Utley v. Donaldson, 94 U.S. 29

“Dear Sir, — Your favor of the inst., with inclosure as stated, is received. We, this a .m., telegraphed you as follows, viz.. ‘ Get rate for $15,000, California Central Pacific R. R. bonds, eliveied to-morrow? Same is hereby confirmed. We herewith hand you bonds. Please close the transaction and telegraph us immediately. The party selling these bonds is waiting here to get p. 30the money for them. This same gentleman is an entire stranger to us, therefore, will you be kind enough to satisfy yourself that the bonds are all right. We desire them sold without any recourse on us. Your early attention will much oblige, respectfully, yours,

This letter was received by plaintiffs at New York on Monay, the 29th of May, a short time before the bonds were p. 32presented by the messenger of the Bank of North America for delivery to plaintiffs, and prior to defendants’ draft for $15,375, which was presented at the same time as the bonds, as hereinafter stated.

“Gentlemen, — We have yours of 3d inst., and regret that you do not give us any more satisfactory information. You will allow us to remind you that we paid your draft for $15,375, and received t erefor nothing but counterfeit bonds. In answer to our despatch to you that counterfeit Central Pacifies had appeared in the marets, you sent us a telegram, referring us to your note of 25th ay, and saying, at the same time, ‘ Will aid you all we can, if counterfeit. Setting aside all questions of legal liability, we sub-to your sense of fair dealing, whether you are fulfilling this P e ge. You now refuse to make an assignment of any claim you may aye against the parties from whom you received the bonds, assign as the reason for such refusal that you are under legal vice, and do not know whether you have any claim. But we p. 36do not ask you to guarantee that you had any claim, and it seems to us that the fact of your being under legal advice is no reason why you should not do every thing in your power to help us in recovering the money you have had from us for worthless bonds, but rather a reason why you should help us the moYe readily. We beg to ask from you a full statement of the precise position you occupied in relation to these bonds; and, if this will aid us in our efforts to make good our loss, you ought to be thankful, and also willing, to give us any rights you have against these parties.

“ Gentlemen, — In reply to your letter regarding the position we have taken, we can only say, that, when you consider the circumstances connected with same, we think that you or anybody would act likewise; viz., Some time in May the Commercial Bank called on us and offered the bonds, and we made a bid. The cashier then informed us that the inquiry came from Newman & Havens, Leavenworth, and they would telegraph to them the bid we made to the Commercial Bank. In short time answer to Commercial Bank from Newman & Havens, that they would accept the bid, and had forwarded bonds to Commercial Bank. Upon arrival of bonds at the Commercial Bank, they received a letter from Newman & Havens, stating that they had never dealt in like bonds, and they were selling them for strange parties, consequently sell them without recourse. The Commercial Bank tendered us the bonds under same condition; and we refused to purchase bonds in the manner presented, but gave the Commercial Bank a check under the following conditions, — not to charge the check against us until we had been informed by you that the bonds were O. K. We then forwarded the bonds, and wrote you precise, that we had not ever handled any of the bonds, and we sell them without recourse, and particularly asked you to examine them, and more distinctly said, we sell without recourse as to genuineness, as they come from strange parties, and use this precaution, not willing to take any risk whatever. Upon receipt of the bonds, you telegraphed us, ‘ Centrals all right,’ and also wrote by mail, confirni ing your despatch, by saying, received bonds and draft, and foun p. 37them all correct. When we received this information, we then informed the Commercial Bank to charge up check, which they did, and at the same time credited Newman & Havens; and we are furthermore informed, the parties of whom Newman & Havens purchased did not call for the money within ten days after this information of bonds being correct. Now, you see plainly that you are all to blame. Had you used the necessary precaution in examining the bonds, specially when your attention was called by us selling without risk, not only would none of us have any trouble or unpleasantness, but would have caught the thieves and brought them to justice. Now, please inform us what else could we have done. It shows that we acted prudently and with care. It is true, you may say, you received the bonds before the letter; but even and more so should you have examined them, and informed us. You are aware that New York is the market to detect all irregularities in the bonds spoken of, and you could easily have discovered, had you not been careless. Now, you plainly see our position. The Commercial Bank will not take them back from us, unless they are compelled to do so ; and why should Donaldson & Fraley suffer for negligence of yours, when they used all precautions and measures at the time ? It is true, it is hard for you to part with your money, but not more so than us, whilst we are in no manner to blame. Upon your information, confirming the genuineness of the bonds, we parted with the money received for the bonds. Should the Commercial Bank, or Newman & Havens, at any time come forward and offer to redeem the bonds, we certainly would be most happy, and be much better satisfied than the way it is now.

Regarding our writing, that we would aid you all we could, did not infer that if you made a demand upon us for the money that we would pay same, but meant, that if it was in our power to make parties originally selling them replace them, we would do so ; an we are more so willing now than ever; but we cannot concede nor agree to give you any claim against the Commercial Bank, w ether we have legal right or not. It would certainly be admitting, on our part, that if we assign claim against Commercial Bank, t at you certainly have likewise claim against Donaldson & Fraley, an also right to assign, which we really cannot admit, as we posiive y do not believe so. We are ready at any time to testify to e acts as they are, and were; and, should the law declare us Ba°k^ feel con^^en^ that Newman & Havens and Commercial an will abide by same; but under no circumstances will they p. 38refund without action, as they firmly believe, as we do, that your claim is not just, under the circumstances.

19. Before writing the letter of May 25, 1871, hereinbefore set out, and transmitting the bonds to New York, the defendr ants, who had never seen any Central Pacific bonds, took sai bonds, or some of them, to two banking establishments in the city of St. Louis, and asked one of the officials of each of said banks p. 39whether they knew about them, but was informed that they did not, as those bonds were not known or dealt in in this market.

And when before breach a new contract is substituted for a previous one, no consideration is necessary if the substituted p. 41contract has become executed. Lawrence n. Dole, supra; Young v. Hunter, 2 Seld. 207.

Defendants parted with their money under the same circumstances as plaintiffs, but on the faith of the acceptance of the bonds by plaintiffs under the letter of May 25, 1871, and P aintiffs letter and telegram that the Centrals were “ O. K.” p. 42The rule of law under this head clearly upholds the finding of the court below. Dairy. United States, supra; Butler v. United States, 21 Wall. 272.

On the 24th of May, 1871, Newman & Havens, bankers, of Leavenworth, telegraphed to Nichols, the cashier of the Commercial Bank of St. Louis, to “ get rate for $15,000 California Central Pacific Railroad bonds, delivered to-morrow.” The defendants offered “ 100^.” Newman & Havens accepted by a telegraphic despatch. On the 25th of May Cashier Nichols received from Newman & Havens the bonds, and also a letter, in which they said, “ The party selling these bonds is waiting here to get the money for them. He is an entire stranger to us.” “Wb desire them sold without any recourse on us.” On the same day Cashier Nichols showed this letter to the defendants, and proposed to deliver the bonds without recourse. They refused to receive them on such terms, but offered to take them, and pay for them when ascertained to be good; otherwise, to return them. The cashier acceded to this proposition. On the 24th of May the defendants telegraphed to the plaintiffs, who were brokers in the city of New York, “ Make best bid for fifteen Central Pacifies, quick.” The plaintiffs answered, on the 25th of May, that they would buy at 102^. Their despatch to this effect reached the defendants about ten A.M. the same day. The defendants answered by despatch on that day, “We accept your offer.” The bonds were delivered by the cashier to the defendants on the 25th of ay, and were by them forwarded by express on that day to a an in New York, with a draft on the plaintiffs for $15,375, the bonds to be handed over on the payment of the draft. a p. 43the morning of that day the defendants addressed a letter to the plaintiffs, which is the hinge of this controversy. It is as follows: —

This letter reached the plaintiffs on the 29th of May, a short time before the draft and bonds were presented. The plaintiffs had sold the bonds “ to arrive ” to Rasmus & Lissignola. They could not be delivered after two o’clock. It was within a few minutes of that time when the messenger of the bank presented himself. One of the plaintiffs went with the messenger to the office of their vendees, and requested Rasmus to examine the bonds. He did so, said they seemed to be correct, and thereupon gave a check for the amount his firm had agreed to pay for them. This check was duly paid. On the same day the plaintiffs wrote to the defendants, “ The Centrals all correct, and we telegraphed you to that effect.” Such a despatch had been sent. Upon receiving it, the defendants paid the bank for the bonds, and the money was remitted by the bank to Newman & Havens. On the 12th of June information was received for the first time in New York, or elsewhere, that there were in existence counterfeits of such bonds. On that day the plaintiffs wrote to the defendants, “ Look out or counterfeit Central Pacifies; some appeared on market to-day. On the next day the plaintiffs telegraphed to the efendants, “ Central Pacifies sold us probably counterfeit, onds shipped to Europe. Can’t hear from them for several ays. On the same day the plaintiffs wrote to the defendants o t e same effect, and said further: “ In case your parties are tful, it would be well to act at once as if the bonds were p. 44not genuine. There has been no suspicion of counterfeits until yesterday.” On the same day, June 13, the defendants replied by despatch: “We sold without risk. Have purchased same day from Commercial Bank, and they from Newman & Havens, of Leavenworth, without risk.” The bonds were counterfeit, and the plaintiffs refunded to Rasmus & Lissignola the amount they had paid. On the 12th of July the plaintiffs telegraphed to the defendants, “ The Central Pacifies bought of you in May are declared counterfeit. We shall look to you for indemnity.” On the same day the defendants replied by telegraph, and asked upon what ground it was proposed to hold them liable. Some subsequent correspondence took place between the parties, which it is unnecessary to refer to in detail. The plaintiffs asked a transfer of the claim of the defendants, whatever it might be, but without guarantee, against the bank. This the defendants refused to give. The money paid to Newman & Havens by the bank was not called for by the party from whom they received the bonds for two or three weeks after the money was paid to them.

3. They refused upon any terms to put the plaintiffs in p. 45their place with respect to any claims they might have against the Commercial Bank.

ie defendants say: “ In accordance with your offer for 15 entral Pac. first mort. bonds, 102^ we replied, We accept your otter, and have forwarded them by ex. to Bk. North America, with draft attached for $15,375.” . ^his, standing alone, would have been a mere carrying out of e contract as made, and as it must have been understood by p. 46both parties. The stress of the case is upon what follows. The letter proceeds: “We would further add, that we have purchased the bonds from a party strange to us.” They had in fact bought them from the Commercial Bank, but were not to take them unless genuine, and were not to pay for them until found to be so. Next: “ And not having ever handled any of the Pacific Central, we would sell the bonds without recourse as to their being genuine; consequently, please examine them, and, upon being found correct, telegraph immediately (Central O. K.).” The phrase, “we would sell without recourse,” considered in the light of the context and the circumstances, may well be interpreted to mean that the writers would prefer or like so to sell, if it could be done. This view derives support from the succeeding member of the sentence, “ please examine,” &c. Examine for whom ? It is not said, examine for yourselves. The language employed is usual where the thing asked is for the benefit of the asker, but not where it is for the benefit of the party addressed. Lastly, it is said: “We do not doubt the bonds, but, coming through strange hands, we use this precaution, and are not willing to take risk.” This is consistent with the construction we have given to the preceding clause. If the examination the plaintiffs were requested to make showed clearly that the bonds were not counterfeit, then there could be no risk, whether the sale was with or without warranty of genuineness. In connection with these views, it is to be observed that while the bonds and draft were sent on pursuant to the original contract, which is distinctly recognized, it is not said in the letter in plain terms, such as would naturally have been used if such had been the intent of the writers. We will sell only at your risk as to genuineness. We will not guarantee it: examine for yourselves. If the bonds are counterfeit, and you take them, the loss will fall upon you, and not upon us. If this language, or terms equally clear and explicit, had been used, the case would have pre sented a very different aspect. “Every intendment is to be made against the construction of a contract under whic i would operate as a snare.” Hoffman v. ¿Etna Ins. N. Y. 405. ; . Upon the whole letter, considering what it does and w a i p. 47does not contain, we are unable to come to the conclusion that the defendants intended to require that the modification since insisted upon should be made, and to make such modification the condition upon which the plaintiffs should take the bonds, if they took them at all. This result leaves the rights of the parties as they were under the original contract, and entitles the plaintiffs to recover.

In Baldwin et al. v. Middleburger, 2 Hall, 176, the defendant ought merchandise of the plaintiff, and it was agreed that it * ou d be paid for by the note of a third person payable to the o endant, to be by him indorsed to the plaintiff. After the g o s were delivered the note was tendered, indorsed without course. The plaintiff refused to receive it, insisting that the greement was that the note should be indorsed without this qualification, and thereupon brought the suit. The court left 0 t e jury to find whether there was a misunderstanding p. 48between the parties as to the manner of the indorsement. The jury so found; and it was held that the plaintiff was entitled to recover as if there had been nothing said about the note, there being no such assent of the two minds as was necessary to make a contract in relation to it.

The plaintiffs were not asked to assent expressly with respect to the waiver of the warranty, if it were demanded, and made no such answer. They were asked to “ please examine, &c., an to telegraph the result. This they did. The despatch was wholly silent as to any thing else. That they understood the waiver was demanded as a sine qua non in no way appear On the other hand, the contrary is clearly manifest. Ite moment they had reason to apprehend that the bonds mig p. 49counterfeit, they notified the defendants; and, as soon as it became certain they were so, the defendants were advised of the fact, and that they would be looked to for indemnity. The defendants denied their liability by reason of their letter. In due time this suit was brought. Conceding that both parties have acted in good faith, it is clear that there was a misunderstanding between them as to the meaning and effect of the letter, and that the plaintiffs never understood and agreed to it as it is now interpreted and insisted upon by the defendants. The aggregatio mentium requisite to give that interpretation effect was, therefore, wanting.

VUL. IV. A p. 50risk. The letter of the defendants clearly manifested an intention not to deliver the bonds unless they were genuine, or unless the plaintiffs would take them at their own risk. On any other terms the plaintiffs had a right to take them. Inquiry and notice to defendants afterwards would have been idle, and would have been no precaution. Consequently the receipt of the bonds by the plaintiffs, after the notice given to them, can have no other meaning than that they took them at their own risk.

The plaintiff in error now moves that all the procee mgs. i execution of the judgment within ten days after its rendit p. 51may be vacated and set aside, and that all further process be stayed.