Sherwin, 20 Colo. 234, 38 Pac. 56. This being the rule, all testimony as to a parol agreement between the indorser and the indorsee contemporaneous with the indorsement of the note sued upon was incompetent, and should have been rejected. It is insisted by appellee that there is sufficient evidence in the record, exclusive of the incompetent testimony above referred to, to support the finding of the court to the effect that there was a waiver of presentment for payment and notice of dishonor. As seen above, by sections 82 and 109 of the negotiable instrument statute presentment for payment and notice of dishonor may be waived, and the waiver may be express or implied. Appellant concedes this to be the law, but insists that the testimony relied upon, which is quoted from the abstract, supra, does not prove a waiver. The findings of the court were as follows: "I am compelled to find, from the evidence in the case, that the evidence discloses the fact that the conduct and promises and manner of transacting the business by the firm, on the part of Mr. Fowler, at that time misled and caused the plaintiff to rely upon those promises and upon that course of conduct, to the extent that she left the matter entirely to the firm of Torbert & Fowler to attend to the collection and take charge of the matter, and that the evidence discloses they got their pay for it and got their commission on this matter, and undertook the responsibility of doing it, and that was the cause, under the evidence at least, for the failure on the part of the plaintiff to present these notes and give any further notice of dishonor." * * The question to be determined is whether, upon a fair construction of the language used by Fowler, his conduct in relation to the matters in controversy, and his acts as agent of appellee, were calculated to mislead appellee, to put her off her guard, and to induce her to forbear taking the necessary steps to charge appellant as indorser. In Union. Bank v. Magruder, 7 Pet. (U. S.) 287, 8 L. Ed. 687, the United States Supreme Court, according to the headnote, held: "Whether certain. declarations by the indorser of a note amounted to a waiver of demand on the maker and notice to the defendant, or to a new promise in consideration of forbearance, are questions of fact for the jury, under instructions from the court, not mere questions of law." Declarations intermixed with acts and conduct, as in this case, seem to us to raise a question of fact to be determined by the court or jury. So the rule is stated by Daniel, § 1103, and Randolph, § 1383, quoted above. The court below found this fact against the appellant, and we do not feel at liberty to disturb it. In view of all the circumstances surrounding this case, as disclosed by the transcript of the evidence, which has been read with great care, the judgment will be affirmed.63 63 See In re Swift (D. C.) 106 Fed. 65 (1901). CHAPTER III TRANSFERROR BICKNALL & SKINNER v. WATERMAN. (Supreme Court of Rhode Island, 1857. 5 R. I. 43.) Assumpsit on a contract for the sale of 65 bales of cotton, made by the defendant with the plaintiffs.1 AMES, C. J. This is a mixed contract of sale and exchange, by which the defendant, on the 24th day of November, 1856, engaged with the plaintiffs, through a broker, to sell to them a specified lot of Augusta cotton, being 65 bales marked "Hoppin," at 13 cents per pound, for the note of one John E. Weeden for about $1,250, having then some four months to run; the balance to be secured by the note of the plaintiffs at six months. It is in proof, that about one-half of the sales of cotton in the market of Providence are made in this way of barter for the notes of third persons, in which it is understood, as sworn by the broker, and as has been frequently proved before us, that the notes are "put off"-that is, exchanged-for the cotton; the very purpose of the transaction on the part of the purchaser being to get rid of the risk of the solvency of the paper, even though, he pay an enhanced price for the cotton. The testimony of the broker who conducted this bargain shows that, so far as the note of Weeden would go towards the price of the cotton at the agreed rate, such was the nature of this contract; time being expressly given to and taken by the defendant to make inquiries concerning the solvency of Weeden, before he bound himself to it. The contract, as of a present sale and exchange, was concluded by the assent of both parties, and was so entered in the broker's book on the evening of the 24th of November; and the subjects of the contract being perfectly identified by it, and nothing remaining to be done but mutually to deliver the stipulated cotton and notes, the effect of the transaction, in the absence of fraud, was at common law -and we have no statute which touches the matter-to vest the title to the cotton in, and place it at the risk of, the plaintiffs, and to vest the title to Weeden's note in, and place it at the risk of, the defendant. Such was the view which forced itself upon my own mind when the case was first tried before me with a jury, and such is the conclusion to which we have all arrived, upon the maturest consideration of the arguments and authorities which have been pressed upon our attention. A well-known common-law principle, applicable alike to sales and exchanges of personal things, is that fraud or warranty is necessary 1 The statement of the case, the arguments of counsel, and part of the opinion are omitted. to render the vendor or exchanger liable, in any form, for a defect in the quality of the thing sold or exchanged. Applying this principle to the sale or exchange of the note of a third person, transferred by indorsement without recourse or by delivery merely, the vendee or person taking it in exchange takes the risk of the past or future insolvency of the maker, or other party to it, unless indeed, in case of past insolvency, the vendor or exchanger is guilty of the fraud of passing it off with knowledge of that fact.2 The case of a sale or exchange of a forged note is equally within the above principle; since the parting with it for value is a representation, and so a warranty, that it is the note of the persons whose note it purports to be—that is, is the thing as which it is sold or exchanged. Although decisions may undoubtedly be found departing from these ancient common-law principles, yet this is the settled doctrine of Westminster Hall, and is supported by the main current of American authorities. Byles on Bills, 122-125, 307, and cases cited, especially Camidge v. Allenby, 6 B. & C. 373; Gompertz v. Bartlett, 24 Eng. L. & Eq. 156; Gurney v. Womersley, 28 Eng. L. & Eq. 257; Hall v. Conder, 38 Eng. L. & Eq. 259, and cases cited; 2 Am. Lead. Cases (Hare & Wallace's Notes) 180-189. As remarked by Sergeant Byles in his valuable treatise, after quoting several conflicting American cases bearing upon this subject: "The confusion has arisen from neglecting to distinguish between questions of law and questions of fact." Byles on Bills, 122, note "i." In other words, what was the agreement of the parties with regard to the transfer of a note or billthat is, whether it was by way of sale or exchange, or, in case of a precedent debt, whether by way of complete payment or as mere security for payment of it—is a question of fact, and varies with proof, direct and presumptive, in cases in other respects similar. It is obvious what contrariety of decision must necessarily arise if courts, mistaking their province, undertake to decide such questions as if they were questions of law; and, however they decide them, of what little value their decisions must be as precedents. In case at bar, the matter of fact has been withdrawn from the jury, and, under the statute, has been submitted to us by the parties, along with the matter of law. We find, in fact, that the defendant agreed to take the note in question, so far as it would go, in exchange for his cotton; and this, without any fraud practiced upon him by the plaintiffs, either by expression or suppression, and without express warranty, on their part, of the solvency of the maker of the note. In such case, the law certainly implies no warranty by the plaintiffs of the solvency of the maker of the note; and we see no reason why they should not be entitled to the benefit of a contract fairly made by them, because the risk assumed under it by the defendant has chanced to turn against him. 2 See Brown v. Montgomery, 20 N. Y. 287, 75 Am. Dec. 404 (1859). The case of Roget v. Merritt, 2 Caines (N. Y.) 117, is relied upon as sustaining the defense that by the insolvency of Weeden the consideration agreed to be given to the defendant had wholly failed before the execution of the contract by delivery, and upon that ground that he had a right to retract from the contract. The note existed at the time of the contract, like the sea-damaged goods sold during a voyage, or the annuity whilst the person upon whose life it was dependent was in extremis, and, though perhaps of little value, will, like them, support a contract of sale which is based upon it (Sutherland v. Pratt, 11 M. & W. 296; Hastie v. Couturier, 20 Eng. L. & Eq. 535); and it would be a singular perversion of a contract, the legal effect of which is that the risk of the value of a note is to be assumed by one contractor, to say, that he was freed from the contract upon the ground of failure of consideration, because the note did not turn out to be as valuable as he anticipated. Judgment for plaintiff. ་ LITTAUER v. GOLDMAN. (Court of Appeals of New York, 1878. 72 N. Y. 506, 28 Am. Rep. 171.) Appeal from judgment of the General Term of the Supreme Court in the First Judicial Department, entered upon an order affirming an an order of Special Term, which overruled a demurrer to the complaint herein. Reported below, 9 Hun, 231. The complaint alleged, in substance, that defendant sold and transferred by delivery to plaintiff, for valuable consideration, a promissory note, which was void for usury in its inception; that plaintiff sued the makers, who interposed the defense of usury; that plaintiff notified defendant of the bringing of the action and of the defense set up, and requested him to take charge of the prosecution of said action, and that he would be held liable in case the defense was sustained; that plaintiff was beaten in said action and a judgment for costs rendered against him. It was not alleged that defendant had knowledge of the defect, or that any express representation or guaranty was made. The defendant demurred that the complaint did not state facts sufficient to constitute a cause of action.* MILLER, J. The right of the plaintiff to maintain this action rests upon the ground that the note in question, which was sold and transferred by the defendant to the plaintiff, was invalid and void, by reason of its original usurious consideration. It is alleged that, being in violation of the statute against usury, it was no note, and by implication of law the defendant did warrant and undertake that the same 8 Compare Dille v. White, 132 Iowa, 327, 109 N. W. 909 (1906); Gordon v. Irvine, 105 Ga. 144, 31 S. E. 151 (1898). 4 The arguments of counsel are omitted. was not usurious or illegal, but a valid and legal note. The complaint does not allege that the defendant had any knowledge of the usury or was a party to the same, but states that the seller by the act of transfer for a valuable consideration, impliedly warranted that the paper was genuine and all that it purports to be upon its face, and incurred an obligation by the sale to make the paper good, although he did not indorse or guarantee the same. The question whether an action will lie for the loss sustained by the plaintiff by reason of the note being usurious, and the recovery of the amount thereof thereby defeated, has never arisen under the precise circumstances presented in this case, and demands an examination of the principle applicable to the contract entered into upon the sale of paper of this description, and of the authorities bearing upon the subject. The rule is well settled that generally one who transfers paper by delivery only incurs none of the liabilities which attach to an indorser, for the reason that the irresistible inference is that if he transfers it, and it is received without his indorsement, that such liabilities did not enter into the bargain or the intention of the parties. This rule, however, is not without exception, and the transferror of notes or bills by delivery warrants the genuineness of the signatures, and that the title is what it purports to be. If the paper is forged, the transferee is liable upon the original consideration, which has never been extinguished by the sale. 2 Parsons on Contracts, 37, 38. So, also, it is laid down by the same author that the vendor without indorsement warrants that the paper is of the kind and description that it purports to be, and there is an implied warranty that the parties to the paper are under no incapacity to contract, as from infancy or marriage or other disability, and the assignment of a bill or note for a valuable. consideration raises an implied warranty that the assignor has done nothing, and will do nothing, to prevent the assignee from collecting it. The reason given as to forged paper is that it is nothing, and the one who has transferred it has transferred nothing, and is therefore liable. Id. 39, 40. The question whether paper tainted with usury, which is transferred by the holder without knowledge of this defect, can be regarded as within the principle of the exceptions stated, is not free from difficulty, and at first view there appears to be some ground for claiming that a note made in violation of a statute which declares usury to be a misdemeanor, and that all paper of this kind shall be void, should stand on the same footing as forged or other paper, which is excepted from the general rule. Although the reported cases do not decide the exact point, an examination of some of the leading authorities tends to throw some light on the subject. In Marvin, Pres't of the Delaware Bank, y. Jarvis, 20 N. Y. 226, a note was transferred to the plaintiff which had been taken at a usurious premium by the defendant and the avails received by him. Upon being sued, the defense of usury was interposed, which was successful, |