' 4th of January, 1825.
The Chief Justicedelivered the opinion of the Court.
In'this case the facts, so far as they are considered mate*' rial, seem to be, That Pope and Hickman purchased from William Davis sundry negroes,’ and in part payment gave their note, dated-6th of February, 1819, for $6,662, payable to John Brahan or order nine months after date. Brdhan endorsed the note in blank, and Davis endorsed it to John Nance and Co. the defendants in Error. In the Spring of 1819, the partnership of Pope and Hickman was dissolved, and ■ Hickman assigned all his interest in the partnership effects to Pope. In December, 1819, John B. Lucas, one of the firm of Nance and Co. with a full knowledge that the partnership of Pope and Hickman had been dissolved, applied separately to Pope for payment of the note. An agreement was made between them that Lucas should take the note of S. D. Hutchings and Co. and Simon Turner, endorsed by Egbert Harris, for $6,408, dated 22d day of December, 1819, payable 1st of Jlngust, 1820. Lucas accordingly received this note and the balance of the money from Pope, and gave up to him the note of Pope and Hickman, which Pope cancelled by striking a pen across the signatures; and so cancelled, it remained in his possession. Pope declared that he would not be responsible for the solvency of. the. *313makers or endorser of the note paid over, and refused to endorse it; but represented Hutchings and Co. tobe merchants in good credit, and Turner and Harris to be respectable planters. At the maturity of the note Lucas, as as-signee of Harris, instituted suit against Hutchings and Bradford, his partner, and against Turner. The suit abated,. as to Hutchings, by his death. Judgment by default was recovered against Bradford. Turner plead that he did not execute the note, supporting his plea by affidavit; andón that plea verdict and judgment were rendered in his favour. Before the commencement of this suit Pope was apprised that Turner had alleged that his signature was forged, and had agreed that it would be well to bring suit, but made no acknowledgment of his liability. There is no evidence of fraud on his part; so far from it, there is evidence that he had offered the cotton to Lucas, on the sale of which afterwards made to Hutchings and Co. he received the note which he transferred to Lucas. No notice of demand and non-payment, &c. was given to Harris the endorser. No proceedings were had against the representatives of. Hutchings, and after the judgment by default against Bradford no farther steps were taken against him. On the trial of the case at bar in the Court below, the presiding Judge charged the Jury that if they believed from the testimony that the signature of Turnerwas a forgery, and that the note was given in payment of the debt of Pope and Hickman, they must find a verdict for the plaintiff The Jury returned a verdict for the plaintiff. Exceptions to this charge, and several other bills of Exceptions were taken on the trial, and the various points growing out of them have • been argued. But such of them as will affect the decision of the case can be examined under this bill of Exceptions to the Judge’s charge.
In the outset of this examination I must declare that my researches for a case in point have been unsuccessful; but in cases analogous to this, principles have been laid down which I believe will, when applied to this, relieve it of every-difficulty. The adjudged cases all go to support this rule— that where the note of a third person, received in payment of a precedent debt proves to be a forgery, an action will lie bn the original consideration as though no payment had been made ; but this right of action is under these qualifications : the note must be returned as soon as the forgery is discovered. The plaintiff must place the defendant in the same condition as to his rights on the forged note that he was in when he made payment of it. If the defendant acted in good faith, although the note paid may be a forgery, he is discharged from all liability, if. the plaintiff has not *314performed these pre-requisites. Put this case on the strongest ground for the plaintiffs in the action, that the note paid was an entire forgery, it was incumbent on them to return ór tender it to Pope as soon as the forgery had been diseo-vere& Tanner had refused payment, alleging that his signature was forged. This should have warned the plaintiffs to act with circumspection, and to avoid every thing like negligence on their part. But Lucas, as assignee of Harris, without offering to return the note to Pope, instituted suit on it. Pope and Hickman should have been placed in the condition in which they were when they paid it away. Notice of the non-payment by the makers was not given to. Harris, and by this neglect he has been relieved from all liability to the holder, or to Pope and Hickman to whom he was originally liable as endorser. It will thus be perceived that it is impossible that Pope and Hickman can be restored to the condition in which they were when they transferred the note and if they cannot, they are discharged from all liability as the case stands on this Record. Again, although the name of Turner is a forgery, it does not necessarily follow that the note was of no value. It does not appear from the Record that Hutchings and Bradford were insolvent, or that the money , might not have been collected from them. In the cases in the books where bills of exchange have been accepted and paid away in discharge of precedent debts, and it was afterwards discovered that the drawer’s name was forged, it has been held that the acceptor is not discharged; and that if the holder does not return the bill as soon as the forgery is discovered, he is supposed to rely on the acceptor, and the party who paid it away is wholly discharged. Here the name of one of the makers only is forged, and the instrument is not wholly void. The liability of Hutchings and Co. and of Harris was not destroyed by the forgery of Turner’s name. The plaintiffs in the action were bound to use due diligence in pi’o.teeting the interests of the defendants (as well as their own) in the note transferred.
There cari be no doubt that the transfer of the note was intended as a payment, and not as security for the payment of. the precedent debt. Why was the note of Pope and Harris given up to be cancelled ? Why did Pope refuse to endorse ? Why pay in money the balance of the original debt ? Why did Lucas, after discovering that Turner's name was forged, go on to. sue in his own name ? All these circumstances go to shew conclusively the intention of the parties to consider it a payment.
It seems then that the charge of the Judge on the tria! *315in the Circuit Court was erroneous. It is the unanimous opinion of the Court that the judgment be reversed,. and that the cause be remanded. i
Judge Ellis not sitting.Note by the Chief Justice. — Since the decision of this case, I havé examined with much interest the opinion of the Supreme Court of the United States, in the case of the Bank of the United States against the Bank of Georgia, (10 Wheaton, 333,) and find that the principles here laid down have been fully recognized by that Court. Indeed, the Supreme Court of the United States seem to have gone much farther, and to rest the question almost entirely on the understanding of the parties at the time of paying and receiving the notes. If they considered it as payment, and not as security for payment of a precedent debt, it would foe at the risk of the party receiving it. It is not so said in so many words; but the reasoning of Judge Story, and the authority on which he rests his opinion, both go to support this position.