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lar quality may be tendered in the performance of the contract and the vendee must see if the article agrees with the terms of the contract, while in an executed sale the agreement is that a particular article actually delivered possesses the quality stipulated for. This undoubtedly expresses correctly the distinction between the classes of contract, but it does not impress us that there should be such an essential difference in their effect. The reason is not palpable why the vendee in the one case more than in the other should have to see that he receives only merchantable articles when a delivery is made. It seems inconsistent that the warranty, which is a part of either contract, should terminate at delivery in one contract and not in the other. Each vendor makes virtually the same warranty, and the two vendors at the point of delivery would appear to stand upon common ground. The seller in an executory contract agrees to do what the seller in an executed contract has already done. When he tenders the articles that he has agreed to deliver, such articles become particularized and identified, and he then represents that such particular and identified articles possess the quality stipulated for by his executory agreement. The terms of the contract of sale become the terms of the sale. The condition precedent becomes a warranty. Professor Wharton (Whar. Cont., $564) expresses the idea in these words: "A substantial though partial (defective) performance of a condition precedent, followed by acceptance on the other side, transmutes the condition precedent into a representation (implying warranty) not barring a suit on the contract, though leaving ground for a cross-action for damages."

Executory and executed contracts are very much alike in the elements that enter into them. There are executory steps in all executed contracts. A bargain precedes the sale. If there be a warranty, that is usually first a part of the bargain and afterward of the sale. So in an executory contract the warranty is part of the agreement of sale, and at delivery a part of the sale. Many contracts commonly spoken of as executed contracts are really wholly or partially executory. All orders for goods whether for present or future delivery are of an executory nature. All sales by sample are such. The author of Smith's Leading Cases (8th ed., vol. 1, part 1, p. 339) says in discussing this distinction: "Where the vendor agrees to sell goods of a certain kind, without designating or referring to any specific chattel, the contract is essentially executory, whether it purports to be a present transfer, or a mere undertaking to deliver at a future period, and the right of property does not pass until the merchandise is delivered to, or set apart for the purchaser." Every contract is executory on the one side or the other until the party has done what he has agreed to do.

The fact of acceptance however, as a matter of evidence, may have great weight on the question of satisfactory or sufficient performance. In the first place, it raises considerable presumption that the article delivered actually corresponded with the agreement. In the next place, it is some evidence of a waiver of any defect of quality, even if the article did not so correspond, evidence of more or less force according to the circumstances of the case. If the goods be accepted without objection at the time or within a reasonable time afterward, the evidence of waiver, unless explained, might be considered conclusive. But if, on the other hand, objection is made at the time, and the vendor notified of the defects, and the defects are material, the inference of waiver would be altogether repelled. But acceptance accompanied by silence is not necessarily a waiver. The law permits explanation and seeks to know the circumstances which induced acceptance. It might be that the buyer was not competent to act upon his own judgment, or had no oppor· tunity to do so, or declined to do so as a matter of ex

pediency, placing his dependence mainly, as he has a right to do, upon the warranty of the seller. Upon this question the facts are generally for the jury under the direction of the court.

The law of waiver more commonly applies to things that are not essential to a substantial execution of the contract; often such as relate to the time, place or manner of performance, or that affect merely the taste or fancy perhaps, and are such departures from literal performance as do not bring loss or injury upon the purchaser. Baldwin v. Farnsworth, 10 Me. 414; Lamb v. Barnard, 16 id. 364.

We think the rule invoked by the defendant a just one. Speaking generally, it is the safer rule for both buyer and seller. The opposite rule imposes on either of them very great responsibility and risk. It might be ruinous to a vendee, who is in urgent need of an article, not to accept it, although even much inferior in quality to the description contained in the contract. Certainly it should not be considered a hardship to a seller to require of him a compliance with his contract or damages for his non-compliance.

The present case illustrates the justness of the rule, if the facts are proved as the defendant alleges them. The plaintiffs agreed to deliver ice which they warranted should be good, clear and merchantable. Two cargoes were loaded for shipment to a southern port. Defendant furnished the vessels, though they were probably chartered by the plaintiffs on the defendant's account. There is nothing in the charge of the judge, in the exceptions, or on briefs of counsel, intimating that the defendant ever saw the ice, either by agent or personally, until it arrived in Virginia, or that he was notified to be present or knew of the delivery at the time of it. It would seem to be a rather stringent construction of the contract that the defendant must watch the loading of the cargoes, upon the penalty, if he failed to do so, of having to pay full price for whatever defective ice might be delivered behind his back, after he had taken for his protection, and paying for it in the consideration of the contract, an agreement of warranty in such positive terms. Still it may be that the plaintiffs could legally refuse to deliver the ice unless the defendant after notice should be present to receive it. The cargoes, after reasonable passages, arrived in a very unmerchantable condition. There was no lack of objection or protest from the defendant. He wrote repeatedly and telegraphed the plaintiffs, expressing his disappointment and asking their advice as to the disposition of the ice. But no satisfactory answer came. What should he do? There

was no possibility of re-shipment, nor could the ice be preserved in that climate without the protection that his own ice-houses would afford for such purpose. Storage in any ordinary manner could not possibly save the property. He stored the ice and sold it by enterprising expedients as rapidly as possible. He alleges that it was late spring ice, of poor texture and in proximately worthless condition when shipped from Maine. If that can be shown by witnesses and in court at the home of the plaintiffs, it would seem to be an injustice if the defendant is not permitted to make the defense.

Mr. Benjamin (Sales [3d Am. ed.], p. 888) in allusion to the buyer's remedies after receiving possession of the goods, says he has three remedies against the seller for a breach of the warranty of quality. First, the right to reject the goods if the property in them has not passed to him. Second, a cross-action for damages for the breach. Third, the right to plead the breach in defense to an action by the vendor, so as to diminish the price. These remedies are mentioned without any distinction between kinds of sales. The propositions are general, without any intimation that the procedure does not apply to warranties in executory sales. In the text such a distinction is not even

noticed. In the notes to the text however it is remarked by the American editor that there are New York decisions inconsistent with the rule stated in the text. The first of these remedies, that of rejecting the goods, seems especially applicable to executory and inapplicable to executed sales, because it precedes acceptance, while in executed sales there has been acceptance and the title has passed. It is only in executory contracts and contracts that are merely prima facie executed that the title has not passed.

Mr. Benjamin states further that the buyer's remedies are not dependent on his return of the goods, nor is he bound to give notice to the vendor, "but," he adds, "a failure to return the goods, or complain of the quality raises a strong presumption that the complaint of defective quality is not well founded." Prof. Parsous, in the text and notes of his work on Contracts, lays down the same legal propositions that Mr. Benjamin does, making not a word of allusion to there being any difference in the application of them between sales executed and sales executory. He also states that if the buyer accepts goods inferior to such as are stipulated for, his continued possession without complaint will be a presumption against him on the question of damages. Pars. Cout. (6th ed.) *591, and notes.

Mr. Smith, in Leading Cases, in notes to the cases of Chandelor v. Lopus, discusses and fully indorses the same rules, as deducible from the authorities, and he and the editors in the last American edition of that work cite and compare a great many of the decided cases on the subject, and they give no recognition to a distinction between executed and executory contracts in the application of such remedies. We quote a few passages from their comments:

When specific prop

erty is referred to, still if the reference be through the medium of a sample, the contract will be so far executory as to fail of effect unless the bulk of the commodity corresponds with the sample." "Nor wil; his (buyer's) right to indemnity or compensation necessarily end on his acceptance and use of the goods with full knowledge of the defect, but he will be entitled to bring suit on the contract, and receive damages for the breach of the implied engagement that the bulk of the commodity should correspond with the sample exhibited at the time of the sale." In the case at bar there was an ideal or descriptive sample, a description equivalent to the exhibition of a sample. There can

be no doubt that if the vendee may bring an action of his own on the contract, he can as well defend against an action brought upon the contract by the vendor.

The right of the vendee to rely on the breach of warranty, or a failure to comply with the terms of an executory contract, as a defense to an action for the purchase-money may now be regarded as established in England and in most of the courts in this country." "The course of decision at the present day tends toward the position that a partial failure of consideration may be given in evidence in mitigation of damages, even when the original contract remains in full force, and the suit is expressly or impliedly founded upon it." "In the case of Withers v. Greene, 9 How. 203, the Supreme Court of the United States receded from the ground taken in Thornton v. Wynn, 12 Wheat. 183, by holding that a partial failure of consideration growing out of fraud or breach of warranty, may be set up as a defense to an action brought by the vendor. The same rule applies to sales under an executory contract, or by sample, and the buyer may rely on the deficiency of value resulting from the failure of the property sold to correspond with the terms of the contract, as a reason why he should not be compelled to pay the price in full. Mandel v. Steel, 8 Mees. & W. 858; Babcock v. Trice, 18 II. 420; Dailey v. Green, 15 Penn. St. 118."

We are unable to find in the English cases much support for any discrimination in the application of

the above doctrine between sales executed and sales executory, although very many of the modern Euglish cases arise out of sample sales and other contracts of an executory nature. The principal support for it is found in some of the New York cases and in those of a few other States that have followed the lead of the New York court in this respect. There are cases which hold to a modification of some of these forms of remedy, having no bearing however on the decision of the present case. Some courts have held that a rejection or rescission is not allowable if the goods tendered are of the kind or species contracted for, even though the quality be inferior. But in this State the doctrine of rescission in cases of warranty has been fully established. Marston v. Knight, 29 Me. 341. In a few cases there is a leaning toward the doctrine that an acceptance becomes a waiver after a long-continued acquiescence on the part of the vendee. Smith Lead. Cas. (8th ed.), vol. 1, part 1, pp. 324, 326, 330, 362, et seq.

It is noticeable that in the more modern English cases the court have preferred to regard executory contracts as based upon a condition precedent rather than upon warranty. No essential difference of remedy follows from it, though a different style of pleading may be apposite. Instead of a breach of warranty and a suit upon warranty, it becomes, ou the new idea, a failure to perform a condition precedent and a suit on the contract. In Leading Cases, before cited, the commentator expresses the theory in an alternative way in these words: "The right of a vendee to rely on the breach of a mere warranty, or a failure to comply with the terms of an executory contract, as a defense to an action for the purchase-money may now be regarded as established in England, and in most of the courts in this country." But the editor at the same time says (p. 334) that "such cases have generally proceeded on the ground of an express or implied warranty." See also in vol. 2, part 1, Smith's Lead. Cas., the discussion under case of Cutter v. Powell, at pp. 18, 20, 22, et seq. Mr. Benjamin inclines to the view taken in the English cases, quoting Lord Abinger as deprecating the prevalent habit of treating a condition precedent as a warranty. Other writers incline favorably toward the views of Lord Abinger as expressed by him in the case of Chanter v. Hopkins, 4 Mees. & W. 399, although admitting that the prevailing theory continues the other way.

The length of this opinion reasonably precludes further discussion of points that may be regarded as merely theoretical. Whether in the present case it be a condition or a warranty, and that might be at the election of the defendant to determine as he pleased, we think the defense set up to the action should have been heard upon the ground of a breach of condition, or of warranty, or upon both grounds.

The main question for our decision has not been the subject of much discussion in our own State, although the principle involved has been acted on in a great number of instances, and there have been judicial expressions and rulings affecting it. In Folsom v. Mussey, 8 Me. 400, it is allowed that evidence of consideration may be received in actions between the parties to a contract, to reduce the damages. In Herbert v. Ford, 29 Me. 546, the doctrine is approved. Rogers v. Humphrey, 39 id. 382, directly applies to the present facts. It is there held that "when a party seeks to recover payment for articles delivered under a special contract which he has not fully performed, the damages suffered by such breach may legally be deducted in the same suit." The case of Peabody v. Maguire, 79 Me. 572, in its effect sustains the same principle. It is there decided that in a conditional sale the mere fact of delivery by the vendor without performance by the vendee, nothing being at the time said about the condition, might afford presumptive evi

dence of the waiver of the condition, but that the fact may be explained and controlled, and whether it be a waiver of the right of title or not would be a question of fact to be ascertained from the testimony. So in the present case whether acceptance be a waiver of the full performance of the condition precedent or not is likewise a question to be settled upon testimony. The position of parties is reversed in the two cases, but the principle is the same.

The first case in this country, except a Maryland decision to the same effect, and perhaps the leading case in the recognition of the principle that affirmation of quality establishes warranty, is Hastings v. Lovering, 2 | Pick. 214, where oil then in Nantucket was sold to be delivered in Boston in ten days, the vendor describing the same to be "prime winter oil." That was in fact as much of an executory contract as is the one under discussion, although not in form such. The point was taken in the trial that the contract although executory was settled by a bill of parcels given at delivery, the executory agreement having no further effect. But the court overruled the position. The case is effective on the present question as showing that acceptance has no greater effect as an estoppel in executory than in executed sales. Other Massachusetts cases bear, either directly or indirectly, upon the question. In none of them is there any judicial utterance indicating that executory and executed sales do not on this question stand alike. Perley v. Balch, 23 Pick. 283; Dorr v. Fisher, 1 Cush. 215; Henshaw v. Robins, 9 Metc. 83; Mixer v. Coburn, 11 id. 559; Morse v. Brackett, 98 Mass. 205. Several Connecticut cases that are often cited as supporting the theory that description imports warranty, and that the defendant may recoup damages for a breach of contract if the vendor brings a suit, were cases of executory contracts or sales. McAlpin v. Lee, 12 Conn. 129; Kellogg v. Denslow, 14 id. 411. And of the same character is the leading case in the Supreme Court of the United States on the same question. Lyon v. Bertram, 20 How. 150. In that case the vendor was to deliver a cargo of flour within three weeks, the price to be according to an inspection to be made at delivery. The contract was in form a sale, but in effect a contract for future sale and delivery. The same deduction may be made from the cases of so many of the States that the rule may be fairly characterized as general. And the same result is produceable from the English cases.

The New York court held in earlier cases that warranty in an executory contract did not in ordinary circumstances survive delivery and acceptance. But the doctrine grew up from the theory of law, maintained for a great while by that court, that description of quality is not a warranty of quality. In Leading Cases, before cited, it is said, in distinguishing the New York theory from that of Massachusetts and Pennsylvania: "The authorities in New York assume that calling a thing by a particular name, or designating as of a certain quality, is no evidence of a warranty or contract that it should be as described." Certainly a thing cannot survive that does not exist. Wilde, J., in Marshall v. Robins, 9 Metc. 90, declared upon that ground that the authorities in New York were without influence upon the question of effect of acceptance in Massachusetts, saying: "Opposed to these authorities are the cases in New York; but these were determined on the assumption that there was no warranty express or implied, and they therefore have no bearing on the question as to the effect of the inspection of the goods sold by the purchaser.”

The last-named rule of the New York cases was found to be so much at variance with the authorities elsewhere, that in the case of White v. Miller, 71 N. Y. 118, all previous cases which held that warranty did not follow from description of quality, were overruled. And as a natural if not necessary consequence thereof,

the tendency of that court seems in later cases to have been progressive toward the adoption of the other rule that acceptance in cases of executory sales with warranty does not preclude the vendee from afterward claiming damages against the vendor for a breach of the warranty, if the court has not already arrived at that point. There are late cases, in that State, of express warranties, the doctrine of which seems to completely vindicate the position of the defendant in the present case, even should he be obliged to stand or fall upon the interpretation of the law of his contract according to the New York authorities. In Brigg v. Hilton, 99 N. Y. 517, and in Fairbank Canning Co. v. Metzger, 118 id. 260, it is declared that an express undertaking to deliver in the future articles of a certain quality was an express warranty of such quality when the articles were afterward delivered, a warranty that survived an acceptance of the articles delivered; and that the rule would be the same whether the goods were in existence at the time of contract of sale or were to be manufactured.

Upon the authority of these cases the contract in the case at bar contains an express warranty. An express undertaking to produce a thing is an express warranty of the thing produced. Exceptions sustained.

WALTON, VIRGIN, LIBBEY, HASKELL and WHITEHOUSE, JJ., concurred.

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A stockbroker is liable to the owner for the value of mining shares received for sale from one who had stolen them, although he acted in good faith without notice, and paid the proceeds to the thief, relying on his representations of ownership.

N bank. Appeal from Superior Court, city and county of San Francisco; John Hunt, J. Wilson & Wilson, for appellant.

Tilden & Tilden, for respondent.

DE HAVEN, J. The plaintiff was the owner of one hundred shares of stock of a mining corporation, issued to one H. B. Parsons, trustee, and properly inThis stock was stolen from plaintiff dorsed by him.

by an employee in his office, and delivered for sale to the defendant, who was engaged in the business of buying and selling stocks on commission. At the time of placing the stock in defendant's possession, the thief represented himself as its owner, and the defendant,relying upon this representation, in good faith, and without any notice that the stock was stolen, sold the same in the usual course of business, and subsequently, still without any notice that the person for whom he had acted in making the sale was not the true owner, paid over to him the net proceeds of such sale. Thereafter the plaintiff brought this action to recover the value of said stock, alleging that the defendant had converted the same to his own use, and, the facts as above stated appearing, the court in which the action was tried gave judgment against defendant for such value, and from this judgment, and an order refusing him a new trial, the defendant appeals. It is clear that the defendant's principal did not by stealing plaintiff's property acquire any legal right to sell it, and it is equally clear that the defendant, acting for him and *S. C., 27 Pac. Rep. 33.

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as his agent, did not have any greater right, and his act was therefore wholly unauthorized, and in law was a conversion of plaintiff's property. "It is no defense to an action of trover that the defendant acted as the agent of another. If the principal is a wrong-doer the agent is a wrong-doer also. A person is guilty of a conversion who sells the property of another without authority from the owner, notwithstanding he acts under the authority of one claiming to be the owner, and is ignorant of such person's want of title." Kimball v. Billings, 55 Me. 147; Coles v. Clark, 3 Cush. 399; Koch v. Branch, 44 Mo. 542. In Stephens v. Elwall, 4 Maule & S. 259, this principle was applied where an innocent clerk received goods from an agent of his employer, and forwarded them to such employer abroad; and in rendering his decision on the case presented, Lord Ellenborough uses this language: The only question is whether this is a conversion in the clerk, which undoubtedly was so in the master. The clerk acted under au unavoidable ignorance and for his master's benefit, when he sent the goods to his master; but nevertheless his acts may amount to a conversion, for a person is guilty of a conversion who intermeddles with my property and disposes of it, and it is no answer that he acted under the authority of another, who had himself no authority to dispose of it." To hold the defendant liable, under the circumstances disclosed here, may seem upon first impression to be a hardship upon him. But it is a matter of every-day experience that one cannot always be perfectly secure from loss in his dealings with others, and the defeudant here is only in the position of a person who has trusted to the honesty of another, and has been deceived. He undertook to act as agent for one whom it now appears was a thief, aud, relying on his representations, he aided his principal to convert the plaintiff's property into money,and it is no greater hardship to require him to pay to the plaintiff the value of this property than it would be to take it away from the innocent vendee who purchased and paid for it. And yet it is universally held that the purchaser of stolen chattels, no matter how innocent or free from negligence in the matter, acquires no title to such property as against the owner, and this rule has been applied in this court to the innocent purchaser of shares of stock. Barstow v. Mining Co., 64 Cal. 388; Sherwood v. Mining Co., 50 id. 413.

The precise question involved here arose in the case of Bercich v. Murye, 9 Nev. 312. In that case, as here, the defendant was a stockholder who had made a sale of stolen certificates of stock for a stranger, and paid him the proceeds. He was held liable, the court in the course of its opinion saying: "It is next objected that, as the defendant was the innocent agent of the person for whom he received the shares of stock, without knowledge of the felony, no judgment should have been rendered against him. It is well settled that agency is no defense to an action of trover, to which the present action is analogous." The same conclusion was reached in Kimball v. Billings, 55 Me. 147, the property sold in that case by the agent being stolen government bonds, payable to bearer. The court there said: "Nor is it any defense that the property sold was government bonds payable to bearer. The bona fide purchaser of a stolen bond payable to bearer might perhaps defend his title against even the true owner. But there is no rule of law that secures immunity to the agent of the thief in such cases, nor to the agent of one not a bona fide holder. * * The rule of law protecting bona fide purchasers of lost or stolen notes and bonds payable to bearer has never been extended to persons not bona fide purchasers, nor to their agents." Indeed we discover no difference in principle between the case at bar and that of Rogers v. Huie, 1 Cal. 571, in which case Bennett, J., speaking for the court, said: "An auctioneer who receives and sells

*

stolen property is liable for the conversion to the same extent as any other merchant or individual. This is so both upon principle and authority. Upon principle, there is no reason why he should be exempted from liability. The person to whom he sells, and who has paid the amount of the purchase-money, would be compelled to deliver the property to the true owner or pay him its full value; and there is no more hardship in requiring the auctioneer to account for the value of the goods than there would be in compelling the right owner to lose them, or the purchaser from the auctioneer to pay for them." It is true that this same case afterward came before the court, and it was held in an opinion reported in 2 California, 571, that an auctioneer, who in the regular course of his business receives and sells stolen goods, and pays over the proceeds to the felon, without notice that the goods were stolen, is not liable to the true owner as for a conversion. This latter decision however cannot be sustained on principle, is oppo sed to the great weight of authority and has been practically overruled in the later case of Cerkel v. Waterman, 63 Cal. 34. In that case the defendants, who were commission merchants, sold a quantity of wheat, supposing it to be the property of one Williams, and paid over to him the proceeds of the sale before they knew of the claim of the plaintiff in that action. There was no fraud or bad faith, but the court held the defendants there liable for the conversion of the wheat. In this case it was the duty of the defendant to know for whom he acted, and, unless he was willing to take the chances of loss, to have satisfied himself that his principal was able to save him harmless if in the matter of his agency he incurred a lia bility by the conversion of property not belonging to such principal.

Judgment and order affirmed.
We concur:
STEIN, JJ.

GAROUTTE, MCFARLAND, SHARP

We dissent: BEATTY, Ch. J.; PATERSON, J.

ABSTRACTS OF VARIOUS RECENT DECISIONS.

INSURANCE-CONDITIONS OF POLICY-FAILURE TO PAY PREMIUM NOTE-WAIVER.-The policy of fire insurance contained a clause, if the assured failed to pay his premium note at the time specified, then the policy should cease to be in force, and remain null and void during the time the note remains unpaid after maturity, and that the payment of the premium revives the policy, and makes it good for the balance of the term. The premium note matured before the loss complained of, and had never been fully paid. Held, that the company was not liable. It is but fair and just that, while the insured is in default of the payment of his note, the company should not be liable for loss when the parties have so agreed. We have no right to make a new contract for them, or refuse to enforce the one they have made. To hold that the policy was in force at the time of the fire would be to set aside and disregard the plain stipulation of the parties. Gorton v. Insurance Co., 39 Wis. 121; Shakey v. Insurance Co., 44 Iowa, 540; Garlick v. Insurance Co., id. 553; Wall v. Insurance Co., 36 N. Y. 157; Williams v. Insurance Co., 19 Mich. 457; Curtin v. Insurance Co. (Cal.), 21 Pac. Rep. 370. There was some evidence offered for the purpose of showing that the company waived the terms of the policy in regard to the payment of the premium note, but such evidence, under the pleadings as framed, could not avail the defendant in error. issue was squarely presented by the pleadings whether or not the note was paid. We doubt not that the stipulation in the policy can be waived, but when such

The

age,

waiver is relied upon it must be pleaded. Zinck v. Insurance Co., 60 Iowa, 266; Welsh v. Insurance Co. (Iowa), 32 N. W. Rep. 369; Mehurin v. Stone, 37 Ohio St. 58; Palmer v. Sawyer, 114 Mass. 13; Nichols v. Larkin, 79 Mo. 264. The policy provides that loss will be paid "upon receipt of proper proofs at its Chicago office." It also provides that, "in case of loss or damthe assured shall forth with give notice of said loss in writing to the company." The evidence shows that the insured immediately after the fire notified, in writing, the company of the loss, but it does not appear that he ever furnished the preliminary proofs of loss. The existence of a loss has not at any time been denied by the company. In fact it is admitted by the answer under which the case was tried that the house was totally destroyed. The company has at all times insisted, and now insists, that it was not liable for the loss, on the ground that the policy was not then in force, by reason of the failure of the insured to pay his premium note. The plaintiff in error, by denying all liability, dispensed with the necessity of furnishing proofs of loss. Carson v. Insurance Co., 62 Iowa, 433; Union v. Whitt, 36 Kaus. 760; King v. Insurance Co., 58 Wis. 508; Tayloe v. Insurance Co., 9 How. 390; Insurance Co. v. Lippold, 3 Neb. 391. Sup. Ct. Neb., July 1, 1891. Phenix Ins. Co. v. Bachelder. Opinion by Norval, J.

·

IN

JURISDICTION-FEDERAL COURT-NEGOTIABLE STRUMENT.-A bill of exchange drawn by a corporation in favor of itself, and by it indorsed in blank, is payable to bearer, within the meaning of the statute restricting the jurisdiction of circuit courts in actions on negotiable instruments. The rule in regard to commercial paper is to the effect that a bill or note made by a person payable to himself or to his order, if indorsed by him and delivered to another person, becomes in legal effect payable to the bearer, and may be so treated and declared on. They are designed to enable the holder to pass them without indorsement, and it seems to be simply a roundabout way of making the bill or note payable to bearer. Tied. Com. Paper, § 20; Daniel Neg. Inst., § 130; Bank v. Alley, 79 N. Y. 536. In Tiedeman on Commercial Paper the author says: "In order that commercial paper may be negotiated without indorsement, and the consequent liability of indorsers, and yet avoid the commercial discredit of an indorsement without recourse,' it has become quite common for bills and notes to be made payable to the order of the drawer or maker, so that the named payee is the same person as the drawer or maker. The drawer or maker then indorses it in blank, and it is then transferred as if it had been made payable to bearer. Of course two parties, distinct and separate, are as necessary to the negotiation of a bill or note as they are to the making of any other contract. In consequence of this necessity, it was once supposed that a note or bill would be invalid if the payee and the maker or drawer were one and the same person. But while it is manifest that such a bill or note is valueless, until it has been transferred by indorsement to another person, because there has been no delivery, and consequently not a complete contract, as soon as it has been indorsed and delivered to the purchaser there are two distinct, separate parties to the contract, and the paper may be sued on as if originally made payable to bearer." In the light of these authorities, I am of opinion that the bills of exchange must be treated and considered as having been made payable to bearer, and having been made by a corporation it follows that this court has jurisdiction of the case by the express provision of the statute above cited. Newgass v. New Orleans, 33 Fed. Rep. 196; Rollins v. Chaffee Co., 34 id. 91; Wilson v. Knox Co., 43 id. 481; Barnum v. Caster Co., 34 id. 91. The conclusion is not, as argued by defendant, opposed by any

There

principle announced in Rollins v. Chaffee Co. the court said: "The warrants being payable to the order of a person named therein, and passing only by indorsement, in the absence of averment that the assignors were qualified to sue in this court, we are without jurisdiction." In that case the warrants were not made payable to the maker, and by it indorsed, but were made payable to another person. Here the bills were made payable to the maker, and by it indorsed in blank, and then delivered, and the bills as thus delivered under the rules applicable to commercial paper, must be treated as having been made payable to bearer. This case comes within the rule of Barnum v. Caster Co., supra, where "the warrants, being payable to bearer, and made by a corporation, appear to be within the exception of the statute." The demurrer is overruled. Circ. Ct., N. D. Cal., February, 1891. Bank of British North America v. Barling. Opinion by Hawley, J. 46 Fed. Rep. 357.

LANDLORD AND TENANT-HALLWAYS NOT LEASEDDUTY TO LIGHT-CONTRIBUTORY NEGLIGENCE.-One who lets offices in a building, and retains control of the halls, entries and stairways, is bound to use reasonable care that the same are safe at all times for persons who are lawfully using the premises, and is liable to one who was injured, without negligence on her part, by reason of failure to properly light the stairway. (2) It was not contributory negligence for the plaintiff to use the stairway, though she knew it to be dark, and was cautioned to use care, when the elevator had stopped running, and there was no other way of getting out of the building. Sup. Jud. Ct. Mass., Suffolk, June 29, 1891. Marwedel v. Cook. Opinion by W. Allen, J.

LIBEL-PRIVILEGED

COMMUNICATIONS-SOLVENCY

OF SURETY.-A communication made by the cashier of a bank to a stockholder with reference to the solvency of the plaintiff, who was surety upon an official bond to the bank, is privileged, and it is not necessary, to justify the communication, that it be in response to an inquiry made by the stockholder. The term "privilege," as applied to a communication alleged to be libellous, means simply that the circumstances under which it was made are such as to repel the legal inference of malice, and to throw upon the plaintiff the burden of offering some evidence of its existence beyond the falsity of the charge. This court, in King v. Patterson, 49 N. J. Law, 419, declared "that a communication, made bona fide, upon any subject-matter in which the party communicating has an interest, or in reference to which he has a duty, is privileged, if made to a person having a corresponding interest or duty, although it contain criminatory matter which, without this privilege, would be actionable." In the case cited the learned judge who delivered the opinion of the court referred with approbation to Lawless v. Anglo-Egyptian, etc., Co., L. R., 4 Q. B. Div. 262, and to Railroad Co. v. Quigley, 21 How. 202. The first of these cases was an action for libel against a corporation for publishing a report made to the company by auditors, in their audit of the manager's account, reflecting upon the plaintiff. The report was submitted at a general meeting of the shareholders of the company, and under a resolution of the meeting was printed and circulated among the shareholders. The court held that, inasmuch as it was the interest of all the shareholders to be informed of the report, the publication was privileged on the ground, as Mellor, J., said, "that to print the report was a necessary and reasonable mode of communicating it to all the shareholders, who must be more or less numerous." In the second case a report made to stockholders in writing, and printed, with respect to the capacity and skill of one of the company's employees, was held to be a

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