Ames, C. J.
This is a mixed contract of sale and exchange, by which the defendant, on the 24th day of November, 1856, engaged with the plaintiffs, through a broker, to sell to them a specified lot of Augusta cotton, being sixty-five bales marked “ Hoppin,” at 13§ cents per pound, for the note of one John E. "Weeden for about twelve hundred and fifty dollars, having then some four months to run; the balance to be secured by the note of the plaintiffs at six months. It is in proof, that about one half of the sales of cotton in the market of Providence are made in this way of barter for the notes of third persons — in which it is understood, as sworn by the broker, and as has been frequently proved before us, that the notes are “ put off,” that is, exchanged for the cotton; the very purpose of the transaction on the part of the purchaser being, to get rid of the risk of the solvency of the paper, even though he pay an enhanced price for the cotton. The testimony of the broker who conducted this bargain shows, that so far as the note of Weeden would go towards the price of the cotton at the agreed rate, — such was the nature of this contract; time being expressly given to and taken by the defendant to make inquiries concerning the solvency of Weeden, before he bound himself to it. The contract, as of a present sale and exchange, was concluded by the assent
of both parties, and was so entered in the broker’s book on the evening of the 24th of November; and the subjects of the contract being perfectly identified by it, and nothing remaining to be done but mutually to deliver the stipulated cotton and notes, the effect of the transaction, in the absence of fraud, was, at common law — and we have no statute which touches the matter — to vest the title to the cotton in, and place it at the risk of the plaintiffs, and to vest the title to Weeden’s note in, and place it at the risk of the defendant. Such was the view which forced itself upon my own mind when the case was first tried before me with a jury, and such is the conclusion to which we have all arrived, upon the maturest consideration of the arguments and authorities which have been pressed upon our attention.
The well-known common-law principle, applicable alike to sales and exchanges of personal things, is, that fraud or warranty is necessary to render the vendor or exchanger liable, in any form, for a defect in the quality of the thing sold or exchanged. Applying this principle to the sale or exchange of the note of a third person, transferred by indorsement without recourse or by delivery merely, the vendee or person taking it in exchange takes the risk of the past or future insolvency of the maker, or other party to it; unless indeed, in case of past insolvency, the vendor or exchanger is guilty of the fraud of passing it off with knowledge of that fact. The case of a sale or exchange of a forged note is equally within the above principle ; since the parting with it for value, is a representation, and so a warranty, that it is the note of the person whose note it purports to be, that is, is the thing, as which, it is sold or exchanged. Although decisions may undoubtedly be found departing from these ancient common-law principles, yet this is the settled doctrine of Westminster Hall, and is supported by the main current of American authorities. Byles on Bills, 122-125, 307, and cases cited, especially
Camidge
v.
Al
lenby, 6 B. & C. 373;
Gompertz
v. Bartlett, 24 Eng. L. & Eq. 156;
Gurney
v.
Womersley,
28 Ib. 257;
Hall
v. Conder, 38 Ib. 259, and cases cited; 2 Am. Lead. Cases, Hare & Wallace’s notes, 180-189. As remarked by Sergeant Byles in his valúa-
ble treatise, after quoting several conflicting American cases bearing upon this subject, “ the confusion has arisen from neglecting to distinguish between questions of law and questions of fact.” Byles on Bills, 122, n. i. In other words, what was the agreement of the parties with regard to the transfer of a note or bill, that is, whether it was by way of sale or exchange, or, in case' of a precedent debt, whether by way of complete payment or as mere security for payment of it, is a question of fact, and varies with the proof, direct and presumptive, in cases in other respects similar. It is obvious what contrariety of decision must necessarily arise if courts, mistaking their province, undertake to decide such questions as if they were questions of law; and, however they decide them, of what little value their decisions must be, as precedents.
In the case at bar, the matter of fact has been withdrawn #from the jury, and, under the statute, has been submitted to us by the parties, along with the matter of law. We find, in fact, that the defendant agreed to take the note in question, so far as it would go, in exchange for his cotton; and this, without any fraud practised upon him by the plaintiffs, either by expression or suppression, and without express warranty, on their part, of the solvency of the maker of the note. In such a case, the law certainly implies no warranty by the plaintiffs of the solvency of the maker of the note; and we see no reason why they should not be entitled to the benefit of a contract fairly made by them, because the risk assumed under it by the defendant has chanced to turn against him.
The case of
Roget
v.
Merritt,
2 Caines, R. 117, is relied upon as sustaining the defence, that by the insolvency of Weeden, the consideration agreed to be given to the defendant had wholly failed before the execution of the contract by delivery ; and upon that ground, that he had a right to retract from the contract. The note existed at the time of the contract, like the sea-damaged goods sold during a voyage, or the annuity whilst the person upon whose life it was dependent was
in ex-tremis,
and though perhaps of little value, will, like them, support a contract of sale which is based upon it;
(Sutherland
v.
Pratt,
11 M. & W. 296;
Hastie
v.
Couturier,
20 Eng. L. & Eq.
R. 535;) and it would be a singular perversion of a contract, the legal effect of which is, that the risk of the value of a note is to be assumed by one contractor, to say, that he was freed from the contract upon the ground of failure of consideration, because the note did not turn out to be as valuable as he anticipated.
It is also contended, that in analogy to the right of stoppage
in
transitu, the defendant, upon ascertaining the failure of Weeden, was equitably entitled to retain possession of the cotton, until that portion of the price represented by his note had been paid or secured. This defence, too, ignores the consideration, that the legal effect of this contract was, to put upon the defendant the risk of Weeden’s solvency; since no one can suppose, that a vendor can equitably refuse to deliver to the vendee the goods sold, when he is tendered for them precisely what he stipulated for, unchanged, except in a particular, the risk of,, which by the contract he took upon himself. It is because, and only when the vendor has not what he stipulated for — the note of a solvent person — that his equity, to stop
in transitu,
arises.
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Ames, C. J.
This is a mixed contract of sale and exchange, by which the defendant, on the 24th day of November, 1856, engaged with the plaintiffs, through a broker, to sell to them a specified lot of Augusta cotton, being sixty-five bales marked “ Hoppin,” at 13§ cents per pound, for the note of one John E. "Weeden for about twelve hundred and fifty dollars, having then some four months to run; the balance to be secured by the note of the plaintiffs at six months. It is in proof, that about one half of the sales of cotton in the market of Providence are made in this way of barter for the notes of third persons — in which it is understood, as sworn by the broker, and as has been frequently proved before us, that the notes are “ put off,” that is, exchanged for the cotton; the very purpose of the transaction on the part of the purchaser being, to get rid of the risk of the solvency of the paper, even though he pay an enhanced price for the cotton. The testimony of the broker who conducted this bargain shows, that so far as the note of Weeden would go towards the price of the cotton at the agreed rate, — such was the nature of this contract; time being expressly given to and taken by the defendant to make inquiries concerning the solvency of Weeden, before he bound himself to it. The contract, as of a present sale and exchange, was concluded by the assent
of both parties, and was so entered in the broker’s book on the evening of the 24th of November; and the subjects of the contract being perfectly identified by it, and nothing remaining to be done but mutually to deliver the stipulated cotton and notes, the effect of the transaction, in the absence of fraud, was, at common law — and we have no statute which touches the matter — to vest the title to the cotton in, and place it at the risk of the plaintiffs, and to vest the title to Weeden’s note in, and place it at the risk of the defendant. Such was the view which forced itself upon my own mind when the case was first tried before me with a jury, and such is the conclusion to which we have all arrived, upon the maturest consideration of the arguments and authorities which have been pressed upon our attention.
The well-known common-law principle, applicable alike to sales and exchanges of personal things, is, that fraud or warranty is necessary to render the vendor or exchanger liable, in any form, for a defect in the quality of the thing sold or exchanged. Applying this principle to the sale or exchange of the note of a third person, transferred by indorsement without recourse or by delivery merely, the vendee or person taking it in exchange takes the risk of the past or future insolvency of the maker, or other party to it; unless indeed, in case of past insolvency, the vendor or exchanger is guilty of the fraud of passing it off with knowledge of that fact. The case of a sale or exchange of a forged note is equally within the above principle ; since the parting with it for value, is a representation, and so a warranty, that it is the note of the person whose note it purports to be, that is, is the thing, as which, it is sold or exchanged. Although decisions may undoubtedly be found departing from these ancient common-law principles, yet this is the settled doctrine of Westminster Hall, and is supported by the main current of American authorities. Byles on Bills, 122-125, 307, and cases cited, especially
Camidge
v.
Al
lenby, 6 B. & C. 373;
Gompertz
v. Bartlett, 24 Eng. L. & Eq. 156;
Gurney
v.
Womersley,
28 Ib. 257;
Hall
v. Conder, 38 Ib. 259, and cases cited; 2 Am. Lead. Cases, Hare & Wallace’s notes, 180-189. As remarked by Sergeant Byles in his valúa-
ble treatise, after quoting several conflicting American cases bearing upon this subject, “ the confusion has arisen from neglecting to distinguish between questions of law and questions of fact.” Byles on Bills, 122, n. i. In other words, what was the agreement of the parties with regard to the transfer of a note or bill, that is, whether it was by way of sale or exchange, or, in case' of a precedent debt, whether by way of complete payment or as mere security for payment of it, is a question of fact, and varies with the proof, direct and presumptive, in cases in other respects similar. It is obvious what contrariety of decision must necessarily arise if courts, mistaking their province, undertake to decide such questions as if they were questions of law; and, however they decide them, of what little value their decisions must be, as precedents.
In the case at bar, the matter of fact has been withdrawn #from the jury, and, under the statute, has been submitted to us by the parties, along with the matter of law. We find, in fact, that the defendant agreed to take the note in question, so far as it would go, in exchange for his cotton; and this, without any fraud practised upon him by the plaintiffs, either by expression or suppression, and without express warranty, on their part, of the solvency of the maker of the note. In such a case, the law certainly implies no warranty by the plaintiffs of the solvency of the maker of the note; and we see no reason why they should not be entitled to the benefit of a contract fairly made by them, because the risk assumed under it by the defendant has chanced to turn against him.
The case of
Roget
v.
Merritt,
2 Caines, R. 117, is relied upon as sustaining the defence, that by the insolvency of Weeden, the consideration agreed to be given to the defendant had wholly failed before the execution of the contract by delivery ; and upon that ground, that he had a right to retract from the contract. The note existed at the time of the contract, like the sea-damaged goods sold during a voyage, or the annuity whilst the person upon whose life it was dependent was
in ex-tremis,
and though perhaps of little value, will, like them, support a contract of sale which is based upon it;
(Sutherland
v.
Pratt,
11 M. & W. 296;
Hastie
v.
Couturier,
20 Eng. L. & Eq.
R. 535;) and it would be a singular perversion of a contract, the legal effect of which is, that the risk of the value of a note is to be assumed by one contractor, to say, that he was freed from the contract upon the ground of failure of consideration, because the note did not turn out to be as valuable as he anticipated.
It is also contended, that in analogy to the right of stoppage
in
transitu, the defendant, upon ascertaining the failure of Weeden, was equitably entitled to retain possession of the cotton, until that portion of the price represented by his note had been paid or secured. This defence, too, ignores the consideration, that the legal effect of this contract was, to put upon the defendant the risk of Weeden’s solvency; since no one can suppose, that a vendor can equitably refuse to deliver to the vendee the goods sold, when he is tendered for them precisely what he stipulated for, unchanged, except in a particular, the risk of,, which by the contract he took upon himself. It is because, and only when the vendor has not what he stipulated for — the note of a solvent person — that his equity, to stop
in transitu,
arises. All the cases of stoppage which can be found, are cffises in which the contract of sale created a debt due from the vendee to the vendor, as
mere secwity
for which, the credit, in some shape, of the former, or of some third person, was relied upon by the latter, which, pending the completion of delivery, had become worthless from insolvency ; not a case, in which, as here, a specific note of a third person had been taken, or contracted to be taken, by way of exchange for the thing sold. The case of
Owenson
v.
Morse,
7 T. R. 60, which suggested this ground of defence, is quite specific upon this very distinction. Lord Kenyon expressly says, that “ if the defendant had agreed to take the notes in payment, and to run the risk of their being paid, that would have been considered as payment, whether the notes had or had not been afterwards paid and adds, that “ this is all that is proved by the cases that have been cited ” — agreeing of course that this
was
proved by those cases. From the opinions of the other judges — Justices Grose and Lawrence — in that case, it seems that the view taken of the facts of it, was, that the plate was purchased for money, — that banker’s notes having
been given for it as money, which turned out to be worthless, that the defendant had not got what the plaintiff had stipulated to give him, — and the plate not having been delivered, that the defendant might therefore retain it for the price. The same remarks apply to the case of
Roget
v.
Merritt,
2 Caines, R. 117, so far as applicable to this ground of defence; since, the distinction just adverted to is, in that case, recognized as settled by
Puckford
v.
Maxwell,
6 T. R. 52, as well as by the above case of
Owenson
v.
Morse.
The only other case cited which bears upon the point we are considering — that of
Parks
v.
Hall,
2 Pick. 206— merely recognizes, that if the
security
given for the price of goods fails, intermediate the delivery, the vendor may retain the goods for the price; the very term “ security” implying, of course, that what was thus given was designed to be collateral, merely, to the vendee’s obligation to pay. In short, without taking up more time with what is so plain, to confound the vendor’s right to retain for the price, or to stop
in transitu,
in case of the neglect or inability of the vendee to pay as stipulated, with the defendant’s refusal to deliver, in such a case as upon the proof we find this to be, is to confound an equity, which all can see, with the breach of the very substance of a contract, which none can justify.
The last ground of defence, that the defendant is released from his obligation to deliver the cotton by the laches of the plaintiffs in not sooner tendering the note, is equally without foundation. Oh the third business day after the evening on which the bargain was concluded, Weeden’s insolvency having on that day become public, the defendant met the broker, who had acted for both parties, in the street, and informed him that in consequence of Weeden’s insolvency he should decline to deliver the cotton. Up to this time, as sworn by the broker, there had been no unusual delay on the part of the plaintiffs in the transaction; and the assent of the broker, as expressed at the time, to the view taken by the defendant of his legal rights, to which he also swears, cannot affect the legality of the claim of the plaintiffs.
The defendant’s refusal to go on with the contract was communicated by the broker to the plaintiffs ; and some ten days
after, having in the mean time taken the advice of counsel, the plaintiffs, under that advice, tendered the notes to and demanded the cotton of the defendant, as preliminary to the commencement of this action, when, the defendant declined to go on with the contract, upon the same ground which he had before taken with the broker. The notice given by the defendant clearly dispensed with an earlier formal tender of the note and demand of the cotton, if it did not dispense with them altogether. • After such notice, the plaintiffs were entitled to time to consult counsel and to act upon their advice, without just complaint of laches, on that account, to be made by the defendant. The note was his, and if he had wanted it, he could have had it at any time on demand. Besides, he suffered and could suffer nothing by the delay now complained of, between the time of his notice to the broker and the time of the formal tender and demand made by the plaintiffs. Weeden’s note had several months to, run ; and had it been in the possession of the defendant at the very time when he gave notice that he would not receive it, he could have taken no effectual means, by legal process, to secure it. The cases cited with regard to laches in returning bankers’ notes, payable on demand, and passed in payment of a precedent debt after insolvency, and of returning forged bills or notes, have no application to such a case as this.'
This action is properly brought for not delivering the cotton according to the contract, as in
Harrison
v. Luke, 14 M. & W. 141, it is said by Bar on Parke, in such a case as this, it should be. As no other damages from the non-delivery are proved, except those occasioned by the plaintiffs not having received the amount of the note in cotton at the stipulated price, judgment must be entered against the defendant for-the value of the note, in money, upon that basis, with interest from the time of the demand; the note, which has been deposited in the registry of the court for the defendant, being at his disposal.