Wheat and others v. Cross.

'WHEAT and others, appellants, v. CROSS.

(31 Md. 99.)

Contracts made by letter. Withdrawal of offer. Mistake of fact.

Where parties treat by correspondence through the post, an offer by one is com plete as soon as the letter containing notice of acceptance is sent.

The party making the offer is bound, when the other party has accepted it before the notice of withdrawal reaches him.

A mutual mistake as to a fact wholly collateral and not affecting the essence of the contract will not invalidate such contract.

APPEAL from the court of common pleas upon a judgment in favor of the plaintiffs. The facts of the case are stated in the opinion.

BARTOL, C. J., delivered the opinion of the court.

This suit was brought by the appellee to recover the price of a horse sold to the appellants.

The plaintiff resided in Frostburg, and the defendants were engaged in the business of buying and selling horses in Baltimore. The contract of sale was made by correspondence between the parties through the mails.

The facts of the case, so far as it is material to state them, were as follows: On the 23d of August, 1867, the defendants received the horse into their possession, to be sold on commission, at that time apparently sound and in good condition. On the 12th of September, 1867, they addressed a letter to the plaintiff, stating that the horse had been sick, but is doing well at this time, and offering $140 for him, clear of all expenses, and saying: "You can draw on us at sight for $140." This letter was received on the 15th or 16th of September; on the 16th, the plaintiff signified his acceptance of the offer by drawing on the defendants for $140. The draft was sent on that day, and on the 17th, the defendants refusing to pay the draft, it was protested.

ferdants addressed a letter to

On the 16th of September, the plaintiff, withdrawing their offer of the 12th, stating that "when they wrote they did not think the horse was so bad, but. since it had turned out to be 'farcy,' they would not buy it at any price," and directing him "not draw on them for the money; that they will

Wheat and others v. Cross.

not pay the draft until they see how the horse gets." This letter was not received by the plaintiff till after he had accepted the offer contained in the letter of the 12th, by sending the draft.

In the argument of the case, two positions have been taken by the defense.

1st. That there was not such mutual assent between the parties as to constitute a binding contract.

2d. That the offer by the defendants was made through mistake of a material fact as to the condition of the horse, and the nature of the disease under which it was suffering; and was withdrawn as soon as the mistake was discovered, and the acceptance thereof was not binding upon them.

1st. On the first question we consider the law well settled, that where parties are at a distance from each other, and treat by correspondence through the post, an offer made by one is a continuing offer until it is received, and its acceptance then completes the aggregatio mentium necessary to make a binding bargain. The bargain is complete as soon as the letter is sent containing notice of acceptance. This rule applies where the offer and acceptance are unconditional.

The offer may be withdrawn, and the withdrawal thereof is effect ual so soon as the notice thereof reaches the other party; but if before that time the offer is accepted, the party making the offer is bound, and the withdrawal thereafter is too late.

In this case it appears the defendants' letter of withdrawal was sent on the same day on which the notice of the plaintiff's acceptance of their previous offer was transmitted, and it has been argued that the onus is on the plaintiff to show that the sending of the acceptance preceded the sending of the letter of withdrawal. This position is not correct; it is quite immaterial to inquire whether the defendants' letter of the 16th, or the draft of the same date, was first sent.

Until the notice of the withdrawal of the offer actually reached the plaintiff, the offer was continuing, and the acceptance thereof completed the contract.

This point was expressly decided in Tayloe v. Merchants' Fire Ins. Co., 9 How. 390. That was a case arising upon an insurance contract, but the reasoning of the court on this question, and the principles decided, are applicable alike to all contracts made by correspondence between parties at a distance from each other.

Wheat and others v. Cross.

There the terms upon which the company was willing to insure were made known by letter, and it was held "that the contract was complete when the insured placed a letter in the post-office accepting the terms."

The court say, page 400, "we are of opinion that an offer under the circumstances stated, prescribing the terms of insurance, is intended and is to be deemed a valid undertaking on the part of the company that they will be bound according to the terms tendered, if an answer is transmitted in due course of mail accepting them, and that it cannot be withdrawn unless the withdrawal reaches the party to whom it is addressed, before his letter of reply announcing the acceptance has been transmitted."

We refer to the able opinion of Mr. Justice NELSON in the case just cited, without attempting to repeat the reasoning upon which it rests.

The rule we have stated as governing the present case is supported by many adjudged cases, some of which are cited in the appellee's brief. Of these we refer to Adams v. Lindsall, 1 B. & Ald. 681; Mactier's Adm'rs v. Frith, 6 Wend. 103. See also Dunlop v. Higgins, 1 H. of L. Cases, 381.

2d. The second ground of defense which was chiefly relied on in the argument, that the defendants made the offer under a mistake of fact as to the actual condition of the horse, and were therefore not bound by it, is, in our judgment, altogether untenable. Such an error or mistake as that in no manner affects the validity of the contract. In a case where there is a mutual mistake of the parties as to the subject-matter of the contract, or the price or terms, going to show the want of a consensus ad idem, without which no contract can arise, such a defense may be made.

But here the mistake of the defendants was in relation to a fact wholly collateral, and not affecting the essence of the contract itself. The vendees cannot escape from the obligation of their contract because they have been mistaken or disappointed in the quality of the article purchased. In the absence of a warranty the principle of caveat emptor applies, and the buyer takes the risk of quality upon himself.

In support of so familiar a principle no authority need be cited Judgment affirmed.

Oberndorf v. Union Bank of Baltimore.

OBERNDORF, appellant, v. UNION BANK OF BALTIMORE.

(31 Md. 126.)

Principal and Surety. Release of Surety. Part payment is reincipal. While a creditor cannot release or compound with the principal debtor without discharging the surety, before a surety can be exonerated from his responsibility upon the ground that there has been an unauthorized indulgence given or composition made with the principal debtor, it must be shown that it has been effected by express agreement four ded upon a valid consideration and legally binding on the creditor.

Part payment of the amount due will not discharge the surety, even where it is agreed that such part payment shall have that effect. Where a party is bound to pay a certain sum there is no consideration in contemplation of law for a promise that a less sum shall be received in satisfaction.

APPEAL from the superior court of Baltimore city.

In 1860 the firm of Stettheimer & Affelder assigned to the appellee certain collaterals to secure any liability then existing or to arise thereafter, with full power to the assignee to collect or compromise such collaterals if said firm made default, and apply the proceeds upon the firm's liability. In 1862 the firm failed, and in October of that year made a deed of trust of all their property to the appellant for the benefit of their creditors; at that time the appellee had on hand a portion of the said collaterals, among which was a note of Weiller Brothers & Co., which had matured January 11, 1862, and was in 1865 compromised by the appellee with them for fifty cents on the dollar.

A part of the liability of the first named firm to the appellees consisted of certain notes amounting to $3,186,42, drawn by Steiner Brothers & Co., and discounted for said firm of S. & A. by the appellees. These notes were compromised with said Steiner Brothers in 1865, for fifty cents on the dollar. One other note, drawn by A. Heilbrun, and discounted for said firm, was also settled for fifty cents on the dollar.

The appellee had also discounted for Frick, Phillips & Co. a note of S. & A., to the payment of which it applied money realized from the collaterals. The appellee collected enough to pay the liabilities of the firm of S. & A. to it in full, and in 1866 delivered to the appellant the remainder of the collaterals which were not collected

Oberndorf v. Union Bank of Baltimore.

The opinion sufficiently shows the questions at issue.

Henry Stockbridge and Charles Marshall, for appellants.

L. Nevitt Steele, for appellee.

ALVEY, J., delivered the opinion of the court.

There is no doubt of the general proposition, that if the creditor release or compound with the principal debtor, without the consent of the surety, although the principal debtor may be in insolvent circumstances, and the arrangement with him be, in truth, to the surety's advantage, it will nevertheless discharge the latter from all responsibility. The question whether the surety has been, in point of fact, actually damnified by such dealing with the principal debtor is not open to inquiry. It is his right to determine for himself what is, or is not, for his benefit. He must be left free to consider whether he will have recourse to his remedy against his principal or not; and if, by any act of the creditor, this right be taken from him, the law allows him to elect to consider himself discharged from the contract altogether. "For it is," says Lord LOUGHBOROUGH, in the leading case of Rees v. Berrington, 2 Ves. Jr. 540, "the clearest and most evident equity not to carry out any transaction without the privity of him who must necessarily have a concern in every transaction with the principal debtor. You cannot keep him bound and transact his affairs (for they are as much his as your own) without consulting him. You must let him ndge whether he will give that indulgence contrary to the nature of his engagement."

But, while such is the rule, before a surety or indorser can be. exonerated from his responsibility upon the ground that there has been an unauthorized indulgence given, or composition made with, the principal debtor, it must be shown that such indulgence or composition has been effected by some express agreement, founded upon a valid consideration, and which is legally binding on the creditor. Without sufficient consideration, the agreement would be a nullity, and consequently would bind no one. And the first question in this case is, whether the compromises and settlements made by the bank with Steiner Brothers & Co., and with Heilbrun, whereby fifty cents in the dollar were received on the notes discounted for Stettheimer & Affelder, had in them the elements of binding contracts, and such as could be enforced by the parties