Bernheimer v. Marshall

• Decision Date: 01 January 1858
• Parties: ISAAC BERNHEIMER vs. MARSHALL & CO.
• Court: Minnesota Supreme Court

2 Minn. 78

ISAAC BERNHEIMERvs.

MARSHALL & CO.

Supreme Court of Minnesota.

Appeal from judgment of district court, Ramsey county.

Judgment was ordered below for defendants on the pleadings. The facts appearing from the pleadings are fully stated in the opinion.

Points and authorities of the appellant:

1. The complaint exhibits a statement of facts and circumstances

showing that the sum of money paid by the plaintiff, and sought to be recovered back in this action, was paid by mistake and in ignorance of facts.

2. That the general rule allowing money so paid to be recovered back, applies to this case, and that the plaintiff was not within the exception which obliges the party paying a draft to know the handwriting of his correspondents. First, in that the plaintiff paid the draft without seeing the signature. Second, in that the plaintiff paid his money, to be applied only to a genuine draft. Third, in that the defendants were most in fault in causing said draft to be paid. Fourth, in that the facts and circumstances of the case were such as made it incumbent on the defendants to make inquiry as to the genuineness of the draft, and they were affected with constructive notice of the fraud. Fifth, in that the question of the bona fides of the defendants, as holders of the forged draft, is in issue.

3. That it was erroneous to order judgment for the defendants when there were issues of fact for a jury, which were material.

Points and authorities for respondents:

1. The complaint contains no cause of action against the defendants. It was incumbent upon the plaintiff to be satisfied that the bill drawn on him was the drawer's hand before he paid it; but it was not incumbent upon the defendant to inquire into it. Price v. Neil, 3 Burr. 1354; U. S. Bank v. Bank of Georgia, 10 Wheat. 333; Byles on Bills, 267; Goddard v. Merchts' Bank, 4 N. Y. 147; Bank of Com. v. Union Bank, 3 N. Y. 230; Story on Bills, §§ 113, 411, 451, 452; Gloucester Bank v. Salem Bank, 17 Mass. 33; Markle v. Hatfield, 2 Johns. [462]; last paragraph of opinion of Kent, C. J.; Young v. Adams, 6 Mass. 187; Smith's Mercantile Law, 315.

2. The complaint being insufficient, for want of facts to constitute a cause of action, no statements or allegations of the answer or reply can save the action. Rev. Stat. 337, §§ 60 and 66, and 340, §§ 84 and 85; amendments to Rev. Stat. 9, § 26; White v. Joy, 13 N. Y. 83.

3. There are no facts in the answer or reply which can cure the defects in the complaint, nor is any allegation of the answer put in issue by the reply.

Hollinshead & Becker, and H. F. Horn, for appellant.

Brisbin & Bigelow, for respondent.

ATWATER, J.

This is an action brought to recover an amount of twenty-seven hundred and fifty dollars, paid by Bernheimer to Marshall & Co., upon a forged draft, which purported to have been drawn at St. Paul by one C. Meyer to the order of E. Howitz & Co., and directed to Isaac Bernheimer, of New York. The draft was negotiated by Marshall & Co. in the ordinary course of business. The draft was sent by Marshall & Co. to C. H. Rogers & Co., their correspondents and agents in New York, who, on the 5th of September, 1855, about two o'clock P. M., presented the same for payment at the place of business of Bernheimer. The person presenting the draft was informed by the clerk of Bernheimer, that he (Bernheimer) was then absent from the office, and that he might wait until his return, or that a check for the amount of the draft would be sent to C. H. Rogers & Co. as soon as Bernheimer should return, if the same was correct, but payment of the draft was refused before his return. The draft was then taken back to C. H. Rogers & Co., by their clerk, the clerk of Bernheimer, however, having drawn a check for him to sign, for the amount of the draft, upon his return.

Upon his return soon after, Bernheimer was informed of the presentation of the draft, who thereupon signed the check drawn for that purpose, and sent the same by his book-keeper to C. H. Rogers & Co., who received it, (and afterwards drew the money upon it,) and gave the draft to the book-keeper, who deposited the same among the papers of Bernheimer, who, it appears, did not see the draft at the time, nor until several days after, when he was informed of the forgery of the name of the drawer, C. Meyer. He then demanded of Marshall & Co. a return of the money, and, upon refusal by them, brought suit to recover the amount.

The rule is too well settled to need any discussion, that money paid under a mistake of fact may be recovered back. The exception to the rule is equally well established, that money paid by the drawee of a draft which has been forged, cannot be recovered back, for the reason that the drawee is supposed to know his correspondent's signature. Whether the appellant comes within the exception in this case is the question upon which the action hinges.

Although the rule and exception thereto, as above stated, were early settled, there seems to have been some difficulty in the application of the principles governing each, to particular cases, and somewhat conflicting authorities may be found in the books upon the subject. A leading case, in which it was held that the drawee or acceptor of a forged draft cannot recover back money paid on the same, is that of Price v. Neal, 3 Burr. 1354. That was an action by the drawee and acceptor of forged drafts to recover back the amount paid on the same. The plaintiff in that case had taken up one of the drafts without having seen it, having sent his servant with the money, who paid the amount of the draft and took it up; the other was paid after acceptance by the plaintiff. Lord Mansfield, in giving the opinion of the court, says, that the plaintiff in such an action cannot recover, unless it be against conscience in the defendant to retain it, and that it was incumbent upon the plaintiff to be satisfied that the bill drawn upon him "was the drawer's hand," before he accepted or paid it. Substantially the same doctrine was held in Jenys v. Fowler, a still earlier case reported in S. C. Str. 946. The principle has been steadily adhered to by the courts, until recently, when there would seem to have been a departure from it, in the state of New York at least, in the case of Goddard v. Merchants' Bank, 2 Sandf. 247. Great stress is laid upon that case by the counsel for the appellant, and indeed it may be admitted, that if this court hold the ruling in that case correct, as given in 4 N. Y. 147, the appellant here must recover, as the case there reported seems to be entirely analogous to the one at bar. But with the highest deference to the opinion of that court, we think its ruling in that case cannot be sustained upon principle, nor by the authorities in analogous cases. It will be observed that the court was not unanimous in its view of that case, and the opinion delivered by one of the two (Ruggles and Jewett) eminent jurists who dissented, is entitled to great weight, and seems better sustained by reason and the current of authority. The court seems to have decided the case solely on the ground that ...