Curtis v. Brooks

By the Court,

Davis, J.

The only ground on which the plaintiff claims to be entitled to recover is upon an implied warranty of the validity of the note ; and this is the only question necessary to be examined. This court, at generall term, lately held, in respect to the very note above mentioned,I that the intermarriage of Fanny J. Stone, the maker, with! Brooks. the payee and holder, operated to discharge the note, and all liability thereon on the part of the maker. (MS. opinion by Soyt, J.) This being the law on the case, we must hold the note, at the time of its transfer by the defendant to the plaintiff, to have been wholly invalid as against Mrs. Brooks. On the sale and delivery of a note without in*478dorsement or express guaranty, the law implies a warranty of certain facts. Unless it he otherwise expressly agreed, the holder so transferring the note is not exempt from all obligations or responsibilities, but he incurs some, although they are of a limited nature. In the first place, he warrants, by implication, unless otherwise agreed, that he is a lawful holder and has a just and valid title to the instrument, and a right to transfer it by delivery; for this is implied as an obligation of good faith. In the next place, he warrants in like manner that the instrument is genuine, and not forged or fictitious. * ■ * * In the next place, he warrants that he has no knowl- • edge of any facts which prove the instrument, if originally valid, to be worthless, either by the failure of the maker or by its being already paid, or otherwise to have become void or defunct; for any concealment of this nature would be a manifest fraud.” (Story on Prom. Notes, § 118.)

In respect to the maker, Adams, the note was a valid one, and the proper subject of sale and transfer. The defendant was the owner and holder, and had good right to transfer the same, as against him. He expressly informed the plaintiff of the insolvency and non-residence of Adams. As to him, therefore, the plaintiff got good title to the note, under circumstances from which no implied warranty can arise ; or at least from which none can be said to be broken. The note is a valid instrument in the hands of the plaintiff; and it is not pretended that it is either fictitious or forged, as to either of the makers. Upon the facts before us, is there any implied warranty in respect to the validity of the note as against the wife of the defendant ? It certainly cannot be claimed that there was an implied warranty, within the rule as laid down by Judge Story, that the defendant had no knowledge of any facts ££ which prove the instrument, if originally valid, to be worthless, either by the failure of the maker or by its being already paid, or otherwise to have become void or defunct.” The reason of this rule is that the concealment of such facts ££ would be a manifest fraud,” and in this case, instead of any *479concealment or silence, there was a full disclosure of all the facts within the knowledge of the defendant. Certainly the law cannot imply that the defendant warranted that the facts he was thus disclosing to.the plaintiff were not within his knowledge !

Nor can it he said that the fact which causes the invalidity of the note (as to Mrs. Brooks) was by any legal implication warranted not to exist. Its existence was not only known to both the parties, but was expressly stated by the defendant to the plaintiff. It seems to me it would be absurd to hold that on the sale of property any fact affecting its title, quality or validity, which is distinctly disclosed and known to the purchaser, can be said to be warranted by implication not to exist. There may be a warranty that an apparent incumbrance or asserted hostile title will not ripen into or prove to be a paramount title ; and such I understand to be the effect of the decision in Dresser v. Ainsworth, (9 Barb. 619,) so far as it bears upon this point.

There was no fact affecting the validity of the note that was not disclosed to the plaintiff just as it in truth existed. The warranty therefore which must be implied in order to sustain the action is that the law, upon these facts, does not declare the note discharged as to the married woman. If there be such an implication of warranty, then according to the decision of this court it was broken, because by the marriage the note was fully discharged or released. But I think there was no such implication. Whatever may be the force of an express warranty that the law in a given case is as the party may represent it, I think where all the facts are known to the parties there is never any implied warranty that the law upon those facts is or is not as the parties may think or desire it to be. The law in such a case is always certain.. The uncertainty about it grows out of the fallibility of the human judgment in discerning and applying it. It is a maxim of the law that parties are presumed to know the law upon the undisputed facts of their case ; and hence a war*480ranty that the law is different from what it is, and from what it is presumed the parties know it to be, cannot be implied by operation of law.

[Erie General Term, September 2, 1861.

Besides, the law never implies a warranty against the consequences of known defects. A special or express warranty must be required in such a case in order to protect the party dealing with such knowledge. « The plaintiff knew, when he bought the note, that it was against the defendant’s wife ; that she had given it to him while sole, and had intermarried with him while he was its owner and holder. It was the doubt as to the legal effect of these facts that the parties had in their minds; and because of this doubt known to and felt by both of them, the defendant sold a note otherwise good and collectable, for some $600, for $100. If the law be as the plaintiff claims it, instantly upon his paying $100 the defendant owed him and was bound to pay $600, because the law is different from what he supposed it to be.

I think the parties must be held to have mutually taken the chances,” in this trade—the one that if the note should be held valid upon the known facts, he would get $600 for $100—the other, if the note proved invalid, he would get $100 for an article of no real value.

The defendant, in my opinion, is entitled to judgment upon the verdict.

Ma/rvm, Davis and Grenier, Justices.]