Court Opinion

ID: 5257083
Source: CourtListenerOpinion
Date Created: 2022-01-06 18:31:12.238463+00
Date Added: 2024-06-11T08:28:01.790874
License: Public Domain

Kelly, J.:
The facts in this case are stated in the opinion of Mr. Justice Rich.
Payments by the bank upon forged indorsements are at the peril of the bank, unless it can claim protection upon some principle of estoppel. This proposition conceded by the appellant is familiar to all of us. (Shipman v. Bank S. N. Y., 126 N. Y. 318.) The appellant argues that in the case at bar the check in question was paid to the person to whom the maker (the plaintiff) intended it should be paid; that she desired to pay the money for a bond secured by a mortgage upon certain specific property in Peekskill; that the proceeds of the check went exactly where she intended them to go and that in return she received the bond and mortgage which she had agreed to take. The appellant cites Mr. Justice Scott’s opinion in Hartford v. Greenwich Bank (157 App. Div. 448; affd., on opinion below, 215 N. Y. 726). I have some difficulty in distinguishing the case at bar from the reasoning of the court in the case last cited. .
Plaintiff had arranged to invest her money upon a bond secured by a mortgage on certain specified property. That property actually belonged to one Bushnell. Bushnell for his own purposes (possibly criminal, but I do not see how that affects the question) represented to plaintiff that this particular property was owned by one Homer E. Remsen.
*789We may assume that Bemsen was a fictitious person. But Bushnell executed the bond and the mortgage on his own property, in the name of Bemsen, and delivered them to the plaintiff.. True, she left the papers with him, and he did not record the mortgage, but that was a matter between her and Bushnell, not brought about by anything the bank did.
So, I take it, Bushnell would not be heard to deny the validity of the bond and mortgage. He signed it in a fictitious name, but he was in no position as against plaintiff to dispute its validity. It seems to me, the bond was the bond of the owner of the premises, and the mortgage was a lien upon the premises precisely as if Bushnell had executed it in his .own name. He received the check indorsed by plaintiff to the order of Homer E. Bemsen — he forged the name of Bemsen, adding his own name, and received the proceeds. It seems to me there is much force in the claim that plaintiff suffered no legal loss for which the bank is accountable by reason of the payment to Bushnell.
Again, I think the plaintiff herself brought about her own loss. The defendant bank did not know Homer E. Bemsen. The plaintiff personally came to the bank asserting that Homer E. Bemsen was an existent person — that she had agreed to invest her money on his bond and mortgage :and it was on her request that the check was issued and indorsed for her signature so as to be payable to Homer E. Bemsen. I think that she is bound by her representation to the bank that Bemsen was a genuine person. This is not a case where some third party — Bushnell, for instance — inserted a fictitious name on the check. The plaintiff did it herself deliberately. It was her own personal action which led to the making of the check payable to Bemsen. With the making of the check her personal dealings with the bank ended. That she was thereafter swindled by Bushnell does not seem to me to be chargeable to the bank. Her representa», tion to the bank at the outset seems to me the causa causans of the loss. (See Jarvis v. Manhattan Beach Co., 53 Hun, 362; S. C., on subsequent appeal, 75 id., 100; affd., 148 N. Y. 652; Manhattan Beach Co. v. Harned, 27 Fed. Rep. 484.) In these cases the corporation was held to be estopped by reason of the fact that it issued‘the stock certificates in *790the fictitious name, and notwithstanding the fact that the dishonest clerk thereafter transferred them by forging the fictitious name, it was held that the original representation of the company was the cause of the loss. ( New York & N. H. R. R. Co. v. Schuyler, 34 N. Y. 30, 59; Fifth Avenue Bank v. F. S. S. & G. S. F. R. R. Co., 137 id. 231; Manhattan Life Ins. Co. v. F. S. S. & G. S. F. R. R. Co., 139 id. 146; Knox v. Eden Musee Co., 148 id. 441.) Judge O’Brien in the Jarvis case in the Court of Appeals referred to the similarity between the rule as applied to commercial paper (148 N. Y. 659), and Mr. Justice Barrett in the General Term on the first appeal considered the rule with regard to certificates of stock as analogous with that concerning commercial paper (53 Hun, 365), as did Judge Wallace in the Harned case.
The judgment should be reversed and a new trial granted, with costs to abide the event. The findings that the defendant bank did not use due and reasonable care and diligence, and that said defendant was negligent in paying the draft, are reversed as contrary to the evidence.
Jenks, P. J., and Jaycox, J., concur; Rich, J., read for affirmance, with whom Putnam, J., concurs.