Case Name: Hudson Iron Company, Appellant, v. Stephen L. Mershon and Frederick Crane, Respondents
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1912-03-08
Citations: 149 A.D. 556
Docket Number: 
Parties: Hudson Iron Company, Appellant, v. Stephen L. Mershon and Frederick Crane, Respondents.
Judges: 
Reporter: Appellate Division Reports
Volume: 149
Pages: 556–558

Head Matter:
Hudson Iron Company, Appellant, v. Stephen L. Mershon and Frederick Crane, Respondents.
First Department,
March 8, 1912.
Bills and notes — replevin to recover possession of notes — fraud and deceit — contributory negligence as defense.
In a suit for replevin to recover possession of three notes made by the plaintiff to the order of its president and by him indorsed and delivered to the defendant M., the plaintiff’s evidence tended to show that the notes were delivered to M. to be by him transferred to a third party, while the defendant’s evidence tended to show that the notes were given to M. for services. M. indorsed and delivered two of the notes to defendant C., who claims to be a holder in due course for value. Plaintiff testified that M. obtained possession of the notes by fraud and deceit.
Held, that under the evidence a judgment awarding C. possession of the two notes should be affirmed but the judgment giving defendant M. possession of the third note should be reversed.
Contributory negligence is not a defense to an action for fraud and deceit.
A person who is negligent in reposing confidence in a wrongdoer is not thereby prevented from recovering his property from the latter.
Appeal by the plaintiff, the Hudson Iron Company, from a judgment of the Supreme Court in favor of the defendants, entered in the office of the clerk of the county of New York on the 13th day of May, 1911, upon the verdict of a jury, and also from an order entered in said clerk’s office on the 15th day of May, 1911, denying the plaintiff’s motion for a new trial made upon the minutes.
William M. Wherry, Jr., for the appellant.
Benjamin F. Spellman, for the respondents.

Opinion:
Miller, J.:
This is a replevin suit to recover possession of three notes, each for the sum of $1,666.66, made by the plaintiff to the order of Harold G-. Villard, its president, and by him indorsed and delivered to the defendant Mershon. The plaintiff's evidence tends to show that the notes were delivered to said defendant to be by bim delivered to a third party. The defend ants' evidence tends to show that the notes were given to the defendant Mershon for services. Mershon indorsed and delivered two of the notes to the defendant Crane and retained the third one. The defendant Crane claims to be a holder in due course for value.
The court charged at the request of the defendants that, if Villard, the plaintiff's president, in delivering the notes to the defendant Mershon did not act "as an ordinary prudent and careful man would under the same circumstances," the jury must find for the defendants. The jury found a verdict for both defendants. Upon the plaintiff's evidence Mershon obtained possession of the notes by fraud and deceit. But under the charge of the court the jury were permitted to find that, if Villard, the plaintiff's president, was negligent in trusting Mershon, the latter acquired good title to the notes even as between himself and the plaintiff. The hare statement of the proposition refutes it. It is not the law of this State that contributory negligence is a defense to an action for fraud and deceit or that a person who is negligent in reposing confidence in a wrongdoer may not recover his property from the latter. (See Wilcox v. American Telephone & Telegraph Co., 176 N. Y. 115.)
It is impossible to say upon what theory the jury rendered their verdict, and, although there were other requests charged by the court which were somewhat inconsistent with the one in question, it is impossible to say that the jury were not misled. Indeed, it is quite probable that they were misled because considerable emphasis appears to have been put upon the assertion that Villard, upon the plaintiff's theory of the case, was negligent in delivering the notes to Mershon.
The defendant Crane testified that he discounted the notes at Mershon's request in reliance upon the latter's statement that they had been given him for services and without any knowledge whatever that they were being diverted from the purpose for which they were given, and that he paid to Mershon the face of the notes, less interest. In support of that testimony his check for the amount of the two notes less interest was produced, and it was established that Mershon procured the check to be certified and obtained the money on it. We are unable to discover a single circumstance tending to discredit that testimony. It is neither improbable nor inconsistent with any other evidence in the case, and we think it would be unfair to the defendant Crane to grant a new trial for an error which was prejudicial only because the issue between the plaintiff and the defendant Mershon was sharply contested. As a matter of fact, the plaintiff has united two causes of action against different parties, though the action appears to have been brought on the theory that all three notes were transferred to, and held by, the defendant Crane. We can now effect a severance and do justice at the same time by affirming the judgment as to the defendant Crane, and by reversing as to the defendant Mershon and granting a new trial.
The judgment in so far as it adjudges that the defendant Crane is entitled to the possession of two notes in suit affirmed, with costs, and the judgment in so far as it adjudges that the defendant Mershon is entitled to the possession of one note for $1,666.66 reversed and a new trial granted, with costs to appellant to abide the event.
Ingraham, P. J., McLaughlin, Laughlin and Dowling, JJ., concurred.
Judgment as to defendant Crane affirmed, with costs, and as to defendant Mershon reversed and new trial ordered, costs to appellant to abide event. Order to be settled on notice.