Court Opinion

ID: 3592371
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:40:41.139354+00
Date Added: 2024-06-11T13:57:45.145554
License: Public Domain

For some time prior to the 20th of October, 1916, the plaintiff, at various *Page 73 
times, had invested different sums of money through her agent in Peekskill, one Bushnell, a lawyer. Shortly prior to the date named he asked her if she cared to loan $1,200 on a lot situate on Constant avenue in Peekskill. She told him if satisfied with the value of the lot she would make such loan. He showed her the lot, told her he had formerly owned it, but it was then owned by Homer E. Remsen. After looking it over she decided to make the loan, same to be secured by a bond and mortgage. At that time she did not know and had never heard, or had any knowledge of Remsen, except such as was given to her by Bushnell in connection with the transaction under consideration. She was a depositor in the defendant bank and then had something like $1,100 to her credit. She drew a draft for that amount on the bank, payable to her own order, took it to the office of her agent Bushnell, at his suggestion indorsed it payable to the order of Homer E. Remsen, and left it with Bushnell to be delivered to him. The balance of the $1,200 was made up as follows: She gave to Bushnell $50 in cash and also her promissory note for $50 payable to his order, which amount he was to advance and deliver with the draft for $1,100. He agreed to deliver the draft and the $100 in cash to Remsen, and in exchange for which Bushnell then gave her a bond purporting to be signed by Remsen, and exhibited to her a mortgage upon the lot which had previously been shown her, but which he retained for the purpose of having recorded. A fire insurance policy on the building upon the lot was also delivered to her at the same time, as was a certificate by Bushnell to the effect that Remsen had good title to the lot in question. Bushnell himself was the owner of the lot. Remsen did not exist and what purported to be his signatures to the bond and mortgage and insurance policy were, of course, fictitious. The draft was subsequently presented by Bushnell to the bank for payment. It then bore what purported to be the indorsement *Page 74 
of Remsen as well as the indorsement of Bushnell. Shortly after the payment of the draft Bushnell committed suicide and there was thereafter found among his papers the mortgage which purported to have been made by Remsen. These facts having come to the knowledge of the plaintiff, she demanded from the bank the amount paid on the draft, viz., $1,100. Defendant refused to make the payment and this action followed.
The trial court directed a verdict in favor of the plaintiff but on appeal to the Appellate Division the judgment was reversed and a new trial granted, two of the justices dissenting. Findings that plaintiff never intended Bushnell should collect the money on the draft, and that plaintiff intended Remsen and no one else should have the proceeds of it were reversed as were also what were termed conclusions of law: (a) That when the draft was presented for payment the bank should have determined the question of the genuineness of the signatures of the payees and indorsers; (b) that the plaintiff having intended that Remsen and no one else should have the proceeds, the fact there was no such person in the transaction did not authorize the bank to pay the money to Bushnell; and (c) that the bank did not use due and reasonable care and diligence in paying the draft to Bushnell, but was negligent in doing so.
With these findings reversed and a new trial ordered, I am unable to agree with the other members of the court that the judgment of the Appellate Division should be reversed and that of the Trial Term affirmed.
However, upon the merits I think the judgment of the Appellate Division was right and that the same should be affirmed. When plaintiff obtained from the bank the draft for $1,100, payable to her own order, took it to the office of her agent, and under his advice indorsed it "payable to Homer E. Remsen," and then gave it to such agent for delivery to him, she was estopped from thereafter asserting, as against the bank, that a good delivery *Page 75 
was not made. She was loaning her money, not to Remsen, but to the owner of the lot in question. She did not know Remsen; had never heard of him, except through Bushnell, and Bushnell's only description of him was that he was the owner of the lot upon which the mortgage had been given. Bushnell himself was the owner of the lot and, therefore, he having the draft, might indorse it under the name which he had assumed in the ownership of the lot. In doing so he did not commit a forgery.
First National Bank of Fort Worth, Texas, v. AmericanExchange National Bank (170 N.Y. 88) it seems to me is in point so far as the use of the name of Remsen is concerned. When the plaintiff indorsed the draft for $1,100 and made it payable to Remsen as the owner of the lot in question and delivered it to Bushnell as her agent, who delivered it to the owner of the lot, it hardly lies with her, as against the bank, to assert that there was not a proper delivery or proper indorsement.
Another case which I consider very much in point is Hartford
v. Greenwich Bank of City of N.Y. (157 App. Div. 448 affd., on opinion of SCOTT, J., at the Appellate Division 215 N.Y. 726). (See, also, Holub-Dusha Co. v. Germania Bank of City of N.Y.,164 App. Div. 279.)
It is perfectly apparent that plaintiff intended to loan $1,200 to the owner of the lot which she had looked over and with the security of which she was perfectly satisfied. She did not know Remsen, made no inquiry as to his financial responsibility, and in fact, so far as appears, cared nothing about that. It was to acquire a lien upon the lot that the loan was made, not upon the financial strength of its owner. In indorsing the draft it was for the purpose of making it payable to the owner of the lot. When she gave it to Bushnell it was for the sole purpose of having him deliver it to the owner. Bushnell himself was the owner, even though he assumed to be acting under the name of Remsen. There cannot be, as it seems *Page 76 
to me, the slightest doubt but that she acquired a lien upon the lot, the strength of which was just as good as if Remsen had been the owner. Certainly Bushnell would be estopped from denying the existence of such lien. When the draft was presented by Bushnell for payment, what should the bank have done that it did not do? It, it is said, made an investigation for the purpose of ascertaining whether the signature of Remsen were genuine. But in making such investigation it would have ascertained that the name of Remsen meant nothing to the plaintiff; that she knew no such person and that such person did not exist; that she did not loan her money on the strength of the financial responsibility of such non-existent person; but, on the contrary, loaned it solely on the security given by the owner of the lot, which security she received. It would have ascertained that Bushnell was the owner of the lot; that he had given the mortgage and, therefore, she had received, so far as his title was concerned, all she had bargained for.
I cannot believe that a bank is held to such strict liability in paying a draft or check as that laid down in the prevailing opinion, or that the law is so unreasonable as to hold a bank liable upon the facts in this case.
I, therefore, dissent and vote to affirm the order of the Appellate Division.
HISCOCK, Ch. J., HOGAN, POUND and ANDREWS, JJ., concur with CARDOZO, J.; McLAUGHLIN, J., reads dissenting opinion in which CRANE, J., concurs.
Order reversed, etc. *Page 77