75 N.Y. 547, People v. Bank of North America

Citation:75 N.Y. 547
Party Name:THE PEOPLE OF THE STATE OF NEW YORK, Appellants and Respondents, v. THE BANK OF NORTH AMERICA, Appellant and Respondent.
Case Date:January 21, 1879
Court:New York Court of Appeals

Page 547

75 N.Y. 547

THE PEOPLE OF THE STATE OF NEW YORK, Appellants and Respondents,

v.

THE BANK OF NORTH AMERICA, Appellant and Respondent.

New York Court of Appeal

January 21, 1879

Argued Dec. 21, 1878.

Page 548

[Copyrighted Material Omitted]

Page 549

COUNSEL

Francis C. Barlow, for plaintiffs. If defendant collected or in any way exercised dominion over the drafts it is liable either in trover for their conversion or for the money received upon them. (Talbot v. Bank of Rochester, 1 Hill, 295; Graves v. American Ex. Bank, 17 N.Y. 205; White v. Sweeney, 4 Daly, 223; Bayce v. Brockway, 31 N.Y. 490; Hoffman v. Carrow, 22 Wend., 287-318-319; Matthews v. Menedeger, 2 McLean R., 145.) The drafts were legally receivable by the treasurer for taxes. (1 R. S. [ 6th ed.], 534, § 1; 1 R. S. [ 6th ed.], 957, §§ 46-47; § 2, act chap. 427, Laws of 1855; 7 Wallace, 666; Millenberger v. Cooke, 18 Id., 421; Decker v. Judson, 16 N.Y. 442; People v. McComber, 18 Id., 315-325; People v. Sherwin, 2 N.Y.S. Ct. [ Thom. & Cook], 528; 1 R. S. [ 6th ed.], 528, subd. 6, 530, § 19.) The treasurer could not give or delegate to any one the power to indorse the paper of the State. (1 R. S. [ 6th ed.], 536, § 22; Chapman v. Inhabitants, 56 Me. R., 390; Com. Bank v. Norton, 1 Hill, 501; Lewis v. Ingersoll, 1 Keyes, 347-356; Newton v. Bronson, 13 N.Y. 594; U.S. v. The Commissioner, 5 Wall., 563; U.S. v. Seaman, 17 How. [ U. S.], 225; State v. Hastings, 10 Wis. R., 533.) There was no negligence on the part of the treasurer which would estop him from denying, as against defendant, that Phelps had authority to indorse drafts. (Weiser v. Denison, 10 N.Y. 68; 10 Id., 83; Man. Nat. Bk. v. Barnes, 65 N.Y. [ Ill.] R., 69.) There was no "acquiescence

Page 550

with knowledge" on the part of the treasurer which is necessary to constitute an authority by estoppel. (34 N.Y. 53; Reynolds v. Lounsbury, 6 Hill, 534; Calkin v. Grote, 4 E. D., 304; Pickard v. Sears, 6 Adol. & E., 475; Freeman v. Cooke, 2 Exch. R., 654; Cairncross v. Lorimer, 3 Macq. H. L. Cases, 829; Swan v. N. B. A. Co., 7 H. & N., 603; Halifax v. Wheelhouse, L. R., 10 Exch., 192; Morris v. Bethel, L. R., 5 C. P., 47.) The treasurer could only be estopped from denying Phelps' authority to indorse for deposit in the Albany banks designated for that purpose. (Floyd Acceptances, 7 Wall., 677.) There is no estoppel against the State. (Pierce v. U.S. 1 Ct. of Claims R., 270; State v. Hastings, 10 Wis., 526; Supervisors v. Ellis, 59 N.Y. 625; Johnson v. U.S. 5 Mason, 425-440; 7 Cranch S.Ct. R., 366; Curtiss v. U.S. 2 Ct. Claims R., 144; Hunter v. U.S. 5 Pet., 173-187; 67 Ill. R., 465; U.S. v. Van Zandt, 11 Wheat., 184; U.S. v. Kirkpatrick, 9 Id., 720-735; Jansen v. The People, 7 J. R., 332; People v. Russell, 4 Wend., 574; 14 Id., 171; Seymour v. Van Slyck, 8 Id., 422.) Neither the treasurer nor his deputy had power to indorse generally, but were restricted to such indorsements as were authorized by law. (1 R. S. [ 6th ed.], 534, § 17; Id., 575, § 50; People v. McComber, 18 N.Y. 315-318-325; The Carlotta, 1 Dodson's Report, 392; 1 Story's Eq. Juris., § 111; Dr. & Student Dialogue, 2 chap., 46; Huntley v. Beecher, 30 Barb., 586; Bishop's Crim. Law, vol. 1, § 375; Story's Eq. Jur., § 116; 53 Ill. R., 458; 6 Clark & Finnelly, 966.) Defendant had ample ground to put it on inquiry, and to charge it through its negligence with a knowledge of the diversion of the drafts. (Shaw v. Spencer, 100 Mass., 382.) The fact that plaintiffs had possession of the drafts at the time of the trial and before does not go in mitigation of damages. (Hanmer v. Wilsey, 17 Wend., 93, 94; Otis v. Jones, 21 Id., 397; Gordon v. Harper, 7 T. R., 9- 13; 2 Selw. Nisi Prius [7th Am. ed.], 1857; Pintard v. Tackington, 10 J. R., 104; Graves v. Am. Ex. Bank, 17 N.Y. 205; Connaughty v. Nichols, 42 Id., 83.)

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Elihu Root, for defendant. Upon the facts found the indorsements by Phelps were duly authorized by the treasurer. (Myers v. Machado, 6 Abb. Pr., 198, 201, 203.) The apparent authority shown was an authority apparent to defendant, and would be conclusive, even if actual authority was not shown. (1 R. S. [ m. p.], 171, § 8; Id., 178, § 13; Bk. of Ky. v. Schuylkill Bk., 1 Pars. Eq. Cas., 180; 1 Parsons on Notes & Bills, 100; Valentine v. Parker, 5 Penn. St., 333; Story on Agency, §§ 114-115; Prescott v. Flynn, 9 Bing., 19; Frudrdy v. Farrar, 32 Me., 225; Dows v. Green, 16 Barb., 72; Smith's Mercantile Law, 170, chap. 5, § 4; Young v. Grote, 4 Bing., 253; Swan v. N. British Australasian Co., 7 H. & N., 603; Barber v. Gingle, 3 Esp., 60; Delafield v. State of Ill., 26 Wend., 192-226; Morrison v. Buchanan, 6 C. & P., 18; Johnson v. Windle, 3 Bing. [ N. C.], 225; Ontario Bank v. N. J. S. S. Co., 59 N.Y. 510.) The treasurer had authority to authorize Phelps to indorse the drafts in question. (U. S. v. Barker, 4 Wash. C. C., 464; 12 Wheat., 561; Johnson v. U.S. 5 Mason, 425 Miltenberger v. Cooke, 18 Wal., 421; Seymour v. Van Slyck, 8 Wend., 403, 422; Smith v. Johnson, 3 H. & N., 222; Com. Bk. v. Norton, 1 Hill, 501-504; Lord v. Hall, 2 C. & K., 698; Rossiter v. Trafalgar, L. Ass'n, 27 Bevan, 377.) The plaintiffs were estopped from denying that the treasurer authorized Phelps to indorse the drafts for him. (U. S. v. Kilpatrick, 9 Wheat., 735; Gibbons v. U.S. 8 Wall., 269; U.S. v. Barker, 12 Wheat., 559; Cooke v. U. S., 12 Blatch., 43-59; Illinois v. Delafield, 8 Paige, 527-542; S. C., 2 Hill, 159-175; U.S. v. Bank of Met., 15 Pet., 389; U.S. v. Planters' Bank of Geo., 9 Wheat., 904-907; People v. Jansen, 7 J. R., 332; People v. Russell, 4 Wend., 570; People v. Berner, 13 J. R., 382; Carver v. Jackson, 4 Pet., 87; Story on Agency, § 307 a; White v. U.S. 3 Otto, 247, 257.) The indorsements on the drafts are as valid as they would have been if there had been no fraudulent diversion of them by Phelps. (Floyd Acceptances, 7 Wal.; Laws 1831, chap. 320, § 21; 3 Edms.

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Gen. Stat., 67, 71; Thompson v. U.S. 9 Ct. Cl. R., 187, 199.)Plaintiffs are estopped from a recovery against defendant by their laches in failing to discover and notify defendant of the alleged forgery. (Canal Bank v. Bank of Albany, 1 Hill, 287.) Defendant acting solely as agent in the course of a public employment is exempt from the strict rule applied to private servants, and would only be liable for conversion in a case of actual fraud. (Greenway v. Fisher, 1 Car. & P., 190; Lee v. Robinson, 25 L. J. C. P., 249-251; Hoffman v. Carrow, 22 Wend., 285; Isaacs v. Clark, 1 Bulst., 312; Thorp v. Busling, 11 J. R., 285.) Plaintiffs having recovered possession of the drafts are entitled to no damages. (Pease v. Smith, 61 N.Y. 477; Morgan v. Bk. of State of N.Y. , 11 Id., 404; S. C., 1 Duer, 434; Ford v. Williams, 24 N.Y. 359-366; Murray v. Burling, 10 J. R., 75; Baker v. Freeman, 9 Wend., 36; Wheelock v. Wheelwright, 9 Mass., 104; Shotwell v. Wendover, 1 J. R., 68; Vosburg v. Welch, 11 Id., 175; Whittaker v. Merrill, 28 Barb., 526; Ball v. Liney, 44 Id., 505; Salt Springs National Bank v. Wheeler, 48 N.Y. 492; Hilliard Rem. for Torts, 236, § 25; Stephens' Plead., 2 App'x, CXXXVI.)

Francis Kernan, for defendant. The drafts in question were not the property of the plaintiffs. (Const. art., 5, §§ 1, 6; 1 R. S. [ 6th ed.], chap. 8, 519; Id., 534, §§ 6, 7, 10, 11, 13; Id., 957, chap. 13, title 3, art. 2, §§ 46, 47, 69; 1 R. S. [ 1st ed.], 402, §§ 24, 25; Id., 419, § 5.) Title to the drafts and checks was not vested in the State by the unauthorized acts of Raines and Gallien. (Delafield v. State of Illinois, 2 Hill, 160, 175; People v. Sherwin, 2 N.Y.S. C. R., 528.) If the State owned the paper it is bound by the same rules of law which apply to corporations or individuals making or indorsing by agents negotiable paper. (Floyd Acceptance Case, 7 Wall., 666, 675; Delafield v. State of Ill., 2 Hill, 160, 177; Commissioners v. Aspinwal, 21 How. [ U. S.] R., 539, 545; Mercer Co. v. Hackett, 1 Wal., 83, 92, 93; City of Lexington v. Butler, 14 Id., 282; Grand Chute v. Winegar,

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15 Id., 356, 368, 369, 371-373; Laynde v. The County, 16 Id., 7; Thompson v. Lee County, 3 Id., 327.)Defendant was a bona fide holder of the paper and not liable to plaintiffs for receiving, collecting and paying over the proceeds. (F., etc., Bank v. B. and D. Bank, 16 N.Y. 125; Belmont Branch Bank v. Hoge, 35 Id., 65; N.Y. and N. H. R. R. Co. v. Schuyler, 34 Id., 30.) The authority of Raines as treasurer to indorse the drafts was implied. (Com. Bk., etc., v. Norton, 1 Hill, 501-506.) The facts established that Phelps was authorized to indorse and deposit the drafts, and the fact that he fraudulently indorsed them does not render defendant liable to plaintiffs for its dealing with them. (Story on Agency, §§ 54, 55, 56, 84; Johnson v. Jones, 4 Barb., 369; Stoney v. Am. Life Ins. Co., 11 Paige, 635, Delafield v. State of Ill., 2 Hill, 160; Farmers', etc., Bank v. Butchers, etc., Bank, 16 N.Y. 125; Belmont, etc., Bank v. Hoge et al., 35 Id., 65; 2 Kent's Comtrs., 614, 615; Johnson v. Jones, 4 Barb., 369.) On the facts as between plaintiffs and defendant the latter should not suffer by the misconduct of Phelps. (Farmers', etc., Bank v. Butchers', etc., Bank, 16 Id., 125, 132, 133, etc.; N.Y. and N. H. R. R. Co. v. Schuyler, 34 Id., 30, 50, 57-68.) Plaintiffs were not entitled to recover for a tortious conversion of the drafts. (Lockwood v. Bull, 1 Cow., 322.)

EARL, J.

This is an action, brought by the plaintiff against the defendant, for the conversion of ten drafts payable to the order of the State treasurer, and delivered into his office by various county treasurers for the payment into the State treasury of taxes due the State. The plaintiff recovered for eight of the drafts, numbered from one to eight inclusive, and failed to recover for two drafts, numbered nine and ten. Both parties...

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