Donaldson v. Newman

• Decision Date: 15 June 1880
• Citation: 9 Mo.App. 235
• Parties: JOHN W. DONALDSON ET AL., Appellants, v. HENRY S. NEWMAN ET AL., Respondents.
• Court: Missouri Court of Appeals

9 Mo.App. 235

JOHN W. DONALDSON ET AL., Appellants,

v.HENRY S. NEWMAN ET AL., Respondents.

St. Louis Court of Appeals, Missouri.

Jun. 15, 1880.

1. Where, in response to an inquiry as to the value of certain bonds, one makes an offer by telegram, to which the inquirer answers, “All right; bonds forwarded by express to-day,” this constitutes a contract of sale, with an implied warranty that the bonds are genuine.

2. The subsequent acts and correspondence of the parties in this case held not to so modify the contract as to amount to a waiver of the implied warranty.

3. In order to relieve one of responsibility on the ground of agency, he must show that he disclosed his principal at the time of the contract.

4. The Statute of Frauds, to be of avail, must be specially pleaded.

APPEAL from the St. Louis Circuit Court, THAYER, J.

Reversed and remanded.

PATRICK & FRANK, for the appellants: The Statute of Frauds must be pleaded.-- Cahill v. Bigelow, 18 Pick. 372; Gist v. Eubank, 29 Mo. 248; Gardner v. Armstrong, 31 Mo. 539; Sherwood v. Saxton, 63 Mo. 84; Graff v. Foster, 67 Mo. 521. The telegraphic correspondence of the parties constituted a valid and binding contract.-- Cunningham v. Ashbrook, 20 Mo. 556; Bass v. Walsh, 39 Mo. 197; Goddard v. Foster, 17 Wall. 142; Koehring v. Menninghoff, 61 Mo. 407. The principal's name must be disclosed at the time of the contract in order to relieve the alleged agent.-- Nash v. Town, 5 Wall. 703; McLellan v. Parker, 27 Mo. 162; Thompson v. McCullough, 31 Mo. 225; Higgins v. Dellinger, 22 Mo. 299. The contract, being complete, was not affected by the subsequent acts of the seller.-- Schuchardt v. Allens, 1 Wall. 369. The contract of sale carried with it an implied warranty that the bonds were genuine.-- Utley v. Donaldson, 94 U. S. 46.

GLOVER & SHEPLEY, for the respondents: The so-called contract is void under the Statute of Frauds.--Browne on Stat. Fr., sect. 505; Wildbahn v. Robidoux, 11 Mo. 660; Chapman v. Plummer, 1 Bos. & Pul. 252; Waterman v. Meigs, 4 Cush. 497; Wright v. Dannah, 2 Camp. 203; Klintz v. Swinney, 5 Esp. 267; Vredenburg v. Spooner, L. R. 1 Exch. 319; Bailey v. Ogden, 3 Johns. 399; Coddington v. Goddard, 16 Gray, 442, 443.

BAKEWELL, J., delivered the opinion of the court.

This action is for the breach of an implied warranty arising upon a sale of certain bonds which proved to be forged. Plaintiffs were stock-brokers in St. Louis, and defendants bankers at Leavenworth, Kansas. It appears from the evidence that a man calling himself Thomas Scott called, on May 24, 1871, at the bank of defendants in Leavenworth, and represented that he had fifteen Central Pacific bonds of $1,000 each which he wished to sell. He said that he desired to invest in Kansas lands; that he had brought the bonds from New York, but did not want to sell unless he made the investment; that it would be difficult for him to sell the bonds in the interior of the State, and that he desired to sell them in Leavenworth. Defendants replied that they had never handled these bonds, and knew nothing about them, and suggested that they would telegraph to their correspondent in St. Louis to know what the bonds were quoted at. Scott requested defendants to telegraph, and paid for the message, which was sent to the Commercial Bank, of which Nichols was cashier. No other transaction in bonds had previously taken place between defendants and the Commercial Bank, which was their correspondent in St. Louis. The dispatch was signed by defendants, addressed to the Commercial Bank, and was as follows: “Get rate for $15,000 California Pacific bonds, delivered to-morrow.” On receiving the dispatch, Nichols took it to plaintiffs, who wrote at the bottom of it, “Will give 100 1/2 for fifteen Central Pacifics.” Nichols at once telegraphed to defendants, “100 1/2 bid for Central Pacifics;” and the same day received a dispatch from defendants, “All right; bonds forwarded by express to-day.” This dispatch Nichols showed to plaintiffs, telling them that defendants had accepted their bid. Whilst these dispatches were passing, Scott was in the bank at Leavenworth, and sanctioned what was done. Plaintiffs on the same day telegraphed to Utley & Co., brokers in New York, and their correspondents in that city, “Make best bid fifteen Central Pacifics, quick.” To this dispatch they received an answer next morning, “We will buy Central Pacific 1sts at 102 1/2.” This they answered at once by telegraph, “We accept offer $15,000 Central Pacific 1sts for 102 1/2.” On the same day (25th), before noon, Nichols received by express from defendants fifteen papers purporting to be Central Pacific bonds, but which afterwards proved to be counterfeits, and with the bonds a letter from defendants, addressed to him as cashier, dated Leavenworth, May 24th, as follows: “We this A. M. telegraphed you as follows: “Get rate for $15,000 California Central Pacific R. R. bonds delivered to-morrow.' Same is hereby confirmed. We herewith hand you bonds. Please close the transaction and telegraph us immediately. The party selling these bonds is waiting here to get the money for them. This same gentleman is an entire stranger to us, therefore you will be kind enough to satisfy yourself that the bonds are all right. We desire them sold without any recourse on us. Your early attention will much oblige.” On receipt of this letter and the bonds, Mr. Nichols at once took them to the office of plaintiffs and handed them to Mr. Fraley without remark. On reading the letter, Fraley said that he would not take the bonds that way; that he would not take the bonds without recourse; that they never did so. To quote Fraley's testimony, which is corroborated by Nichols: “I stated to Nichols that we had sold the bonds in New York to Utley, Dougherty & Scott, at such and such a price, and that we were bound to make the delivery in order to make our contract good; I insisting upon Mr. Nichols making good his contract made for Newman & Havens with us by telegram of May 24, for the reason we had sold the bonds and were bound to deliver.” After he had handed the bonds and letter back to Nichols, Fraley says Nichols stood there hesitatingly, and Fraley said to him, “I will tell you what I will do: I will send these bonds; but since there is a question of doubt raised--as they came from strangers, according to the terms of this letter--we will send the bonds to New York, and call their attention to these facts, and in the meantime, for safe-keeping, I will give you a check, and if they telegraph back that these bonds are all O K, why, you can charge up the check to us and credit Newman & Havens. But at the same time I made the remark repeatedly that I wanted it strictly understood that we didn't buy any bonds without recourse; and my object in giving Mr. Nichols the check, and in closing it in that way, was to take advantage of the doubt, so that in case the bonds should be counterfeit, why then we wouldn't need to go back on Newman & Havens to get our money. So we took the safe side, and kept the bonds and money until we heard from New York. * * * I said, you must not charge the check up to us until we get a telegram from New York saying that those bonds are genuine, and we will ask those parties in New York to have the bonds examined before they even pay us.” To this Nichols agreed, and Donaldson & Fraley at once gave him their check for $15,075, on which Mr. Nichols wrote in pencil, “Credit Newman & Havens if bonds are reported all right in New York.” Plaintiffs at the same time handed the bonds to Nichols, to be forwarded to New York, together with a draft on Utley & Co. for $15,375 for collection, and Nichols forwarded the bonds at once to New York, to be delivered to Utley & Co. on payment of the draft. Meanwhile Utley & Co., on the 24th, had written to plaintiffs, “Your telegram of to-day received. You have sold us $15,000 Central Pacific 6s at 100 1/2 flat.” On the afternoon of the 25th, plaintiffs wrote to Utley & Co. as follows: “In accordance with your offer for fifteen Central Pacific 1st mort. bonds, 102 1/2, we reply, we accept your offer, and have forwarded them by ex. Bank of North America, with draft attached for $15,375. We would further add that we have purchased the bonds from a party strange to us, and not having ever handled any of the Pacific Central, we would sell the bonds without recourse as to their being genuine. Consequently, please examine them, and upon being found correct, telegraph immediately ‘Central all OK.’ We do not doubt the bonds, but, coming to us through strange parties, we use this as a precaution, and not willing to take any risk.”

On May 25th, Nichols telegraphed to Newman & Havens, “No one here knows anything about bonds. Parties sold to, have shipped to New York. Soon as heard from will telegraph you. Hold money till then.” This dispatch was shown to Fraley before it was sent. Nichols on the same day wrote to Newman & Havens, “The bonds appear to be all right, but no one here knows for certain. The party that I sold to has shipped them to New York, with instructions to telegraph if all O K, and so soon as he is advised I will telegraph you.” To these last communications Newman & Havens sent no reply.

On May 29th, Utley & Co. honored the draft of plaintiffs, thus paying for the bonds. On the same day they telegraphed to plaintiffs, “Centrals all right,” and also wrote to them, saying: “Yours of the 25th and 26th and fifteen thousand Centrals with draft received. The Centrals all correct, and we telegraph you to that effect.” On the same day the New York telegram was shown to Nichols, the check of plaintiffs was charged by the Commercial Bank to account of plaintiffs and credited to Newman & Havens, and on the next day Newman & Havens received a telegram from Nichols, “California Central Pacific bonds reported O K.” Scott had then left Leavenworth. He left as soon as he was informed that the bonds had been sent to New York, remarking...