Montgomery Garage Co. v. Manufacturers' Liab. Ins. Co.

• Decision Date: 01 March 1920
• Docket Number: No. 23.,23.
• Citation: 109 A. 296
• Parties: MONTGOMERY GARAGE CO. v. MANUFACTURERS' LIABILITY INS. CO.
• Court: New Jersey Supreme Court

109 A. 296

MONTGOMERY GARAGE CO.

v. MANUFACTURERS' LIABILITY INS. CO.

No. 23.

Court of Errors and Appeals of New Jersey.

March 1, 1920.

(Syllabus by the Court.)

Appeal from Circuit Court, Hudson County.

Action by the Montgomery Garage Company, against the Manufacturers' Liability Insurance Company. Judgment for plaintiff, and defendant appeals. Affirmed.

Randolph Perkins, of Jersey City, for appellant.

Frank J. Higgins and Harry Lane, both of Jersey City, for respondent.

TRENCHARD, J. This is an action to recover the amount of a bank check for $1,500 signed by the defendant, drawn on the Commercial Trust Company of New Jersey, payable to the order of N. K. Turner, and negotiated to the plaintiff.

The agreed facts, so far as material to the questions presented in this court, are as follows: On March 15, 1918, one Ennis, representing himself to be N. K. Turner, went to the Manufacturers' Liability Insurance Company and delivered to it a check for $5,000, which turned out to be bogus, and received from the company its check for $1,500, being the check in question. On the same day that check was indorsed and delivered to the plaintiff by the person representing himself to be N. K. Turner. The check was promptly presented by the plaintiff to the bank for payment, but payment had been stopped overnight by the defendant.

It is further agreed that the plaintiff became the holder of the check "before it was overdue, and, at the time it was negotiated to it, the plaintiff had no notice of any infirmity in the check, or of any defect in the title of the person negotiating it," and before receiving any such notice the plaintiff gave or paid to the person who negotiated the check, as consideration therefor, $300 in cash, a check for $200, a check for $500, and a negotiable certificate of credit for $500 on the purchase price of an automobile. These checks given by the plaintiff passed into the hands of bona fide holders for value, and were paid by the plaintiff. The negotiable certificate of credit for $500 on the purchase price of an automobile was delivered to the person known as N. K. Turner, and is still outstanding, and is admitted to be assignable "by the holder without the consent of the plaintiff," and is treated by the plaintiff "as binding on it." It is further admitted that at the time of the above transactions both the plaintiff and the defendant believed that Enuis was N. K. Turner, and that Ennis was the person to whom the defendant issued and delivered the check, and who was intended by it to be the payee.

On this state of facts, the trial judge, sitting without a jury, found for the plaintiff for the full amount of the check, and the defendant appeals from the consequent judgment.

We are of the opinion that the judgment was right.

We do not rest the plaintiff's right to recover upon section 9 of the Negotiable Instruments Act (C. S. p. 3736). The check cannot be said to have been payable to bearer by force of that section declaring that "the instrument is payable to bearer * * * when it is payable to the order of fictitious or nonexisting persons and such fact was known to the person making it so payable," because it does not appear that such fact was known to the drawer.

But we think that the rule is, where, as here, the drawer of a check delivers it, for a consideration which turns out to be fraudulent, to an imposter under the belief that he is the person whose name he has assumed and to whose order the check is made payable, a bona fide holder for a valuable consideration, paid to the imposter upon his indorsement of the payee's name, is entitled to recover from the drawer; it appearing that the person to whom the check was delivered was the very person whom the drawer intended should indorse it and receive the money, and that the drawer made no inquiry before issuing the check concerning the identity or credit of the named payee who was unknown to the drawer.

U. S. v. National Bank (C. C.) 45 Fed. 163; Meyer v. Indiana Bank, 27 Ind. App. 354, 01 N. E. 596; Emporia Bank v. Shotwell, 35 Kan. 360, 11 Pac. 141, 57 Am. Rep. 171; Robertson v. Coleman, 141 Mass. 231, 4 N. E. 619, 55 Am. Rep. 471; First Nat. Bank v. American Bank, 49 App. Div. 349, 63 N. Y. Supp. 58; Merch. Bank v. Metropolis Bank, 7 Daly (N. Y.) 137; Land Title & Trust Co. v. N. W. Bank, 196 Pa. 230, 46 Atl. 420, 50 L. R. A. 75, 79 Am. St. Rep. 717; Metzger v. Franklin Bank, 119 Ind. 359, 21 N. E. 973.

And see Meridian Bank v. First Bank, 7 Ind. App. 322, 33 N. E. 247, 34 N. E. 608, 52 Am. St. Rep. 450; Elliott v. Smltherman, 19 N. C. 338; Forbes v. Espy, 21 Ohio St. 474, in which, though the name adopted by the swindler appears to have been really fictitious, the loss is thrown on the drawer for the same reason.

In the present case the plaintiff has merely carried out the drawer's intent. In other cases of fraudulent impersonation the drawer is sometimes said to have a double intent: First, to make the check payable to the person before him; and, secondly, to make it payable to the person whom he believes the stranger to be. But the courts have almost unanimously held that the first is the controlling intent, except where the named payee was already known to the drawer, as in Cundy v. Lindsay, 3 A....