
    Calvin H. Bell, Respondent, v. Walter Dagg, Appellant.
    (Argued April 15, 1875;
    decided April 27, 1875.)
    If at the time of the sale of a promissory note the vendor expressly declines to warrant the genuineness thereof, no such warranty can he implied.
    
      It seems, however, that a general refusal to guarantee does not, of itself, exclude an implied warranty of genuineness; the refusal will he presumed to have been understood as confined to the question of the responsibility of the maker, and that the genuineness of the instrument was not within the contemplation of the parties.
    
      It seems that, where there is an implied warranty of genuineness, the vendor is estopped by a judgment in favor of the maker in an action brought against him by the vendee upon the note, in which the genuineness thereof was put at issue, in case the vendor had notice of the action and defence and an opportunity to he heard.
    Appeal from judgment of the General Term of the Supreme Court in the third judicial department, affirming a judgment in favor of plaintiff entered upon the report of a referee. (Reported. below, 2 2sT. Y. S. C. [T. & C.], 622.)
    
      Bell v. Dagg (2 N. Y. S. C. [T. & C.], 622) reversed.
    
      The complaint in the action alleged that defendant sold and delivered to plaintiff a paper purporting to be a'promissory note executed by one Joseph Brown, falsely representing that it was genuine and valid, and by such representation induced plaintiff to purchase, when, in fact, the note was a forgery. That plaintiff commenced an action on the note, in which said Brown, by his answer, denied the making of the note, and alleged it to be a forgery; that plaintiff immediately thereupon notified defendant, and requested him to take charge of the prosecution, or that he would be held responsible; that defendant refused, and said action resulted in a verdict and judgment in favor of Brown. The facts appearing upon the trial in reference to the purchase of the note are stated sufficiently in the opinion ; as to the action against Brown, the notice thereof and the result, the facts appeared substantially as stated in the complaint.
    Defendant’s counsel moved for a nonsuit upon the trial upon the following grounds, among others : “ That the evidence shows that the implied contract of warranty, as presumed in such cases by the law, was expressly waived and overcome by the plaintiff at the time of the purchase of the note, and was overcome by an express contract and refusal to warrant, and that he, plaintiff, made such purchase with full knowledge, and at his own risk, both as to the responsibility of the maker and the genuineness of his signature, and plaintiff had superior knowledge to defendant; that this action was brought in tort, and no fraud or wrongful act or intention is proved against the defendant; that no action of tort will lie under the evidence in the case.”
    The motion was denied and defendant excepted.
    
      Wm. Youmans for the appellant.
    A reliance upon the representations of the vendor is an essential ingredient to a warranty, as well as to a fraud. (1 Wait’s L. and Pr., 518 ; Moak’s V. S. Pldgs., 170; Curtis v. Brooks, 37 Barb., 475.) This action having been brought for fraud, no recovery can be had for breach of warranty. (Ross v. Mather, 51 N. Y., 108 ; Thomas v. Beebe, 25 id., 244; Bayard v. Mahon, 2 J. R., 550; Moore v. Noble, 53 Barb., 425; McGovern v. Payne, 32 id., 83; Lamb v. Kelsey, 9 Alb. L. J., 324, May, 1864; Wakeman v. Dalley, 51 N. Y., 27; Myers v. Amidon, 45 id., 169 ; Oberlander v. Speiss, id., 175 ; Marsh v. Falker, 40 id., 562; Marshall v. Gray, 57 Barb., 44.)
    
      C. H. Bell for the respondent.
    Plaintiff was entitled to recover. (Del. Bk. v. Jarvis, 20 N. Y., 228; Fake v. Smith, 7 Abb. [N. S.], 106; Whitney v. Nat. Bk. of Potsdam, 45 N. Y., 303.) Money paid by one party to another through a mutual mistake of facts, in respect to which both parties were bound to inquire, may be recovered back. (Canal Bk. v, Bk. of Albany, 1 Hill, 287.) Any one who disposes of a promissory note like the one in suit, is liable in an action for the full value of what was received for it. (Fowler v. Acrams, 3 E. D. S., 1 ; Craig v. Ward, 3 Barb., 378; Bennett v. Judson, 7 E. D. S., 28 ; 1 Wait’s L. and Pr., 678, 862; Swartout v. Paine, 12 J. R., 296; 1 id., 517; 6 id., 158 ; 7 id., 168 ; 13 id., 225 ; 4 Cow., 341; 1 Wend., 50 ; 5 id., 535 ; 7 Taunt., 152.)
   Rapallo, J.

There can be no doubt of the correctness of the general proposition that, upon the sale of a note or other written obligation, there is an implied warranty by the vendor of the genuineness of the instrument. (Whitney v. National Bank of Potsdam, 45 N. Y., 305.) But it is equally certain that the contract of sale may be made in such form as to exclude the warranty of genuineness, which would be implied by law in case of a contract silent upon that subject. If, at the time of the sale of the note in question, which was oral, the vendor expressly declined to warrant the genuineness of the note, no such warranty could be implied. The rule “ Faypressum fácil cessare taciturn ” would apply. This rule is frequently adverted to in cases where promises or covenants are sought to be implied. Upon a general acknowledgment of indebtedness, where nothing is said to prevent it, the law implies a promise to pay, which will take a case out of the operation of the statute of limitations; but when the party guards his acknowledgment, and accompanies it with an express declaration to prevent any such implication, the rule applies. (Tanner v. Smart, 6 Barn. & Cress., 603, 609.)

In the present case, according to the plaintiff’s own testimony, the defendant offered to him for sale the note in question, which was made by one Brown, payable to the order of one Cutter, for $200. The plaintiff offered $180 for it. Defendant disclaimed any personal acquaintance with Brown. The plaintiff testified that he was engaged in the business of buying notes; that he knew Brown, had seen him write, and had his signature in his office at the time, and had another note of his. That he said to defendant that he (plaintiff) knew Brown, and his signature, and thought the note his. That the defendant said that plaintiff knew more about Brown’s responsibility and signature than he (defendant) did, and he (defendant) did not like to guarantee the note, and refused to do so. In another part of his examination, the plaintiff testified that defendant said that plaintiff knew more about the man than he did, and if he sold the note at such a shave, he did not like to guarantee it. The plaintiff, after this refusal, purchased the note of defendant, for $180. This was the substance of all the evidence bearing upon the question of warranty.

The defendant’s counsel moved for a nonsuit upon the ground, among others, that the evidence showed that the implied contract of warranty, as presumed in such cases by the law, was expressly waived and overcome by the plaintiff at the time of the purchase of the-note, and was overcome by an express contract and refusal to warrant.

We are of opinion that this position of the defendant’s counsel was well taken, and that the nonsuit should have been granted. The plaintiff’s evidence showed that the genuineness of the note, as well as the responsibility of the maker, were the subject of discussion in the negotiation for the sale of the note, and the conversation respecting a guarantee by the defendant, and that the defendant’s refusal to warrant extended to both. The plaintiff evidently relied upon his own knowledge of the signature of Brown, and the defendant placed his refusal to warrant on the ground of this superior knowledge of the plaintiff, and the shave which he demanded. The defendant’s counsel contends that a general refusal to guarantee, of itself, excludes any implied warranty of the genuineness of the note. We are not prepared to go to that extent. If nothing had been said in respect to the genuineness of the note, a general refusal to guarantee might well have been understood as confined to the responsibility of the maker. In such a case, it would be presumable that the question of genuineness was not within the contemplation of the parties. But where it appears, as in this case, that in connection with the subject of a guarantee by the defendant, the question of genuineness was discussed, the knowledge on that subject possessed by the respective parties compared, the plaintiff professing knowledge of the signature, and expressing his opinion that it was genuine, and the defendant disclaiming any knowledge on the subject, and placing his refusal to guarantee on the ground of the superior knowledge of the plaintiff, and of the amount of the discount which he demanded, we think there is no room left for implying a guarantee by the defendant of the genuineness of the note. The subject having been expressly mentioned and embraced in the negotiation, no tacit understanding in respect to it can be presumed.

It was perfectly competent for the plaintiff to take upon himself the risk of the correctness of his own judgment in respect to the signature, and we think the evidence shows that he did so. The result showed that his judgment was reliable, for the referee found that the note was, in fact, genuine; but this fact cannot avail the defendant here, he-being estopped by the judgment in favor of Brown, in the action upon the note, of which action he was notified by the plaintiff.

No fraud upon the part of the defendant was shown. There was an entire failure to prove the allegations in this respect contained in the complaint.

The judgment should he reversed, and a new trial ordered, with costs to abide the event.

All concur; Miller, J., not sitting.

Judgment reversed.  