Colville v. Besly , 2 Denio 139 ( 1846 )

By the Court, Jewett, J.

This is an action for money had and received by the defendants to the use of the plaintiff. It is denominated an equitable action, and is less restricted by technical rules than most others. It aims at the mere justice of the case, and looks entirely to the question whether the defendants hold money which in equity and good conscience belongs to the plaintiff. It is an appropriate action to recover back money paid upon a consideration which happens to fail; as where money has been paid by one party in contemplation of some act to be done by the other, which is the consideration of the payment, and the thing stipulated to be done is not performed. (Wheeler v. Board, 12 John. Rep. 363; Chit. on Cont. ed. 1842, 622; Rew v. Barber, 3 Cowen, 280.)

Tiiat the consideration for which the plaintiff made and delivered his note for six hundred dollars to the defendants has wholly failed, there is not, as I think, the least room to doubt. In consideration of receiving that note the defendants agreed to sell the plaintiff the two notes held by them, and on the return of Besly to New-York immediately to transmit them to the plaintiff. The defendants instead of performing their undertaking, after it had been made claimed the interest in the notes and actually sued W. J. Nelson as the endorser of them; and in consideration of his assigning to them certain rail-road stock valued at $1000, discharged him from his liability as endorser 'by erasing his name from the notes; and then, having waited nearly two weeks from the time of making the agreement transmitted the notes through the mail to the plaintiff, the endorsements being thus cancelled. The notes sent were not the notes purchased by the plaintiff. As well might the defendants say that sending the plaintiff any other notes against Nelson & Caven or indeed against any other persons, would be a performance of their undertaking.

In my opinion the sending these notes to the plaintiff did not cast upon him the necessity of returning or offering them to the defendants as upon a recision of a contract, to entitle him to this action to recover the consideration which he had paid. If sending these notes with the cancelled endorsements was an act in part performance of their contract with the plaintiff, then on their failure to perform the remainder of that agreement, the plaintiff could not sustain the action for money had and received until he returned or offered to return the notes thus sent to him. (Thornton v. Wynn, 12 Wheat. R. 189; Chit. on Contr. 741.)

It was proved that the defendants had sold the plaintiff’s note and received pay for it; and as no question was made on the trial, but that it had been transferred to an innocent holder, before maturity and before this suit was brought, so as to entitle such holder to recover against the plaintiff, such facts may be here properly assumed. The question then arises whether the giving of the note by the plaintiff to the defendants and their transfer of it to a bona fide holder for value paid to them before this suit was brought was equivalent to the payment of money ? This question is not free from diíñculty. I do not find that the precise point has been decided by this court. It was considered by Savage, Ch. J. in Reed v. Van Ostrand, (1 Wend. 424,) though the question was not directly involved in the case. The question there was, whether the maker of several promissory notes negotiable in terms, given for the purchase money of a patent right to which the purchaser got no title, could sustain an action against the payee as for money had and reeceived, the notes not having been paid by the maker or transferred by the payee, the vendor of the patent. It was held that as between maker and payee, the giving of a note was not the payment of money, which would authorize a recovery in that action on failure of the consideration. The chief justice said, that “ had the notes in question been given to a third person in payment and discharge of a debt due by the defendants to such third person, then the case would have come within the previous decisions.” He added, that if one of the notes which fell due before the suit was brought “had been transferred and paid, or even transferred to an innocent endorsee, before suit brought, there would be a strong analogy to decided cases.” The case at bar in this branch of it is precisely that suggested by the learned chief justice, and it seems to me that the distinction suggested is striking and sound, and that in the cases supposed by him the action for money had and received will lie, where the consideration of the note so given to a third person or transferred to an innocent holder has failed. The case of Chapman v. Shaw, (5 Greenl. Rep. 59,) is in some of its features like the one at bar. There a note had been made by the plaintiff to the defendant payable in twelve months as the consideration for a written engagement of the defendant to convey certain goods to the plaintiff at a future day, which note the defendant forthwith endorsed and sold for its amount in money, after which the original contract was rescinded. It was held that the maker, the plaintiff, might recover the amount of the payee, the defendant, though the twelve months had not elapsed. Some stress, however, was placed by the court on the fact that the defendant had repeatedly said the plaintiff’s claim was just.

Upon the whole, I am of opinion that the action was sustained.

New trial denied.