Court Opinion

ID: 5553900
Source: CourtListenerOpinion
Date Created: 2022-01-11 00:37:29.112684+00
Date Added: 2024-06-11T08:35:15.723319
License: Public Domain

— Stephens J.

By the Court.

delivering the opinion.
This was an action for deceit, in the sale of a note to the plaintiffs by the defendant. The evidence was that the defendant traded the note to the plaintiffs, representing it to be perfectly good, just after he had been informed that it was worthless; that the plaintiffs, when they discovered the worthlessness of the note, within a few days, tendered it back to the defendant, and demanded a return of the money they had paid for it; and that the defendant refused to rescind the contract, not denying the worthlessness of the note when asserted to him by plaintiffs’ agent, who tendered back the note to him, but simply saying that he did not make child’s bargains. The Judge nonsuited the plaintiffs, upon the ground that they had not used the legal steps to collect the note. This ground rests, we think, upon an erroneous conception of the plaintiffs’ rights and remedy. If the facts stated in evidence were true, the plaintiffs had a right to rescind the contract, without the consent of the defendant, on account of his fraud, and tendering the note back to him was the proper step to rescind it. After that, the contract was rescinded, and the money they had paid for the note belonged to the plaintiffs, and the note belonged to the defendant ; and the plaintiffs were not bound to take legal steps to collect it, nor to do any thing at all with it. The defendant had no right to require them to look after or take care of his property, after he had it tendered to him. His refusal to accept *692it did not affect their rights in the least, for they had a right to rescind without his consent. The Judge may have acted upon the idea that the legal steps for collecting the note were the only test of the goodness of the note at the time when it was traded, and that the plaintiffshaving failed on that pointy had failed to show, in the only possible mode of showing, the main fact /on which their whole case rested — the fact that the note was not good when traded. Counsel declined to take this ground in the argument, but it may be as well to show that it is not maintainable. This ground assumes that a representation that a note is good, is equivalent to a warranty that it can be collected by the use of legal means. The assumption is not true. The debtor might be in possession of a large estate, be in full credit and free from all other debts at the time when the representation is made, and the representation therefore be perfectly true, and yet he might squander every thing at the gaming table or otherwise, before judgment could be obtained, or even before the maturity of the note. And so, while the representation might be perfectly true, it might turn out that the use of all legal means would prove inadequate to the collection of the note. So the reverse of this might happen. The representation might be false when made, and yet from unforeseen good luck, the debtor might subsequently acquire means and actually pay the note. The use of legal means to collect the note, therefore, so far from being the only test of the truth of the representation at the time when it was made, is no certain test at all. And this is so on one of the principles which led the Judge to rule out the plaintiffs’ evidence of a judgment of insolvency, to show the fact of an insolvency at some time before the judgment. His Honor correctly, held, that the judgment showed only [an insolvency, when the proceedings to obtain it were instituted, and not a previous insolvency at the time of the trade. So the use of the legal means to collect the note, and their failure to accomplish the collection, would have shown that the note was not good at *693the end of the legal process, but would not have shown but what the debtor might have had ample means arid credit, and so the note have been good, according to the universal understanding of the term, at the time when it was represented to be good. The value of paper can not be subjected to any such perfect test. Commercial paper is a marketable commodity, and its value is to be fixed, like that of other marketable commodities, by facts and circumstances, and also by the judgments of witnesses. The market value of a thing, is what it will bring in the market, and this can be proven only by the judgments of witnesses. It was contended in the argument, that the defendant’s representation that the note was good, could notbe legally fraudulent, though false in fact, because it was a representation concerning the solvency of the debtor — a subject, it was said, equally open to the knowledge of both parties. Where the subject of the representation is open to inspection, it is equally open to the knowledge of both parties, and in that case, each party must rely on his own inspection, and not on representations of the other. But solvency is not an object of inspection, and a knowlege of it is to be acquired not by inspection, but in large measure, by human testimony. The plaintiffs could have ascertained the solvency of the debtor, not by inspecting him nor by inspecting his possessions, but by inquiry, and the answers of persons who knew his affairs or knew his commercial standing in the market. And they never could have ascertained it, if all the persons to whom they might have applied, had done as the defendant did, if the evidence be true —that is, if they had all represented the note to be good when they knew it to be bad. The defendant spoke on the point which could be settled only by human testimony, and the plaintiffs surely had as much right to expect and require truth from the man who was receiving their money for it, as from the disinterested multitude in the streets. The plaintiffs, by their evidence, showed the trade, showed the representation, showed it to have been false, and that its false*694hood was known to the defendant when he made it. This was not a case for a nonsuit, but a case for recovery, unless the defendant had broken down the force of this evidence.
Judgment reversed.