fendants received the notes for sale from E. O. Libby, who indorsed the same, they advancing to him $300 thereon, and on the same day sold them to the plaintiff without indorsing them for $1,406.80, which sum, deducting the $300 and their commissions, they paid over to E. O. Libby on the same day. The notes were sold for a price less than their face, equal to a discount of twelve per cent. per annum, for the time they had to run, to which was added one-eighth of one per cent., which was equal to one-half of the defendants' commissions. The plaintiff knew that the defendants acted as brokers in the transaction, but the name of their principal was not disclosed or asked for. The signatures of H. J. Libby & Co. were forged, but this fact was not known either to the defendants or the plaintiff till after the maturity of the notes. No assurance was given or asked for at the time of the sale, that the signatures were genuine.

Upon these facts judgment was rendered for the defendants, and the plaintiff appealed to this Court.

CHAPMAN, J. The first question presented by this case is whether a person who purchases a note of a broker for cash, and takes the note by delivery, can recover back the money paid if the maker's signature turns out to be forged. The text-books state the law to be that he can recover it back on the ground of an implied warranty that the note is not in reality what it purports to be: Bayley on Bills, 148; Chitty on Bills (10th Amer. ed.) 245. The English cases are referred to in these treatises. The recent case of Gurney v. Womersley, 4 El. & Bl. 132, asserts the same doctrine. It has been repeatedly so held in New York: Markle v. Hatfield, 2 Johns. 455; Herrick v. Whitney, 15 Johns. 240; Shaver v. Ehle, 16 Johns. 201; Murray v. Judah, 6 Cow. 484; Canal Bank v. Bank of Albany, 1 Hill (N. Y.), 278. It is so held in Rhode Island: Aldrich v. Jackson, 5 R. I. 218. Also in Vermont: Thrall v. Newell, 19 Verm. 202. But there are two cases which state a distinction in respect to this implied warranty that is not recognized in the other cases. The first is Ellis v. Wild, 6 Mass. 321. The plaintiff had purchased of the defendant two promissory notes, both of which, without the knowledge of either party, had forged indorsements. They were taken in payment for a quantity of rum. The Court held that if it was the original intent of the plaintiff to buy the notes and to make

payment in rum, the defendant was not liable; but if the payment by the notes was not a part of the original stipulation, but an accommodation to the defendant, then he was liable on the ground that he had not paid for the rum. Some early English cases are referred to as authorities for this distinction. The other case is Baxter v. Duren, 29 Me. 434, and it states the same doctrine.

If this is the law of this Commonwealth, then the plaintiff cannot recover; for he bought the notes for cash, and did not take them in payment of a debt. But it is difficult to see any valid reason for such a distinction. Whether the purchaser pays cash or discharges a debt in payment for the forged paper the injury is the same to him. There is in both cases failure of consideration growing out of a mistake of facts. The actual contract and the implied understanding as to the genuineness of the note is in both cases the same. And we think that the authorities which hold the seller to an implied warranty, in such case, that the note is genuine, are in conformity with the principles of sound reason and justice, and with the understanding of the parties in making such a contract. In Cabot Bank v. Morton, 4 Gray, 156, the case of Ellis v. Wild is not noticed; but it is held that one who gets a note discounted at a bank without indorsing it impliedly warrants that its signatures are genuine. The two cases are therefore contradictory. The doctrine held in Lobdell v. Baker, 1 Met. 193, in effect goes beyond any of the cases cited. The note sold was indorsed by a minor. It was held that upon the sale there was an implied warranty that the indorsement was by a person capable of binding himself by a valid contract. A warranty which goes to that extent includes the idea that there is a genuine signature. In that case the note was not sold to pay a debt, but for cash, and that point was not regarded as material.

2. Another question raised is whether the fact that the defendant made the sale as a broker, but without disclosing the name of his principal, relieves him from his liability. The authorities establish his liability as principal: 2 Kent Com. (6th ed.) 630; Gurney v. Womersley, Canal Bank v. Bank of Albany, Cabot Bank v. Morton, ubi supra.

3. A third question is whether he is relieved from his liability by the fact that he had paid over the money to his principal be

fore it was demanded by the plaintiff. We think he is not, there having been no unreasonable delay in giving him notice of the forgery after it was discovered: Canal Bank v. Bank of Albany, ubi supra; Fuller v. Smith, Ry. & Mood. 49.

And we think the deduction made to the purchaser of the notes does not alter the nature of the transaction. It did not, as the defendants contend, create a partnership in the commissions, but merely fixed the amount to be paid for the notes.

Judgment for the plaintiff.

What Will Operate to Discharge the Liability of Parties to a Bill or Note.-Forgery and Alterations as a Discharge.*

MEAD v. YOUNG.

4 Term. Rep. 28. 1790.

This was an action brought by the indorsee of a bill of exchange for 901. against the acceptor. The bill was drawn at Dunkirk by Christian on the defendant in London, payable "to Henry Davis, or order;" and, having been put into the foreign mail inclosed in a letter from Christian, it got into the hands of another Henry Davis than the one in whose favor it was drawn. The defendant accepted the bill; and when Davis desired the plaintiff, to discount it, the latter made application to the defendant to know whether or not it was his acceptance? and, on receiving an answer in the affirmative, coupled with an assurance that it was a good bill, he discounted it, not knowing the H. Davis from whom he took it. There was no ground to impute any fraud to the plaintiff. On the trial before Ld. Kenyon, after the plaintiff had proved the defendant's handwriting, and the indorsement by Davis, the defendant offered evidence to show that the H. Davis who indorsed to the plaintiff, was not the real H. Davis in whose favor the bill was drawn: but Ld. Kenyon

See Secs. 841-843, Vol. 6, Cyclopedia of Law.

being of opinion that such evidence was inadmissible, the plaintiff recovered a verdict. A rule having been obtained to show cause why a new trial should not be granted on this misdirection.

Ld. Erskine for the plaintiff argued that, if there had been any particular description of the payee on the bill, the plaintiff must have taken care that the person from whom he received it answered the whole of the description; but there was no description of, or addition to, the H. Davis; there was nothing on the bill to lead either the acceptor or any third person to suspect that the H. Davis, who was in possession of the bill, was not the real payee. And, so far from the plaintiff's having incurred any charge of neglect, he seems to have taken more than ordinary caution in making inquiries of the acceptor before he discounted the bill. There is no pretense to impute either fraud or neglect to the plaintiff; he stands in the situation of an innocent purchaser for a valuable consideration. This case therefore falls within the common rule, that, where one of two innocent persons must suffer by the fraud of another, the loss must be borne by him who enabled the party to commit the fraud; and in this case that person is Christian, who ought to have described the payee more particularly.

In support of the rule it was argued that, a party, purchasing a bill of exchange, is, like the purchaser of any other species of property, bound to inquire into the title of him from whom he buys. No person can derive title to this bill but he who claims under the real H. Davis: and it is indifferent whether the person indorsing the bill be or be not of the same name with the real payee; in neither case can any property be transferred but by him who has the title. If he bear the same name, prima facie indeed he may be presumed to be the same person, till the contrary be shown: but here the question was, whether evidence should not have been received to prove the contrary? If such evidence be not admissible, it will follow that payment to a person of the same name with a legatee would discharge the executor, or a payment by a debtor to any person who had the same name as his creditor: but that cannot be pretended. This bill was drawn in order to satisfy a debt due from Christian to the real H. Davis; and yet payment of this bill to the plaintiff can never be considered as a discharge of that debt, without the indorsement of

:

that H. Davis. In all cases where a bill is drawn payable to A. B. or order, it is indispensably necessary to prove the handwriting of the payee, which was not in fact done in this instance. The necessity of this proof is apparent from the form of the declaration which after alleging that the bill was drawn in favor of H. Davis, avers that the said H. Davis afterwards indorsed to the plaintiff. If the negligence of either of the parties be resorted to as a ground for the determination of this case, the plaintiff seems to have been guilty of the greatest negligence in taking a bill from a person whom he did not know, whereas the transaction, as far as Christian was concerned, was carried on in the ordinary course of business. There is also another objection to the plaintiff's recovering, because he claims through a forgery: For the H. Davis, who received the bill, inclosed in a letter from Christian, must have known that it was not intended for him; and the circumstance of his bearing the same name with the payee would be no defence to him on a prosecution for forgery, since he put a false signature to an instrument with intent to defraud.

The question here is, Whether the name of H. Davis, to whom the bill on the face of it was payable, shall or shall not convey a title to this plaintiff who gave a valuable consideration for it, and who discounted it with the name of H. Davis upon it, and with an assurance from the defendant that it was accepted by him? If any fraud, or even neglect, could be imputed to the plaintiff, that would vary the case; but, circumstanced as these parties were, I think that, if the plaintiff cannot recover, it will put an insuperable clog on this species of property. I cannot distinguish this case on principle from that of Miller v. Race (1 Burr., 452 (1758)), where the innocent holder of a note, which had been taken when the mail was robbed, was held entitled to recover; that indeed was a note payable to bearer, but still the same principle must govern both cases. In this case the fault originated with the drawer of the bill, in not describing more particularly the person to whom he intended it should be paid. The plaintiff was not bound to send to Dunkirk to know whether the person, who had possession of the bill, was or was not the real H. Davis. There may indeed be some inconvenience the other way; but setting the inconvenience on