Case Name: BANK OF NEW YORK v. AMERICAN DOCK & TRUST CO.
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1893-06-30
Citations: 24 N.Y.S. 406
Docket Number: 
Parties: BANK OF NEW YORK v. AMERICAN DOCK & TRUST CO.
Judges: 
Reporter: West's New York Supplement
Volume: 24
Pages: 406–408

Head Matter:
(70 Hun, 152.)
BANK OF NEW YORK v. AMERICAN DOCK & TRUST CO.
(Supreme Court, General Term, First Department.
June 30, 1893.)
Warehouse Companies—Fraudulent Receipts—Bona Fide Holders.
One loaning money on a warehouse receipt signed by the president o£ the warehouse company, and acknowledging receipt of certain goods from such president, is put on inquiry, and cannot rely on the representations of such officer, they being in such case only those of an individual.
Exceptions from circuit court, New York county.
Action by the Bank of New York, National Banking Association, against the American Dock & Trust Company, for damages for issuing a spurious warehouse receipt. Judgment for defendant. Plaintiff moves for new trial on exceptions ordered to be heard in the first instance at general term.
Motion denied.
Argued before VAN BRUNT, P. J., and FOLLETT and BARRETT, JJ.
Gibson & Whiting, (John B. Whiting, of counsel,) for appellant.
Kenneson, Crain & Ailing, (Thaddeus D. Kenneson, of counsel,) for respondent.

Opinion:
BARRETT, J.
The main question here is whether the plaintiff is to be treated as a bona fide holder of the warehouse receipt upon the faith of which it advanced money to the defendant's president, Stone. This warehouse receipt was signed, "M. W. Stone, Prest.," and it acknowledged the receipt on storage at the American docks, for account of M. W. Stone, of 162 bales of cotton. This acknowledgment was false. The company had received no such cotton. Stone had simply prepared and signed the paper to raise money thereon for his own private purposes. There is no question here of general authority. Both the president and the treasurer were expressly authorized by the board of directors to sign warehouse receipts. If, in the present case, therefore, this particular receipt had been made out in the name of some one disconnected with the company, and the plaintiff had innocently and in good faith advanced money to such person thereon upon the strength of official representation, a recovery could doubtless have been had. There is ample support for this proposition in the case of Fifth Ave. Bank v. Forty-Second St. & G. St. Ferry R. Co., decided by the court of appeals, and reported in 33 N. E. Rep. 378. But here the receipt was made out in the name of the president, and was signed by him. The plaintiff knew that the Stone named in the receipt was the same person who, as president, had signed it. The implication was that the defendant's president had attempted to contract with himself as an individual. The instrument not only acknoviedged the receipt of the goods, but specified the terms and conditions of the pretended bailment. Upon the presentation of such a document, to be used for Stone's personal benefit, the plaintiff was at once put upon inquiry, and was bound to verify its genuineness in a proper way. It certainly could not rely upon the representation of- the officer, whose very appearance in the transaction was what called for the inquiry. Any representation that he made would necessarily have been individual, and not official. The law does not recognize his acting in the dual capacity. He cannot at the same moment borrow the money as an individual and as án officer represent the genuineness of the security. The case on this head is directly within the principle enunciated in Manhattan Life Ins. Co. v. Forty-Second St. & G. St. Ferry R. Co., 19 N. Y. Supp. 90, and in Moores v. Bank, 111 U. S. 164, 4 Sup. Ct. Rep. 345. There is a plain distinction between the present case and those cases where the instrument simply acknowledged the officer's interest in the company. This distinction was pointed out in Titus v. President, etc., 5 Lans. 250, 61 N. Y. 237; and the rule laid down in Claflin v. Bank, 25 N. Y. 295, was not questioned. That rule, in substance, is that, when what purports to be the company's contract shows upon its face the officer's use of his official position for his own benefit, every one to whom the contract comes is put upon inquiry. See, also, Neuendorff v. Insurance Co., 69 N. Y. 389; Pratt v. Insurance Co., 53 Hun, 101, 6 N. Y. Supp. 78; Farrington v. Railroad Co., 150 Mass. 406, 23 N. E. Rep. 109. The plaintiff was permitted to show the actual transaction between it and Stone; that is, the loan of the money relying upon the warehouse receipt, and in ignorance of its character. What was excluded was Stone's representations. But these representations, as we have seen, were not official. The representations were made at the bank, when Stone applied for the loan, and were simply Ms individual statements with regard to his own private business. Even if admitted, they would not have helped the plaintiff, for notMng that Stone could have said at the time and under the circumstances would have absolved it from the duty of further inquiry; and no other inquiry was made. The exceptions should be overruled, and judgment ordered dismissing the complaint, with costs of this application and of the trial. All concur.