Coolidge v. Brigham

Wilde, J.

The plaintiff founds his claim on two grounds In the first place, his counsel contend that he had a legal right *550 to rescind the contract, set out in the special count, without restoring, or offering to restore, the note therein mentioned, to the defendant.

This right, we think very clearly, cannot be maintained. A contract cannot be rescinded by one of the parties for the default of the other, unless both of them can be put in the same state as before the contract. It cannot be rescinded as to one party, and remain in force as to the other. It must be rescinded in toto. . And if the party rescinding has received property of any value, however inconsiderable, under the contract, he must restore it to the other party.

This rule of law is well established and is not controverted by the plaintiff’s counsel; but they contend that the note received by the plaintiff is worthless, and may be treated as a nullity. There is, however, no proof that the note is worthless. It is unquestionably a valid note against George C. Whitney, the maker; and if it had been restored to the defendant, he could maintain an action against him, notwithstanding the forged indorsements. He might maintain an action on the note in the name of the nominal promisee, or an action of deceit, if he purchased the note of the maker; and in either case, the note in question might be necessary to establish his claim. It is true that eventually the note may become of no value, either by the death or insolvency of the maker, or otherwise ; but this possibility does not excuse the plaintiff for not returning the note. He must, if he undertakes to rescind the contract, either restore the note, or prove clearly that in no event can it be of any value. This he has failed to show, and cannot therefore be allowed to treat the note as a nullity.

The other ground, on which the plaintiff relies, is an alleged warranty, express or implied, that all the signatures of the note were genuine. But, as the declaration is framed, this ground also fails. There is no averment that the defendant promised or undertook to warrant that the signatures on the note were genuine. In the special count it is alleged that the defendant promised to procure a note signed by George C. Whitney, and indorsed bv George Whitney and D. M. Whitney; that he procured *551 and delivered to the plaintiff the note in question, purporting to be so signed and indorsed, but that the indorsement had after wards been discovered to have been forged. On this count the plaintiff would be entitled to recover, if on discovery of the forgery, he had returned the note to the defendant, although there had been no warranty. For as the defendant had promised to deliver a note of a certain description, it was a breach of promise to deliver a note not truly answering that description, unless the plaintiff had accepted it knowing that the indorsements were not genuine.

The rule, we think, is correctly laid down by Chancellor Kent, in a case similar in principle. “ When goods are discovered not to answer the order given for them, or to be unsound, the purchaser ought immediately to return them to the vendor, and give him notice to take them back, and thereby rescind the contract ; or he will be presumed to acquiesce in the quality of the goods.” 2 Kent Com. (3d ed.) 479,.480. It is clear, therefore, that the plaintiff cannot recover, unless he should be allowed to amend his declaration by counting on a sale of the note with warranty. And as the question has been argued, whether any warranty has been proved, we have considered that question.

In contracts of sales a warranty of title is implied. The vendor is always understood to affirm that the property he sells is his own. .And this implied affirmation renders him responsible, if the title proves defective. This responsibility the vendor incurs, although the sale may be made in good faith, and in ignorance of the defect of his title. This rule of law is well established, and does not trench unreasonably upon the rule of the common law, caveat emptor. The possession of personal property is prima facie evidence of title; and in many cases it would be difficult, if not impossible, before the sale, to discover the defect of title. How far this rule of law applies to the present case, may perhaps admit of some doubt. It is, however, certain that the defendant had no title whatever, on the note, against the supposed indorsers ; and he had no legal title against the maker. He could not maintain an action upon it in his own name, although he might in the name of the nominal promisee *552 But we do not decide the case on this point — upon which we give no decided opinion — because we think, that from the evi - dence reported, a warranty is to be inferred. The defendant’s letter to the plaintiff, enclosing the note in question, appe'ars to be an admission of the executory agreement, corresponding substantially with the agreement set out in the special count. In this letter, the defendant expressly affirms that the note enclosed was “indorsed as proposed.” This is an express affirmation that the note was indorsed as it purported to be, or in other words, that the indorsements were genuine. This affirmation was made when the contract of sale was consummated; and it is a well settled principle of law, that an affirmation made by the vendor at the time of the sale amounts to a warranty, if it appears, on the evidence, to have been so intended. This doctrine was laid down by Lord Holt, in Medina v. Stoughton, 1 Salk. 210, and 1 Ld. Raym. 593, and has been uniformly adopted ever since. 3 T. R. 57. 20 Johns. 196 . So also if the defendant’s letter is considered as a description of the note sold, the result will be the same. The note is described as a note indorsed by George Whitney and D. M. Whitney, and was accepted as a note bus indorsed. This description is sufficient evidence of a warranty. This was fully established by the case of Hastings v. Lovering, 2 Pick. 214 . That case was ably argued, and was decided after a careful examination of the authorities. The plaintiff there produced in evidence a sale note signed by the defendant, containing the words following : “Sold Mr. E. T. Hastings two thousand gallons prime quality winter oil and it was held that these words amounted to a warranty that the article sold agreed with the description.

The same principle is laid down by Lord Ellenborough, n Gardiner v. Gray, 4 Campb. 144, and in Bridge v. Wain, 1 Stark. R. 504. The case of Higgins v. Livermore, 14 Mass. 106 , was decided on the same principle ; it being held that an insurance upon the Swedish brig Sophia amounted to a warranty that the vessel was Swedish. In Bradford v. Manly, 13 Mass. 139 , it was held that a sale by sample is tantamount to an express warranty that the sample is a true representative of the ar *553 tide sold. So in Gallagher v. Waring, 9 Wend. 20 , and Beebee v. Robert, 12 Wend. 413 .

These cases establish a principle which we think decisive of the present case.

The plaintiff was at liberty either to restore the note to the defendant, or to retain it and resort to his action on the warranty. In the latter case, the measure of damages will be the difference between the amount of the note and its actual value, whatevei that may be.

A new trial, therefore, will be granted, with liberty for the plaintiff to amend his declaration, by counting on the warranty ; he paying the defendant his costs of the former trial, and of the present term.