Court Opinion

ID: 6115240
Source: CourtListenerOpinion
Date Created: 2022-02-03 15:47:46.786868+00
Date Added: 2024-06-11T08:14:27.012279
License: Public Domain

Daly, F. J.
It was held, in Murry v. Lardner (2 Wall. U. S., 110), that a purchaser in good faith, for a valuable consideration, of government securities transferable by delivery, acquires a title valid against all the world: and that to constitute want of good faith there must be knowledge of the want of title, or, as Baron Park said in May v. Chapman (16 Mees. & W., 261), the means of knowledge to which the purchaser willfully shuts his eyes; that it will not suffice that there was on his part a want of care and caution, or gross negligence, or a knowledge of circumstances which would excite suspicion in the mind of a prudent man, the rule in respect to mala fides being a question of honesty or dishonesty, of the existence either of guilty knowledge or of that willful ignorance which is equivalent to it.
This decision, though not of controlling authority in a State tribunal, is entitled to the greatest weight, in view of the circumstances under which it was decided. There had been a previous ruling of the court to the same effect in Goodman v. Simonds (20 How. U. S., 343)—a case which was most elaborately argued, and in which all the authorities bearing upon the subject, either in this country or in England, were reviewed. The ruling of the court in this case was deliberately reconsidered in Murry v. Lardner, the leading English authorities were again examined, the reasons which had satisfied the court before we:e maturely weighed, and this ruling was sustained by a unanimous decision. A judicial conclusion so deliberately, arrived at by the highest court in the nation, upon a point which affects the whole commercial world, is not only entitled, as I have said, to the greatest weight, but should be regarded as settling the law in this country.
The defendant in the case now before us is a "banking corporation, dealing largely, as they offered to show, in *354government securities. The two "bonds, for the conversion of which the action was "brought, and which were stolen from the plaintiff, were bought by the defendant in the usual course of business, at a fair market value. The -clerk or officer by whom they were purchased had left the bank nine months before the trial, and was, by report, in the State of Iowa. It appeared, however, by the books of the bank, and by the testimony of the cashier, that the two bonds were purchased from the 13th to the 18th of Sept., 1865, the entries indicating that the purchase was made on the 13th, the day after the robbery. The market rate on that day was between 107 and 108, varying from 107 to 107, .and they were bought at 107½ A purchase like this, by a bank, at their fair market value, and in the usual course of business, of government bonds, which pass by delivery, was conclusive upon the question of good faith, unless the plaintiff could show that the defendant purchased with a knowledge of the robbery, or with the means of knowledge at hand which they intentionally avoided.
The evidence relied upon to show this was that a printed handbill, announcing the loss and describing the bonds, was, on the morning after the robbery, left before 9 o’clock on the desk of the cashier of the bank, and on the desk opposite, but it was not shown that the handbill was seen or came to the .knowledge of any of the officers or employees of the bank.',
The plaintiff testified that he called upon the cashier after the 23d of Sept., and told him that he had sent to the bank a printed notice' of the robbery, and that the cashier replied, “We don’t care for notice which the cashier, in his testimony, qualified by saying that he told him that they could not pay attention to notices, or something like that, and which he said was true. “We buy and sell, ” he said, “bonds, without any regard to these notices left in the office. We look at notices from time to time, but we keep no record of them. No instructions are given by me to the clerks or officers to bring the notices to me personally.”
This was all- the evidence relied upon to show mala *355fides. It was, to say the least, very slight; and was submitted to the jury by the court with the instructions that if the defendant either had, or with reasonable care and attention might have had, notice of the loss, the plaintiff was entitled to recover; to which the defendant excepted.
The exception was- well taken, as this was in effect holding that a bank, broker, or other person who buys a negotiable government bond, in the usual course of business and pays the fair market value for it, acquires no title if he might, by the exercise of reasonable care and attention, have ascertained that it had been stolen. A rule like this would make it the duty of the banks to take notice at their peril, of all printed notices sent to them of the loss of government bonds, bills, or other negotiable securities in which they deal, to keep an accurate record of all information of this kind sent to them, and to consult it in every instance, at the risk of liability, before they ventured to purchase a bond or to discount paper. They would, in fact, have to institute an inquiry in every case, a rule which, as Lord Kenyon said, in Lawson Weston (4 Esp., 56), would paralyze the circulation of all the paper in the country.
The defendants offered to show that they dealt largely in government bonds, receiving and paying them out as money; that United States securities of the description of the two bonds in question are payable to bearer ; that they are bought and sold daily in the market, and are received and paid out by banks, brokers and bankers as money ; that they pass from hand to hand by delivery, and are always paid for in cash on delivery; that the amount in circulation is very great, and that very large amounts, several millions, have been stolen and advertised; that the amount in circulation is so large, the amount stolen or lost so great, and the notices of theft and losses so frequent, that it would be impossible for the defendants to keep track of those lost or stolen, without stopping their business ; that notices are constantly thrown to their bank of such thefts or losses, with lists, numbers and descriptions, and that, if they were bound to take notice of all such no*356tices, it would "be impracticable to deal in government securities ; which offer on their part was excluded.
All, in my judgment, that could be legitimately inferred from the omission of the defendants to pay attention to such notices when they purchase negotiable securities of this kind in the regular course of business, and pay the market value for them, would be the want of care and caution, or, at best, gross negligence on their part, and this, according to the rule-laid down in the two cases before referred to, of Goodman v. Simonds and Murry v. Lardner, would not be sufficient to destroy their title. Under certain circumstances, gross negligence may be evidence tending to show mala fides (Goodman v. Harvey, 4 Adol. & E., 870), and assuming that the habit of the bank to pay no attention to such notices was evidence from which the jury might infer that the defendants acted in good faith, then the evidence which they offered, and which the court excluded, should have been received, for it was most material upon the question of dishonest intent. It was material, as showing that them motive was not to facilitate the sale of bonds dishonestly acquired for their own pecuniary benefit, but that they did so because it was impracticable, from the magnitude of the amount of such bonds in circulation, and the large amount that had been lost and stolen, to do otherwise. If the evidence given was sufficient to submit the question of a want of good faith to the jury, then the defendants were certainly entitled to the benefit of what they offered to show, and for this reason a new trial should be granted.
Ordered accordingly.