Superior Court of Cincinnati. 103 If the castings were not fit for the purpose for which they were furnished, the plaintiff was guilty of the breach of the warrranty implied in their sale that they should be suitable for the purpose, and such damages might be recovered as in the contemplation of the parties, would flow from the breach of an implied warranty. The measure of damages ordinarily, upon a breach of a warranty of personal property, is the difference between the actual value of the article and the value it would have possessed had it conformed to the warranty. Street v. Chapman, 29 Ind., 142; Sedgwick on Damages, p. 344, (6th edition); Sutherland on the Measure of Damages, vol. II, p. 425. At the time of making the contract for the delivery of the castings and material in question, it cannot reasonably be supposed that the parties had in contemplation the fact that a breach of warranty would result in a loss to the business and reputation as elevator builders of the party to whom the castings were furnished. In the case of Woodworth v. Woodburn et al., 20 Ill., 184, the petition declared on a promissory note for spokes and hubs sold the plaintiff by the defendant. The defense was a part failure of the consideration on account of a breach of warranty of the quality of the spokes and hubs. The defendants sought to introduce evidence of loss to their business arising from difference in value on account of the spokes being green or unsuitable for ready use. The court, in sustaining an objection to evidence of this character, held, that to entitle the party to such damages, it should be specially claimed in the declaration, with proof that the warranty was made with express reference to such damages. In the case of Blanchard v. Ely et al., 21 Wend., 342, the court held, that in an action for the recovery of the price stipulated for the building of a steamboat, the plaintiff was entitled to recover the full amount, without any deduction by way of recoupment of damages to the defendant in consequence of damages sustained by him for the loss of trips and the profits resulting therefrom occasioned by defects in the boat or its machinery. Cowen, J., says on page 348: "In short, it will be seen by the cases cited and many more, that on the subject in question, our courts are more and more falling into the track of the civil law, the rule of which is thus laid down by a learned writer: 'In general, the parties are deemed to have contemplated only the damages and interest which the creditor might suffer from the non-performance of the obligation in respect to the particular thing which is the object of it; and not such as may have been accidently occasioned thereby in respect to his own affairs.' 1 Evans' Poth. 91, Lond. ed. 1806.” In the case of Rhodes v. Baird, 16 Ohio St., 573, an action was brought on a contract to which the defendant agreed to execute a lease to the plaintiff for a term of years, of certain lands on which to plant and cultivate a peach orchard. The defendant failed to make the lease, and evicted the plaintiff from the premises after the peach trees had been planted and within years from the time the plaintiff went into possession. The plaintiff, on the trial, was permitted to introduce evidence of the probable profits that might, in the future, be realized from the orchard, but it was held to be error, because the evidence as to probable future profits, was incompetent as furnishing a basis for the assessment of damages. The court held that such evidence was uncertain and speculative in its nature, and in a great degree conjectural. 103 Knorr et al. v. Reedy et al. In the case of Gaar, Scott & Co. v. Snook, 1 Circ. Dec., 142, the plaintiff sought to recover damages for loss of profit on a contract on the sale of a steam saw-mill and attachment. The mill failed to do the work which it was warranted to perform, and the defendant was unable to fulfill his contract. In an action to recover the purchase price, the defendant claimed damages resulting from a loss occasioned by the failure of the plaintiff to furnish suitable saws according to the terms of said warranty, whereby the defendant was prevented from filling a contract made after the delivery of said mill, for the sawing of a lot of logs, and was deprived of the profits thereof. The court lays down the doctrine that the law does not hold one liable for all the consequences that may follow the breach of his contract; if it were so, his liability would be without limit, for it would continue as far as the consequences of this act could be traced. But the law wisely limits liability to direct and immediate effects of the breach of a contract. The damages claimed in this defense are not of that character. They resulted remotely from the fact that the plaintiff failed to finish the mill according to the contract, and are not the natural and proximate consequences of the breach of the contract. The damages arising upon a breach of contract of this character to the business and reputation of the plaintiffs as elevator builders, would necessarily be uncertain and, speculative in their nature, and in a great degree conjectural. The demurrer will be sustained. Lowrey Jackson, Meyers & Wright, for the demurrer. BANK CHECKS-NEW TRIAL. [Superior Court of Cincinnati, General Term, 1892.] METROPOLITAN BANK v. C., H. & D. R. R. Co. 105 1. A finding of fact in Special Term will not be set aside in General Term unless clearly contrary to the weight of the evidence. 2. No privity of contract exists between the holder of a check and the bank upon which it is drawn; and no action can therefore be maintained against a bank by the holder of a check, unless the bank has accepted the same. SMITH, J. J. E. Ash was a depositor with the Metropolitan Bank of this city, and on the tenth of May, 1886, had on deposit with said bank, $547.00. Prior to said date, the bank had discounted for Ash a note for $141.00, made payable to him by one ; and falling due May 10, 1886; and Ash had indorsed the note to the bank who became the owner and holder of the same. On the said tenth of May, Ash gave his check on said bank to the C., H. & D. R. R. Co., for $338.31, and on the eleventh of May, the Railroad Company presented the check to the bank for payment, but the same was refused upon the ground that there were not sufficient funds on deposit to the credit of Ash to meet the check. Upon the twelfth of May, Ash made an assignment under the insolvent laws for the benefit of his creditors. Superior Court of Cincinnati. 105 Upon the refusal of the bank to pay the check held by the Railroad Company it began an action against the bank to recover the amount of the check, and upon a trial of the action in the court below recovered a judgment against the bank for such amount. The bank now prosecutes error to reverse said judgment. The refusal of the bank to pay said check presented upon the eleventh as aforesaid, is based upon two grounds. First-That at the time Ash became a depositor with the bank an agreement was entered into between him and the bank, that in case the bank discounted any paper for him and the same was not paid at maturity, it should be charged up to his account; that the note of $141 which was discounted for Ash by the bank and upon which he was liable as indorser was within the terms of this agreement; that it was not necessary for the bank to protest the paper in order to fix the liability of Ash, and, that immediately upon the failure of the maker to pay it upon maturity the bank had the right to charge it up to his account, which it accordingly did; that upon the same day, viz., the tenth of May, said bank honored a check of Ash for $205.00, and this amount taken with the amount of the note charged against the account as aforesaid, reduced the amount on deposit to his credit to $201.08; and that therefore when the check of Ash for $338.31 in favor of the C., H. & D. R. R. Co. was presented on the eleventh of May there were not sufficient funds to pay the same, and the payment therefore was refused. It will appear from the above statement that unless the bank can establish by sufficient proof the alleged agreement between it and Ash with reference to charging into his account paper discounted for him, and upon which he might be liable as indorser without protesting the same, then there were sufficient funds in said bank on said eleventh day of May to pay the check of the Railroad Company; because in that event the only deduction which the Bank was entitled to make from the deposit of $546.08 was $205.00, the amount of the check which it had honored and paid as aforesaid. The trial judge found that the Bank had failed to prove that any such agreement was entered into between it and Ash, and as such finding is not clearly contrary to the weight of the evidence we are unwilling to disturb the judgment of the court upon that ground. Second-We are thus brought to a consideration of the second ground upon which the bank defends against this action. This ground is that no privity of contract exists between the holder of a check and the bank upon which it is drawn; and that therefore no right of action exists in the holder against the bank until the bank has accepted the check. It is well settled in the United States courts "that a check, unless accepted by the bank, will not sustain an action at law by the drawee against the bank, as there is no privity of contract between them." Laclede Bank v. Schuler, 120 U. S., 514; and the reason for the rule is clearly set forth by Mr. Justice Davis in Bank of the Republic v. Millard, 10 Wallace, 156, where it is said: "As checks on bankers are in constant use, and have been adopted by the commercial world generally as a substitute for other modes of payment, it is important for the security of all parties concerned that there should be no mistake about the status which the holder of a check sustains towards the bank on which it is drawn. It is very clear that he can sue the drawer if payment is refused, but can he also in such case sue the bank? It is conceded that the depositor can bring assumpsit for the breach of contract to honor his checks, and if the holder has a similar right, then the anomaly is presented of a right of action upon one promise, for the same thing, existing in two distinct persons at the same time. On principle there can be no foundation for an action on the part of the holder, unless there is a privity of contract between him and the bank. How can there be such a privity when the bank owes no duty and is under no obligation to the holder? The holder takes the check on the credit of the drawer, in the belief that he has funds to meet it, but in no sense can the bank be said to be connected with the transaction. If it were true that there was a privity of contract between the banker and the holder when the check was given, the bank would be obliged to pay the check, although the drawer before it was presented, had countermanded it, and although other checks, drawn after it was issued, but before payment of it was demanded, had exhausted the funds of the depositor. If such a result should follow the giving of checks, it is easy to see that bankers would be compelled to abandon altogether the business of keeping deposit accounts for their customers. If then, the bank did not contract with the holder of the check to pay it at the time it was given, how can it be said that it owes any duty to the holder until the check is presented and accepted? The right of the depositor, as was said by an eminent judge, is a chose in action, and his check does not transfer the debt or give a lien upon it to a third person without the assent of the depositary. This is a well established principle of law, and is sustained by the English and American decisions. The few cases which assert a contrary doctrine, it would serve no useful purpose to review." In a recent decision Covert v. Rhodes, 48 Ohio St., 66, our Supreme Court adopts the reasoning of the U. S. Supreme Court in the case of Bank of Republic v. Millard, supra, as to the relation which the holder of a check bears towards the bank upon whom it is drawn. Thus it says "The obligation of the bank to its general depositors is not that of bailee or trustee, but that of debtor simply. It does not agree to pay checks or bills drawn on it out of any particular fund, nor does it retain any particular funds for that purpose. As said by Mr. Justice Davis in Bank of Republic v. Millard, 10 Wallace. 162, 155, when deposits are received by the bank "unless there are stipulations to the contrary they belong to the bank, become part of its general fund, and can be loaned by it as other money. The banker is accountable for the deposits which he receives as debtor, and he agrees to discharge those debts by honoring the checks which the depositor shall from time to time draw on him. The contract between the parties is purely a legal one, and has nothing in the nature of a trust in it." The authorities are without exception to that effect. There is little, if any conflict of authority upon the proposition that on notice of the drawer's death, before acceptance by the bank, its right to pay the bill or check ceases, and its indebtedness to the drawer becomes assets of his estate. The reason we apprehend is, not because the bank is the agent of the drawer for the disbursement of a particular fund, and the agency is terminated by the death of the principal, but because, before acceptance, the title remains in the drawer, and devolves immediately on his death upon his personal representatives by operation of law. The authorities are also nearly uniform to the effect, that the holder of such draft or check cannot maintain an action against the drawee without the latter's acceptance. The reason given is that without acceptance there is no privity between them. It would Superior Court of Cincinnati. 105 seem clear that if before acceptance, the check or draft operated as an equitable assignment pro tanto, such action might be maintained, for as has already been seen, an equitable assignment transfers the fund, and the refusal of the drawee to pay, would be a conversion by him of the payee's property, for which suit might be at once brought." The language of our Supreme Court leaves no doubt that they have adopted the rule of the U. S. court that no privity exists between the holder of a check and the bank upon which it is drawn until the bank has accepted the same. And as the Metropolitan Bank has never accepted the check drawn upon it by Ash in favor of the C., H. & D. R. R. Co., it follows that said company cannot maintain an action against the bank to recover the amount thereof. The principle is not confined to the U. S. courts and our state. As our Supreme Court says: "The authorities are also nearly uniform to the effect that the holder of such draft or check cannot maintain an action against the drawee without the latter's acceptance," and the following authorities are in point as bearing out this statement: Carr v. Bank, 107 Mass., 45; Bank v. Bank, 46 N. Y., 82; Rively v. Bank, 83 N. Y., 318, Sayler v. Bushong, 100 Pa., 27; Moses v. Bank, 34 M1., 580; Pickle v. Bank, 88 Tenn., 380; Wentrick v. Bellows, 12 Bush., 139; Baitcher v. Bank, 24 Pac. Rep., 582; Podrys v. Delaware, 13 La., 98; Hopkinson v. Foester, 19 L. R. Eq., 74; Harrison v. Wright, 100 Ind., 524; Creveling v. Bank, 46 N. J. Law, 255. As the Supreme Court did not consider it necessary in its decision in Covert v. Rhodes to refer to any previous decisions of that court, which might be apparently in conflict with the principle laid down in that case, we have not felt under any necessity to do so. We are of the opinion, however, that an examination of former decisions in that court which may appear to be in conflict with Covert v. Rhodes are not necessarily so, and that most of the expressions which might appear to announce a doctrine different from that of Covert v. Rhodes, are either obiter dicta, or occur in cases in which the bank was not a party. Undoubtedly there are decisions in this state of courts lower than the Supreme Court where a different doctrine is announced, but it is not necessary in view of the decision in Covert v. Rhodes to examine them. It is only fair to the court below to say that at the time the decision in this case was rendered Covert v. Rhodes had not been decided. Judgment reversed and case remanded. MOORE, J., and HUNT, J., concurred. Pogue, Pottenger & Pogue, for plaintiff. |