Thornton vs. Wynn. horse and chaise, and that the plaintiff had no option to refuse to take them back; and that, being bound to receive them, the case was the same as if he had actually accepted them. He adds that the distinction between those cases where the contract is open, and where it is not, is, that if it be rescinded, either by the original terms of the contract, as in this case, where no act remains to be done by the defendant, or by a subsequent assent by him, the plaintiff may recover back his whole money, and then this action will lie. But if it be open, the plaintiff's demand is only for damages arising out of the contract. The Court proceeded upon this distinction in deciding the case of Payne vs. Whale, 7 East's Rep. 274, which followed the one just noticed. The action was to recover back money paid to the defendant for a horse sold by him to the plaintiff, which he warranted sound. The plaintiff offered to return the horse upon an allegation of his unsoundness, which the defendant denied, and refused to take him back, but agreed that, if he was in fact unsound, he would take him back and return the purchasemoney. The unsoundness was proved at the trial; but the Court was of opinion, that the action could not be supported, and distinguished this case from the preceding one by observing, that in that the plaintiff had an option, by the original contract, to rescind it on a certain event: but, here, it was no part of the original contract that the horse was to be taken back; and that the subsequent promise amounted to no more than that he would take him back if the warranty were shown to be broken, which still left the question of warranty open for discussion, and then the form of the action ought to give the defendant notice of it by being brought upon the warranty. The case of Lewis vs. Congrave, 2 Taunt. 2, was precisely like the present, in which the same distinction, and the same principles, were recognised by the judge who tried the cause at nisi prius. It was an action on a bill drawn for the price of a horse, which, on the sale of him, was warranted sound, but turned out not to be so. The defendant offered to return the horse, which was refused, and the defendant left him in the plaintiff's stable without his knowledge. The judge decided that as the plaintiff had refused to take back the horse, the contract of sale was not rescinded, and consequently, that the defendant must pay the bill, and take his remedy by action for the deceit. But upon a rule to show cause why a new trial Thornton vs. Wynn. should not be granted, the Court said that it was clear the plaintiff knew of the unsoundness of the horse, which was clearly a fraud, and that no man can recover the price of an article sold under a fraud. See also the cases of Fortune vs. Lingham, 2 Campb. 416, and Solomon vs. Turner, 1 Stark. 51. The result of the above cases is this: if, upon a sale with a warranty, or if, by the special terms of the contract, the vendee is at liberty to return the article sold, an offer to return it is equivalent to an offer accepted by the vendor, and, in that case, the contract is rescinded and at an end, which is a sufficient defence to an action brought by the vendor for the purchasemoney, or to enable the vendee to maintain an action for money had and received in case the purchase-money has been paid. The consequences are the same where the sale is absolute, and the vendor afterwards consents, unconditionally, to take back the property; because, in both, the contract is rescinded by the agreement of the parties, and the vendee is well entitled to retain the purchase-money in the one case, or to recover it back in the other. But if the sale be absolute, and there be no subsequent agreement or consent of the vendor to take back the article, the contract remains open, and the vendee is put to his action upon the warranty, unless it be proved that the vendor knew of the unsoundness of the article, and the vendee tendered a return of it within a reasonable time. We are, therefore, of opinion, that the direction of the Court in this case, upon the second exception, was entirely correct. The judgment is to be reversed, and the cause remanded to the Court below for a new trial. Two important but entirely distinct principles are discussed and decided in this case, to each of which we will give a separate consideration. The first principle, as to the liability of an endorser who has been discharged by the laches of the holder upon his subsequent promise to pay, has been repeatedly recognised, with the limitations placed upon it in the opinion of the Court, by the American authorities. Reynolds et al. vs. Douglas et al., 12 Peters, 497; Hopkins vs. Sirwell, 12 Mass. 52; Beck vs. Thompson, 4 Harr. & J. 531; Farrington vs. Brown, 7 N. Hamp. 271; Martin vs. Winslow, 2 Mason, 241; Moore us. Tucker, 3 Iredell, L. R. 347; Contra, Lawrence vs. Ralston, 3 Bibb's Rep. 102; Peabody vs. Harvey, 4 Conn. Rep. 119. In Trimble us. Thorn, 16 Johns. Rep. 152, it was held that the plaintiff must show affirmatively that the endorser was apprised of the want of notice, and that such knowledge will not be intended from the mere fact of a subsequent promise. But a different rule was recognised by the Court of Appeals of Vir Thornton vs. Wynn. ginia in the case of Walker vs. Laverty & Gantley, 6 Munf. 487, and Pate vs. McClure, 4 Rand. 170. This question has been discussed in several recent cases in England. In Hicks vs. Duke of Beaufort, 4 Bing, N. C. 229, 33 E. C. L. 337, Tindal, C. J., says: "The cases go to this point only; that if after the dishonor of a bill, the drawer distinctly promises to pay, that is evidence from which it may be inferred, he has received notice of the dishonor; because men are not prone to make admissions against themselves; and therefore, when the drawer promises to pay, it is to be presumed that he does so, because he knows that the acceptor has refused." Whether, however, the defendant intended to admit the notice, or to waive it, seems to be in all cases a question of fact to be submitted to the jury. See Brownell us. Bonney, 1 Ad. & Ellis, N. S. 39; E. C. L. 41, 427; Curlewis vs. Corfield, ib. 814, 41 E. C. L. R. 796; Chapman vs. Annett, 1 Carr. & Kirw. 551, 47 E. C. L. R. The doctrine which is laid down by Judge Washington as to the cases in which the vendee is at liberty to return the article purchased, and when he must resort to his warranty for redress, is fully sustained by the English authority of Street vs. Blay, 2 Barn. & Adolph. 460, overruling Curtis vs. Hannay, 3 Esp. N. P. C. 83. "It is not necessary," says Lord Tenterden, "to decide whether in any case the purchaser of a specific chattel, who having had an opportunity of exercising his judgment upon it, has bought it with a warranty that it is of any particular quality or description, and actually accepted and received it into his possession, can afterwards, upon discovering that the warranty has not been complied with, of his own will only, without the concurrence of the other contracting party, return the chattel to the vendor, and exonerate himself from the payment of the price, on the ground that he has never received that article which he stipulated to purchase. There is, indeed, authority for that position. Lord Eldon, in the case of Curtis vs. Hannay, is reported to have said that "he took it to be clear law, that if a person purchases a horse which is warranted sound, and it afterwards turns out that the horse was unsound at the time of the warranty, the buyer might, if he pleased, keep the horse, and bring an action on the warranty, in which he would have a right to recover the difference between a sound horse and one with such defects as existed at the time of the warranty; or he might return the horse and bring an action to recover the full money paid; but that in the latter case the seller had a right to expect that the horse should be returned in the same state he was when sold, and not by any means diminished in value;" and he proceeds to say that if he were in a worse state than he would have been in if returned immediately after the discovery, the purchaser would have no defence to an action for the price of the article. It is implied that he would have a defence in case it were returned in the same state, and in a reasonable time after the discovery. 1 "This dictum has been adopted in Mr. Starkie's excellent work on the Law of Evidence, part 4, p. 645; and it is there said, that the vendee in such a case may rescind the contract altogether by returning the article, and refuse to pay the price, or recover it back, if paid. It is, however, extremely difficult, indeed impossible, to reconcile this doctrine with those cases in which it has been held, that where the property in the specific chattel has passed to the vendee, and the Thornton vs. Wynn. price has been paid, he has no right upon the breach of the warranty to return the article and revest the property in the vendor, and recover the price as money paid on a consideration that had failed, but must sue upon the warranty, unless there has been a condition in the contract authorizing the return, or the vendor has received back the chattel, and has thereby consented to rescind the contract, or has been guilty of a fraud which destroys the contract altogether. Weston vs. Downe, 1 Doug. 23; Towers vs. Barrett, 1 Term Rep. 133; Payne vs. Whale, 17 East. 274; Power vs. Wells, Dougl. 24, n.; and Emanuel vs. Dane, 3 Cam. 299; where the same doctrine was applied to an exchange with a warranty, as to a sale, and the vendee held not to be entitled to sue in trover for the chattel delivered, by way of barter for another received. If these cases are rightly decided, and we think they are, and they certainly have been always acted upon, it is clear that the purchaser cannot by his own act alone, unless in the excepted cases above mentioned, revest the property in the seller, and recover the price when paid, on the ground of the total failure of consideration; and it seems to follow, that he cannot by the same means protect himself from the payment of the price on the same ground. On the other hand the cases have established, that the breach of warranty may be given in evidence in mitigation of damages, on the principle, it should seem, of avoiding circuity of action, Cormack vs. Gillis, 7 East, 480; King vs. Boston, 7 East, 481, n.; and there is no hardship in such a defence being allowed, as the plaintiff ought to be prepared to prove a compliance with his warranty, which is part of the consideration for the specific price agreed to be paid by the defendant. "It is to be observed, that although the vendee of a specific chattel delivered with a warranty, may not have a right to return it, the same reason does not apply to cases of executory contracts, where an article, for instance, is ordered from a manufacturer, who contracts that it shall be of a certain quality, or fit for a certain purpose, and the article sent as such is never completely accepted by the party ordering it. In this and similar cases, the latter may return it as soon as he discovers the defect, provided he has done nothing more in the meantime than was necessary to give it a fair trial. Okell vs. Smith, 1 Stark. N. P. C. 107. Nor would the purchaser of a commodity to be afterwards delivered according to sample, be bound to receive the bulk which may not agree with it; nor after having received what was tendered and delivered, as being in accordance with the sample, will he be precluded by the simple receipt from returning the article within a reasonable time for the purpose of examination and comparison. The observations which have been made, are intended to apply to the purchase of a specific chattel, accepted and received by the vendee, and the property in which is completely and entirely vested in him." Among the American cases, Thornton vs. Wynn is approved in Kase rs. John., 10 Watt's Rep. 107; Williams vs. Hurt, 2 Hum. p. 68; Contra, Rutter vs. Blake, 2 Harr. & J. 353. PAYMENT. THE PRESIDENT, DIRECTORS, AND COMPANY OF THE BANK OF THE UNITED STATES US. THE PRESIDENT, DIRECTORS, AND COMPANY OF THE BANK OF THE STATE OF GEORGIA.* A Bank having received its own notes in payment, is concluded from afterwards denying their genuineness. MR. JUSTICE STORY delivered the opinion of the Court. This is a case of great importance in a practical view, and has been very fully argued upon its merits. The Bank of Georgia having originally issued the bank notes in question, they were, in the course of circulation, fraudulently altered, and having found their way into the Bank of the United States, the latter presented them to the former, who received them as genuine, and placed them to the general account of the Bank of the United States, as cash, by way of general deposit. The forgery was not discovered until nineteen days afterwards, upon which notice was duly given, and a tender of the notes was made to the Bank of the United States, and by them refused. Both parties are equally innocent of the fraud, and it is not disputed that the Bank of the United States were holders bona fide, for a a valuable consideration. Under these circumstances, the question arises, which of the parties is to bear the loss, or, in other words, whether the plaintiffs are entitled to recover in this action, the amount of this deposit. Some observations have been made as to the form of the action, the declaration embracing counts for the balance of an account stated, as well as for money had and received, &c. But, f the plaintiffs are entitled to recover at all, we see no objections to a recovery upon either of these counts. The sum sued for is * 10 Wheaton's Rep. 333. 6 Cond. Rep. 120. |