Edward Douglass White

“ On the contrary, both in England and in the United States the doctrine is universally recognized that, where commercial paper is sold without indorsement, or without express assumption of liability on the paper itself, the contract of sale, and the obligations which arise from it, as between vendor and vendee, are governed by the common law relating to the sale of goods and chattels. ”

“ In passing, however, it is worthy of note that, while the civil law enforces, in the contract of sale, generally, the broadest obligation of warranty, it has so narrowed it, when dealing with credits and incorporeal rights, as to confine it to the title of the seller and to the existence of the credit sold ”

“ Of course, this warranty of existence, as established by the law of Louisiana, and as found in France and other civil-law countries, does not govern a contract of sale when the object contemplated by a sale is a thing whether existing or not existing; in other words, where the parties buy, not an existing obligation, but the chance of there being one. ”

“ The admission being that both parties contemplated the delivery of valid obligations, bonds of that character being outstanding, if warranty of existence was implied by law, such purpose was not fulfilled by the delivery of a mere equity, which one of the parties, the seller, claims was existing in his behalf. Valid bonds, and not the mere claim by the seller to enforce invalid bonds, was the object of the contract. ”

“ Code, art. 2501. 'Even in case of stipulation of no warranty, the seller in case of eviction is liable to a restitution of the price, unless the buyer was aware, at the time of the sale, of the danger of eviction, and purchased at his risk and peril.' Civ. Code, art. ”

“ A like rule is maintained in the jurisprudence of France, where, in addition to the Code Napoleon or Civil Code, there is a Commercial Code regulating mercantile contracts. This is shown by the decision in a case where the vendor transferred certain notes without recourse, and in consequence of the forgery of some of them was held liable to return the price. 24 Laurent, 535, thus states the case:
'The court of cassation had applied the same principle to commercial matters. The case is worthy of citation. Exchange dealers sold a certain number of notes of the Austrian bank of 100 fiorins each. ”

“ If the defendant's doctrine could prevail it would very materially impair the credit of these instruments. They are not, in practice, indorsed, or not beyond the first taker. A man takes this security looking to the persons who are to pay it. He takes it on the presumption that it is a navy bill. It was once a navy bill, but from the moment wherein it was altered it became of no value whatsoever. It is unnecessary to go into the authorities.'
In Wilkinson v. Johnson (1824) 3 Barn. & C. 428, one who had taken up a bill for honor subsequently discovered that the signatures were forgeries. ”

“ Under the state of facts thus supposed, the purpose of the parties to make a contract of that nature would legally result from the fact that they were both necessarily equally chargeable with notice of want of power, and therefore would be both presumed to have acted with reference to such knowledge. ”