Court Opinion

ID: 5445627
Source: CourtListenerOpinion
Date Created: 2022-01-08 18:10:13.313598+00
Date Added: 2024-06-11T08:32:10.596234
License: Public Domain

Garoutte, J., dissenting.
I concur in the opinion of Mr. Justice McFarland as to the invalidity of the bonds, but dissent wherein he concludes that plaintiff purchased at his peril, and is prevented upon the principle of caveat emptor from recovering the money paid defendant.
In this case there is no question of fraud practiced by the seller, and no question of negligence involved upon the part of the buyer. Both parties thought these instruments were valid bonds of Calaveras County. It was an honest mistake of fact, and caveat emptor never applies to a mistake of fact. If plaintiff’s mistake had been a mistake of law, — that is, if Sutro had known at the time of the purchase that these bonds were an overissue,— such knowledge would have defeated his right of recovery; but there can be no mistake of law, unless the facts are known.
The question involved here is not a question of warranty, but a total failure of consideration, the existence of which fact is fatal to all contracts; and this principle has been fully and repeatedly recognized by this court. (Keller v. Hicks, 22 Cal. 457; 83 Am. Dec. 78; Peat Fuel Co. v. Tuck, 53 Cal. 305; Redington v. Woods, 45 Cal. 429; 13 Am. Rep. 190.)
*129As a case involving the legal principles involved here, we will suppose that one blind man should sell to another blind man a lump of clay, both believing at the time that it was gold; there was no express warranty, and under the sections of the code cited in the prevailing opinion there is no implied warranty upon which to base a recovery of the price paid, yet it must be conceded that the right of recovery exists. If a plaintiff’s right of recovery is to be limited only to those cases where there is a violation of an express or implied warranty, then there can be no recovery in this state where one innocent party sells another innocent party a forged or counterfeit bond or note, for, under the provisions of the Civil Code, there is no implied warranty that the instrument is genuine; yet no court to my knowledge, either in this country or England, ever denied the right of recovery in such a case.
In Redington v. Woods, 45 Cal. 429, 13 Am. Rep. 190, this principle was recognized and recovery had, not by reason of any warranty, but by reason of the fact that-the money was paid without consideration, under an innocent mistake, and the court said: “The authorities in-support of this view of the question are numerous and uniform, and we have been referred to none to the-contrary.” Story on Sales, sec. 377, says: “ There is a class of cases which it may be well to notice in this connection, and which are usually included under the'head of implied warranty, but to which the doctrine of warranty does not properly seem to be applicable; . . . .. that is, where the parties suppose themselves to- be buying and selling one thing, when in point of fact they are contracting for the purchase and sale of an entirely different thing. .... But where there is neither fraud nor an express warranty, the case seems to be- one of pure mistake with reference to the subject-matter, and mistake is properly the ground of the- seller’s liability; but it does not seem that the doctrine of implied warranty would properly apply, nor is it at all necessary to found a right of recovery in the vendee, .... for in *130matters of pure mistake the doctrine of caveat emptor would not seem to apply.....A vendee only warrants by implication the epithet or adjective, but not the substantive.” This doctrine is sustained by Benjamin on Sales, secs. 77, 618, 619, 918, 1005; 4 Wait’s Actions and Defenses, c. 98, secs. 18, 21; Wood v. Sheldon, 42 N. J. L. 427; 36 Am. Rep. 523; Whitney v. National Bank of Potsdam, 45 N. Y. 304; Terry v. Bissell, 26 Conn. 24; Paul v. Kenosha, 22 Wis. 599; 94 Am. Dec. 598; Hurd v. Hall, 12 Wis. 136; and many other cases unnecessary to cite. In the case of Hurd v. Hall, 12 Wis. 136, Chief Justice Dixon, having first decided that the vendor and vendee contracted under a mistake of fact, says: “I also think the action could be maintained upon the ground of a failure of consideration by reason of the plaintiff’s not having obtained what he bargained for; that the instruments did not answer the description of those the defendant professed to sell or the plaintiff to buy. The instruments assigned, though resembling school-land certificates, were not such certificates at all. They were mere worthless pieces of paper, drawn up in the form of such certificates. The fact that they were signed .by the commissioners in their official capacity can make no difference; so long as they were wholly unauthorized to do so, their acts in signing and issuing them under the circumstances were wholly void, and the certificates in that respect were no better than if they had been signed by some other persons, and were sheer forgeries, except so far as recovering back the money already paid was .concerned.”
The equities existing between the innocent vendor .and vendee of invalid municipal bonds, whether those "bonds are the skillful work of a forger or the illegal work of fund commissioners, would seem to stand upon the same plane. Such bonds are equally worthless to a vendee, whether conceived in crime or in illegality. Their nullity in both cases consists in want of legal capacity to make them. In this case, the vendor thought that he was selling valid bonds of Calaveras County, and *131the vendee thought that he was buying valid bonds of Calaveras County; but both parties labored under a mistake of fact, as they were not valid bonds of Calaveras County, or bonds at all, but worthless pieces of paper. The consideration totally failed, and both parties being equally innocent, they should be restored to their original condition prior to the sale; for the vendor has money which in equity and good conscience belongs to the vendee.