Case Name: Saul Oliner and Isidor Oliner, Respondents, v. Benjamin Goldenberg and John D. Nussbaum, Defendants, Impleaded with Herman Gronich and Isaac Gronich, Appellants
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1915-07-09
Citations: 168 A.D. 874
Docket Number: 
Parties: Saul Oliner and Isidor Oliner, Respondents, v. Benjamin Goldenberg and John D. Nussbaum, Defendants, Impleaded with Herman Gronich and Isaac Gronich, Appellants.
Judges: 
Reporter: Appellate Division Reports
Volume: 168
Pages: 874–884

Head Matter:
Saul Oliner and Isidor Oliner, Respondents, v. Benjamin Goldenberg and John D. Nussbaum, Defendants, Impleaded with Herman Gronich and Isaac Gronich, Appellants.
First Department,
July 9, 1915.
Bills and notes — bona fide holder for value — bad faith — evidence creating suspicion insufficient.
In an action upon a cheek it appeared that one the payee, had stolen money from his employers in Austria and deposited it with a firm in Europe, whose correspondents in New York in good faith sent a check therefor to G. at the latter place; that G. indorsed the check and delivered it to N. under circumstances sufficient to show bad faith; and that N. presented the check to the plaintiffs who cashed it.
Held, on all the evidence, that the plaintiffs were bona fide holders for value, and entitled to recover from the drawers of the check.
Evidence creating or sufficient to create a suspicion in the minds of the plaintiffs concerning the transaction was not sufficient; there must be actual proof of bad faith on the part of a purchaser of a negotiable instrument.
Clarke and Dowling, JJ., dissented, with opinion.
Appeal by the defendants, Herman Gronich and another, from an order and determination of the Appellate Term of the Supreme Court, entered in the office of the clerk of the county of New York on or about the 26th day of April, 1915, reversing a judgment of the City Court of the City of New York in favor of the appellants and granting a new trial.
Morris Cukor, for the appellants.
Alexander Pfeiffer of counsel [Alfred D. Lind with him on the brief], for the respondents.

Opinion:
Ingraham, P. J.:
The check in question was a negotiable instrument, issued by the bankers payable to the order of Goldenberg. It represented money stolen by Goldenberg from his employers in Austria, who are the defendants Gronich in this action, Golden-berg having deposited the money with the correspondents of the drawers of the check in Europe to be transmitted to Goldenberg in the United States. They sent to Goldenberg at New York a check for this money. There is no question but what the bankers acted in good faith when they sent this check to Goldenberg and without notice of the defendants' claim. Goldenberg indorsed the check and delivered it to one Nussbaum. The circumstances under which it was delivered to bim would be sufficient to show bad faith on his part. So as between him and the defendants the defendants were entitled to the proceeds of the check. Nussbaum, however, took the check to,the plaintiffs, who cashed it for him, and, if they received this check in good faith, without notice of any infirmity, they were entitled to recover it against the makers, payment having been subsequently stopped by the bank upon which it was drawn.
The court found that Nussbaum, with full knowledge of all the facts and circumstances, and with a wrongful and fraudulent intent and purpose, cashed said check at the place of business of the plaintiffs and received in exchange therefor $1,785.62; and further found that the cashing of said check was not had and done in the ordinary, usual and regular course of their business, but as an extraordinary and unusual transaction for the plaintiffs as well as for defendant Nussbaum. Now, the only fact upon which this finding can be based was that hiussbaum came to the plaintiffs' banking house at five o'clock in the afternoon on the day of the date of check and asked plaintiffs to cash it. Nussbaum had been a depositor in the plaintiffs' bank, and plaintiffs, relying upon Nussbaum's indorsement, actually cashed the check and paid the money for it. The court further found that the circumstances and conditions surrounding the presentation to the plaintiffs of said check and the demand for the cashing of same by Nussbaum created or ought to have created a suspicion in the minds of said plaintiffs concerning the entire transaction and ought to have put them on their guard before delivering the money to said Uussbaum. But assuming this finding was sustained by the evidence, still I think the plaintiffs are entitled to recover. There is no finding that plaintiffs acted in bad faith or with knowledge of the fact that this check represented money stolen by the defendant. But it is found that the " circumstances and conditions surrounding the presentation to plaintiffs of said check created or ought to have created a suspicion in the minds of said plaintiffs concerning the entire transaction and ought to have put them on their guard. " But as I understand the rule, this is not sufficient. There must be actual proof of bad faith. It is settled in this State that something more than suspicion is required to prove bad faith on the part of a purchaser of a check or promissory note. (See Cole v. Harrison, 167 App. Div. 336; Cheever v. Pittsburgh, etc., R. R. Co., 150 N. Y. 59; Second National Bank v. Weston, 161 id. 520; Meg. Inst. Law [Consol. Laws, chap. 38; Laws of 1909, chap. 43], § 95.)
The plaintiffs' cashing the check, without actual notice of the defendants' claims, seems to me to have constituted them bona Tide holders for value and entitled them to recover from the .drawers of the check for the reason, first, that there was no evidence that plaintiffs acted in bad faith, and, second, if plaintiffs were put on inquiry they could only inquire of the drawers of the check or bank upon which it was drawn, and there is no evidence in the case to show, if they had made such inquiry on the night on which the check was cashed or the next morning, that they would have received any notice of any infirmity in the check or that Goldenberg had not a right to cash it. I think, therefore, the determination of the Appellate Term should be affirmed, with costs.
Scott and Hotchkiss, JJ., concurred: Clarke and Dowling, JJ., dissented.