Bank of Havelock v. Western Union Telegraph Co.

• Decision Date: 16 November 1905
• Docket Number: 2,143
• Citation: 141 F. 522
• Parties: BANK OF HAVELOCK v. WESTERN UNION TELEGRAPH CO.
• Court: U.S. Court of Appeals — Eighth Circuit

141 F. 522

BANK OF HAVELOCK v. WESTERN UNION TELEGRAPH CO.

No. 2,143

United States Court of Appeals, Eighth Circuit.

November 16, 1905

(Syllabus by the Court.)

In the absence of notice of facts or circumstances which would awaken inquiry and arouse suspicion in the mind of a person of ordinary prudence and intelligence in a like situation regarding the authority to send it of the party who presents a message for transmission, the exercise by a telegraph company and its operators of reasonable care to receive and transmit genuine and authorized messages only does not require them to investigate or ascertain the identity, or authority to send it, of the person who tenders a message for transmission, whether that message is in writing, or is spoken directly to the operator, or is communicated to him by telephone.

But when such facts or circumstances come to the notice of the company, or of its acting operator, the exercise of reasonable care to transmit genuine and authorized messages only requires the party who receives the notice either to investigate and ascertain the authority of the sender before transmitting the message, or to communicate the facts and circumstances and the inquiry or suspicion to the addressee at or before its delivery.

Action by mortgages against a telegraph company for loss of their lien on cattle worth $3,500, caused by the receipt over the telephone, from one whose voice was not known to the operator and who had no authority to send it, and the transmission to the plaintiffs to whom it was addressed, of this telegram 'We will pay Barnes' draft for thirty-five hundred. Bank of Denison. ' Held:

(1) The telegram was not so indefinite that reliance and action might not lawfully be based upon it.

(2) The loss of the lien upon the cattle was not an unnatural or improbable effect of the delivery of the telegram, and the damages resulting from this loss were not too remote to warrant a recovery.

(3) A draft by Barnes was not essential to the maintenance of the plaintiff's action for the false representation embodied in the telegram and the resulting damages.

It is no defense to an action by mortgages against a stranger for causing the loss of their lien upon some of the mortgaged property that it still covers an amount sufficient to secure the payment of the mortgage debt.

When a verdict is directed on specific, but untenable, grounds, it may not be affirmed on other grounds, unless it is clear beyond doubt that the new grounds could not have been obviated if they had been called to the attention of the defeated party at the time the verdict was rendered.

But, when the defeated party has introduced at the trial all the legal evidence he offered and has rested his case, he has thereby estopped himself from denying that he can do no more to overcome the objection that the evidence is insufficient to sustain a verdict in his favor; and if the bill of exceptions contains all the evidence, and it is clear beyond doubt that it would not sustain a verdict in his favor, an instruction by the court to return a verdict against him upon some other, but untenable, ground is error without prejudice, and no ground for reversal.

The trial of issues tendered by a pleading as though they had been properly made, in the absence of any plea, answer, or replication which raises them, estops the parties from subsequently denying that the issues were duly made, and from taking any advantage of the lack of the plea, answer, or replication.

D. M. Kelleher (F. H. Helsell and Healy Bros., on the brief), for plaintiff in error.

H. D. Estabrook, Asa F. Call, and Rush Taggart (George H. Fearsons, Craig L. Wright, and John F. Dillon, on the brief), for defendant in error.

Before SANBORN, Circuit Judge, and PHILIPS and CARLAND, District Judges.

SANBORN Circuit Judge.

The plaintiffs constituted a copartnership under the title of the 'Bank of Havelock,' and they sued the Western Union Telegraph Company, a corporation, for damages in the sum of $3,5 , because it received by telephone from some one at Denison, in the state of Iowa, who had no right to send it, and delivered to the plaintiffs, this telegram:

'Dated Denison, Iowa, Feb. 28, 1902.

'To the Bank of Havelock: We will pay Barnes' draft for thirty-five hundred.

Bank of Denison.

At the time this telegram was received the plaintiffs had a chattel mortgage on some cattle of the value of $3,500, which Barnes had bought, and they were induced by the telegram to lose their lien upon and to surrender the cattle to him. On March 25, 1902, Barnes made a draft on the bank of Denison in favor of the plaintiffs for $3,500, but the drawee refused to pay it. The Bank of Denison was a copartnership, composed of Leslie M. Shaw and Carl M. Kuehnle. These partners, Charles E. Voss, the cashier, and A. B. Lorenson, were the only persons who had authority to send such a telegram, or to act for the bank in any way. E. G. Lyman was the operator of the defendant at Denison, who received the telegram over the telephone and sent it to the plaintiffs. He had been in his position from February 5, 1902. He did not know the voice of the person who gave him the telegram, but took it for granted that it was the voice of some one who had the right to send it. He knew Voss, the cashier, and did not think that the voice was his. He subsequently became acquainted with Barnes, but could not say that he recognized the voice as that of Barnes. He did not know who gave him the message, because he did not recognize the voice which communicated it to him. The forgoing facts were proved at the trial, and there was no evidence tending to prove any other facts which were material to the decision of the case before us.

At the close of the evidence counsel for the defendant made a motion, which the court granted, for an instruction to the jury to return a verdict for their client upon the specific grounds that plaintiffs had never taken or expended anything for any draft in reliance upon the telegram, that the telegram was so indefinite that they had no right to rely upon it, and that the plaintiffs had no right to recover for the surrender of the cattle, or for the loss of their lien upon them, because the telegram contained no agreement to indemnify them against any such loss, nor was the release of such security within the contemplation of the parties. This ruling is assigned as error. It is true that the plaintiffs never paid out or lost anything by taking or relying upon any draft of Barnes, and that they were not entitled to recover at the trial upon that ground. But the Bank of Denison refused to pay the draft of Barnes on March 25, 19 2, and it would not have paid it at any time after the telegram was delivered, if it had been presented. The telegram was not so indefinite or uncertain that reliance and action might not have been lawfully founded upon it. It contained a direct promise to pay Barnes' draft for $3,500, and if it had been authorized by the Bank of Denison, and the plaintiffs had procured and paid value for a draft of Barnes for that amount, within a reasonable time after they received the telegram, they would have had a perfect cause of action against the Bank of Denison for its amount. Coolidge v. Pavson, 2 Wheat.66, 4 L.Ed.185; State National Bank v. Young (C.C.) 14 Fed.889.

While the plaintiffs parted with no property in reliance upon the draft, they were induced by the telegram to surrender the cattle and to lose their lien by mortgage upon them, and they thereby lost $3,500 of their security for their claim against their debtor. Why were they not entitled to recover back this amount? Counsel for the telegraph company answered (1) because the plaintiffs surrendered the security of the cattle in reliance upon the promise of Barnes to make his draft on the Bank of Denison, and not in reliance upon the telegram; (2) because the failure of Barnes to make his draft was, and the telegram was not, the proximate cause of the loss; and (3) because the plaintiffs had ample security for their debt after the loss of their lien upon the cattle bought by Barnes, so that they never sustained any damage. The evidence, however, does not sustain these positions. It is that the plaintiffs refused to surrender the cattle or their lien upon them for the promise of Barnes to make his draft, or for the draft itself, and that they were induced to lose their lien by the telegram in evidence only. The failure of Barnes to make his draft was not the proximate or other cause of the loss of the plaintiffs, because the proof is that they would not have surrendered the cattle or their lien upon them upon the faith of it, and that the Bank of Denison would not have paid it any event, so that its execution and presentation would have been nothing but one of those idle ceremonies which the law never requires. The proof is clear and convincing that the telegram was the proximate cause of the loss. Without it the plaintiffs would never have lost their lien upon the cattle without payment of their purchase price, and would never have suffered the damages they claim.

It is conceded that, if the telegram had been genuine, the plaintiffs could not have recovered of the Bank of Denison unless they had purchased or discounted a draft of Barnes upon that bank for value. This, however, is because their cause of action against that bank would have arisen upon contract, if at all, and that contract would not have been made until the plaintiffs had accepted the offer tendered by the telegram, according to its terms. The action in hand, however, against the telegraph company, is not an action upon a contract, but is an action for a tort. The gravamen of this suit is false representation and resulting damage,...