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UTLEY v. DONALDSON.

October 1, 1876

UTLEY
v.
DONALDSON.



ERROR to the Circuit Court of the United States for the Eastern District of Missouri.

This is an action to recover from Donaldson & Fraley the sum of $15,375, paid to them by the plaintiffs, for fifteen bonds, purporting to be first mortgage bonds of the Central Pacific Railroad Company, and which subsequently proved to be counterfeit.

The court below found the following facts:––

1. On the twenty-fourth day of May, 1871, Newman & Havens, bankers, of Leavenworth, Kansas, telgraphed to St. Louis from Leavenworth to W. Nichols, cashier of the Commercial Bank of St. Louis, as follows:–

'Get rate for $15,000, California Central Pacific R. R. bonds, delivered to-morrow.'

This despatch was, on said day, shown by Nichols to defendants, and defendants made a bid for said bonds, i.e., (100 1/2) one hundred and one-half. This offer was reported by telegraph to Newman & Havens by Nichols, and was by them accepted by telegraph.

2. On the following day, May 25, Nichols received from Newman & Havens a letter, as follows:––

'LEAVENWORTH, KANSAS, 24th May, 1871.

'W. NICHOLS, Esq., Cash., St. Louis, Mo.:

'DEAR SIR,–Your favor of the inst., with inclosure as stated, is received. We, this A.M., telegraphed you as follows, viz.: 'Get rate for $15,000, California Central Pacific R. R. bonds, delivered to-morrow.' Same is hereby confirmed. We herewith hand you bonds. Please close the transaction and telegraph us immediately. The party selling these bonds is waiting here to get the money for them. This same gentleman is an entire stranger to us, therefore, will you be kind enough to satisfy yourself that the bonds are all right. We desire them sold without any recourse on us. Your early attention will much oblige, respectfully, yours,

'NEWMAN & HAVENS.'

This letter accompanied fifteen papers, purporting to be so many bonds in said letter described.

Nichols handed this letter to defendants May 25, with the bonds, and proposed that the defendants should take said bonds without recourse. Defendants refused to take the bonds without recourse, but said they would do this; viz., would give to the Commercial Bank their (defendants') check for the agreed amount, $15,075, with the understanding that this check was not to be charged up by the Commercial Bank, where defendants kept their accounts, until defendants had sent the bonds to New York and learned that the bonds were ('O. K.') correct. If the bonds were found to be correct, the check was to be charged up against defendants, and Newman & Havens to be advised; if not, the bonds were to be returned to the Commercial Bank, and the check returned to defendants.

3. On the 24th of May, defendants having received invitation to make a bid from Nichols, as requested by Newman & Havens in their despatch, telegraphed to plaintiffs by night despatch as follows:––

'ST. LOUIS, May 24, 1871.

'TO UTLEY, DOUGHERTY, & SCOTT:

'Make best bid fifteen Central Pacifics, quick.

'DONALDSON & FRALEY.'

After sending this despatch, and before receiving reply thereto, to wit, on the morning of May 25, defendants were shown by Nichols the letter of May 24, from Newman & Havens above recited, and the bonds.

Plaintiffs received this despatch, and on the twenty-fifth day of May replied by despatch, as follows:––

'NEW YORK, May 25, 1871.

'TO DONALDSON & FRALEY:

'We will buy Central Pacifics at a hundred and two and a half (102 1/2).

'UTLEY, DOUGHERTY, & SCOTT.'Defendants received this despatch on the same day about ten A.M.; and on the same day replied by telegraphic despatch, as follows:––

'ST. LOUIS, May 25, 1871.

'TO UTLEY, DOUGHERTY, & SCOTT, New York:

'We accept your offer, fifteen Centrals, one hundred two and a half.

'DONALDSON & FRALEY.'

4. On the same day plaintiffs wrote and mailed a letter to defendants, as follows:––

'NEW YORK, May 25, 1871.

'DEAR SIRS,–Your telegram of to-day received. You have sold us fifteen thousand Central Pacific 6's at 102 1/2 flat. . . ..

'Respectfully yours,

'UTLEY, DOUGHERTY, & SCOTT.'

The fifteen bonds were delivered to defendants by Nichols, cashier of Commercial Bank, May 25, and were by defendants forwarded by express on the same day to the Bank of North America, New York, with a draft on plaintiffs for $15,375, the bonds to be delivered by the bank to plaintiffs on payment of the draft. By mail–mailed by defendants. On the morning of the 25th of May defendants sent to plaintiffs a letter, as follows:––

'ST. LOUIS, May 25, 1871.

'Messrs. UTLEY, DOUGHERTY, & SCOTT:

'GENTLEMEN,–In accordance with your offer for 15 Central Pac. 1st mort. bonds, 102 1/2, we replied, We accept your offer, and have forwarded them by ex. to Bank North America, with draft attached for $15,375. We would further add, that we have purchased the bonds from a party strange to us; and, not having ever handled any of the Pacific Central, we would sell the bonds without recourse as to their being genuine; consequently, please examine them, and, upon being found correct, telegraph immediately (Central all O. K.). We do not doubt the bonds, but, coming to us through strange parties, we use this as a precaution, and not willing to take any risk.

'Respectfully yours,

'DONALDSON & FRALEY.'

This letter was received by plaintiffs at New York on Monday, the 29th of May, a short time before the bonds were presented by the messenger of the Bank of North America for delivery to plaintiffs, and prior to defendants' draft for $15,375, which was presented at the same time as the bonds, as hereinafter stated.

5. On the 29th of May, Monday, the messenger of the Bank of North America, with the bonds, fifteen in number, and the draft of defendants for $15,375, appeared at the office of plaintiffs in New York, to deliver said bonds and collect said draft.

Plaintiffs had, on the said twenty-fifth day of May, sold the bonds 'to arrive' to Rasmus & Lissignola, bankers and stock-dealers in New York, engaging to deliver them four days thereafter.

When the messenger of the Bank of North America arrived at the office of plaintiffs, with the bonds and draft, it lacked but five or ten minutes of the hour after which, by the rules of the New York stock board, deliveries of bonds and stocks sold could not be made for that day.

Utley, therefore, without examining the bonds, went hurriedly with the bank-messenger to the office of Rasmus & Lissignola, to be in time for delivery that day. Arriving there with the messenger of the bank, he asked Rasmus to examine the bonds, saying he had not had time to do so. Rasmus opened and briefly examined the bonds; said they seem to be correct; and, at the request of Utley, gave the messenger of the Bank of North America Rasmus & Lissignola's check for the amount agreed between them and plaintiffs, $15,403.12, which check was paid.

On the same day, and after the delivery of the bonds as above stated, plaintiffs wrote and mailed letter to defendants as follows:––

'NEW YORK, May 29, 1871.

'MESSRS. DONALDSON & FRALEY, St. Louis:

'DEAR SIRS,–Yours of 25th, and 15 thousand Centrals, with draft, received. The Centrals all correct, and we telegraphed you to that effect.

'Respectfully yours,

'UTLEY, DOUGHERTY, & SCOTT.'

7. On the same day plaintiffs sent telegraphic despatch to defendants, as follows:––'NEW YORK, May 29, 1871.

'TO DONALDSON & FRALEY:

'Centrals all right.

'UTLEY, DOUGHERTY, & ...


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