H. G. S. Key vs. Francis Knott and Wife, 9 G. & J. 342

Stephen, Judge, delivered the opinion of the court: We think that the decree in this case is erroneous, and ought to be reversed. The complainant against whom the judgment was obtained at law, not being able to make his defence before that tribunal, was clearly warranted in appealing to the remedial powers of a court of equity for that relief, which he could not obtain in a court of common law jurisdiction.

The action in which the judgment was rendered, was instituted upon a single bill, and the principle is uncontrovertible, that the failure of consideration upon which the defence was founded, could not have been inquired into, or proved, upon the trial of the case in a court of law.

The single bill which constituted the cause of action, was given for the repayment of a sum of money loaned by the plaintiff to the defendant in that suit; there was no allegation of fraud or illegality in the transaction, but a part of the money which formed the consideration of the single bill was a post-note of the Bank of the United States, to which the plaintiff had no title at the time it was loaned to the defendant, it having been stolen out of the mail, and put into circulation by a forged endorsement of the name of the true owner.

Upon being satisfied of these facts, the bank paid the amount of the note to the parties who were the legal holders at the time the theft was committed, and of course refused to pay it a second time, upon presentation by the party into whose hands it had passed since the forged endorsement. These facts are proved by the testimony of James M. Broome, Esq. to whom the note was transmitted by the appellant, for the purpose of instituting suit against the Bank of the United States for its recovery, after the payment of it had been refused by that institution. Under the provisions of .the act of 1832, the whole of Mr.

Broome’s testimony is admissible, no exceptions being taken to it in the court below; therefore the objection that a part of it is hearsay, derived from the officers of the bank, cannot now be raised. That the holder of negotiable paper, whose name is forged in the endorsation of it, does not thereby lose his right to the money, and that no title can be made through the medium of such a forgery, is a proposition too well established to admit of controversy. If for such a principle authority be necessary, it may be found in 4th Term Rep. 32, where Mr.

Justice Grose, after stating that no person but the payee, or the person' authorized by him, can demand payment of a bill of exchange payable to order, says, “ if this decision will prove a clog on the circulation of bills of exchange, I think it will be less detrimental to the public, than permitting persons to recover through the medium of a forgery.” To the same effect see Byles on Bills of Exchange, 113, where he says, “ if the acceptor or maker pay one who' derives his title through a forgery, that will not discharge him.” In 13 Wendell Rep, 101, it is said, “ that payment in the bills of an insolvent bank is not a satisfaction of a debt, although at the time and place of payment the bills are in full credit, and the parties to the transaction are wholly ignorant of such insolvency.

If previous to such payment the bank has in fact bee,ome insolvent, the money must be lost in the hands of him who held it when the bank failed.” For the same principle see 2 John. Rep» 455, where the court say, that a counterfeit or forged note of a bank, is no- payment for goods sold and delivered, although both parties were equally ignorant of the forgery at the time the payment was made. The note paid away in this case, which proved to be a counterfeit, was a note of fifty dollar^, purporting to be a note of the Boston Branch Bank of the United States.

The appellant, therefore, was clearly entitled to a credit upon his single bill for the note of five hundred dollars, unless he has forfeited his right to such credit, or made the loss his own, by some act or laches on his part, which would operate as a bar to such claim. It appears by the proof in the cause, that the appellant on receiving this note from the appellee, immediately paid it away in the course of his dealings, with two persons of the name of Armstrong, by whom it was returned to him, bn payment being refused by the bank.

The single bill which was given for the money loaned, was executed on the 12th of December, 1818, and it appears by a letter of the appellant, filed as testimony by the appellees, that notice was given to the lender on the 18th of February, 1818, that the note had been presented at bank for payment, and that the bank had refused to pay. In this letter, the lender of the money is informed, that the appellant claimed a credit for the note, not considering it to be his loss, and his services are tendered to her to endeavour to get the money from the bank, as her agent.

To this letter it does not appear that any answer was returned, but the silence of the party to whom it was written may, we think, be .fairly construed as a tacit acquiescence in the proposition therein contained. Qui tacet consentiré m-detur; qui potest et debet vetere, jubet. In support of this principle see 4 Dallas, 134, where the court, in speaking of letters of credit, say, it is not necessary that they should be answered if credit is given upon them; like the case of transmitting a bond in a letter, acquiescence and acceptance are implied in the silent receipt of the instrument.

Not only is there proof of acquiescence and assent by her silence, but it appears by a letter written by her counsel at a subsequent period, that she recognized the complainant as her agent in the steps taken by him to recover the money from the bank. The letter here alluded to, was the one written by Thomas Blackstone to James M. Broome, whom the appellant had employed to institute a suit against the Bank of the United States, for the recovery of the money claimed to be due upon the note. In that letter, it appears, that she considered the suit as instituted for her benefit.

Blaclcstone states himself to be counsel of the person who loaned the note in question to Key, the appellant, and asks of Broome to be informed of the state of the suit, and all the circumstances relative to it, as soon as he could make it convenient.

If this suit was not instituted with the consent and approbation of the appellee, if she felt no interest in the prosecution or termination of it, if she intended to hold Key responsible, no matter what the issue of it might be, and intended to rely solely upon her bond as the evidence of her claim, it is difficult to conceive a motive which could have prompted such an inquiry.

This letter, too, was written shortly after the recovery of the judgment at law, and pending the suit in equity for an injunction and relief against it; and affords a pretty strong commentary upon the state and conviction of her own mind, as to the justice and equity of the complainant’s pretensions in that suit. No objection being taken to the admissibility of this letter, as evidence in the court below, it is too late to except to its legality as testimony in this. court.

The note in this case being a bank note, which is a common medium of exchange,, and. circulates from hand to hand as money, the rules as to-demand, and notice applicable to bills of exchange and promissory notes, do not, we -think, apply. The establishment of such a principle would go far to impede, if not to destroy their circulation as a common currency, and would be productive of great inconvenience to the public generally, and to the mercantile community in particular; the objection, therefore, founded upon the want of timely notice of dishonour, is not we think sustained.

In cases of this description, the jurisdiction of a court of Chancery is two-fold, and embraces the powers of both court and jury, and even where the testimony is conflicting and contradictory, a resort to a court of law for the decision of a jury, rests in sound discretion, and is not necessary if the conscience of the chancellor can be satisfied without it. If authority be deemed necessary for so plain a principle, it may be found in 1 Hen. and Munford, 91 and 312.

Upon the whole, we think that the suit against the bank, having terminated unfavourably to the plaintiff, the complainant in- the court below was entitled to equitable relief against the judgment at law, obtained against him in St.

Mary’s county court, so far as the same embraced a recovery of the plaintiff’s claim for the post, note of $500 loaned by the plaintiff to the defendant, and that he ought to be credited with the amount of that note, and interest thereon from the time he was chargeable with interest for the money loaned, according to the terms of his obligation to the appellee; and as he was forced into equity to obtain relief against the judgment at law recovered against him, in justice he is also entitled to his costs incurred in the court of Chancery.

Upon these principles we think that the rights of the. parties will be equitably adjusted, and this court will sign a decree accordingly. DECREE REVERSED.