Court Opinion

ID: 3549493
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:02:46.254716+00
Date Added: 2024-06-11T13:45:50.360923
License: Public Domain

The case of Putnam v. Sullivan, 4 Mass. 45, is very much like the present. There the defendants, having occasion to be absent from home, had intrusted to their confidential clerk several blank papers with the name of the firm written upon them, to be filled up, some of them as notes signed by the firm, and others made payable to the firm, with the firm's indorsement upon them. One of these blanks was intended to be given to the promissor on the note in suit, but he by a fraudulent trick induced the clerk to give him more than one of these papers, and this note had been fraudulently made on one of them.
It was conceded that the plaintiffs were bona fide indorsees for value without notice. The case was ably argued, and judgment rendered for the defendants by PARSONS, C. J. The learned judge, in his opinion, says, — "The counsel for the defendants agree, that, generally, an indorsement obtained by fraud shall hold the indorsers according to the terms of it; but they make a distinction between the cases where the indorser through fraudulent pretences has been induced to indorse the note he is called on to pay, and where he never intended to indorse a note of that description, but a different note, and for a different purpose.
Perhaps there may be cases in which this distinction ought to prevail, — as, if a blind man had a note falsely and fraudulently read to *Page 602 
him, and he indorsed it, supposing it to be the note read to him. But we are satisfied that an indorser cannot avail himself of this distinction, but in cases where he is not chargeable with any laches or neglect, or misplaced confidence in others. Here, one of two innocent parties must suffer.  *  *  The loss has been occasioned by the misplaced confidence of the indorsers in a clerk too young or too inexperienced to guard against the arts of the promissor."
In the present case, no fault is imputable to the plaintiff. It clearly stands in the position of a bona fide indorsee for value without notice.
I have nothing to add to the citation above made, from the case of Putnam v. Sullivan. Of two innocent parties, he by whose negligence the loss has been occasioned must bear it.
It is interesting to remark that the law, as held today by the English court in the case cited by my brother LADD, after the discussions of nearly three quarters of a century, stands exactly where the great American jurist left it.
SMITH, J. In Lickbarrow v. Mason, 2 Term 70, ASHHURST, J., says, — "We may lay it down as a broad principle, that whenever one of two innocent persons must suffer by the acts of a third, he who has enabled such third person to occasion the loss must sustain it." This rule is based in a sound legal principle, and commends itself to the good sense of every intelligent person. It has been long established by numerous authorities, both English and American, including several in this state, cited in the briefs of counsel. It appears from the report of the referee that the plaintiff purchased the note in suit, before maturity, in good faith, and without notice of any defect. It further appears from the report, that it was a negligent act on the part of the defendant to sign the note, without ascertaining whether it was what the payee represented it to be. The defendant, then, having by his negligent act enabled another person to occasion a loss, he must sustain it. Unless the circuit court, for cause shown, shall recommit the report, the plaintiff is entitled to
Judgment on the report. *Page 603