Court Opinion

ID: 3624260
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:05:15.946899+00
Date Added: 2024-06-11T13:59:06.328893
License: Public Domain

The city of New York made an award in a condemnation proceeding to Harry Wolter. William L. Abrams, an attorney who also apparently dealt in condemnation awards, met Samuel Goldberg, the plaintiff's husband, and offered to sell him a condemnation award at a discount. Later Goldberg and *Page 413 
Abrams agreed upon the price to be paid for the award and Goldberg referred Abrams to his attorney, Irving Feinstein, who would search the record title, attend to the legal details and fix a date for closing.
The plaintiff gave her husband, Goldberg, full authority as her agent to handle the matter. Goldberg, who had known Abrams for some time, relied upon him for the regularity of the transaction and relied upon his own attorney, Feinstein, in the matter of the title. Feinstein and Goldberg met Abrams at his office to close the transaction. Attorney Albert Kurtz, who was supposed to represent the owner of the award, was also present, and was dealt with as the attorney for an impostor called Harry Wolter, who appeared at the office and was introduced as Harry Wolter. Goldberg testified that he believed him to be the person from whom he purchased the award. Goldberg had in his possession a check issued by the defendant Lincoln Savings Bank for $4,500, and drawn on Irving Trust Company, payable to the order of plaintiff, a depositor, who had indorsed it in blank and delivered it to her husband, Goldberg. He handed the check to Abrams with instructions to deliver it to Attorney Kurtz or his client.
Goldberg saw Abrams write over the blank indorsement of plaintiff, "pay to the order of Harry Wolter." At the same time he delivered to Abrams another check for an assignment of an interest in the award to a third party. That check is not involved in this action.
Goldberg testified that he gave the two checks to Abrams to deliver to Attorney Kurtz or his client. The man who represented himself as Harry Wolter was an impostor. His true name was Dennis. He executed and acknowledged an assignment of the award in the name of Harry Wolter and it was delivered to plaintiff's attorney. He indorsed the check in the name of Harry Wolter and transferred it to the defendant Jacoby who became an innocent holder for value. The check was presented in due course to the Irving Trust Company, *Page 414 
the drawee, and paid. The defendant Lincoln Savings Bank, the drawer, charged the amount against the account of the plaintiff, the payee.
This action is to recover from the Lincoln Savings Bank the amount of the check upon the ground that the indorsement was a forgery and, therefore, that the charge of the amount against the plaintiff's account should be canceled. The other parties were interpleaded and judgment over sought against them.
The assignment of the award was stricken from the records as it was a forgery. If this judgment is affirmed, the loss will fall upon the appellant Jacoby, an innocent holder for value, as judgment over has been recovered by each of the other defendants. If the indorsement of the name Harry Wolter on the check made by the impostor Dennis was a forgery, the loss must be borne by the appellant Jacoby as he was the person who accepted the check from Dennis, the impostor, and thereafter transferred it.
"One who obtains possession of a bill or note by means of a forged indorsement acquires no interest in the instrument, although he is ignorant of the forgery, and has no right to enforce its payment against any party to it unless such party is estopped or precluded from setting up the defense of forgery." (8 Am. Jur., Bills and Notes, § 605; Negotiable Instruments Law [Cons. Laws, ch. 38], § 42; Shipman v. Bank of State of NewYork, 126 N.Y. 318; Seaboard Nat. Bank v. Bank of America,193 N.Y. 26.)
On the other hand, if Goldberg, acting as plaintiff's agent, intended to deliver the check to Dennis, believing him to be Harry Wolter, the owner of the award, then the indorsement of the name "Harry Wolter" on the check was not a forgery, although made by an impostor for the purpose of accomplishing a fraud. (FirstNat. Bank v. American Exchange Nat. Bank, 170 N.Y. 88;Halsey v. Bank of New York  Trust Co., 270 N.Y. 134;Montgomery Garage Co. v. Manufacturers' Liability Ins. Co. *Page 415 94 N.J.L. 152; s.c., 22 A.L.R. p. 1224, and note in which many cases from various jurisdictions are collated; 7 Am. Jur., Banks, § 599.)
A contrary view is held by the courts of Rhode Island and a few other States. (Tolman v. American Nat. Bank, 22 R.I. 462.)
The rule prevailing in those States is not the law of this jurisdiction. Thus, the question for determination on the undisputed evidence is whether the indorsement of the check by Dennis, the impostor, in the name of Harry Wolter, constituted a forgery.
Under the Negotiable Instruments Law the fact that the check was procured from Goldberg by fraud does not constitute a defense as against Jacoby, an innocent purchaser for value, or justify a recovery against the appellant bank which issued the check and charged the amount against the plaintiff's account.
If an impostor deceives a drawer of a negotiable instrument as to identity by posing as another, and the instrument is delivered to and indorsed by him in the name of the person whom he fraudulently represents himself to be, his indorsement is not a forgery and a subsequent innocent holder for value may enforce it against the maker. The same principle applies under the facts in this case. (Montgomery Garage Co. v. Manufacturers' LiabilityIns. Co., supra, and note in 22 A.L.R. p. 1224; First Nat.Bank v. American Exchange Nat. Bank, supra; Halsey v. Bank ofNew York  Trust Co., supra.)
The underlying basic principles which have induced a great majority of courts to adopt that rule are the business necessity of keeping commercial paper negotiable; the fact that the maker delivers the instrument to the person intended, although deceived as to the actual identity of that person (Land Title  TrustCo. v. Northwestern Nat. Bank, 196 Penn St. 230; see note in 50 L.R.A. p. 75; s.c., 211 Penn. St. 211; Robertson v.Coleman, 141 Mass. 231; Strang v. Westchester County Nat.Bank, *Page 416 235 N.Y. 68; First Nat. Bank v. American Exchange Nat. Bank,supra; Halsey v. Bank of New York  Trust Co., supra); the fact that a maker has the opportunity of ascertaining the true identity of a person to whom the instrument is delivered while a purchaser for value of the instrument may know the signature of the drawer and rely upon it but cannot in the ordinary course of business know to whom the maker intended to deliver the instrument; and finally that where one of two innocent persons must suffer a loss, that loss should fall upon the one who was at fault in the first instance and made the loss possible. (UnitedStates v. National Exchange Bank, 45 Fed. Rep. 163; CentralNat. Bank v. National Met. Bank, 31 App. Cas. [D.C.] 391;Montgomery Garage Co. v. Manufacturers' L.I. Co., supra;McHenry v. Old Citizens Nat. Bank. 85 Ohio St. 203.)
It is often difficult to determine whether an impostor has appropriated an instrument intended for someone else or by fraud has induced the delivery of the instrument to himself. If the impostor has appropriated that which was intended for another and indorsed it in the name of the other, his indorsement constitutes a forgery and the maker is not liable.
In many cases there exists two intents on the part of the drawer. He may intend by issuing the instrument to pay a debt to his creditor or to pay the vendor of property which he intends to purchase and at the same time he may intend to deliver the instrument to an impostor who is present and fraudulently represents himself to be the creditor or vendor with whom the maker supposes he is dealing. In such cases, ordinarily the actual presence of the impostor and the delivery of the instrument to him constitutes the controlling intent. An indorsement by the impostor does not constitute a forgery and the loss must fall upon the one who in the first instance had it within his power, before placing in circulation a negotiable instrument, to ascertain the actual fact. (Robertson v.Coleman, supra.) *Page 417 
The question here presented is not the delivery of a check to a fictitious payee, in which case a different rule may be applicable. (7 Am. Jur., Banks, § 601.) Neither is it a case where a check is delivered to an agent to be delivered by him to his principal, in which case an indorsement by an impostor constitutes a forgery. (7 Am. Jur., Banks, § 600.)
Only one inference can be drawn from the undisputed facts here involved. No one present knew the true Harry Wolter. Dennis, the imposter, was introduced as Harry Wolter and Goldberg testified that he believed him to be the owner of the award and that he was present with his attorney, Kurtz, to close the transfer of the award. He also testified as follows: "Q. Did you give the two checks to Abrams to deliver to Kurtz or his client? A. Yes."
The only client Kurtz had, so far as Goldberg knew, was the impostor introduced as Harry Wolter. Goldberg's instructions, according to his testimony, were to deliver the check to Kurtz or his client. His client, according to the testimony, was the imposter. True it is that at one time in his testimony, Goldberg stated that he instructed Abrams to "assign the checks to the proper owner," but he also testified that he believed the impostor to be the person from whom he purchased the award, and, therefore, the owner. It is perfectly clear that Goldberg believed the impostor to be the true Harry Wolter, the owner of the award, and that he intended the check to be delivered to him upon his executing and delivering an assignment of the award. The impostor, at the same time, executed and delivered an assignment of the award in the name of Harry Wolter and it was accepted by the attorney for the plaintiff and the check was delivered as Goldberg instructed and intended it should be. Goldberg determined for himself the identity of the person to whom he instructed the check to be delivered and plaintiff is bound by his act. In those circumstances, the indorsement of the check by the impostor was not a forgery and there can be no recovery *Page 418 
in this action. This is not a case where a purchaser has negotiated with the owner for the purchase of property and by fraud was induced to deliver a check to an impostor representing himself to be the owner. Here the purchaser did not know the true Harry Wolter, the owner, and had never communicated with him. The only person known as Harry Wolter was the impostor to whom Goldberg gave instructions that the check should be delivered.
While it is unfortunate that the plaintiff must suffer the loss caused by the fraud, it would be equally unfortunate if the innocent purchaser for value of the check should be required to bear the loss when he was entirely free from fault.
The judgment should be reversed, with costs and the complaint dismissed.
LOUGHRAN, FINCH and RIPPEY, JJ., concur with LEHMAN, J.; HUBBS, J., dissents in opinion in which CRANE, Ch. J., concurs; O'BRIEN, J., taking no part.
Judgment affirmed.