Case ID: ad_2/html/0508-01.html
Source: Caselaw Access Project
Author: {"author": "Williams, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The Second National Bank of the City of New York, Respondent, v. Benjamin D. F. Curtiss and Benjamin Wright, as Executors, etc., of Charles Curtiss, Deceased, Appellants.
    
      JPraud—false representation — attesting a forged assignment of a stock certificate — acts not binding a, corporation.
    
    In an action brought to recover damages, resulting from the defendants’ testator’s fraudulent,attestation of an assignment of stock, it appeared that in May, 1873, a person named Westfall owned a certificate for fifty shares of stock in the Forty-second Street and Grand Street Railroad Company in New York; that about Appil 37, 1887, a person named Alien, the transfer agent of the company, who had in his possession a number of blank certificates of its stock signed by -its former president, filled out one of the blank certificates to correspond with Westfall’s real certificate, signed it as transfer agent, wrote upon it the name ■of Charles Curtiss as treasurer, placed the company’s seal 'upon it, and then wrote Westfall’s name as a signature to the blank assignment which was , printed on the back of the certificate. Allen then applied to the plaintiff for a loan, offering the certificate as security for his note, which the plain tiff refused to accept unless Westfall’s signature was attested. Allen then procured Charles Curtiss, the defendants’ testator, to sign the assignment as a witness to the forged signature of Westfall, upon the faith of-which the plaintiff accepted the . certificate, the signature of Charles Curtiss being known to its cashier.
    The note was not paid and the present action was brought to recover the damages resulting from the fraudulent attestation by Charles Curtiss as to the signature of Westfall, the complaint alleging that the plaintiff had relied upon the representation thus made;, that it was false, and that the plaintiff had suffered damage because of it.
    
      Meld, that the action could be maintained as one for fraud;
    That the act of Charles Curtiss was a representation by him that the signature to the assignment of the certificate was made by Westfall in his presence, or was acknowledged by Westfall in his presence, and that he had become a wit-mess at Westfall’s request;
    That as Charles Curtiss knew that Allen intended to use the certificate to procure a loan, and that his signature would be relied upon by the party making the loan, and falsely asserted that a material fact was true and thereby induced another to act upon the fact to his prejudice, an action for deceit would lie against him or his estate;
    That the acts of Allen as treasurer and of Charles Curtiss who was then president of the railroad company in illegally assigning the stock, were not within the scope of their employment and did not bind the company.
    . Appeal by the defendants, Benjamin D. F. Curtiss and another, as executors, etc., of Charles Curtiss, deceased, from a judgment of the Court of Common Pleas for the city and county of New York in favor of the plaintiff entered upon the report of a referee.
    
      The action was brought to recover damages for false representations made by the defendants’ testator by his signing as a witness an assignment to the plaintiff of stock in a street railroad company. The transaction complained of occurred April 27, 1887 The plaintiff was a national bank doing business in New York city. The Forty-second Street and Grand Street Railroad Company was a corporation operating a street railroad in the city. It had been in existence since 1863, and its stock was selling at 210. It was well known to the plaintiff,, with whom it kept a bank account. The defendants’ testator was president of the railroad company, and one Allen was its treasurer and transfer agent. The certificate of stock which purported to have been assigned bore data May 1, 1872. At that time one Green was president of the railroad company, and the defendants’ testator was its treasurer, and Allen was its transfer agent. From 1868 until 1887 Allen kept the stock transfer book, stock ledger, dividend book and stock certificate book; and.these books, with the seal of the company, were kept in his desk. While-Green was president of the company, in expectation of going abroad, temporarily, he signed a number of blank certificates of stock to be used while he was away when transfers of stocks were necessary to-be made, and left them in the possession of Allen, who still had. some of them in 1887.
    May 1,1872, one Westfall, of Illinois, became the owner of fifty shares of the stock of the railroad company, and a certificate therefor was issued to him at that time, which he continued to hold on the 27th day of April, 1887, and long thereafter, and which he assigned to no one. Allen knew the contents of such certificate from having issued it himself, and having the books relating to the stock certificates in his possession. Shortly before April 27, 1887, Allen, desiring to procure a loan from the plaintiff, took one of the blank certificates which had been signed by Green, as president, and filled it out to correspond with Westfall’s real certificate for fifty shares, including the number and date. He put the company’s seal upon it, and wrote his own signature to it as transfer agent, and also wrote the name of defendants’ testator thereto as treasurer. The certificate was then a duplicate of the real certificate except that the name of defendants’ testator was written by Allen instead of by the testator himself. Alien then wrote Westfall’s name as a signature to the blank assignment printed on the back of the certificate. ■ He applied to the plaintiff for a loan of $7,500 on his note, • to be secured by this fifty shares of stock. He did not, have the certificate with him when he made the application, and he was then told by the plaintiff’s cashier that he must have the assignment on the back of the certificate witnessed by some person whose signature was known to the plaintiff. Allen procured one Murray and the defendants’ testator to sign the assignment as witnesses to the same, saying that he was going to use the stock for the purpose of a loan. The two witnesses signed at the same time. Allen then took the certificate to the plaintiff, the cashier looked at the signature of the defendants’ testator, recognized the handwriting, which he was. well acquainted with, and said that would do, and he made the loan to Allen, relying on the signature of defendants’ testator as such witness. He knew nothing of Westfall or his signature. The note was the ordinary stock note payable on demand. ■ Green, formerly president, died in 1887 and defendants’ testator in 1888. Many irregularities on the part of Allen, in. respect to the certificates of stock of the company came to light in 1889, and he was indicted, convicted and sent to State’s prison. Nothing was paid upon this note. The plaintiff demanded a transfer of the fifty shares of stock upon the company’s books, but it was refused, the real nature* of the transaction having become known, and subsequently this action was begun.. The signature of Westfall to the assignment made by Allen was not an imitation of Westfall’s handwriting. The defendants’ testator was more or less acquainted with Westfall’s handwriting.
    The complaint alleged that the attestation of defendants’ testator ' to the signature of Westfall to the assignment on the back of the certificate -was wrongful and fraudulent, and was made by the defendants’ testator with the intent or knowledge that it should or would be relied or acted upon by the holder or assignee of the certificate, and the referee in his decision found that the defendants’ testator did state and represent to the plaintiff that Westfall had executed the assignment in the presence of the defendants’ testator; that this representation and statement was false, and was known by him at the time to be false, and was made by him fraudulently and with the intent to deceive the plaintiff; that the plaintiff relied upon the statement and representation: -in making -the loan^ and it ' would not have been made if plaintiff had not believed the statement and representation to be true, and that the plaintiff had suffered damage thereby in the amount of the loan and interest.
    
      John A. Taylor, for the appellants.
    
      William Allen Butler and John JShotman, for the respondent.
   Williams, J.:

The action was based upon the allegation of fraud and the decision found that there was fraud. The only representation made by the defendants’ testator was by means of the act of subscribing his name as a witness to the assignment of the stock. That act was a statement and representation by the testator,-in effect, that the signature to the assignment was made by Westfall in the testator’s presence, or was acknowledged by Westfall in testator’s presence, to be his (Westfall’s) signature, and that the testator thereupon at West-fall’s request wrote his name as witness thereto. Such was fairly the meaning of the act in law and, as generally understood in the business community. (1 Greenl. on Ev. [14th ed.] §§ 569, 569a.) It does not seem to us that it could be fairly said that this act implied merely that the testator believed or was of the opinion that the signature of Westfall was. his genuine handwriting. Regarding this act as a statement and representation of the facts we have referred to, there can be no doubt but that the conclusion of fraud so far as it was essential to support the judgment necessarily followed. The testator stated and represented as facts what he knew to be untrue. Westfall did not sign the assignment in the presence of the testator, nor did he acknowledge the signature to be his, and the testator did not thereupon become the witness thereto at the request of Westfall. The testator was informed and knew at thei time he signed his name as a witness to the assignment that the stock was tfo be used by Allen to secure a loan of money, and he understood, therefore, that his signature as a witness would be relied upon by the party making the Loan as establishing the actual execu- ( tian of the assignment. , Nevertheless, instead of stating the facts truly as they occurred, which would have avoided any injury to the plaintiff, he wholly misrepresented the facts and thereby brought about the injury and damage complained of in this case.

The only question is, whether there was sufficient evidence of an intent to defraud, to support the finding, of the referee and the judgment entered thereupon. It clearly appears that the defendants’ testator made the representations as of his own knowledge for the purpose of inducing the loan; that is, with knowledge that they were to be made-use of to secure the loan, and that they would be relied upon by the person making the man. The purpose of the testator in thus asserting his own personal knowledge must have been to induce a belief of the facts represented, and the inference of fraud, therefore, necessarily resulted. This principle of law has been frequently asserted and is supported by abundant authority. Andrews,. Ch. J., in Kountze v. Kennedy (147 N. Y. 124) said It has been held that one who falsely asserts a material fact, susceptible of accurate knowledge, to be true of his own knowledge, and thereby induces another to act upon the fact represented, to his prejudice, commits a fraud which will sustain an action for deceit. This -is not an exception to, but an application of the principle that actual fraud must be shown to sustain such an action.” . .

We are of the opinion that fraud was properly found by the referee so far as necessary to enable the plaintiff to maintain the action. -

It is said that no damage resulted from this act of the defendants’ testator, because the plaintiff could have enforced against the railroad company its title to the stock; that Allen and the testator were the officials and agents for the railroad company, and acted, within the scope of their authority as such in the assignment of the stock to the plaintiff. In Fifth Avenue Bank v. R. R. Co. (137 N. Y. 231) the act complained of was the issue of the stock itself, and that was clearly within the course of employment of. the officers of the company. Here, however, the act which caused the damage was not the original issue of the .stock of the company, but was the illegal assignment of stock already issued and held by a stockholder, and this act was not within the scope of the employment of such officers, and was not done as such officers, and was not binding upon the company itself. The damage here resulted solely from the act of the testator himself. The acts of Allen would not have produced the result, the procuring of the loan from the plaintiff. If the assignment had been really executed by Westfall, it would have carried good title to the fifty shares of stock to the plaintiff irrespective of the question whether the certificate itself was the one actually issued by the railroad company or not. If the whole certificate had been merely a copy and not the original at all, still the fifty shares of stock being really owned by Westfall, his .execution and delivery ®f the assignment on the back of the certificate, would have operated to give plaintiff good title to the stock described therein, the same as though the assignment had been written upon the back of the original certificate. The language of the assignment in effect was: For value received I hereby.sell, assign, and transfer to plaintiff the within fifty shares of the within mentioned stock, and hereby authorize the plaintiff as attorney to make the necessary transfer on the boobs of the company.” It was only necessary to refer to the body of the certificate itself for the purpose of identifying the stock intended to be assigned, and this would be made to appear as well by a copy as by the original certificate, the copy reading precisely the same as the original.

The damage, therefore, resulted solely from the invalidity of the assignment, and plaintiff was "injured by relying upon the act, statement and representation of defendants’ testator that, to his personal knowledge, the- assignment Was executed by Westfall himself.

We conclude that the decision of the referee was correct and that the judgment should be affirmed, with costs.

Fan Brunt, P. J., Barrett, Rumsey and Patterson,. JJ.5 concurred.

Judgment" affirmed, with costs.