US SUPREME COURT DECISIONS

In an action in tort for the breach of an express warranty that bonds sold to plaintiff were genuine and valid bonds of a municipality when in fact they were forgeries, and false and fraudulent, to which was joined a declaration in deceit on the same cause of action, the warranty is the gist of the action, and it is not necessary to allege or to prove a scienter.

This writ of error brought up for review a judgment of the Circuit Court of the United States for the District of Colorado, in an action brought by the plaintiff in error to recover damages chanrobles.com-red

Page 122 U. S. 576

for the delivery to him of certain sheets of written and printed paper, purporting to be the valid and genuine bonds, with interest coupons attached, of the County of Clark, in the State of Arkansas, issued under and in accordance with the provisions of an act of the General Assembly of that state approved April 29, 1873, entitled "An act to authorize certain counties to fund their outstanding indebtedness," but which instruments, it was alleged, were "false and spurious forgeries," imposing no legal obligation whatever upon said county. The plaintiff alleged that, in consideration of a certain sum paid by him in cash to the defendant, the latter sold and agreed forthwith to deliver to him valid and genuine bonds of said county, of the above description, but delivered the said spurious and forged bonds in execution of the terms of such sale and agreement; that the defendant at the time of such delivery, "falsely and fraudulently represented and warranted" said forged bonds "to be genuine and valid bonds and interest coupons of said county;" that the plaintiff,

"relying on such representation and warranty, received and accepted the same from defendant, supposing them to be such genuine and valid bonds and interest coupons,"

and that,

"by said tortious and wrongful act and fraudulent breaches of said agreement and warranty of genuineness, done and committed by defendant in the delivery by him as aforesaid of such spurious, forged, and altered instruments, the plaintiff had been subjected to great loss and damage,"

&c.

The defendant denied that the bonds and coupons delivered by him were spurious or forged, and averred that they were, in law, genuine, valid obligations of the County of Clark, and were delivered by him in the belief that they were of that character. He also denied that

"he ever at any time, expressly or by implication, warranted said bonds and coupons so sold and delivered by him to plaintiff to be genuine bonds and coupons of said County of Clark."

He averred that the plaintiff purchased and received them

"at his own risk as to the validity and genuineness thereof, and without any warranty on the part of defendant, express or implied, against such defects or infirmities in said bonds and coupons. "

Page 122 U. S. 577

The original complaint and answer contained other allegations, but it is not necessary in the view taken of the case, to set them out.

The plaintiff amended his complaint, adding all the allegations which are essential, under any system of pleading, to support an action for deceit. These allegations were traversed by the defendant, and, upon a trial before a jury, there was a verdict and judgment in his favor.

The bill of exceptions states that the plaintiff, to sustain the issues on his part, introduced evidence tending to show that at the date mentioned in the complaint defendant sold to him, for $8,000, ninety-one sheets of paper purporting to be Clark County, Arkansas, funding bonds; that said sheets of paper were forgeries, and not genuine bonds, as they purported on their face to be; that defendant at the time of sale, expressly affirmed their regularity and validity, although he knew or had reason to suspect at the time that they were not genuine and valid; that plaintiff believed and supposed that they were genuine and valid, and relied upon defendant's representations to that effect, and that plaintiff had no notice or knowledge that defendant was acting in said sale as agent for another person.

The defendant introduced evidence tending to show that said papers were genuine and valid Clark County, Arkansas, funding bonds; that at the time of the sale he made no statement, representation, or warranty as to their genuineness or validity, but, on the contrary, stated that he knew nothing of the circumstances under which they were issued; that he had neither notice nor knowledge of any want of validity or of any defects in said bonds, nor notice of any facts which would have aroused suspicion in reference to them; that in the sale of said bonds to plaintiff, he was acting as the agent of Charles W. Tankersley, from whom he had received the bonds shortly before their sale, but did not at the time disclose to plaintiff his agency.

The court charged the jury that, upon the facts conceded before them, the bonds, by reason of certain unauthorized alterations of the coupons, were not valid and genuine obligations chanrobles.com-red

Page 122 U. S. 578

of the County of Clark. The jury were also instructed that whoever sells such instruments as those delivered to the plaintiff,

"if nothing whatever be said in respect to their character, by the act of selling warrants them to be the genuine obligations of the county; that is, that they are not forged or counterfeited, but are the true and proper obligations of the county, such as they purported to be on their face, and upon an action for breach of warranty, or an action upon the contract, the defendant would undoubtedly, beyond all question, be liable for the amount which he received for the bonds; . . . but this action is not of that character -- that is it is not an action upon the contract alone. As I said to you in the outset, it is an action for a false representation, or for a misrepresentation of fact, and there must be something more to maintain this action than the implied warranty which arises from the act of selling, and which is an inference of law coming from the act of selling."

The court said further upon the subject of warranty:

"It is not claimed that there were any direct representations in respect to the genuineness of those bonds made at the time of the sale thereof, except in this way: I think Mr. Shippen states that the defendant said he would warrant the title to the bonds. I will not undertake to repeat what the witnesses said in respect to that matter; the only witnesses were the parties to the suit, I believe, as to what was stated at the time."

Without giving more of the charge, it is sufficient to say that its scope is indicated by the circuit judge in the opinion delivered by him when denying the plaintiff's motion for a new trial. He said:

"The complainant charges that, to induce plaintiff to purchase certain bonds, the defendant represented that they were genuine and valid bonds, whereas, in truth and in fact they were worthless forgeries. The court charged the jury that it was necessary for plaintiff to show that the defendant at the time of the sale of the bonds to the plaintiff, misrepresented the facts concerning their genuineness. In other words, the court was of the opinion, and so charged the jury, that plaintiff could not recover in this action by merely proving a sale of the bonds to him by defendants, and that the

Page 122 U. S. 579

bonds were forgeries. It was held to be necessary to prove knowledge on the part of the defendant of the forged character of the bonds, or an express misrepresentation concerning the fact of their genuineness. The counsel for plaintiff insists that in such a case as this no scienter need be alleged, nor if alleged need be proved. I am unable to concur in the soundness of this proposition. "

Page 122 U. S. 581