Court Opinion

ID: 6422846
Source: CourtListenerOpinion
Date Created: 2022-06-25 12:01:26.06443+00
Date Added: 2024-06-11T15:51:51.109759
License: Public Domain

Morton, C. J.
The defendants, being the owners of a promissory note which they had taken in the ordinary course of business, sold it through brokers to the plaintiffs. It was afterwards ascertained that, two hours before this sale, the makers of the note had made a “ voluntary assignment of all their assets for the benefit of their creditors, to be administered under the insolvent laws of Ohio,” of which State they were residents. Neither of the parties to this suit, nor the brokers employed by the defendants, knew of the assignment at the time of the sale, but they all supposed that the makers were doing business as theretofore. The plaintiffs contend that they are entitled to recover upon either of two grounds: first, that there was a mutual mistake of the parties as to the thing sold, and therefore no contract was completed between them; and, secondly, that there was a warranty, express or implied, by the defendants, that the makers of the note were then can-ying on business, and had not failed or made an assignment.
1. It is a general rule, that, where parties assume to contract, and there is a mistake as to the existence or identity of the subject matter, there is no contract, because of the want of the mutual assent necessary to create one; so that, in the case of a contract for the sale of personal property, if there is such mistake, and the thing delivered is not the thing sold, the purchaser may refuse to receive it, or, if he receives it, may upon discovery of the mistake return it, and recover back the price he has paid. But to produce this result the mistake must be one which affects the existence or identity of the thing sold. Any mistake as to its value or quality, or other collateral attributes, is not sufficient if the thing delivered is existent, and is the identical thing in kind which was sold. Gardner v. Lane, 9 Allen, 492. Gardner v. Lane, 12 Allen, 39. Spurr v. Benedict, 99 Mass. 463. Bridgewater Iron Co. v. Enterprise Ins. Co. 134 Mass. 433. Benjamin on Sales, § 54.
In the case at bar, the subject matter of the contract was the note of J. and S. B. Sachs. The note delivered was the same *339note which the parties bought and sold. They may both have understood that the makers were solvent, whereas they were insolvent ; but such a mistake or misapprehension affects the value of the note, and not its identity. Day v. Kinney, 131 Mass. 37. In Day v. Kinney, the makers of the note sold were in fact insolvent, but they had not stopped payment or been adjudged insolvent, and the decision is confined to the facts of the ease. But we think the same principles apply in this case. The makers of the note had made an assignment for the benefit of their creditors, but this did not extinguish the note, or destroy its identity. It remained an existing note, capable of being enforced, with every essential attribute going to its nature as a note which it had before. Its quality and value were impaired, but not its identity. The parties bought and sold what they intended, and their mistake was not as to .the subject matter of the sale, but as to its quality. We are therefore of opinion, that the sale was valid, and that the plaintiffs cannot recover the amount they paid, as upon a failure of consideration.
2. The other question is one of some difficulty, created in part by the manner in which the case is brought before us. The case was submitted to the Superior Court upon an agreed statement of facts, “ with a right to draw such inferences as a jury might draw therefrom.” The court found for the plaintiffs, but upon what ground does not appear. If upon the facts stated, and any inferences of fact which the court might reasonably draw therefrom, its finding can be justified, this court cannot revise its finding. Old Colony Railroad v. Wilder, 137 Mass. 536.
When a man sells a note, the law implies a warranty that it is genuine, and that he has such a title as to give him the right and power to sell it. Lobdell v. Baker, 1 Met. 193. Cabot Bank v. Morton, 4 Gray, 156. Merriam v. Wolcott, 3 Allen, 258. This is . upon the ground that the offer of the note is in itself a tacit affirmation or representation that it is genuine, and that the proposed seller has a right to sell it, and from such affirmation the law implies a warranty, which enters into the contract. But it is settled that he does not warrant the solvency of the maker. Day v. Kinney, ubi supra. Burgess v. Chapin, 5 R,. I. 225. Beckwith v. Farnum, 5 R. I. 230. Applying these *340principles to this case, if the brokers who acted for the defendants at the time of the sale made any express or tacit representations that the note was a note of a firm then in business, which the parties understood as forming part of the contract, and the plaintiffs relied upon it, it might, in law, amount to a warranty that the note was as they affirmed it to be. But the difficulty of ■the plaintiff’s case is, that there was no warranty in terms, and there are no facts agreed which justify an inference that the parties intended any such warranty as a part of the contract. The fact that both parties supposed and believed that the makers continued in business, is immaterial. In the sale of a horse, both parties may believe the animal is sound; probably, in most cases of the sale of notes, both parties believe and understand that the maker is solvent, but no warranty can be implied or inferred from that fact. So the facts that the plaintiffs would not have bought, and the defendants’ brokers would not have sold without disclosing the facts to the purchaser, if they had known that the maker had failed, are immaterial.
It is recited in the facts agreed that the transactions of buying and selling commercial paper conducted through brokers “ are confined to the paper of persons actually carrying on business.” If the statement had stopped here, it might imply that there was a usage of brokers not to sell paper of makers who had failed, and that an intending purchaser had the right to rely upon the offer by the broker of a note for sale as an affirmation that the note offered was the note of a man or firm then in business. But the statement goes on in explanation of its meaning as follows: “ In other words, it is the universal custom of such brokers not to offer for sale the paper of any person whom they have reason to believe to have failed or made an assignment.” As thus explained, it goes little farther than to prove that it is the custom of brokers not to commit a fraud by concealing facts known to them. It does not go far enough to show any usage to warrant the note of any person, when the broker has no reason to believe that he has failed.
The plaintiffs rely upon the case of Harris v. Hanover Bank, 15 Rep. 390, in which the question here raised was decided in their favor. We think that case is in conflict with the weight of the authorities. In that case the court relies upon the an*341tliority of Roberts v. Fisher, 43 N. Y. 159, but that is a case of the payment of a debt by a worthless note. There are cases like Roberts v. Fisher, where it has been held that, if one pays a debt by a worthless note, draft, or check, the debt is not extinguished. Small v. Franklin Mining Co. 99 Mass. 277. Weddigen v. Boston Elastic Fabric Co. 100 Mass. 422. The distinction between such a transaction and the sale of a note in the market, is obvious. Where a man offers a note, draft, or check in payment of a bill, unless something is said to the contrary, he offers it as an equivalent for money, and thus tacitly represents that it is as good as money. But the offer of a note for sale, without recourse to the seller, does not involve any representation as to the solvency of the parties to it, or as to its value.
We think the principles we have stated are decisive of the case before us. The defendants sold the note in good faith. So far as the evidence shows, neither party, at the time of the sale, spoke of, or inquired about, or knew anything about, the failure of the makers. They stood upon an equal footing, and they had equal means of knowing the standing of the makers. It was understood that the defendants were selling the note without recourse to them. They did not expressly warrant the value of the note, and we are of the opinion that from the circumstances no warranty could fairly be inferred of the solvency of the makers, or that they continued to do business.
We are therefore of opinion, that the first three instructions requested by the defendants should have been given, and that, upon the facts of the case, the court was not justified in finding for the plaintiffs.

Exceptions sustained.