author: By the Court.—Van Vorst, J. Sedgwick, J. (dissenting).

text:
    THE NATIONAL BANK OF COMMERCE IN NEW YORK, Plaintiffs and Respondents, v. THE NATIONAL MECHANICS BANK OF NEW YORK, Defendants and Appellants.
    On the fifteenth day of February, 1870, one A. J. Greenleaf procured from Messrs. Vermilye & Co., bankers, of this city, a bank check of that date, drawn by them, payable to his order, on the plaintiffs, for $56.75.
    This check for $56.75 was presented to plaintiffs, and was certified in the usual manner by one of their tellers (Mr. Adriance), writing his name across the lower end thereof in front.
    After being thus certified, the check was fraudulently altered, by changing the date thereof from February 15th, to February sixteenth,—and by changing the amount thereof from $56.75 to $15,006.

      On the 16th o£ February, 1870, the check thus fraudulently altered was deposited by Greenleaf with the defendants, and was passed by them to his credit on their books.
    Said Greenleaf, on the same day, drew from the defendants, by his check on them, §17,981.25, leaving to his credit am apparent balance of §2,626.24. The check thus fraudulently altered was on the next day (17th February, 1870), according to custom of banks in the city of New York, presented by defendants at the Clea/ring Home, and was there accounted for as a genuine check, in ail respects, and the amount of §56,006, to which it had been so fraudulently altered, was, according to the system practised at the Clearing Home, and in ignorance of the forgery, taken from the funds of the plaintiffs, and paid to the defendants.
    Mr. Sherman, the teller of plaintiffs, to whose hand the check, thus altered, came after it had been so paid, finding no entry in the certificate book on the 16th of February (the date which had been forged on the check) of any certification on that date for §15,006, and recognizing the autograph of Mr. Adriance on the check, supposed that an entry of it on that date had been omitted by accident. The forgery deceived him, and, not doubting the genuineness of the contents of the check, and knowing Mr. Adriance’s signature, he entered it as of February 16th.
    The bank book of Vermilye & Go. with plaintiffs, was written up, and sent to them, by plaintiffs, with 715 vouchers, including the forged check, on the 24th of February, 1870, and the fraudulent alteration of this check, and the payment thereof by mistake, were discovered by Vermilye & Co. on the 1st of March, 18-70.
    On the day last named, they informed the plaintiffs thereof, and the plaintiffs thereby first learned of such fraudulent alteration, and payment by mistake, and forthwith gave notice thereof to defendants, and required repayment from them of the amount so erroneously paid.
    Upon these facts, and it not appearing that plaintiffs were guilty of any negligence or laches in the premises that worked to the injury of defendants, held that plaintiffs are entitled to recover the difference between the original amount of the check, and the amount of the same as altered and by mistake paid by plaintiffs.
    This main question, and the question of negligence in like cases, and the authorities relating thereto, fully discussed in the opinion of the court by Vak Vobst, J., and in the dissenting opinion by Sedgwick, J.
    Before Monell, Sedgwick and Van Vorst, JJ.

      Decided February 1, 1873.
    Appeal by defendants from a judgment entered upon a verdict of a jury under the direction of the judge before whom the case was tried, and from an order denying a new trial.

      The action was brought to recover the sum of $14,-949.25, claimed to have been paid by plaintiffs to defendants under a mistake of facts.
    The case shows that Vermilye & Co. were dealers with plaintiffs, depositing money with them, and drawing checks against the same. On the 15th day of February, 1870, they drew a check Ho. 101 on the plaintiffs for $56.75. The check was made payable to the order of A. J. Greenleaf, to whom, or to whose use, it was delivered by Vermilye & Co. on the day on which it was. drawn. The check was taken on the same day to the plaintiffs, by a person purporting to be Greenleaf, the-payee, and presented to Thomas B. Adriance, the receiving teller, to be certified. But who on that day acted as paying teller in the temporary absence of the paying teller % Adriance certified the check.
    The plaintiffs kept a record of certified checks, and a book for the purpose, and in this book Adriance entered the check for $56.75 in question, as certified on that day. Greenleaf, the payee of the check, was a dealer with the defendants. He had been introduced to its cashier as a banker and broker by a customer of the bank, and left with the defendants his card, with the number of his office thereon, as 70 Broadway. He opened an account with the bank on the first of February, 1870, and from that time down to the 16th day of February, 1870, he had made divers deposits amounting in the aggregate to over $56,000, and upon which he had from time to time drawn checks, so that on the 16th of February, when his account was balanced, there was standing to his credit only $1.49.
    On the day last named, and after his account had been balanced, Greenleaf deposited with the defendant the check of Vermilye & Co., which had been certified on the 15th February by Adriance, but which after its certification had been fraudulently changed in its date from the 15th to the 16th February, and altered in its amount from $56.75 to $15,006. The check was received by the defendants as genuine, and credited to Green-leaf’s account at the sum of $15,006. Greenleaf after-wards, on the same day, further deposited with the defendants the sum of $5,600 (his last deposit), and on the same day drew out of the bank by his checks the sum of $17,981.25, leaving an apparent balance in his favor on that day of $2,626.24.
    The defendants, having no knowledge of the forgery in the body of the check, deposited the same in the clearing-house on the morning of the 17th day of February, where the same was paid to the defendants by the plaintiffs, as a check for $15,006 through the exchanges in the clearing-house, in the ordinary way in which the accounts of banks are there adjusted, and the same actually came to the plaintiff’s banking house on the morning of the 17th February with other vouchers. The check came from the clearing-house to William W. Sherman, who was the regular paying teller of plaintiff’s bank, who was absent from the bank on the 15th, the day the check was certified. It was brought to Sherman by the check clerk, as not being entered as a certified check on the certificate book. Sherman looked at the book and saw no entry of the check. He made no inquiries of Vermilye & Co., nor of anybody in the bank, but knowing the signature of Adriance, and supposing the check to be genuine and regularly certified, and its entry on the 16th accidentally •omitted, he entered the same upon the book as a check certified of the 16th for $15,006, and the same was charged to the account of Vermilye & Co.
    In this condition the affair remained until the 24th of February, when the account of Vermilye & Co. with the plaintiffs was written up, and the vouchers, including the check of $15,006, were returned to Vermilye & Co. On the 1st March, Vermilye & Co., having in the meantime examined the vouchers, called upon the plaintiffs, produced the check, and notified the bank that the check had been altered after drawn by them, from $56.75 to $15,006. Whereupon the plaintiffs addressed to the defendants a letter in these words :
    “National Bankoe Commerce.
    “New York, Miweh 1, 1870.
    “M. Chandieb, Esq., Cashieb National Mechanics’ Banking Association. '
    “Deab Sib:—I enclose herewith check ofVermilye & Co. upon this bank, No. 101, to order of A. J. Greenleaf, purporting to be for fifteen thousand and six dollars ($15,006) received for that amount through the clearing-house exchange from your bank, as per your slip, also inclosed herewith, which check we have this day learned has been altered from $56.75, the amount for which it was drawn, and certified by us, and I therefore hereby claim and require repayment to us of the difference of $14,949.25.
    “ Yours very respectfully,
    “H. F. Vail, Cashier.”
    This was the first actual notice the defendants had of the forgery. The defendants’ cashier immediately sent a clerk to 70 Broadway to make inquiries for Greenleaf, but he was not to be found there. The office was closed and no person on hand. The balance in the hands of the defendants, $2,626.24, has since the 17th' day of February been attached.
    At the close of the testimony the defendants’ counsel requested the court to submit to the jury the question, whether the defendants had been injured by the laches or negligence of the plaintiffs in notifying the defendants of the alleged mistake.
    The court refused, and the defendants excepted.
    The court directed a verdict for plaintiffs for the sum of $14,949.25 with interest, being the difference between the amount for which the check was originally drawn and certified, and the altered amount. Defendants excepted to such direction.

      Defendants moved for a new trial, which was denied.

      James Emott, for appellants.

      Benjamin D. Silliman, for respondents.
   By the Court.—Van Vorst, J.

When the check, in the altered condition in which it had been taken by the defendants as genuine, came back to the cashier of the plaintiffs’ bank on the 17th day of February, it was there also received as genuine, and its payment through the exchanges at the clearing-house was adopted and ratified, and as a valid check it was charged to the account of Vermilye & Co., the drawers of the same.

The alteration being in the body of the instrument, and not in the signature of their customer, which they were presumed to know, they are not, by the act of recognition and payment of it as valid, under an honest belief that it was so, disentitled from establishing that the instrument was a forgery, or from recovering back the money paid (Bank of Commerce v. Union Bank, 3d Coms. 230).

The plaintiffs, on the 17th day of February, were deceived by the fraudulent alteration of the check, as the defendants themselves had been on the 16th, and the recognition by each bank of the check as valid was made under a clear mistake of facts. Ho effect can be given to the certification of the check on the 15th of February by Adriance, the clerk of plaintiffs, other than that the signature was genuine, and that the check was good for $56.75, the amount for which it was drawn (Farmers and Mechanics Bank v. Butchers and Drovers Bank, 16 N. Y. 135); and the money paid by plaintiffs over and above that sum they are entitled to recover back from the defendants, unless there be such facts and circumstances peculiar to this case as would justify the defendants, according to equity and conscience, to detain it from the plaintiff. The defendants claim that the plaintiffs have "been guilty of laches, which has resulted in loss to them, and that this negligence of plaintiffs should defeat a recovery. It was urged on the argument Tby defendants’ counsel that it was negligence in the plaintiffs not to have entered the check when certified Tby its number, in addition to its date and amount; that the entry of the number would have aided in detecting the forgery; and further, that when the check came back to them on the 17th of February, they did not make sufficient inquiry in regard to its genuineness before accepting it as a true instrument.

The defendants urge substantially that the plaintiffs could and should have detected the forgery on the 17th of February, and should have immediately given notice thereof. The evidence on the trial was to the effect that it was not customary to enter certified checks on the books by their number, but that memoranda of the dates and amounts were sufficient for the purposes for which the book was kept.

The question as to whether or not the omission of plaintiffs in this respect was negligence, was not submitted to the jury, nor was any request made that it should be ; and it cannot be said as matter of law that the plaintiffs were bound to make such entry, and that a failure to do so is negligence. But that the plaintiffs did not make all the inquiry and examination on the return of the check which the defendants now demand, affords no good reason why the plaintiffs should not recover in this action.

It was without doubt formerly the rule that if a party pays money under a mistake of fact, and no laches is imputable to him in respect of his omitting to avail himself of the means of knowledge within his power, he might recover back the money (Milnes v. Duncan, 6 B. & C. 671). But the limitation of the rule with respect to laches in such cases, has been modified (Kelly v. Solari, 9 M. & W. 54).

In this case, one Solari had an insurance on his life in the plaintiffs’ company. He had made default in the payment óf a .premium due on the 3d of September, by which the policy lapsed. The actuary advised two of the directors of the default. One of them, “ Clift,” wrote on the policy the word “lapsed.” After the death of Solari, which happened in October next after the default, Ms wife, who had entered upon the administration of Ms estate, made a demand on the company for the amount of the policy. Three of the directors, including the two who had known of the default, and the lapsing of the policy in September previous, and the one who had made the entry of the word “ lapsed,” paid the amount. After discovering the mistake, an action was brought against the executrix to recover the money. The two directors on the trial testified that at the time of the payment, they had entirely forgotten that the policy had lapsed. The plaintiff was non-suited on the trial. The chief baron deciding that if the directors had had knowledge, or the means of knowledge, of the policy having lapsed, the plaintiffs could not recover, and their afterwards forgetting it could make no difference. But a new trial was ordered. Baron Parke saying, “ that if money be paid under the impression of the truth of a fact, which is untrue, it may, generally speaking, be recovered back, however careless the party may have been in omitting to use diligence to inquire into the fact.” In that case, the counsel for the defendants, in opposing the motion for a new trial, urged that the defendant was an executrix, that the money paid had become assets of the estate, and that if plaintiff succeeded the loss would fall upon her.

In Townsend v. Crondy, 8 C. B. N. S. 477, it was held that the mere fact that the person who paid the money had at the time of payment means of knowledge of which he neglected to avail himself, will not disentitle him to recover the money back, if it was paid under a real mistake (Lucas v. Warwick, 1 Moody and Robinson R. 293; Daily v. Floyd, 12 B. R. 531; 2 Smith’s Leading Cases, edition of 1873, Marriote v. Hampton, and cases cited, marginal page 402).

There is no rule that because a party has the means of knowledge he has the knowledge itself, or that as a condition to a recovery he should have actually possessed himself of the knowledge within his reach. Nor can it be maintained that the omission by a party to do everything in the conduct of his own business, the performance of which might prevent loss to himself or others, is necessarily negligent.

But in Kingston Bank v. Eltinge (40 N. Y. 391), it was held, that “ Care and diligence are not controlling elements in the case. It is a question of fact merely. The inquiry is, were the parties mutually in error, and did they act upon such mutual mistake, not whether they ought to have so acted. If, in consequence of such mutual mistake, one party has received the property of another, he must refund, and this without reference to vigilance or negligence.” In the Union Bank of Troy v. The Sixth National Bank (43 N. Y. R. 452), it was objected by the defendants, to tho plaintiff’s right of recovery, that he had been negligent in an omission to make inquiries, and to use the means at hand for arriving at correct information of the facts, before parting with the money; but it was held in that case, that it is no defence that the mistake arose from a want of care on the part of the plaintiff (see also Canal Bank v. Bank of Albany, 1 Hill, 287).

Before taking this check from Greenleaf, on the 16th February, the defendants were as much bound to make inquiries in regard to its genuineness, as the plaintiffs were before accepting it, on the following day. The defendants had means of inquiring within its reach. They used nona And before sending it to the clearing- i house, they impressed upon it the sanction of their own stamp, as an evidence of their belief in the trueness of the paper.

In such condition, it came to, and was accepted by, the plaintiffs as true. Viewed in a moral light, each party was guiltless ; in the law, the negligence of the one is no greater than that of the other, and for this reason it is inequitable in the defendant to detain the money paid by the plaintiff, under a mistake common to each.

At the close of the evidence, the defendants’ counsel asked the judge before whom the trial was had, to submit to the jury the question, whether the defendants had been injured by the laches or negligence of the plaintiffs, in notifying the defendants of the alleged mistake, and that the court refused, and the defendants excepted.

The defendants’ request assumed that there was negligence in respect to the notification. Negligence is neither to be assumed nor presumed. It is true that negligence is often a question of mingled law and fact. But, in this case, whether the plaintiffs had omitted such duties, or had failed to exercise such care and diligence as amounted to negligence, were facts to be determined by the jury. The fact that there was negligence in the plaintiffs, should have been found before they should have been called upon to consider its consequences to the defendants.

The forgery was not discovered by the plaintiffs until the first of March, when Vermilye & Co. returned the check ; immediate notice was then given to the defendants, and a demand of payment made.

The position of the defendants, if not earlier, was fixed on the 17th of February, when, through the exchanges of the clearing-house, the checks of Greenleaf on them to an amount exceeding $17,000 were paid. This took from the defendants more than .the amount of the forged paper. The plaintiffs were under a duty, without doubt, to notify the defendants of the forgery as soon as it was discovered by them; and had the forgery been brought to the plaintiffs’ knowledge before the defendants parted with the credit they had given Greenleaf on the faith of thé forged check, and there had been a culpable omission to give notice in time to save them from loss, it might well be that the plaintiffs should not recover in this action.

The remedy of the defendants is against Greenleaf now, as it would have been on the 17th February, had the forgery been then discovered by the plaintiffs, and they had then refused the check ; under such circumstances, the plaintiffs would have made immediate reclamation on the defendants for the amount paid through the clearing-house, and the defendants would have proceeded against Greenleaf. This course is still open to them. Of the deposits made by Greenleaf on the 16th February, there still remains with the defendants, undrawn, a balance of $2,626.24, which has been attached, by whom, or upon what ground, it has been seized, and whether before or since the discovery and notice by plaintiffs of the forgery, does not appear. But in the view taken of this case, this attachment cannot be interposed by defendants to affect, in any way, the plaintiffs’ right of recovery, and it would be difficult to conceive how any creditor of Greenleaf could make a claim to this balance which was placed to his credit on the faith of a check which proved to be a forgery.

Upon the facts, this money still belongs to the defendants ; Greenleaf himself can make no valid claim to it, and no creditor can have a better right to the money than Greenleaf himself.

The judgment should be affirmed.

Sedgwick, J. (dissenting).

One Greenleaf kept an account with defendant. He obtained on some pretext, from Yermilye & Co., their check on the plaintiffs, dated February 15,1870, for $56.75, payable to his order. On the same day the plaintiffs certified that check. Green-leaf then altered it, so that it appeared of the date of 16th February, 1870, and for the payment of $15,006. He then deposited it to his account with the defendants, on 16th February, 1870. Greeuleaf drew checks on this account to the amount of $17,981.25. These checks being deposited by third parties in other banks, went to the clearing-house on the morning of the 17th. Then they were charged to defendants, and thence they were sent to defendants, when they were charged to Green-leaf’s account. A balance of $2,626.24 remained to Greeuleaf’s credit.

The altered check went also on the 17th to the clearing-house. From that, after being charged to plaintiffs, it went to plaintiffs’ bank. In the course of business a clerk of plaintiffs’, who had it with the other checks to examine if they were properly payable by plaintiffs, noticed that it had not been entered as a certified check in any book of the bank. He took it to the paying teller, who saw that the certification had been made by the receiving teller, and supposing that the latter had by accident omitted to make the usual entry when the check was certified, he, the paying-teller, entered it himself in a book, containing entries of certified checks, under date of February 17th, but stating the 16th as the date of the check. In due course the check was charged to Yermilye & Co., and with other checks on that account was sent to them for examination. It was about March 1st, when Yermilye & Co. returned to the bank the check as a forged and altered one. The plaintiff forthwith sent it to the defendants, and informed them of the character of the check, and demanded that the defend- ' « ants should return the difference between the amounts of the check unaltered and altered as money paid under a mistake. For this amount this action is brought.

There can be no doubt that the plaintiffs being charged with the amount of the check at the clearing-house, and acquiescing in that disposition, was a payment of it to the defendant on the 17th February. The defendants, by the same kind of treatment of Greenleaf ’ s checks drawn on it, paid such checks and became bond-flde holders for value of the check in question.

The plaintiffs are under no obligation to the holder of a check to pay it. Upon its certifying a check, it becomes the principal debtor to the holder. The certificate is an admission of funds in hand -to meet the check, and an original agreement to pay such funds on presentation of the check. It is not an engagement to pay the debt of another (Mead v. The Merchants’ Bank, 25 N. Y. R. p. 148).

Here the check after it was altered still bore the genuine certification of the plaintiff. Of course whatever rights the defendants had were such as arose from its being in that state. We will treat it as if it had the appearance of an acceptance by the plaintiffs presented to it for payment. I am of opinion that the law conclusively presumes that a maker or acceptor of negotiable paper knows whether or not such paper presented to him for payment is his obligation. After he, having opportunity to see and examine it, has paid it to a bond-Jide holder for value, the holder has a right to retain the money paid.

Otherwise uncertainty will be brought into the dealings of merchants in respect of this peculiar class of evidences of debt. Every day millions of money are paid in this city upon commercial paper. If the rule is, that each one is bound to know his own obligation, there will be care and scrutiny in making payments and confidence in receiving them. Otherwise, the fact that there is opportunity to correct mistakes will be a temptation to carelessness, and a corresponding uncertainty on the part of those who receive money will restrict the use of it, lest there be reclamations,

An exception to the general rule that money paid under a mistake may be re'covered, exists in the case of a drawee who is bound to know the handwriting of the drawer. If he accepts or pays a bill in the hands of a boml-ftde holder for value, he is concluded by the act, although the bill turns out a forgery. If he has accepted he must pay, and if he has paid he cannot recover the money (Goddard v. The Merchants Bank, 4 N. Y. R. p. 147). With much more force does such a rule apply to the case of an acceptance not genuine, paid by the acceptor, so far as is concerned the presumption as to the knowledge of genuineness. It would seem to be at the foundation of legal liability, that a man is absolutely bound to know whether or not it is his duty to pay commercial paper presented to him.

The Bank of Commerce v. Union Bank, 3 N. Y. p. 231, differed from the present case. A naked check was presented for payment. There had been no certification or acceptance of it. Ko obligation, or what purported to be, of the bank’s was presented to it, as to what it was, or whether the check was sufficient authority to it to make the payment. Kow apart from the duty of the bank to know its customers’ handwriting, if the check had been forged no authority was given by the customer to pay the money. The Court of Appeals said in the case, that in respect of the drawer’s signature the bank was bound to know if it was genuine, and if it chose to pay the money it could not recover it. But there was not the same reason for the presumption that the bank knew whether the check had been filled in by the drawer or under his direction. If we suppose that there was a presumption that the bank did know at the time it paid the check, if or not the filling was genuine, then no doubt the decision of the case would have been the logical consequence of the bank being "obliged to know if the check in all its parts was genuine, and its payment of the check on presentation would have been held final. This is rather enforced by Goddard v. The Merchants Bank, 4 N. Y. p. 147. In that case the court held that if a party intervenes to take up a protested bill for the honor of the drawer, and sees it, and then pays it, he cannot recover the money back though it turns out a forgery ; but that as the plaintiff who held such a position in respect of the bill involved in that case had not seen it before paying, he could recover the money he paid. But Judge Buggies, who gave the opinion of the court in the Bank of Commerce v. The Union Bank, dissented, and thought that the plaintiff was bound to see and examine the bill, and to decide at his peril as to its being genuine.

There is authority for the position that money paid by a party on what purports to be his own obligation, after inspection or an opportunity for inspection, cannot be recovered back. In the Bank of The U. S. v. The Bank of Georgia, 10 Wheaton, 133, the court was unanimous. The decision was, that if a bank receive as genuine, forged notes purporting to be its own, and pass them to the credit of a depositor, it is bound by the credit thus given. Judge Stoby, delivering the opinion, said that the bank was bound to know its own paper and provide for its payment; that if it pays forged notes, i't must be deemed to adopt them ; that the holder of such notes is at a disadvantage; he has not the means of knowledge, nor the means of proof, that the bank has; that proof of actual damage may not always be within his reach, and that to confine the remedy to cases of that sort would fall far short of the actual grievance ; that the doctrine of negligence is not applicable to such cases.

He further said, considering then, as we do, that the doctrine is well established, that the acceptor is bound to know the handwriting of the drawer, and cannot defend himself from payment by a subsequent discovery of the forgery, we are of opinion that the present case falls directly within the same principle. We think the defendants were bound to know their own notes, and having once accepted the notes in question as their own, they are concluded by their act of adoption, and cannot be permitted to set up the defence of forgery against the plaintiffs. The acceptance here meant was the receiving of them as cash. Judge Story said further: “ Here, d fortiori, the maker must be presumed and is bound to know his own notes. He cannot be heard to aver his ignorance, and when he received notes purporting to be his own without objection, it is an adoption of them as his own.”

Still more strongly yet does the rule apply to a case of an acceptance of a specific check having mere individuality, than the bank bills, the subject of the cited case.

It is suggested that the parties treated this as a check, and that the plaintiffs paid it, because of the drawer’s credit. The defendants, in presenting the paper, made no such discrimination, but relied on it as a whole. It was dealt with by the plaintiffs as its acceptance. The clerk, on receiving it from the clearing-house, looked upon it in that light, for he examined to see if it had been entered in the certified check-book. When he found it had not, he showed it to the paying teller, and stated the facts, and the latter entered it himself in the book. The reason of this was, that when the checks were certified they were entered in the book referred to, and from that at once charged against customers as paid ; so that when the bank paid a check certified by it, it followed the theory of the law—that it had kept and had on hand funds to meet it. Clearly, the paying teller regarded it as a purported obligation of the bank.

As a result, I am of the opinion that when the acceptance was presented to the plaintiff for payment by the defendant, who was a bona-fide holder for value, the former was conclusively presumed and was bound to know whether such acceptance was its obligation. Therefore it cannot recover the money paid, as paid under a mistake of fact.

It cannot make a difference that the genuine certification being on the check, the alteration affected only the filling up, which might deceive the plaintiff, because the contract of acceptance involves the paper on which it is made. The plaintiff knew, in the sense in which we are speaking, that it had never placed its certification on that paper, and therefore it was not an acceptance binding on it.

We proceed to another view of the case. The recovery is placed upon the averment of a mistake of fact. The complaint says that the plaintiff, its officers and agents, were ignorant that the check had been fraudulently altered, etc. We have seen that the bank was not only dealing with a check but also with its acceptance or certification upon the check. If the bank did not know that the check had been altered, but did know that it had never certified the check, did it pay under a mistake of fact % The payment to the defendant operated on the acceptance as well as on the check. Can the plaintiffs say, We paid the acceptance, knowing at the time we had not made it; but as we did not know that the check was altered, we can recover for the mistake in paying the check ? I shall assume, that if the plaintiffs knew when they paid the certified check, that they had not certified it in the state in which it was presented, and yet paid it, the plaintiffs ought not to recover., because there was no mistake.

The plaintiffs being a corporation, actual knowledge of a fact (the want of which gives an action for money paid under mistake), as distinguished from notice or imputed or constructive knowledge, can only be possessed by it through the actual knowledge of natural persons—its officers or agents. To it is to be applied the general rule, that in such cases a neglect to use means of knowledge will not take away the right of action. Forgetfulness "by an officer of a corporation may avail it in such a case. It perhaps may further "be said, that if an officer or agent who has knowledge is absent at the time of the payment, it would be held that for the purposes of such an action the corporation acted under a mistake. It seems evident, however, that a corporation cannot, for the purpose of getting the advantages that may arise from making payments in ignorance of the facts, so arrange its mode of business that one set of officers may have actual knowledge, at the same time and in the same place that another set of officers are acting under a mistake. This would be virtually a fraudulent device. It seems to me right to hold that if a corporation has empowered its officer to do for it a certain thing, and he does it, and thereafter the corporation acts in respect of a further stage of the business, through another authorized agent, when and while the first officer is present, that the actual knowledge of the latter as to the act done by him is that of the corporation. The officer in such case is not merely a means of knowledge which the corporation need not use. The corporation is the party in interest, who alleges the mistake and must prove it. It sees, and hears, and knows, and acts, through persons appointed by it for the various purposes of its business.

On the 15th February, its paying teller, the usual certifying officer, being absent, the receiving teller acted in his place by authority, and wrote his name on the check. On the 17th, the paying teller resumed his duty. All this time the corporation is acting. Virtually it says to the paying teller, We give you authority to say for us whether this acceptance is good or bad. At the same time, we infer, from the testimony, that the man whom it formally authorized to write the so-called acceptances is present.

Is not the corporation obliged to prove its want of knowledge through that agent it appointed to act for it and get knowledge, and who is present %

To illustrate: we, as we have said, think the evidence shows that the receiving teller was at the bank when the check was paid. When he was on the stand, he was shown the check as altered, and was asked :

“ How do you know that this is the check that you certified for $56.78 %
“A. I saw it two or three times, and examined it pretty closely. I know it to be the same one.
“Q. How do you know that you did not certify a check for $15,006 %
“ A. Because every check certified is entered in a book at the time.”

If the rule, that the means of knowledge need not be used in such case, is to be applied to corporations, then, as a logical result, the president, cashier, and all the officers, but one of the tellers, may have knowledge of a matter, and be present, and yet their knowledge be not that of the corporation.

I do not think the plaintiff proved what its knowledge or ignorance as a matter of fact was, in respect to its having accepted the check, without calling the receiving teller and proving by him what at the time of the payment was his knowledge or ignorance.

For these.reasons, I am of opinion that the exception taken to the direction of the court to the jury to find for plaintiff should be sustained.

If, however, I err in thinking that, in such case, the plaintiff owed a positive legal duty to the defendant to know the facts, and the case is of that kind that it falls under the rules made by Kingston Bank v. Eltinge, 40 N. Y. R. 397, and the older kindred authorities, then I am of opinion that the other exception should not be sustained. It was to the refusal of the court to submit to the jury the question whether the defendants were injured by the laches or negligence of the plaintiff, in notifying the defendants of the alleged mistake.

There was no negligence or laches under the authorities. Kingston Bank v. Eltinge, 40 JY. Y. 397, decides that, in the contingency of a mistake, a party need not show that he used care or diligence. An omission to use either is not negligence for which a plaintiff is responsible. If the plaintiff’s rights here are on this point to be measured by the paying teller’s want of knowledge at the time, then that paying teller was not bound to make inquiries of the receiving teller who wrote his name on the check when certifying it, nor to otherwise investigate the matter, hi or was it negligence on the part of the plaintiff, not to have entered the number of the check when it was certified in its unaltered state. If, up to the time of payment, the plaintiff was not bound to use care and diligence, the measure of its obligation remained the same until the discovery of the forgery (Canal Bank v. Bank of Albany, 1 Hill, 291). It not being bound to know or to find out, it would be impossible to make it its duty to notify, until knowledge came to it. On the discovery of the forgery the plaintiff at once informed the defendant of the fact. Since that time the defendant has not suffered additional damage. The mere fact of loss before that time by defendant, does not prevent a recovery (Kingston Bank v. Eltinge, 40 N. Y 397).

There was, therefore, no basis of fact in the case for the charge which the defendant requested the court to make.

For the reason first stated, I am of opinion that there should be a new trial, with costs to appellant to abide the event.


source: Caselaw Access Project

author: Van Vorst, J.

license: Public Domain

text:
    EDWARD FITCH, Plaintiff and Appellant, v. CHAUNCEY P. FITCH, Defendant and Respondent.
    Upon the breach of a valid contract, the party complaining is entitled to some damages, although it may be difficult to ascertain the amount, and they may be nominal only. Such general damages as can be recovered for the simple breach of a valid contract, need not be expressly detailed or described in the complaint, and are recoverable under the.common conclusion, otherwise as to special damages (Clotty on Contracts, Chitt/y on Pleadings, Sedgwick on Damages).

    Before Monell and Van Vorst, JJ.

      Decided February 1, 1873.
    Appeal from an order made at Special Term, sustaining a demurrer to the complaint, and directing judgment in favor of defendant, with leave to plaintiff to amend on payment of costs.

      A. P. Fitch, for appellant.

      Samuel J. Crooks, for respondent.
   Van Vorst, J.

The defendant assigns two grounds of demurrer to the complaint:

First. That the plaintiff has not legal capacity to sue.

Second. That the complaint does not state facts sufficient to constitute a cause of action.

The complaint, in the first subdivision thereof, alleges a loan by plaintiff to defendant of a specific sum of money, which the defendant had promised to pay, and that lie has omitted and neglected to make repayment, and claims that the defendant still is indebted thereupon.

The complaint further alleges a failure on the part of the defendant to perform skilfully, and in a proper manner, a contract entered into between him and plaintiff, for dentistry work on the teeth of plaintiff’s minor daughter. It being understood and agreed, as alleged, that the sum due from defendant to plaintiff was to be allowed and credited in payment, so far as it would go, for the defendant’s dentistry work when completed.

The complaint alleges that the work was not completed, and that what was done was badly performed, and with improper materials, and that the daughter’s teeth were injured, discolored, and damaged.

Damages to the amount of five hundred dollars, besides .costs, were demanded in the concluding part of the complaint.

It was objected in Ms argument, by defendant’s counsel, that the complaint was defective, in not setting up that any special damages had been sustained by plaintiff by the defendant’s failure to perform, and his breach of the contract for the dentistry work, and, in fact, that no damages were shown to have been suffered by him.

When there is a valid contract, and it has been broken, the plaintiff must be entitled to recover such damages as necessarily ensue from the non-performance or breach. There are general damages, and they need not be expressly detailed in the complaint, and are recoverable under the common conclusion (Chitty on Contracts, 985, Edition of 1860, and cases cited).

If special damages are claimed, they must be stated in the complaint to prevent surprise on the trial, and so as to show that plaintiff is entitled to them. But upon the breach of a valid contract the plaintiff is entitled to some damages, though it may be difficult to ascertain the amount, and they may be nominal only (Chitty on Pleadings, Vol 1, 338; Sedgwick on Measure of Damages; Devendorf v. West, 42 Barb. 227).

Although there be nothing stated which would entitle the plaintiff to recover special damages growing ont of the unskilful manner in which the work is alleged to have been done on his daughter’s teeth, yet the money loaned has not been repaid. The plaintiff would be entitled to recover at least that amount of his contract with defendant, for the work and materials have not been furnished through defendant’s default, which is alleged.

This disposes of the second and principal ground of demurrer. The first is untenable, and, in fact, falls with the disposition made of the second.

Order of Special Term reversed, judgment for plaintiff on the demurrer, with leave to defendant to answer on payment of costs.


author: By the Court.—Sedgwick, J.

text:
    ADAM J. LEDWITH, Plaintiff, v. HASLETT McKIM, et al., Defendants.

      Saüroad bonds, by the terms of which the company had the option to pay either $1,000 or £325 sterling, me not negotiable instruments, for the reason that they do not provide for the payment of a definite or certain sum.

    Negotiable paper must be for a “fixed and certain amount, and not for a variable amount ” (Story on Promissory Notes, §§ 20 and 21).
    In this case the company had the option to pay $1,000 or £225 sterling, and it had not determined which ; besides the bond had an uncertain denomination. £225 sterling in London is not the equivalent of $1,000 in New York or New Orleans, and besides no place of payment was provided. A party offering for sale and actually selling bonds of a railroad company of a non-negotiable character, such as described, impliedly warrants his title to the same, precisely as if he sold any other chattels or personal property; and if it subsequently appears that the bonds were stolen from the possession of the company, before any issue or delivery of the same, and therefore had no legal existence or inception, nor any force as against the company, then there was a breach of warranty on the part of the seller, and the purchaser can recover the amount paid by him for them as damages.

      Before Sedgwick and Van Vorst, JJ.

      Decided February 1, 1873.
    Suspension of judgment, on a verdict for the plaintiff, •on an order that the exceptions on the trial "be heard in the first instance at the General Term. The facts in the case, and the exceptions, appear in the opinion of the court.

      Winter & Jones and James Clark, for plaintiff.

      Foster & Thomson and T. C. T. Buckley, for defendants.
   By the Court.—Sedgwick, J.

The defendants sold one Scranton ten instruments, purporting to have been executed by The Vicksburg, Shreveport and Texas Railroad Company, for $1,800. Each of these certified that the railroad company was indebted to John Ray, or bearer, for value received “in the sum of either 225 pounds sterling, or 1,000 dollars lawful money of the United States of America, to wit, 325 pounds sterling, if the principal and interest are payable in London, and 1,000 dollars lawful money of the United States of America, if the principal and interest are payable in New York or New Orleans,” which the company promised to pay with interest at 8 per cent, per annum, half-yearly. It further provided, “that the president of said company is authorized to fix by his endorsement •the place of payment of the principal and interest in conformity with the tenor of the obligation.”

Endorsed on each instrument were the words, “I hereby agree that the within bonds and the interest coupons thereto attached shall be payable inC. G. Youkg, President.” It is clear that the maker of the instruments only authorized the president to fill in the blank for the place of payment.

Therefore, if you suppose that the instruments went into the hands of innocent holders for value, there is no presumption that they were authorized to fill in that "blank.

These instruments were not negotiable. It is a necessary quality of negotiable promissory instruments that, they should be for the payment of a sum certain. It-must be for a “fixed and certain amount, and not for a variable amount ” (Story on Prom. Notes, §§ 20 and 21). “ There should be entire certainty and precision as to-the amount to be paid. The reason of this is especially obvious, for if the note is to represent money effectually, there must be no chance of mistake as to the amount of money, of which it thus takes the place and performs the office” (1 Parsons on Notes and Bills, p, 37). This is the opinion of Chancellor Walworth in Henchel v. Mahler, 3 Duer, p. 431).

The company had the option to pay either $1,000 or £225 sterling ; which it chose to pay had not been determined. There is a material difference whether such a matter is at the option of the holder or of the maker. Irrespective of this, however, the bond, so to call it, had an uncertain denomination. £225 in London are not the equivalent of $1,000 in BTew York or New Orleans. Bor would $4.44 buy a pound sterling in this country.

The instruments not being negotiable, and not having been issued by the company, but having been feloniously taken from it, the defendants had no title to them or to the paper on which these were printed, and gave none to Scranton. Whether they were choses in action non-negotiable, or chattels, the defendants, when they sold and delivered to Scranton, impliedly warranted that they had title to them.

The papers having been originally stolen from the railroad company before delivery, there was a breach of that warranty, and Scranton had a right to recover damages (Scranton v. Clark, 39 N. Y. 225; McCoy v. Artcher, 3 Barb. 327; Thomas v. Bartow, 48 N. Y. 197; Ketchum v. Bank of Commerce, 19 N. Y. 503; 2 Parsons on Notes, 37 and 39).

This right of action passed to the plaintiff by assignment of Scranton.

The facts already stated were found upon the trial, but it remains to examine the exceptions taken for defendants.

The exception was taken that there was no proof that at the time of the sale the defendants made any representation whatever to Scranton, and that, therefore, there was a failure of proof of the cause of action stated in the complaint.

The complaint stated that the defendants represented that the instruments sold were the bonds of the railroad company, and had been issued by, and were binding upon it, and that in consideration thereof, and relying upon, such representations, Scranton bought. If the proof had supported these averments—that is, if the defendants had by act or words affirmatively made the representations stated in the complaint—there might be room for the plaintiff to say, that in law these representations constituted a warranty that the instruments were as represented. The reverse, however, is not so clear,, viz.: that if there is an implied warranty of title from the fact of sale, proving a sale will prove that representations were made. On the whole, I think that proof that a man contracts or agrees that a certain fact exists, does not of itself show that he asserts it to exist. Such might be his contract, although he might consistently assert that he neither knew nor believed that the fact existed. If these averments were indispensable to his cause of action, I think the complaint should have been dismissed. Striking these averments and the others referring to them from the complaint, what is left would .show that a sale by defendants to plaintiff, of non-negotiable instruments had been made for $1,800, that the fact was that the defendants had no title to transfer them, and- that, giving no cause of action against the railroad company, they were worthless. This substantially states the cause of action that was really proved. The learned judge was correct in not dismissing the complaint upon the ground here discussed.

The exception taken to the refusal of the court to admit as evidence the submission to a committee of the difference between Scott, Zerego & Go. and these defendants, cannot be sustained. Scott, Zerego & Go. assumed to have bought the instruments here in controversy from the defendants, instead of Scranton having bought them on his own account. They made a claim on defendants. It was this difference which was submitted and decided in favor of the defendants, as was asserted by the offer now discussed. Unless Scranton was in some way bound by this, it could not affect his cause of action. There is no proof to show that he took part in the submission. It was left to the jury to say whether he was principal in the purchase, or whether he acted for Scott, Zerego & Go. The jury have found he was principal. It follows that the submission and decision were immaterial and irrelevant matters, and should have been excluded.

There was no question raised as to the measure of damages. The point made, that there was no proof of damage, is not valid. The evidence does not sustain it.

There was sufficient evidence of the identity of the bonds, at the different stages of the proof, to take the case to the jury.

The judgment should be entered upon the verdict for plaintiff, with costs.


author: By the Court.—Van Vorst, J.

text:
    GEORGE K. DEMING, Plaintiff and Respondent, v. JOHN H. PULESTON, Defendant and Appellant.
    In an action brought by a creditor of a mining coloration to collect his judgment against one of the trustees because of the failure of said corporation in making and filing an annual report, it appeared that the defendant’s term as trustee had expired before all the debt had accrued, and the company had neglected to elect trustees, the defendant and others continuing to act as trustees after their term had expired, and it also appeared that the unliquidated debt of the company in favor of the plaintiff had merged or been liquidated or included in the company’s notes, that were taken by the plaintiff, and the judgment was recovered against the company by plaintiff, at a time when defendant claims he had ceased to be a trustee, his term having expired as above stated.
    In this act of 1848, the fourth section provides, that, if an election of trustees be not had at the time appointed, “ all acts of trustees shall be valid, and binding as against the company until their successors shall be elected,” and the weight of authority favors the conclusion,' that trustees in office at the time of election would hold over and continue to be trustees after the year had expired, in case there was no election held, and if they acted as trustees, they would be such “ de jure ” as well as “ de facto.”
    The trustee, in this case, acted as such after the time for said election had passed, and his acts indicated that he considered himself as a trustee “ de jure,” and he most certainly was such “ de facto,” and therefore held to be liable as trustee.
    The liquidation of the debt by the company, and payment thereof in its promissory notes, did not cancel the debt, and does not alter the situation nor the liability of the trustees.
    Before Sedgwick and Van Vorst, JJ.

      Decided February 1, 1873.
    Appeal to the General Term from a judgment recovered in favor of the plaintiff against the defendant upon the verdict of a jury.
    The Hocking Valley Oil and Coal Company was organized on the 21st day of November, 1864, as a corporation, under the act of February, 1848, upon which day the certificate of incorporation required Tby the act was filed in the proper offices.
    The defendant was named as one of the trustees for the first year in the articles of association, and thereafter acted as such. On the first day of May, 1865, plaintiff was employed to superintend the operations of the company in Ohio, at a salary of one hundred and twenty-five dollars for the first month, and one hundred and fifty dollars per month afterwards. The defendant took part in employing plaintiff. From the defendant plaintiff received directions, and to him plaintiff made monthly statements of the operations. Plaintiff continued in the employment of the company until May 8, 1866. In May, 1866, plaintiff had a settlement with,the company at the office of Cochran, the treasurer. Defendant.was present with the president and other trustees. The defendant himself produced the statements rendered Tby plaintiff; his accounts were pronounced satisfactory, and his claim for services was adjusted at $1,004.28, defendant offering to make his personal affidavit, that plaintiff’s claim was, correct. The company then gave the plaintiff their two promissory notes, one for $802.83, the other for $201.45, payable, the one in thirty days, and the other one day after date.' The notes were neither of them paid, and the plaintiff brought an action and recovered a judgment against the corporation for their amount. Since the recovery of the judgment the plaintiff had collected on his claim $33. The balance remains unpaid.
    The corporation has filed no certificate stating the amount of capital of said company fixed and paid in, nor any annual report, or report in writing, concerning or affecting the company since the date of the certificate of incorporation filed as above mentioned. There has been no annual election of trustees held since the filing of the certificate in November, 1864. In November, or December, 1865, at a meeting of the trustees, at which defendant was present, a discussion took place on the subject, a motion was made by defendant that the trustees should hold over. There was a disagreement. After the meeting in May, 1866, at which plaintiff’s claim was adjusted, another meeting of the trustees was held in June following, at which the defendant was present. By a vote of the board, a new superintendent in plaintiff’s place was appointed. Defendant himself engaged the new superintendent. In August following another meeting of the board was held, at which defendant was also present, and in the proceedings of which he took part. This meeting had reference to the operations of the new superintendent. The defendant was also secretary of the company, but an assistant secretary in the employ of the company took the minutes of the company instead of defendant.
    At the close of the testimony the “ defendant’s counsel “moved to dismiss the complaint on the ground that the “liability of the company has merged in the promissory “ notes at or subsequent to the time when the defendant “ceased to be a trustee, viz., November 21st, 1865. “That whatever claim or demand the plaintiff may have “had against him, under the statute, as a trustee of “a defaulting company, he waived it as to a trustee “who had ceased to be a trustee by taking the promis- “ sory notes and entering judgment upon them.”
    The defendant’s motion was denied, and the defendant excepted.
    The defendant’s counsel also asked the court to direct the jury that they only find a verdict for the plaintiff for $475, the amount due on the 21st November, 1865, on the ground that defendant then ceased to be a trustee. This request was denied, and the defendant excepted.
    A verdict was directed for the plaintiff by the court for $2,339.48, to which defendant also excepted.

      H. S. Bennets, of counsel for appellant.

      W. B. Putney, of counsel for respondent.
   By the Court.—Van Vorst, J.

The defendant seeks to avoid liability in this action, in any event, for1 so much of the plaintiff’s claim as accrued after the 21st November, 1865, on the ground that the defendant’s-term as a trustee then expired, and further urges as an objection to the whole claim that it was merged in the company’s notes taken by plaintiff, and the judgment-recovered thereon in his favor, when the defendant was-no longer a trustee.

A failure to elect officers of a corporation at the designated time would not dissolve the corporation. The old officers may hold over until their successors are appointed. The fourth section of the act of 1848 provides, that, if an election be not had at the time appointed,, “all acts of trustees shall be valid and binding as-against the company until their successors shall be-elected.” In McCall v. Bryan, 6 Conn. 428, it was held,' that where the officers of a corporation are required by its charter to be elected yearly, yet they may continue' in office until their successors are elected (Nashville Bank v. Petnay, 3 Hamp. Tenn. R. 522).

In Slee v. Bloom, 5 John. Chy. 366, it is said, “The officers already in would continue to be good officers after the year and until others are elected.”

The better opinion appears to be, that where the members are to be “annually elected,” these words are-directory only (2 Kent’s Com. 295, and cases cited).

The defendant’s acts, after the 21st November, 1865, in the affairs of the corporation would indicate that he-considered himself still a trustee “ de jure,” and as to third persons would constitute him at least “ de facto.” He attended meetings of the board; he received the monthly statements of the plaintiff’s operations and services for the company up to May, 1866, and knew all about, approved, and aided in continuing his services. He himself, at a meeting of the trustees, pronounced the claim of the plaintiff for his services rendered the corporation up to May, 1866, just, and aided in continuing the operations of the company by the employment of a new superintendent in the summer of 1866. He himself employed the new superintendent, as he had the power. Such acts on his part are consistent with no other relation than that of trustee and manager. He substantially held himself out as such, and aided by his acts in maintaining the corporate existence, and the purposes for which it was formed. Public interests require that the acts of officers, who are such “ de facto,” should be held valid as to third persons, and when they so act they are entitled to all the benefit and should assume' all the liabilities imposed by such relation.

The acts of the defendant above mentioned did not properly belong to him as secretary. They advanced the material purposes for which the corporation was organized, enabled it to contract debts and incur liabilities, such as directors only assume. The requests of the-defendant’s counsel in effect asked the judge to decide, as matter of law, on the trial, that after the 21st November, 1865, the defendant was no longer a trustee. This, under the facts disclosed, the judge could not properly do. The most that the defendant was entitled to ask on that subject was, that it be submitted to the jury whether defendant, after that time, had assumed to act, and had acted as a trustee. This he did not do. In the absence of such request, the judge was justified in holding, as he unquestionably did, that the defendant had so acted.

Although the portion of the act under which this corporation was organized, which imposes liability upon trustees for its debts, in the event of a failure to file annual statements, may be considered penal in its nature, yet, if the party assumed to act as a trustee, it was his duty to perform all the acts incumbent upon a trustee, and to aid in making, signing, and filing such' certificate as the law requires, if he would escape liability:

The objection that the plaintiff’s claim became merged in the notes of the company, and in the judgment recovered, is unsound. The notes did not cancel the debt. They amounted to the company’s promise to pay at a future day, which it failed to do. The indebtedness still remains.

The obtaining of the judgment and the attempt to collect it out of the corporate property before resorting to the defendant personally, was favorable to the defendant, and in no manner affects the liability imposed upon him under § 12 of the act of 1848.

None of the defendant’s exceptions are well taken, and the judgment should be affirmed with costs.


author: Barbour, C. J. Sedgwick, J. Freedman, J. (dissenting).

text:
    ELIZABETH R. COFFEY, Plaintiff and Respondent, v. THE HOME LIFE INSURANCE COMPANY, Defendants and Appellants.
    Sanity of mind will be presumed until the contrary be proven, is a general rule. The law does not presume that a person who has taken his own-life was insane at the time. (Conclusion of the court.)
    The most that can be said is, that inasmuch as many, perhaps most, persons who destroy their own lives are insane at the time, the fact of self-destruction removes the general presumption of sanity.—Opinion of Barbour, Oh. J.
    The law has not made any presumption on this specific subject.—Opinion of Sedgwick, J.
    "What is life ? What is suicide ? See the views of Judge Freedman in his dissenting opinion, favoring the position that a person who commits suicide was insane at the time.

      Before Barbour, Ch. J., Freedman and Sedgwick, JJ.

      Decided February 1, 1873.
    Appeal from a judgment. The facts and the main point in the case appear fully in the opinion of Barbour, Ch. J.

      George W. Parsons, for appellants,
    arguedThe court, on the trial, considered itself bound by authority in this State to hold, that if an insured party was insane at the time of committing the act of self-destruction, then, as matter of law, he did not die by his own hand : and it is not proposed to discuss the soundness of that doctrine in this court, nor to attempt to distinguish this case from the authority referred to.
    But in declining to charge the jury as requested by defendants’ counsel, in the fifth and sixth requests, at page 97, and in charging the jury, as he did on pages 100 and 101, and at fol. 334, in substance, that as matter of law the jury must presume, from the fact of suicide, the deceased, when he took his life, was not in a sound state of mind, and that the burthen of removing such presumption of insanity was upon defendant, the court announced a doctrine which we respectfully submit cannot be sustained, either on principle or authority.
    1. It is elementary law, and long established, that the law presumes that a faét continuous in its character, still continues to exist, until a change is shown; and a leading elementary work, in illustrating this principle, lays down the proposition—“ so sanity will be presumedand cites numerous adjudications to sustain it (1 Phil Ev. [4 Am. Ed.], p. 604; vide Jackson, ex dem., Cadwell v. King, 4 Cow. 207; Jackson, ex dem., Van Dusen v. Van Dusen, 5 Johns., and cases cited at latter, pages 144 and 158; White v. Wilson, 13 Ves. 87, 88, 89; Den. ex. dem., Stevens v. Van Cleve, 4 Wash., C. C. R. 262, 269; Atty.-Genl. v. Paruther, 3 Bro. C. C.
      441, 443; Lessee of Hoge v. Fisher, 1 Pet. C. C. R. 163 Lee’s Heirs v. Lee’s Ex’rs, 4 McCord [S. C.] 183; Kinloch v. Paleyer, Mills’ Rep., Const. Court [S. C.], at p. 225; Donnay v. Borradaile, 10 Beav., at p. 342; Sutton v. Sadler, 3 C. B. [N. S.], 87.
    2. In a recent work, the author having carefully collected all the authorities on this subject, concludes that “ the burthen of proof of insanity is on the plaintiff,” in such cases (Bliss on Life Ins. § 378; vide also §§ 224 to 226, 233 and 238).
    3. In Nimick v. Ins. Co., a case in the U. S. Circuit Court, reported in 10 Am. Law Reg., at p. 101, also in 3 Brewster P. 502, McKennan, J., carefully reviews-the whole subject and cases, and concludes that the-proviso against liability in case the assured “shall die-by his own hand” includes all kinds of voluntary destruction. That if the assured commit suicide, comprehending the physical nature and consequences of his own act, and intending to destroy his life, the policy is-void, though he may not have been able to comprehend the moral nature of the act; and finally, that defendant having shown the fact that the insured died by his own. hand, the burthen is on the plaintiff to prove that the-assured was of such insane mind, that he did not commit the act with the knowledge and intent that it should result in death.
    To same effect is the case of Dean v. American Life Ins. Co., 4 Allen (Mass.) 98.
    4. In the case of the St. Louis Mutual Life Ins. Co. v. Graves, reported in 6 Bushnell, 268, also in Bigelow’s life Ins. Rep. at p. 736, the court, after a most exhaustive examination of most of the prominent cases in this country and in England on the subject, decide in substance, that an instruction given by the judge to the jury on the subject of insanity, similar in principle to that given in this case, was erroneous, and the verdict was set aside. See also Cooper v. Mass., etc., Ins. Co., 102 Mass. 227.
    The recent case of Terry v. Mutual Life Ins. Co., tried at U. S. Circuit Court, in May, 1871, before Mr. Justice Miller, of the U. S. Supreme Court, and Dillon, Circuit Judge, now reported in 1 Dillon's Rep., at p. 403, seems to be very full and decisive. The case was similar to ours, and language of the policy precisely the same. Mr. Justice Miller distinctly charged the jury ■that “ the burden of proof to establish the insanity is, in “ such cases, upon the plaintiff. . . . That there is no “presumption of Ism, prima facie or otherwise, that “ self-destruction arises from insanity.”
    This, it will be seen, is exactly the reverse of the propositions charged by the learned judge on the trial of this action.

      Wheeler H. Peckham, for respondent,
    presented the following points on the main question :—The important .and meritorious question in the case is, as to the charge of the court in respect to presumptions of insanity. The court charged, that while in cases of murder the presumption is that the defendant is sane, when a man takes his own life the presumption of law is otherwise, and so far as there is any presumption, it favors insanity at the time of committing an act of self-destruction.
    The charge of the court was correct.
    It is the settled law of this State, that the phrase “ die by his own hand,” does not mean a death while the prisoner is insane (4 Seld. 299). The law is now the same in England (How v. Anglo, etc., Life Ins. Co., 7 per N. S. 673; 30 L. J. Chane, 511; 9 W. R. 359; 4 L. T. N. S. 142).
    If, therefore, the deceased took poison, but was insane when he did so, there is no breach of the condition.

      The court charged that suicide itself was evidence of insanity. That, in itself alone, unexplained, it raised a legal presumption of insanity. Was the charge correct %

    It is obvious that in the solution of this problem a clear idea and statement of what is the legal definition of the term insanity is primarily and essentially important.
    There have been various definitions of insanity—medical and legal.
    So widely have definitions varied, that “some,” says Dr. Grood, “are so narrow as to set at liberty half the “patients at Bethlehem or the Biritre; and others so “loose and capacious as to give a straight-waistcoat to “ half the world ” (Dean, 457).
    Prof. Dean then proceeds to give a number of the definitions propounded by writers and thinkers on the subject (q. v. p. 458). John Locke considered madmen as not having lost the reasoning faculty, but that, in j oining together incongruous ideas, they mistake them for truths, and err as men do that argue right from wrong principles. Dr. Battie defines madness to consist in false perceptions. Dr. Chrichton defines the disease as consisting in general derangement of the mental faculties, in which deceived perceptions are mistaken for realities. Dr. Connolly considers it to consist in the impairment of any one or more faculties of the mind, accompanied with or inducing a defect in the comparing faculty. Dr. Heville defines it to consist in disordered functions of the brain generally, or of one of its several parts, without consciousness of this derangement on the part of the individual affected. Dr. Spurzheim defines it to be “an aberration of any sensation or intellectual power from the healthy state, without being able 'to distinguish the diseased state; or again, an aberration of the manifestations of the mind from their ordinary normal healthy state.” This last seems to be specially approved by Prof. Dean, pp. 458, 459.

      But, however defined, it is now conceded to "be a disease, and substantially conceded to be a disease of the brain (Dean, p. 459).
    In its characteristics and manifestations, insanity has been divided into intellectual and moral insanity (Dean, p. 488), according as the disease is manifested, more particularly in the intellectual power and faculties, or in the emotions, passions, and feelings (Ib.).

    In strictly legal definitions, Lord Hale seemed to regard insanity as diminishing the mental faculties instead of deranging them. In Arnold’s trial, the doctrine was stated that total deprivation of understanding and memory, so that the accused knew what he was doing no more than an infant, than a brute, than a wild beast, were necessary to exempt from punishment (Dean, pp„ 532, 533). In Hadfield’s case the definition was greatly enlarged. Total deprivation of reason was held not necessary, and derangement sufficient (Dean, 355). In Percival’s case, Lord Mansfield held that the test was whether the accused had sufficient understanding to distinguish good from evil, right from wrong (Dean, 537).
    This seems generaEy to have been the received doctrine since, except as it has in some cases been modified by requiring a knowledge of the wrong of the particular act he was then doing (Dean, 539, 540, and see a résumé of the different doctrines held on p. 544 of Dean).

    The test is, are the suspected actions the offspring of a healthy or a diseased brain % If of a healthy brain, the person should be held responsible, no matter how extraordinary the act. If of a diseased brain, not responsible, no matter how simple or common the act.
    And if we are right in our definition of insanity, the question presented by the charge is, whether the act of suicide is primá-faeie evidence that the relations of the suicide to external nature has been changed by disease of the brain.
    On that point we must first remember the wonderful strength in the natural, sane man, of the. love of life. “All that a man hath will he give in exchange for his life.” “Greater love hath no man than this, that he lay down his life for his friend.”
    Of course, the fact of suicide is conclusive evidence that in the patient this love of life is extinguished— conclusive evidence that the relations of the suicide to external nature had "been changed. The simple question then is, is it fair to presume that such change was induced by disease of the brain %

    We apprehend that few would deny that by far the greater number of cases of suicide are cases of insanity.
    All writers on insanity state that a tendency to suicide is one of the most frequent manifestations of insanity (Dean, p. 508, and see the curious cases referred to.)
    So far as there is any direct judicial decision on this point, it would seem to be in accord with the charge as delivered.
    In Borradale v. Hunter, 5 Mann and G. 647, the jury found that deceased threw himself into the water, intending to destroy himself, but added that previous to that time there was no evidence of insanity. Mr. Justice Erkskihe, however, told them that they must lake the act itself into consideration in connection with his previous conduct, and then say whether, at the time of its commission, they thought him capable of knowing right from wrong. They then found him incapable. That direction does not seem to have been questioned in the further progress of that case.
    The question appeals to the knowledge of the court derived from whatsoever source it may be, and founded upon human experience, as to whether, in the majority of cases of suicide, the cause is not mental disease. *
    If it be so, then the conclusion is correct, that from the mere naked act of self-destruction, with no statement of surrounding circumstances, the presumption is that insanity was the cause.
   Barbour, C. J.

This was an action upon a life insurance policy, which contained this condition : “In case he” (the person whose life was covered) “shall die by his own hand . . then the said company shall not be liable for the payment of the sum insured, or any part thereof.” Upon the trial, evidence was given, tending to prove the following facts: Just previous to the

taking of the policy, Coffey, the person whose life was insured for the. benefit of his wife, the plaintiff, was insolvent and out of business, and had a wife and several children dependent upon him for their support. While thus situated, he procured insurances upon his life to the amount of some $40,000, mostly in favor of his wife, borrowing the money from his friends to pay the premiums thereon upon the false statement that he wanted the same for his expenses in carrying into effect some pretended land sales. A short time after he effected those insurances, Coffey took his passage on a steamboat from Louisville to Cincinnati, where during the trip he went into his stateroom, and although the weather was quite warm, locked and fastened the doors and windows. After the arrival of the boat at Cincinnati, the next morning, the door of the stateroom was broken open, when he was found to be in a comatose state, and the next night he died from the effects, as then appeared on examination, of an overdose of morphine. Other evidence was also given of circumstances which tended to prove that his death was caused by his own voluntary act in a sane state of mind, and in pursuance of a preconceived plan.

The judge, before whom the cause was tried, charged the jury inter alia, thus : When a man takes the life of another, and alleges insanity as an excuse and defence, he is met by the presumption of law that he was sane, and he must remove or rebut such presumption, by showing affirmatively, and by competent and sufficient proof, that he was insane when he committed the deed. But when a man tafees his own life, the presumption of law is otherwise. The law does not and cannot preñóme that a man in the full possession of his mental , faculties, in that normal condition of mind which we call sanity, will deliberately tafee Ms own life; and therefore, so far as there is any presumption, it favors insanity at the time of committing an act of self-destruction.

I therefore charge you as matter of law, that as affecting this case, you must presume that the deceased when he toofc his life was not in a sound state of mind.

It is, however, but a mere presumption, and may be removed by evidence. But as I have said before, the burthen of removing it lies upon the defendants, and it is for you to say whether they have done so.

The question raised by the exceptions to this portion of the charge of the learned judge is somewhat novel and important. It has long been a well-settled rule in the law of evidence, that where the deed or act of a party is sought to be avoided on the ground of his insanity, he will be presumed to be of sound mind until the contrary shall appear, and therefore that the burthen of proving such party to have been insane, rests upon him who alleges it. Indeed, the rule that sanity is to be presumed until the contrary be proven, is a general one, applicable to all cases, and its reason is obvious.

It is founded upon the fact that general sanity is the natural and ordinary condition of the human mind, and that mankind, considered as a class or whole, are sane (the exceptions being comparatively few and rare), followed by the natural conclusion that each individual may well be assumed to be like the great mass of his fellow-men in that regard, unless proven to be otherwise (1 Greenl. Ev. §42; 2 Id. §§ 689, 373; 3 Id. § 5 ; 2 Kent's Com. § 451; Bliss on Life Ins. § 378 ; McNaghtin’s Case, 10 Clarke & Fin. 210; Gardner v. Gardner, 22 Wend. 526. Aside from extrinsic facts and circmnstances, therefore, the law presumes that every person who destroys Ms. own life is sane up to the very moment when he does the act which causes his death. Can it properly be said, then, that the commission of that act not only removes the presumption of sanity, but establishes a legal presumption that he was then insane 1

Ho presumption that insanity exists in the case supposed, can be deduced from the mere fact that the death of the person was caused by his own physical act; for every legal presumption of a fact of that character must be founded upon and derived from some other fact or facts with which it is usually or always found, as the result of general experience and knowledge, to be connected in a certain relation (1 Greenl. Ev. § 33).

There can be no doubt, however, that if courts were at liberty to assume as a fact established by experience, that all persons who intentionally deprive themselves of life are insane, or diseased in mind, or even such a majority of them, that it might properly be said that persons who thus destroy their lives are, as a general rule, insane, and that sanity is a mere exception; the legal conclusion that insanity or derangement of mind must be presumed in every case in which it appeared that the man intentionally caused Ms own death, would necessarily follow. But that fact is not so established. Hot only is the history of the world in former times filled with instances in which great and sound-minded men, such as Cato and Hannibal, have committed suicide, and where others have for the purpose of saving their estates from forfeiture, submitted themselves to the peine forte et dure, but the most learned men of the present day in this branch of mental science, not mere lawyers, are still groping for the truth in the twilight of doubt and peradventure. Indeed, it is by no means settled, either among educated men or in the common mind, that even a majority of those who deprive themselves of life by their own physical act, do so because of insanity. The fact cannot be legally presumed, therefore, that a person who has killed himself was not sane at the time, and consequently the charge in question was erroneous.

The most that can be said is, that inasmuch as many, and perhaps most persons who destroy their own lives, are insane at the time, the fact of such self-destruction of itself wholly removes the presumption of sanity (see Cooper v. Mass., etc., Ins. Company, 102 Mass. R. 227; Terry v. Mutual Life Ins. Company, 1 Dillon’s R. 403).

Judgment reversed with costs, and new trial directed.

Sedgwick, J.

I amobliged reluctantly to differ with the learned judge, in charging the jury that the law presumed that a man was insane who killed himself.

First. I do not think the law has made any presumption on that specific subject. The only presumption it has made on the general subject, is, that every man is sane until the contrary is shown.

Second. A judge, as such, cannot determine, nor has he the means to determine, whether an individual case of suicide is the result of insanity—especially when the cause of the insanity is to be confined to suicide. Therefore he cannot 'make a presumption on the subject, which is a generalization, more or less perfect, from individual cases.

I think the judgment should be reversed.

Freedman, J. (dissenting).

This is an action upon a policy of insurance for five thousand dollars, made by the defendants upon the life of Benjamin S. Coffee in favor of the latter’s wife, the plaintiff in the action. The policy, among other provisions to avoid it, contained a clause that, in case the assured should die by Ms own hand, the company should not be liable for the payment of the sum insured or any part thereof. .In Breasted v. The Farmers’ Loan, and Trust Co. (4 Seld. 299), the policy contained precisely the same clause, and the Court of Appeals, in sustaining the decision of the Supreme Court in the same case (4 Hill, 73), and disapproving the English doctrine of Borradale v. Hunter, 5 Man. & Gr. 648, and Cliff v. Schwabe, 3 Man. & Gr. 437, settled the law of this State to be, that the phrases “death by his own hand,” and “death by suicide,” mean the same thing, and that both, unless qualified by some other expressions, import a criminal act of self-destruction, whicli can be committed only by the free will of a sane man.

The learned judge who presided at the trial was correct, therefore, in charging that, if Coffee, at the time he took the poison, was insane, if he was then laboring under either permanent or temporary insanity, he did not die by his own hand within the true meaning of that phrase, and that consequently there was no breach of the condition of the policy in that respect. Indeed, no error whatever seems to have been committed in giving and refusing instructions to the jury, provided the learned judge was justified in refusing to charge, that the presumption of sanity attaches to the commission of suicide, and in charging, in place thereof, as follows:

“The law does not and cannot presume that a man “ in the full possession of his mental faculties, in that “normal condition of mind which we call sanity, will “ deliberately take his own life; and therefore, so far as “ there is any presumption, it favors insanity at the time “of committing an act of self-destruction. * * * *
“I therefore charge you as matter of law that there is “no such presumption, and that as affecting this case “you must presume that the deceased, when he took “ his life, was not in a sound state of mind.
“It is, however, but a mere presumption, and may “be removed by evidence. But as I have said before,
“the burthen of removing it lies upon the defendants, “ and it is for you to say whether they have done so.
“ The defendants, to strengthen their position that the “assured died by his own deliberate and criminal act, 16 have given some evidence which they claim shows- a “motive, and, as they say, a sufficient motive for the “ criminal act. They have shown that the assured was “in a pecuniarily embarrassed condition ; was in debt, “and prosecuted and harassed by his creditors. They “ have also shown that at or about the time he effected “ the insurance in this case, he procured other policies “ upon his life in other companies, all for the benefit of “his wife, and amounting in the aggregate to forty “thousand dollars; and they have further proved the “substance of a conversation between the deceased and “a lawyer of Cincinnati, in which he sought information and advice respecting the legal effect of the con- ‘£ dition against self-destruction in the policy.
“These facts and circumstances are submitted to you “ as tending to show, as is claimed, a motive, and there“by to repel the presumption of insanity, and it is for “you to say whether you believe they are sufficient.”

The question thus presented is an important, novel, and difficult one. It is an open one in this State, and as the few adjudications made elsewhere upon it (Nimick v. The Mutual Life Ins. Co., 10 Am. Law Reg., N. S. 101; Terry v. The Mutual Life Ins. Co., 1 Dillon, 403; St. Louis Mutual Life Ins. Co. v. Graves, reported in 6 W. P. D. Bush, 268, and also in N. Y. Daily Transcript of March 7th, 1871, in which last-named case the Kentucky Court of Appeals stood equally divided) are conflicting,' it must be decided on principle. Fortunately, in this case its consideration is not embar ■ rassed by other questions, which are usually connected with it and relate to the different forms or species of insanity known to the law. For the charge has not been excepted to in that respect; nor has the definition of insanity, which was laid down for the guidance of the jury, been complained of in any manner, tío, by omitting to move for the direction of a verdict, the defendant has conceded the sufficiency of plaintiff’s evidence to carry the case at least to the jury.

Freed, therefore, from all embarrassments which the intervention of other questions might occasion, I think the examination of the point at issue may be commenced in the most fitting manner, by considering for a moment what IAfe is. The definitions of it given by philosophers and biologists are almost innumerable. But none of them commends itself so much to my mind, as that given by Professor Herbert Spencer, who deservedly ranks in scientific circles as one of the greatest of modem thinkers. It is, that Life consists in the definite combination of heterogeneous changes, both simultaneous and successive, in correspondence with external co-existences and sequences, or in other words, in the continuous adjustment of internal relations to external relations. Consequently, Life is a continuous struggle. All vital actions, considered not separately, but in their ensemble, have for their final purpose the balancing of certain outer processes, by certain inner processes. There are increasing external forces tending to bring the matter of which organic bodies consist, into that state of stable equilibrium displayed by inorganic bodies ; there are internal forces by which this tendency is constantly antagonized ; and the perpetual changes which constitute Life, may be regarded as incidental to the maintenance of the antagonism. So strong is this antagonism in the human organism, that while there is life there is hope. The strength in the natural, sane man, of the love of life is indeed proverbial. Drowning men will catch at straws. All that a man has, will he give in exchange for his life.

From individual organisms thus struggling for life, small aggregations were formed, which soon felt the want of alliance and union with each other. This led to the formation of civil society, and the formation of that necessarily led to the establishment of government, for the express purpose of preserving and keeping that society in order. Thus it came, that every member of the society had to submit to a restraint by human laws of his natural liberty, to do as he pleased in his struggle for life and existence ; and that judges, juries, and all the instruments of the law came into being. Whenever it was found necessary or expedient, on account of new manifestations of the tendency on the part of the strong to subjugate the weak, in spite of existing law, to extend and perfect the prevailing system of law, it was done. In the course of the general improvement which our system has thus undergone, the doctrine of presumptive evidence became engrafted upon it. The presumptions recognized by the law were founded, either upon the first principles of justice, or the laws of Nature, or the experienced course of human conduct and affairs, and the connection usually found to exist between certain things. Under these circumstances it was found indispensably necessary for the proper enforcement of the whole body of the law, and essential to the safety of society, to establish the rule that, because sanity is the normal condition of the intellect, every man should be presumed to be sane, and that under the effect of such presumption, he who seeks to avoid responsibility for an act on the plea that he was insane, and hence not responsible, should take upon himself the burden of proving that condition of his mind. The rule was accordingly established, and upon it has since been built the further one, that every sane person must be presumed to intend that which is the ordinary and natural consequence of his own purposed act. Both these presumptions have ever since been firmly maintained, and rigidly enforced. They are applied, and justly so, to the murderer, the homicide, the parricide, and the living animal of every grade ; for the experience of mankind has demonstrated that even the most atrocious crime is generally perpetrated in the course of the struggle for life and existence, with the deliberate purpose of effecting by its commission' an adjustment of internal relations to external relations. The presumption of sanity attaches, therefore, to a man in all his dealings with his fellow-men.

But in case of suicide, the reason for the rule fails, and the necessity for its application disappears. Suicide is self-destruction. It is a self-inflicted, violent, and summary severance of relations, contrary to the ordinary laws of Nature. It is a refusal to obey Nature’s law, and, therefore, in the light of the present state of science, such an unnatural proceeding, that eminent men of great learning and research insist that suicide is necessarily an insane act, while others contend that it is only prima facie evidence of insanity. The first proposition has never been accepted to any great extent; but the second is quite prevalent among scientific men, and is daily gaining ground (Winslow’s Anatomy of Suicide, ch. 11, p. 237; Esguirol's Maladies Mentales, vol. 1, pp. 559, 560; Ellis on Insanity, London Edition of 1838, pp. 114,115; Prichard, London Edition of 1842, pp. 134, 141; Bernard & Tuke on Insanity, Philadelphia Edition, 1858, pp. 88, 153, 202, 204, 331; Dean’s Medical Jurispr. pp. 508, 509).

As,the law should always keep step with the great truths that are unearthed from time to time by science, the courts, upon these authorities, might well hold, and in my judgment should hold, in a case like the present, that—while upon the whole case the burden of proof is upon the plaintiff to satisfy the jury that a loss has occurred under the policy, that is to say, that the person whose life is covered by the policy was insane at the time of the perpetration of the deed within the true definition of that term in the law—the presumption to be drawn from the naked and unexplained fact of suicide is, that the perpetrator at the time of the fatal act was not in the possession of a sane and well-poised mind. Such presumption, like other presumptions of a similar character, is by no means conclusive, but may be removed by evidence. It becomes neutralized and inoperative as soon as a motive for the commission of the act is shown by evidence. Upon this latter point the charge of the learned judge below is wholly unexceptionable.

As long as the presumption of insanity is thus applied and enforced, harmony will prevail between science and law, and no evil results can accrue to society. For the danger to be dreaded does not lie in the presumption, which, as such, may be rebutted and overcome by proof in each case, but in the doctrine of moral and emotional insanity, and of temporary insane impulses ; or, to be still more specific, in the vague and unsatisfactory definition sometimes laid down by the courts for that species of insanity and that class of impulses.

The fact, which is generally alluded to, to sustain the opposite doctrine, that men of historic fame, such as Themistocles, Demosthenes, Hannibal, and Cato, committed suicide, without the imputation or suspicion of impelling insanity, cannot have much weight at this late day. Insanity, as now understood, was not known then, nor were the unerring and immutable laws of Hature then known and understood to the same perfection as they are now. So it may also be safely assumed that each of these men shared the mythological notions of his age. The ancients seem very generally to have arrogated to themselves the right to destroy their own lives, whenever, in their judgment, it should be proper. Pliny was accustomed to term it the greatest privilege the gods had left in the power of men, amid the calamities of human life. Judge Robertson, of the Kentucky Court of Appeals, very properly remarked of these historic men: “ Without faith in a future state of retribution, they seemed, each and all, to prefer, on rational calculation, annihilation to hopeless torture or degradation.” With the Christian era, however, came a change of views and of feeling in that respect, and Christian rulers set to work to suppress the barbarous practice. Thus it came, that under the common law suicide was declared to be a crime, and visited with punishment as such. As the criminal could not be reached himself, for the reason that by the very act of .suicide, he had placed himself beyond the reach of human punishment, the penalty consisted in denying the body of the criminal Christian burial, and in the forfeiture of his goods to the king.

Nor can I appreciate the force of the reasoning of the learned chief justice in this case, in first denying that insanity can be presumed, and then holding, that the most that can be said is, that inasmuch as many, and perhaps most, persons who destroy their lives are insane at the time, the fact of such self-destruction, of itself, wholly removes the presumption of sanity. If suicide is the unnatural proceeding I have shown it to be, and the fact of self-destruction wholly removes the presumption of sanity, because many, and perhaps most, .persons who destroy their lives are insane at the time, I can see no escape from the conclusion, that the naked and unexplained fact of suicide must be prima facie evidence of the existence of insanity at the time of the perpetration of the act.

I have also carefully examined the recent case of Fowler v. The Mutual Life Ins. Co., 4 Lans. 202, but do not consider it in point here. It seems to have been determined, on the strength of the declarations made by the assured shortly before his death, and which, in the judgment of the court, conclusively established the fact, that his subsequent suicide was entirely voluntary, deliberate, wilful, and with knowledge of its nature, character, and consequences.

Being unable to discover any error in the instructions given and refused on the trial, and defendants’ exceptions to the -admission and exclusion of testimony by the court having been found, on examination, to be untenable, I am of the opinion that the judgment and order appealed from should be affirmed with costs.