First Nat. Bank of Ft. Worth, Tex. v. American Exch. Nat. Bank

• Decision Date: 25 February 1902
• Citation: 170 N.Y. 88,62 N.E. 1089
• Parties: FIRST NAT. BANK OF FT. WORTH, TEX., v. AMERICAN EXCH. NAT. BANK.
• Court: New York Court of Appeals Court of Appeals

170 N.Y. 88

62 N.E. 1089

FIRST NAT. BANK OF FT. WORTH, TEX.,

v.AMERICAN EXCH. NAT. BANK.

Court of Appeals of New York.

Feb. 25, 1902.

Appeal from supreme court, appellate division, First department.

Action by the First National Bank of Ft. Worth, Tex., against the American Exchange National Bank. From a judgment on an order of the appellate division (63 N. Y. Supp. 58) granting plaintiff's motion for judgment on a verdict directed by the trial court, defendant appeals. Affirmed.

Michael H. Cardozo, for appellant.

George H. Yeaman, George C. Kobbe, and James A. Speer, for respondent.

CULLEN, J.

The action is brought to recover the amount of a draft drawn by the First National Bank of Denver upon the defendant, to the order of A. W. Hudson, and accepted by the defendant. The plaintiff claims title to the draft through the indorsement of the alleged payee thereof. The circumstances attending the issue of the draft and its acquisition by the plaintiff are as follows: A stranger inquired at the office of a real estate broker in the city of Denver whether a loan could be procured on certain real estate in that city, of which one Olive K. Hudson, who resided with her husband, A. W. Hudson, at Colorado, Tex., was the owner. The broker stated that a client, Mrs. Leonora K. Bosworth, would loan from $2,000 to $2,500 on the property. The stranger then informed the broker that the Hudsons were near Ft. Worth, Tex., and that they would communicate directly with him in reference to the loan. Correspondence passed between the parties, the broker receiving communications purporting to proceed from A. W. Hudson, which resulted in Mrs. Bosworth agreeing to make the loan. An abstract of title showing the ownership of the property to be in Olive K. Hudson was forwarded to the broker and verified by the attorneys of Mrs. Bosworth. Thereupon a note and trust deed or mortgage were prepared by the broker and sent to A. W. Hudson, at Ft. Worth, for execution. Thereafter the First National Bank of Denver received from Ft. Worth a letter signed ‘A. W. Hudson,’ inclosing the note and trust deed, purporting to be signed by Olive K. Hudson and A. W. Hudson, and instructing it to deliver the note and mortgage to Mrs. Bosworth upon her paying to the bank the amount of the loan, $2,500, less broker's commission and expenses incurred in examining the title, and to remit the proceeds to A. W. Hudson, at Ft. Worth. Mrs. Bosworth paid the bank the amount of the loan, less the expenses, and received the note and trust deed. The bank drew its draft on the defendant for the net proceeds of the loan in favor of A. W. Hudson, and forwarded the same by mail to him at Ft. Worth. There was at this time, and had been for some period previous,at Ft. Worth, a man known as A. W. Hudson. He received the draft, and, upon his indorsement and identification of him by a lawyer residing in the place, the plaintiff discounted the draft and gave Hudson the proceeds. It subsequently appeared that neither Olive K. Hudson, who owned the Denver property, nor A. W. Hudson, her husband, ever signed the note or executed the mortgage; that they never applied for the loan, and had no knowledge of the transaction; and that the notarial certificate of the acknowledgment of the trust deed was a forgery. On the discovery of these facts payment of the draft was stopped, whereupon the plaintiff instituted this action to recover its amount.

To establish title to the draft, the plaintiff was bound to show that it received it through indorsement by the payee. It is not sufficient that...