Mechs.' Bank v. Chardavoyne

Decision Date12 October 1903
Citation55 A. 1080,69 N.J.L. 256
CourtNew Jersey Supreme Court

(Syllabus by the Court.)

Error to Circuit Court, Essex County.

Action by the Mechanics' Bank against Annie N. Chardavoyne and William S. Chardavoyne. Judgment for plaintiff, and defendant Annie N. Chardavoyne brings error.


Lambert & Stewart, for plaintiff in error.

Albert C. Wall, for defendant in error.

GUMMEBE, C. J. This suit was brought against William S. Chardavoyne and Annie N., his wife, upon a promissory note made by William to the order of Annie, and indorsed by her. The note is dated Newark, July 28, 1899, and is payable at the Mechanics' Bank, Brooklyn, N. Y. The case was tried by the court without a jury, by consent of the parties. The following are the pertinent facts found by the trial court: Mrs. Chardavoyne, about ten days or two weeks before July 28, 1899, intrusted her husband with a blank form of promissory note, indorsed by her, to be filled up and signed by him, and used at the German National Bank of Newark to obtain a loan for Mrs. Chardavoyne. The German National Bank refused to discount the note, and its refusal was reported to her. She never authorized her husband to use the note for any other purpose. Notwithstanding this fact, he, on the 28th day of July, took the blank note to the banking house of the plaintiff company, in Brooklyn, New York; and the body of the instrument was then filled up by the plaintiff's president, at the request of Mr. Chardavoyne, for a sum equal to the amount of an indebtedness due from Mr. Chardavoyne to the plaintiff. The next day the note was discounted by the plaintiff, and the proceeds placed to Mr. Chardavoyne's credit. The president of the bank, when he filled up the note, was ignorant of the fact that it had been indorsed in blank by Mrs. Chardavoyne; and the plaintiff took it in the regular course of business, in good faith, without notice of any infirmity in it, and in payment of the indebtedness then due to it from Mr. Chardavoyne. On this finding of facts, judgment was entered for the plaintiff against both the maker and indorser of the note. The writ of error is sued out by the indorser, Mrs. Chardavoyne, alone.

The principal ground upon which we are asked to reverse this judgment is that, upon the facts found, no liability on the part of Mrs. Chardavoyne can be predicated. The contention is that her husband had no authority to fill up the note, except for the purpose of having it discounted at the German National Bank for her benefit; that, when this purpose failed, her husband's agency ceased, and her indorsement became a nullity, and that his subsequent fraudulent act in having the blanks in the note filled up, and then appropriating it to the payment of his own indebtedness, did not render her responsible thereon as indorser. An examination of the authorities, however, will disclose that this contention is untenable. The question to be determined in a case like the present is not what is the actual limit of authority conferred by the indorser of a blank note upon the person into whose hands she delivers it, but, rather, what authority such an indorser, by her conduct, holds out that person as possessing, to one who takes the note in good faith, for value, and without notice that the actual authority conferred is a limited one only, and therefore, as is stated by Mr. Parsons in his treatise on Notes and Bills (volume 1, p. 110), "it is no defense against a bona fide holder for value to prove either that the person to whom the instrument was intrusted in blank had no authority at all to fill the blank, or that his authority was limited to a certain sum, which he had exceeded, or that he was only authorized to use the paper for a particular purpose, and had fraudulently converted it to a different purpose, or that he was only authorized to fill the blank upon a certain condition, which had not happened, or that the authority was limited in point of time, and that the time had expired." Practically the same statement appears in 1 Daniel on Neg. Instr. § 143, where it is said that "the authority implied by a signature in blank, and the credit granted, are so extensive that the party so signing will be bound, though the holder was only authorized to use it for one purpose, and has perverted it to another, and though the authority was limited to a time which has expired, or was only to be exercised upon a condition which has not happened." The decided cases fully support the rule laid down by these authors. As early as 1780, Lord Mansfield, in Russel v. Langstaffe, Doug. 514, declared that "tire indorsement on a blank note is a letter of credit for an indefinite amount. Bf it the indorser says, 'Trust G.' (the person who received the note from the indorser) 'to any amount, and I will be his security.' It does not lie in his mouth to say that the indorsement is not regular." In Gerrard v. Lewis, L. R. 10 Q. B. Div. 30, it was held that "a man who gives his acceptance [to a bill of exchange] in blank holds out the person to whom it is intrusted as clothed with ostensible authority to fill in the bill as he pleases." In Bank of Pittsburg v. Neal, 22 How. 96, 16 L. Ed. 323, it was held that "where a party to a negotiable instrument intrusts it to the custody of another, with blanks not filled up, whether it be for the purpose to accommodate the person to whom it was intrusted, or to be used for his own benefit, such negotiable instrument carries on its face an implied authority to fill up the blanks and perfect the instrument," and that "a bona fide holder of such an instrument, for valuable consideration, without notice of the facts which impeach its validity between the antecedent parties, if he takes it before the same becomes due, holds the title unaffected by these facts, and may recover thereon." In Michigan Bank v. Eldred, 9 Wall. 544, 19 L. Ed. 763, it is declared to be "well-settled law that where a party to a negotiable bill of exchange or promissory note containing blanks Intrusts it to the custody of another, whether it he for the purpose of accommodating the person to whom it was intrusted, or to be used to raise money for his own...

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2 cases
  • Ex parte Goldberg & Lewis
    • United States
    • Alabama Supreme Court
    • December 17, 1914
    ... ... delivery. The American cases are collected in notes to ... Benton, etc., Bank v. Boddicker, 105 Iowa, 548, 75 ... N.W. 632, 45 L.R.A. 321, 67 Am.St.Rep. 310; Vander Ploeg ... 140, ... 66 N.E. 646, 97 Am.St.Rep. 426, and Mechanics' Bank ... v. Chardavoyne, 69 N.J.Law, 256, 55 A. 1080, 101 ... Am.St.Rep. 701. In his note to Bedell v. Herring, 77 ... ...
  • First Nat. Bank of Springfield v. Di Taranto, A--344
    • United States
    • New Jersey Superior Court — Appellate Division
    • October 18, 1950
    ...instructions as to the amount to be inserted in the note. 8 Am.Jur., 'Bills and Notes', sec. 418, p. 158. Mechanics Bank v. Chardavoyne, 69 N.J.L. 256, 55 A. 1080 (E. & A.1903); Hudson County, Nat. Bank v. Alexander Furs, Inc., 133 N.J.L. 256, 44 A.2d 73 (E. & A.1945); Central Savings Bank ......

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