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Vol. I.]

HAYNER v. SMITH.

(No. 11.

There is a covenant in this lease for the quiet enjoyment of the whole of the demised premises; but if there was not such a covenant, such enjoyment, without any protestation by the landlord, would be implied in the condition on which the tenant is bound to pay the rent. The law im plies covenants against such acts of the landlord as destroy the beneficial enjoyment of the premises leased. Wade v. Halligan, 16 Ill. 507.

Forcible expulsion of the tenant is, of course, an eviction, and may terminate the tenancy.

There is much diversity of opinion in the books on the question of a constructive eviction and the consequences flowing from it. Some courts have held that an actual eviction of the lessee by a title paramount, or by the lessor himself, would alone justify the lessee in resisting the payment of rent, whilst other courts go further, and hold that an eviction from a part of the leased premises by the act of the landlord will justify the tenant in abandoning the premises, and thus discharge himself from liability for rent; and other equally reputable courts have said that any act of the lessor which defeats the enjoyment of the entire property by the lessee, though he may continue in possession of the part not intruded upon by the lessor, would be a bar to the recovery of the rent. It is unnecessary to collate these authorities; it is sufficient to say they are not entirely harmonious.

In a case similar to this in all respects, between the same parties, before this court at a former term, in disposing of the instructions given in that case, the second, given on behalf of the lessees defendants, to this effect, was held to be proper: The principle upon which a tenant is required to pay rent is the beneficial enjoyment of the premises unmolested in any way by the landlord ; and if the jury believe from the evidence that the plaintiff took possession of any part of the premises leased by her to the defendants, against their consent, then in law it is an eviction, and releases the defendants from the payment of any more rent, and they will find for the defendants. The fourth and seventh instructions were substantially the same.

In addition to the authorities cited in that case, Briggs v. Hall, 4 Leigh (Va.), 484, may be referred to. In that case a farm was let for one year, and the landlord entered on a meadow, parcel of the premises, within the year, and cut and carried away the hay without the consent and against the will of the tenant, who, nevertheless, continued to occupy the farm during the residue of the year. It was held, the landlord, by such disturbance of the tenant, lost the benefit of the entire contract, and was not entitled to recover any part of the rent. A reference is made to Smith v. Raleigh, 3 Campb. 553, in which Lord Ellenborough said, “ An eviction from part of the demised premises is a complete answer to the action.”

In Dyatt v. Pendleton, 8 Cowen, 727, the court of errors of New York recognize a distinction found in the books where an eviction is by a third person, or by the landlord.

A legal eviction of the tenant by a third person excuses the payment of rent; so does any eviction by the lessor. If the eviction be partial, by a third person, the rent will be apportioned, but a partial eviction by the lessor excuses from the payment of the whole rent.

The principle is, that a party who deprives another of the consider

Vol. I.)

HAYNER v. Smith.

(No. 11.

а

ation

upon which his obligation is founded cannot, in general, recover for a violation of that obligation.

In Leishman v. White et al. 1 Allen (Mass.), 489, which was an action for use and occupation of a tenement hired by the defendants to the plaintiff, as set out in the first count of the declaration, and in another count, a lease was set out by which plaintiff leased to the defendants a hotel near Spot Pond, with the lands adjoining, and an island in the pond, for five years, at the yearly rent of two hundred and fifty dollars, payable quarterly.

The defendants, among other things, set forth in their answer an eviction by the lessor from a portion of the premises. Evidence offered on the trial, to show the defendants were evicted from a part of the premises, was refused, the court holding that such eviction, if proved, would only bar the plaintiff's claim pro tanto, and that he might still recover a proportionate share of the rent according to the ratable value of the portion of the premises from which the defendants were not evicted.

On appeal to the supreme court, it was held, the action could not be maintained if the defendants proved they had been evicted from a part of the demised premises by the plaintiff. The court say: “ In such case, no recovery can be had on the covenant to pay rent, because the defendant has been deprived of the beneficial enjoyment of a portion of the estate by the tortious act of the lessor, and the covenant being entire, cannot be severed or apportioned so as to allow the plaintiff to recover a part of the rent reserved by the lease.”

The same doctrine was held by the same court in Shumway v. Collins, 6 Gray, 232.

In Christopher, Ex'r, v. Austin, 1 Kernan (N. Y.), 216, it was said: “A wrongful eviction by the landlord from a part of the demised premises suspends the rent until the possession is restored, and the landlord cannot recover a portion of the rent agreed upon, or any compensation for the part of the premises occupied by the tenant while the eviction continued.”

Further reflection and a closer examination of the authorities have satisfied us that these instructions require some modification.

As was said in the court of common pleas, by Jervis, Lord Chief Justice, in Upton v. Townsend, 84 Eng. c. L. 30, and Same v. Greenleaf, Ibid. : “ It is extremely difficult, at the present day, to define with technical accuracy what is an eviction. The word eviction was formerly used to denote an expulsion by the assertion of a title paramount, and by process of law. But that sort of an eviction is not necessary to constitute a suspension of the rent, because it is now well settled that, if the tenant loses the benefit of the enjoyment of any portion of the demised premises by the act of the landlord, the rent is thereby suspended. The term “eviction ’ is now popularly applied to every class of expulsion or amotion.” This eminent judge further says: “I think it may now be taken to mean this — not a mere trespass and nothing more, but something of a grave and permanent character done by the landlord with the intention of depriving the tenant of the enjoyment of the demised premises.” The question, therefore, of eviction or no eviction depends upon the circumstances, and is in all cases to he decided by the jury.

Vol. I.)

MATTHEWS v. Mass. NATIONAL BANK.

(No. 11.

Williams, Justice, in the same case, in delivering his opinion, said: “ Considering how frequently transactions of this sort are taking place, it is somewhat remarkable that so little is to be found in the books upon

the subject of eviction. There clearly are some acts of interference by the landlord with the tenant's enjoyment of the premises which do not amount to an eviction, but which may be either acts of trespass or eviction, according to the intention with which they are done. If those acts amount to a clear indication of intention on the landlord's part that the tenant shall no longer continue to hold the premises, they would constitute an eviction.”

We are inclined to think the true rule is announced in these cases last cited. The court below will so give instructions in the case as shall conform to it, on the trial of another action brought by the proper party. For the reasons given, the judgment below is reversed.

Judgment reversed.

DISTRICT OF

CIRCUIT COURT OF THE UNITED STATES.

MASSACHUSETTS.

[SEPTEMBER, 1874.]

ESTOPPEL OF BANK, BY SIGNING BLANK TRANSFER, TO SET UP FOR

GERY. - NEGLIGENCE.

MATTHEWS v. MASS. NATIONAL BANK.

An altered certificate was deposited with defendant, by a third party, as collateral

for a loan and the usual printed form of transfer on the back thereof, signed by their cashier. It subsequently came into the hands of plaintiff, who took it in good faith and relying upon the cashier's signature, and who, upon discorering the fraud, brought suit against defendants. Held, that the bank by signing the blank transfer had so far warranted the genuineness of the certificate that it was

estopped from setting up forgery as a defence. Held, also, that it was negligence in the bank to transfer the certificate in blank in

stead of to the party who deposited it by name.
THE facts are set forth in the opinion.
Messrs. Dwight Foster f. G. W. Baldwin, for plaintiff.
Messrs. Joshua P. Converse f E. A. Kelley, contra.

SHEPLEY, J. The defendant, the Massachusetts National Bank, loaned to one James A. Coe twenty-two thousand dollars payable on call with interest, taking from him his memorandum of indebtedness for that sum, with, as collateral security therefor, what purported to be a certificate of two hundred shares of the capital stock of the Boston & Albany Railroad Company issued to said Massachusetts National Bank, as collateral.

This instrument was originally a genuine certificate for two shares of the capital stock of the Boston & Albany Railroad Company issued to H. E. Coe, but by false and forged erasures and interlineations had been so altered as to purport to be a certificate for two hundred shares of its

Vol. I.)

MATTHEWs v. Mass. NATIONAL BANK.

[No. 11.

stock issued by said railroad corporation to the Massachusetts National Bank, as collateral.

The bank received the said certificate in good faith and without any suspicion of its fraudulent character, and in supposed fulfilment of the promise of James A. Coe to give as security for the loan aforesaid two hundred shares of the capital stock of said railroad corporation.

Subsequently, on payment by said Coe to the bank, he received back his memorandum of indebtedness, and the cashier of the bank, for the purpose and with the intention of restoring the collateral to Coe, returned to him the fraudulent certificate with the usual printed form of transfer on the back thereof signed by H. K. Frothingham, cashier of said bank, in blank.

About two weeks after the surrender by the bank of this certificate to Coe with the transfer in blank of the cashier on the back of it, the plaintiff, Matthews, pursuant to his agreement to loan Coe twenty-five thousand dollars on call with interest, received from Coe, in good faith, the said fraudulent certificate with the blank assignment on the back thereof, supposing the same to be a genuine certificate for two hundred shares of said stock issued by the corporation and duly transferred and assigned so as to enable to obtain a new certificate therefor in his own name, and on receipt thereof loaned the sum of twenty-five thousand dollars. The signature of the cashier was well known to Matthews, who correctly supposed the signature on the blank assignment to be genuine. Coe was tried and convicted for obtaining money by false pretences, and indictments for forgery are now pending against him, and he has been declared bankrupt. The next day, or very soon after the day when the money was loaned by Matthews, the fact first became known to plaintiff and defendant of the fraudulent alteration of the certificate before it came into the possession of defendant, and plaintiff thereupon notified the bank that he should hold it responsible for any loss sustained by him by reason of the premises. This action is brought for the recovery of the damages thus sustained.

The real question presented in the case is whether the bank, by signing the blank transfer, has so far warranted the genuineness of the certificate that it is estopped from setting up the forgery as a defence to this action.

Defendant denies that the cashier had authority or right to bind the bank by the contract declared on.

Cashiers of a bank are held out to the public as having authority to act according to the general usage, practice, and course of business conducted by the bank. Their acts, within the scope of such usage, practice, and course of business, will in general bind the bank in favor of third persons possessing no other knowledge. Morse, Jr., et al. v. Mass. National Bank, U. S. Circuit Court, Mass. Dist. ; Miner v. The Mechanics' Bank, 1 Peters, 70; Merchants' Bank v. State Bank, 10 Wallace, 604. One of the ordinary and well known duties of the cashier of a bank is the surrender of notes and securities upon payment; and his signature to the necessary transfers of securities or collaterals when in the form of bills of exchange, choses in action, stock certificates, or similar securities for loans, which are personal property is an act within the scope of the general usage, practice, and course of business in which cashiers of a bank

Vol. I.)

MATTHEWS v. Mass. NATIONAL Bank.

(No. 11.

are held out to the public as having authority to act. Undoubtedly the ordinary duties of a cashier do not comprehend the making of a contract which involves the payment of money, without an express authority from the directors, unless it be such as relates to the usual and customary transactions of the bank. But the transfer of certificates of stock held as collateral is certainly one of the usual and customary transactions of banks, and the public would be no more likely to require evidence of a special authority to the cashier to make such transfer than of a special authority to draw checks on other banks, or to perform any other of the daily duties of his office.

The signature of the cashier must therefore be considered as the signature of the bank, and the question returns whether such blank assignment on the back of the certificate by the bank be so far a warranty of the genuineness of the certificate that the bank is estopped from setting up the forgery as a defence. In the case of forged negotiable instruments it is well settled that the indorser warrants that the instrument itself and the antecedent signatures thereon are genuine. Story on Promissory Notes, sec. 125 ; State Bank v. Fearing, 16 Pick. 533; fortsman v. Henshaw, 11 Howard, 184; Cricklow v. Parry, 2 Camp. 182; Canal Bank v. Bank of Albany, 1 Hill, 287. The indorser's liability in these cases is properly placed upon the ground of estoppel. “ This proceeds,” says Judge Story,“ upon the intelligible ground that every indorser undertakes that he possesses a clear title to the note deduced from and through all the antecedent indorsers, and that he means to clothe the holder under him with all the rights which by law attach to a regular and genuine indorsement against himself and all the antecedent indorsers. It is in this confidence that the holder takes the note without further explanation, and if each party is equally innocent and one must suffer, it should be the one who has misled the confidence of the other, and by his acts held out to the holder that all the indorsements are genuine and may be relied on as an indemnity in case of the dishonor thereof." This is a statement of the grounds upon which the rule of law rests as applicable to negotiable instruments, but the reasoning would seem to apply with equal force and pertinency to the case of a transfer of a certificate of stock by indorsement in blank. Stock certificates are sold in open market like other securities, and form the basis of commercial transactions. In the language of Mr. Justice Davis, in Bank v. Lanier, 11 Wallace, 377, “ Although neither inform nor character negotiable paper, they approximate to it as nearly as practicable.” In Leitch v. Wells, 48 N. Y. 613, it is said, “ Since the decision of the case of McNeil v. Tenth National Bank, certificates of stock, with blank assignments and powers of attorney attached, must be nearly as negotiable as commercial paper. The common practice of passing the title to stock by delivery of the certificate, with the blank assignment and power, has been repeatedly proved and sanctioned in cases which have come before the courts in New York. In New York of New Haven Railroad Co. v. Schuyler, 34 N. Y. 41, the rights of parties claiming under such instruments were fully recognized by the court, and such mode of transfer was shown to be the common practice in the city of New York. It is well settled that the form of assignment printed on the back of stock certificates, when signed in

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