Sherman v. Connecticut Mut. Life Ins. Co.

• Decision Date: 18 October 1915
• Citation: 222 Mass. 159,110 N.E. 159
• Parties: SHERMAN v. CONNECTICUT MUT. LIFE INS. CO. et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

222 Mass. 159

110 N.E. 159

SHERMAN

v.CONNECTICUT MUT. LIFE INS. CO. et al.

Supreme Judicial Court of Massachusetts, Suffolk.

Oct. 18, 1915.

Appeal from Superior Court, Suffolk County.

Bill by John F. Sherman against the Connecticut Mutual Life Insurance Company and others. Decree for complainant, after dismissal as against the defendant Insurance Company, and defendant Harry R. Stanley, executor, appeals. Affirmed.

Mayberry, Hallowell & Hammond, of Boston, for appellant.

Hewitt & Williams, of Boston, for appellee Sherman.

R. J. Cram, of Boston, for appellees Hunt and Gibbs.

RUGG, C. J.

The pertinent facts are that in February, 1907, the plaintiff delivered to one George E. Williams, two notes each for $500, blank as to payee, a policy of insurance upon his life and an assignment thereof blank as to assignee, for the purpose of securing a loan of $1,000 which Williams made to him. Williams by forgery raised one note to $1,500 and delivered it, together with the other note, the policy of insurance and the assignment, to the defendant Stanley, from whom he obtained $2,000. Later, in April, 1910, Williams paid Stanley $2,000, thereby terminating the latter's right to hold the notes, policy and assignment, all of which were returned to Williams. In September, 1910, Williams delivered to Stanley a note for $3,000 bearing a forged signature of the plaintiff, the policy of insurance and a forged assignment thereof, all without authority from the plaintiff, who, since February, 1907, had done nothing in the premises except to pay interest to Williams on $1,000 as it became due. After the death of Williams the genuine $500 note and the raised $1,500 note were found among his papers.

In the superior court a decree was entered requiring the defendant Stanley to deliver to the plaintiff the policy of insurance and the forged assignment and forged $3,000 note, and the administrators of the estate of Williams, upon payment by the plaintiff of $500 and interest thereon, to deliver to him the genuine note for $500 and the note fraudulently raised to $1,500. The defendant Stanley alone appealed from that decree.

[1][2][3] The rights of the defendant Stanley to the policy of insurance so far as they grew out of the first transaction between him and Williams were extinguished in April, 1910, by the payment to him of $2,000. He then had no claim upon it. When subsequently, in the following September, he received it again, together with a forged note and a forged assignment, he acquired no rights against the plaintiff. The forgeries were nullities as to the plaintiff. The fraudulent alteration by Williams of one of the genuine notes by trebling its face destroyed the value of that note in his own hands. Greenfield Savings Bank v. Stowell, 123 Mass. 196, 25 Am. Rep. 67. As it is now in the hands of his estate, the defendant Stanley can gain no advantage from it. The single circumstance that once Stanley held that note for value by transfer from Williams gives Stanley no right after the payment and surrender of the note to Williams. The mere possession of the policy of insurance by Stanley without right, so far as concerns the plaintiff confers upon Stanley no right as against the plaintiff. Tower v. Stanley, 220 Mass. 429, 437, 107 N. E. 1010. The fraudulent alteration of the note by Williams not only destroyed its validity, but extinguished the maker's obligation to pay the consideration given for that note. This rests upon the firm foundation that the perpetrator of a forgery cannot acquire by his own fraudulent act a right of action which otherwise he would not possess and thus run no risk of losing anything by his wrong even in detected. Wheelock v. Freeman, 13 Pick. 165,23 Am. Dec. 674;Adams v. Frye, 3 Metc. 103;Stoddard v. Penniman, 108 Mass. 366, 11 Am. Rep. 363. To state the rule with technical accuracy, it may be said that the only obligation resting on the maker was the note itself. The contract expressed by the note has not been used, but destroyed by the alteration. The note as altered he never made. Draper v. Wood, 112 Mass. 315, 17 Am. Rep. 92;Citizens' Nat. Bank v. Richmond, 121 Mass. 110;Greenfield Savs. Bank v. Stowell, 123 Mass. 196, 206,25 Am. Rep. 67;Munroe v. Stanley, 220 Mass. 438, 443, 107 N. E. 1012. There is no liability on the part of the plaintiff to anybody connected with the note fraudulently raised. Hence no one can gain any right in the policy arising out of that transaction. The lien on the policy to that extent has been discharged. No question arises in this connection as to a bona fide holder in due course of a fraudulently raised note under R. L. c. 73, § 141 (see Stone v. Sargent, 220 Mass. 445, 449, 107 N. E. 1014;Herman v. Conn. Mut....