between the parties on the second cause of action contained in the second amended petition of the plaintiffs, and filed March 28, 1856. The defendant is therein charged with a guaranty of said bill of exchange at the time of its transfer, and by the letter in which it was forwarded, marked “ C,” and dated December 4, 1854.
The defendant, by its answer to said second amended petition (1), denies the fact of guaranty, and (2) the power of the cashier of the defendant to make it.
If the court shall be of opinion that, upon the facts as thus-agreed to and set forth, there is a right to recover on -said second cause of action, averring a guaranty of said bill of exchange, then judgment is to be rendered for the plaintiffs accordingly. If otherwise, then judgment is to be rendered for the defendant.
O. N. Olds, for plaintiffs, made the following points :
1. As to guaranty.
“No express words of guaranty are necessary, nor any express form. If the parties clearly manifest that intention, it is sufficient.” 1 Parsons on Contracts, 495; Bell v. Buren, 1 How. 186; Lawrence v. McCalmond, 2 How. 449.
“ Any distinct assertion or affirmation of quality made by the owner during a negotiation for the sale of a chattel, which it may be supposed was intended to cause the sale, and was operative in causing it, will be regarded as a warranty.” 1 Parsons on Contracts, 463; Osgood v. Lewis, 2 Har. & Gil., 495; Hawkins v. Berry, 4 Gilman, 36; Hillman v. Wilcox, 30 Maine, 170; Pennock v. Tilford, 17 Penn. 456.
If the seller does not intend to give a guaranty, using words carefully and artfully to avoid it, but such as to induce the purchase, and such as the purchaser may reasonably receive as a guaranty, he is liable. 1 Parsons on Contracts, 468; Lawrence v. McCalmond, 2 How. 450; Wood v. Smith, 4 C. & P. 45.
“ You will be perfectly safe in crediting A. & Co. for £4,000, indeed, I have no objection to guaranty you against any loss from this credit.” Held, that notice of acceptance would have made this binding. 1 Mawle & Selwyn, 557; 1 Story C. C. 22.
“ I warrant this note good,” is a guaranty of its collectibility. 14 Wend. 231.
“ I stand security for the payment of which bond ” — a guaranty. 16 S. & R. 79.
“ Sold A. B. this note, and agree that it is good” — a guaranty of its collectibility. 16 Barb. 342.
“ I guaranty this note is good,” is a guaranty of' its collectibility. 1 Cush. 473.
The buyer of a horse said to the seller, “ She is sound, of course ? ” The latter replied, “ Yes, to the best of my knowledge.” On being asked if he would warrant her, he replied, “ I never warrant. I would not even warrant myself.” This was held to amount to a qualified warranty. Wood v. Smith, 4 C. & P. 45.
“ You may depend upon it, the horse is perfectly quiet, and free from vice,” held to be an express warranty. Case v. Coleman, 3 M. & R. 2.
2. As to indorsement by agent, sans recourse, see.
Chitty on Bills (Ed. of 1826), 133-139 ; (Ed. of 1842), 226.. 3. As to notice.
Notice is expressly waived by the agreed statement of facts' in the case. But notice was unnecessary. Bashford v. Shaw, 4 Ohio St. Rep. 263; 12 Peters, 503; 9 S. & R. 195.
4. As to powers of cashier.
Charter of Bk. Circleville, O. L. L. Vol. 32, p. 344, gave to bank power to deal in bills of exchange.
“ The cashier of a bank, authorized by its charter to deal in bills of exchange, may assign or accept such bills as the agent of the bank. This is in the scope of his agency, and is sanctioned by universal usage. The trade in bills of exchange is the most profitable business of a bank. And the usage is sufficient to hold the bank responsible for the acts of its cashier.” La Fayette Bk. v. St. Bk. Ills. 4 McLean, 208.
The acts of the cashier, within the scope of the general usage, practice, and course of business of banks, are binding on the corporation, in favor of third persons transacting business with it. Lloyd v. W. Br. Bk. 15 Penn. St. 172.
“ The officers of a bank are held out to the public as having authority to act, according to the general usage, practice, and course of their business ; and their acts, within the scope of such usage, practice and scope of business, would in general bind the bank in favor of third persons possessing no other knowledge.
“ It would be not only inconvenient but perilous for any persons dealing with the bank, to transact business with its officers on any other presumption.” Miner v. Bk. Alexandria, 1 Peters, 70.
“ A cashier has prima facie authority to indorse on behalf of a bank, securities held by it; and any restriction on this authority must be proved by the party contesting it.” Flecker v. W. S. Bk. 8 Wheat. 347; also, 3 Mason, 505.
“ If a servant be empowered to sell a horse, Ms warranty thereof will hind Ms master, unless the servant was particularly ordered not to warrant.” Chitty on Contracts (5 Am. Ed.), 219; Bk. U. S. v. Dunn, 6 Pet. 51.
P. Van Trump, also for plaintiffs, argued,
1. That Lawrence, the cashier of the defendant, in the letter marked “C.,” of December 4, 1854, guaranteed the bill, or made an affirmation in the nature of a guaranty. Morrell v. Wallace, 9 N. H. Rep. 111; Chandelor v. Lopus, Cro. Jac. 4; Dyer, 75, note; 4 Camp. 144; 2 B. & C. 627; 5 B & Ald. 240; 2 Pick. 214; 13 Mass. 145; 1 Stark. 504; 1 Bing. 344; 8 Bing. 48; 5 C. & P. 78; 2 Caines, 48; 20 Johns. 296; 4 Johns. 421; 2 Esp. 575; 10 Wend. 411, 413; 2 Cow. 438; 4 Cow. 440; 3 D. & E. 57; 1 Salk. 210; 1 Ld. Raymond, 593; 8 Cow. 25; 12 East. 637; 2 Kent, 381; 5 Johns. 354; 13 Wend. 278; 3 Verm. 53; 19 Johns. 290; Sweet v. Bradley, 24 Barb. 553-4; Bonekins v. Bevan et al., 3 Rawle, 37; Peak on Ev. 228; Smith’s Merc. Law, 587; Kannon v. Neely, 10 Humph. Rep. 288; Chitty on Bills, 228, 248; 9 B. & C. 210; 2 B. & Ald. 383; 5 M. & S. 345; 2 C. & M. 368; 4 Tyr. 320.
2. That the cashier had power to make the guaranty claimed to exist. 32 O. L. L. 344, see. 2 (charter of the defendant); 15 Conn. 445; 6 Port. Rep. 166; 10 Geo. Rep. 9; 1 Sm. & Marsh. 237; 12 S. & R. 265; Ang. & Ames on Corp. 346; Story on Agency, 59; 4 T. R. 177.
N. H. & W. Sivayne and H. JET. Hunter, for defendant, made the following points:
I. Neither the pleadings nor the evidence raise any question as to the good' faith of the defendant. That is unquestioned.
H. The only questions are, whether a guaranty was, given — and if so, whether the cashier had authority to give it. The brief for the plaintiff is confined to these points, and we need not look beyond them.
HI. Was a guaranty given?
(1.) "A guaranty is a promise to answer for the payment of some debt, or the performance of some duty in case of the failure of another person, who is himself, in the first instance, liable to such payment or performance.” Smith’s Merc. Law (3d ed.), 563.
(2.) “ Warranty and guaranty, being derivatives from the same root, are identical in signification and effect; the one usually, but not always, denoting a covenant in a conveyance, and the other a parol promise.” Per Gibson, C.J., Ayres v. Findlay, 1 Barr, 501.
(3.) “ The answer of the seller to the question of the buyer, whether the horse was sound? does not amount to a warranty. It must be express. It will not be implied by the mere affirmation of the quality or kind of the article sold, nor by a mere affirmation of the value, nor where the subject is of dubious quality, on which common judgment might be deceived; and the reason is, that as a warranty renders the party subject to all losses arising from the failure of it, however innocent he may be, courts of law are careful of creating an obligation of such extent
“ To make an affirmation at the time of the sale a warranty, it must appear by the evidence to be so intended, and not to have been mere matter of judgment and opinion.” Erwin v. Maxwell, 3 Murphy L. and Eq. 241.
(4.) “ The law will subject a man having no interest in the-transaction, to pay the debt of another only when his undertalcing manifests a clear intention to bind himself for the debt. It is the duty of the individual who contracts with one man on the credit of another, not to trust to ambiguous phrases and strained constructions, but to require an explicit and plain-declaration of the obligation he is about to assume.” Russell v. Clark’s ex’rs, 7 Cranch, 90.
(5.) “An assertion by the vendor to the vendee, at the-time of selling a mare, that he is sure she is safe and kind and gentle in harness, amounts merely to a representation, and does not constitute a warranty or express promise that she is so.” Jackson v. Wetherill, 8 S. & R. 480.
(6.) “ The true doctrine is, that an innocent misrepresentation, not being fraudulent, furnishes no cause of action and no sufficient ground for rescinding a contract.” Stewart v. Doherty, 3 Dana, 481.
(7.) “ No implied warranty arises from the unfounded affirmation of soundness in the sale of a chattel, but for a deceitful representation of it, the remedy is by an action ex delicto.”
“A naked affirmation is not a warranty nor evidence of it, and though it may, in connection with other circumstances, be competent to show that the vendor had agreed to be responsible for the truth of it; yet the effect of oral words in constituting an express warranty, is determinable, not by the court but by the jury. McFarland v. Needham, 9 Watts, 55.
(8.) “ When a purchaser of property, in payment therefor, transferred, to the vendor notes upon third persons, and upon being requested to indorse the notes, for the purpose of enabling the vendor to sue in his own name, refused to do so, but said 'they were good,’ it was held that the words ' they were good,’ used in the manner they were, did not furnish any evidence of' a promise to make the notes good.” Carpenter v. Wall, 4 Dev. & Batt. 144.
(9.) See, also, the following cases to the same effect with those above cited. Wasson v. Rowe, 1 Washburne, 525; Davis v. Meeker, 5 J. R. 354; Morgan v. Fincher, 1 Blackf. 19; Foster v. Caldwell, 3 Washburne, 176; Tyre v. Cansey, 4 Harrington, 425; Hardy v. Pool et al., 6 Iredell’s Eq. 28; Stafford v. Low, 16 J. R. 67; Windsor v. Lombard, 21 Pickering, 57.
(10.) The construction which the parties themselves have given to a writing, is entitled to great weight in fixing its intent and meaning. French v. Carhart, 1 Comstock, 102; Livingston v. Tenbroek, 16 J. R. 22, 23.
(11.) The correspondence between the parties shows conclusively that the defendant did not intend to guaranty the bill in question, and that the plaintiffs understood distinctly that no such guaranty had been given. The transaction was a swap of broken bank paper for the bill in question, “ without recourse.” If the cashier intended a guaranty, why did he not put it on the bill? If the plaintiffs intended a guaranty, why did they not require it to be put on the bill?
(12.) If the intention and understanding of the parties were that there was to be no guaranty, it is decisive. Morgan v. Fincher, 10 Blackf. 10; Duffee v. Mason, 3 Cowan, 25; Foster v. Caldwell, 3 Washb. 176.
IV. Had the cashier authority to give such a guaranty?
(1.) The charter gives no such authority.
(2.) There is no proof of such usage.
(3.) There was no authority from the board of directors.
‘“An agreement by the president and cashier of the Bank of the United States, that the indorser of a promissory note shall not be liable on his indorsement, does not bind the bank.” Bank U. S. v. Dunn, 6 Pet. 51.
“ It is not the duty of the cashier and president to make such contracts, nor have they the power to bind the lank, ex cept in the discharge of their ordinary duties.” Ibid. 59.
This doctrine was followed and approved by the same court in The U. S. v. The City Bank of Columbus, 21 How. 364.
(4.) This guaranty, if given, did “ involve the payment of money,” and the act was not done by the cashier “ within the ordinary course of his duties.” 21 How. 364.
(5.) Most banks, it is believed, pass through the whole term of their corporate existence without the occurrence of a single instance of such a transaction. When a bill is indorsed, the law requires prompt notice, and the matter is speedily brought to a close. Where a guaranty is given, no such promptitude is required. The transaction may remain open for years.
It would be dangerous to hold that such an act may be done by a cashier without special authority, and that it is “ within the ordinary course of his duties.”
See, also, upon this point, in addition to the authorities above cited, Hoyt v. Thompson, 1 Selden, 320, and Kirk v. Bell, 12 Eng. Law and Eq. 385.

Opinion:
Suture, J.
Two questions are presented in this case for our consideration.
Does the state of facts shown by the correspondence amount to an undertaking, or contract, upon which a right of action in law could arise in favor of the plaintiffs ? and,
If so, does the proof show such undertaking or contract to be obligatory upon the defendant ?
Each of these propositions is denied by the defense. And it is evident that they must both be sustained by the plaintiffs in order to entitle them to recover. Eor, if a valid undertaking, sufficient to give a right of action, was made by the cashier, professing to act as the agent of the defendant, and duly authorized, when in fact he had no authority, and his act, as such agent, was not recognized, but repudiated by the bank for whom he assumed to so act, the Bank of Cireleville would not, and the cashier alone would be liable upon such unauthorized undertaking by him so made.
It may, therefore, be well to consider, first in order, the last proposition — does the proof show the undertaking, negotiation or arrangement so made by the cashier of the bank with the plaintiffs, according to its terms, obligatory upon the bank?
It is not denied that the acts of the cashier of the bank in the exercise of all of his powers and the discharge of all of his duties, as cashier, would be obligatory upon the bank, as the acts of an authorized agent; and would require no ratification or assent on the part of the bank to give them validity as against the bank.
The charter of this bank provides that " it shall be lawful for said bank to loan money, buy, sell and negotiate bills of exchange, checks and promissory notes," etc. O. L. L., Yol. 32, p. 344. But these acts can only be done on the part of the corporation by its agents. And corporations are subject to the same laws in relation to the acts of their agents, which are applied to individual persons in regard to the acts of their agents.
It is not claimed that the respective duties of the board of directors, president and cashier, in the exercise of the franchises of the bank, are prescribed by the charter. So far, therefore, as the limitation of the appropriate duties of the cashier depend upon his office, we can only have respect to the ordinary and well understood duties of that officer in determining his powers. A cashier is defined to be one who has charge of money, or who superintends the hooks, payments, and receipts of a bank or moneyed institution. His actual powers and duties, like those of all other agents, may be more or less qualified, restricted or enlarged by the corporation, institution or party for whom he acts. But in this case, there being nothing to show any restriction or qualification of his powers in that regard, the duties of the cashier may reasonably be understood to extend to the buying and selling, and negotiating bills of exchange, checks and promissory notes, as well as to that of borrowing money, as the agent of the bank. In the discharge of his duty, he is supposed to be instructed and directed, either generally or specially, by the bank, either through its board of directors or president, as the case may be.
It is not denied that if the cashier had purchased or sold a bill of exchange, the property in the same might, by the cashier, have been acquired by or transferred from the bank; but it is said that he had not the power, by virtue of his office and as such agent, to impose any liability upon the bank, further than to transfer title to and from his principal. If this be so, it would follow that in case the cashier could sell a bill of exchange at par by not guarantying it, and for a large premium by doing so, that although he knew the bill to be unquestionably good, it would not only be his duty to indorse the same without recourse, and sell at par, but that if he should guaranty the same and sell at a premium, such guaranty would be void. But this could not be claimed on the part of the principal, even in the absence of authority on the part of the agent, after retaining the proceeds of the sale and-ratifying the act. In the case before us, there is no evidence that the correspondence was not approved and assented to by the bank at the time, or that the transaction on the part of the cashier was, at any time after, repudiated or even disapproved by the bank.
We have no doubt, therefore, that the acts of the cashier in the transaction are to be regarded as they were by the parties at the time, as the acts of the bank by its agent, and as obligatory upon the principal as if done by itself through any other regularly constituted agency.
There remains, then, to be considered the other question — does the agreed statement of facts show an undertaking or contract on the part of the defendant upon which a right of action could arise in favor of the plaintiffs ?
A guaranty, in its strict legal and commercial sense, is said to be " an undertaking by one person to be answerable for the payment of some debt, or the due performance of some contract or duty by another person, who himself remains liable to pay or perform the same." . . . " Originally, the words warranty and guaranty were the same, the letter g, of the Norman French, being convertible with the w of the German and English, as in the name William or Guillaume. They are now sometimes used indiscriminately; but in gen eral, warranty is applied to a contract as to the title, quality or quantity of a thing sold; and guaranty is held to be the contract by which one person is bound to another for the fulfillment of a promise or engagement of a third party." 1 Parsons on Contracts, 493. Each is, alike, an undertaking by one party to another to indemnify or make good the party •assured against some possible default or defect, in the contemplation of the parties. A guaranty is, perhaps, always understood, in its strict legal and commercial sense, as a collateral warranty, and often as a conditional one, against some default or event in future. The term warranty, on the other hand, is generally understood as an absolute undertaking in .presentí, as well as in futuro, against the defect, or for the quantity or quality contemplated by the parties in the subject matter of the contract. But this contract of warranty, whether qualified and collateral, as applied to the performance of a duty, payment of a debt, or happening of an event, when denominated a guaranty; or unqualified and absolute, as in cases of warranty when applied to the quality or title of things, has alike, in either case, all the characteristics of a contract or undertaking. It must be supported by a sufficient consideration; it must appear to be an agreement of the minds of the two contracting parties to the proposition constituting the contract. The same remark is also equally applicable to each — that no particular form of words is required to express the contract. Any form of words expressing an undertaking, upon a consideration, to insure the other party against the nonpayment or delinquency of a third party, may constitute a guaranty. And any affirmation or words, sustained by a consideration, showing an undertaking that the quality or title of the thing sold is such as represented, may •amount to a warranty. The consideration in each case may arise out of the transaction. In the case of a guaranty that -it was operative to cause the negotiation or acceptance of the paper; and in that of a warranty that the affirmation or undertaking was operative in causing the purchase, would in each case he a sufficient consideration.
What, then, is the state of facts before us upon the single point to which these general principles apply ?
On the 11th day of November, 1854, the plaintiffs submitted to the defendant a written proposition to purchase a certain bill of exchange held by the defendant against Buckingham & Co., on Adams & Buckingham, for $5000, paying therefor principal, interest and exchange.
The defendant replies on the 15th of November, that the defendant does not then hold that bill, but returns a proposition to sell to the plaintiffs similar bills drawn by Buckingham & Co., of Toledo, for the same amount, on like terms, due November 24.
On the 21st of November, the plaintiffs accept this proposition of defendant, and forward the money in compliance on their part.
Thus far, it is evident that both the parties regarded the negotiation as being for a " perfectly good " bill; and principal, interest and exchange were to be paid as the agreed-price. The defendant barely mentions the names of the parties to the bill, and the plaintiffs accept the proposition upon their own knowledge, without question as to the responsibility of the parties.
But the defendant accepts the plaintiffs compliance with-their proposition, retain the full price paid to them, and on-the 4th of December, by letter acknowledges the receipt of principal, interest and exchange, and attempts a performance-on its part of its own proposition — not by sending the bill which defendant had proposed to sell, and for which defendant had so received the price ; nor by returning the money, or offering to do so, and opening a negotiation for the sale of some other bill. But the defendant sends another bill made by entire strangers to the plaintiffs, indorsed by a stranger, and that " without recourse," and impart to it full credit on the part of plaintiffs, by an attendant written assurance or affirmation, that it " is perfectly safe." This is the language; of the defendant's letter containing the bill sent to the plaintiffs, upon the subject: " The Buckingham bills I proposed to give you are gone, but this bill is perfectly safe."
And upon receipt of the bill and the assurance of its quality by the defendant, the plaintiffs reply: " Your favor of the 4th inst., with stated inclosure, is received, and is very satisfactory." This consummated the contract, as understood by the parties. But how was it consummated ? The defendant proposed to sell the Buckingham bills, and it was those only which the plaintiffs agreed to buy, and for which payment was made by plaintiffs, and received and retained by the defendant. Yery true, says the defendant; but the plaintiffs, by their letter of December 7th, just referred to, express their assent to accept the bill of Jefferson Fulton, instead of the Buckingham bills of like amount. There is nothing in the letter, I think, to authorize such a conclusion. The plaintiffs did not say, and there is nothing to induce the supposition that they would have said, that the bill sent them was of itself a satisfactory equivalent for the one withheld, and for which they had paid. All the circumstances going to show that the plaintiffs were unacquainted with the parties to the bill, it is not to be presumed that the defendant would have sent, or the plaintiffs have accepted the bill in place of the Buckingham bills, without an assurance of its being of the same value. But we are not left to conjecture upon this point. The defendant did not presume to s,end the Fulton bill as a compliance of the contract on its part, without an accompanying written assurance; and the plaintiffs only accepted it with such assurance. " Yourffavor," . . (say they,) "with stated inclosure, is received* and is very satisfactory." What was the stated inclosure? The Fulton bill, by the bank stated or vouched to be " perfectly safe." That favor simply credited plaintiffs the full price of the Buckingham bills, told them those bills were gone, and added, " but this bill is perfectly safe." And this favor, meaning obviously this explanation, and their assurance of the goodness of the bill, forwarded with the bill, the plaintiffs say "is very satisfactory."
Here, then, is a positive affirmation on the part of the de fendant, in relation to a bill of exchange offered to the plaintiffs, that it is perfectly safe. On the strength of that representation, defendant asks, and the plaintiffs pay for the bill of $5000, the sum of $5050.
It is admitted that after the exercise of all due diligence on the part of the purchasers, the plaintiffs, the bill has proved to be defective of the quality for which it was sold. It was not such a bill as the defendant assured, or affirmed to the plaintiffs at the time of the sale. Now, if a like representation had been made and acted upon in the sale and purchase of a personal chattel, I apprehend there would be no difficulty in arriving at the conclusion that the representation so made by the vendor was clearly a warranty.
But the distinction already alluded to, between a guaranty and warranty, renders the application of the term guaranty, in its strict legal and commercial sense, perhaps inapplicable to this case. For, although hills of exchange are bought and sold like personal property, and the word warranty might be applied not improperly to the title of the holder, the warranty accompanying their transfer, as to their quality, generally has respect merely to the payment of the debt which the bill or note evidences, and is called a guaranty. These facts, however, are apparent in the case. The defendant offered to sell the bill and at a premium price, under a positive affirmation that it was "perfectly safe; " and on that representation of its quality, the plaintiffs, in full confidence, having no other means at hand to know, bought the bill, and paid such premium price; and this representation so made and received, has proved untrue. It matters nothing, I apprehend, that the defendant honestly regarded the bill safe. The defendant affirmed it to be so, and it is not admissible.for it to now qualify that undertaking. And although this representation is not in the strict language or form of a guaranty, it is difficult for me to perceive how it does not substantially comprehend at least an assurance of the collectibility of the bill. . The term perfectly safe, when applied to commercial paper, must at least mean that the paper is collectible. Short of this, it can not properly be said to possess the quality of being " perfectly safe."
Having respect, therefore, to the substance of the transaction between the parties, and the common and well understood meaning of the language used by the defendant and accepted by the plaintiffs, a majority of the court are clearly of the opinion that the same constituted an undertaking on the part of defendant, upon which a right of action in law has accrued to the plaintiffs.
It is not material whether this undertaking be called a warranty, or whether we term the affirmation of the defendant a representation in the nature of a guaranty; the substance of the transaction is the same.' In either case, it was an undertaking which the defendant had a right to make, and the plaintiffs to accept and rely upon. And we think sound principles of law, as well as good morals, require that the same should be held obligatory between the parties.
Nor can this undertaking be invalidated by the doubts which seem to have been expressed afterward by the plaintiffs, whether the same could be enforced in law.
Judgment must, therefore, be entered for the plaintiffs.
Brinkerhoff, C.J., and Scott, J., concurred.
Peck and Gholson, JJ., dissented.