Strang v. Westchester Cnty. Nat. Bank

• Decision Date: 27 February 1923
• Citation: 138 N.E. 739,235 N.Y. 68
• Parties: STRANG v. WESTCHESTER COUNTY NAT. BANK.
• Court: New York Court of Appeals Court of Appeals

235 N.Y. 68

138 N.E. 739

STRANG

v.WESTCHESTER COUNTY NAT. BANK.

Court of Appeals of New York.

Feb. 27, 1923.

Action by Bessie M. Strang against the Westchester County National Bank. Judgment for plaintiff by the court, a jury having been waived, was reversed by the Appellate Division (191 App. Div. 787,182 N. Y. Supp. 41), and a new trial granted, and plaintiff appeals.

Reversed.

McLaughlin and Crane, JJ., dissenting.Appeal from Supreme Court, Appellate Division, Second department.

P. A. Anderson, of Peekskill, for appellant.

Charles E. Scribner, of New York City, for respondent.

CARDOZO, J.

Plaintiff had a deposit account with the defendant bank. She informed the cashier that she wished to make a draft for $1,100, payable to one Homer E. Remsen, to whom she was to loan the money on bond and mortgage. The cashier told her to make the draft to her own order, and to indorse it to the order of Remsen. She brought the draft thus indorsed to one Bushnell, a lawyer. Bushnell gave her in return a bond, signed, as it seemed, by Homer E. Remsen and Alice, his wife, exhibited a mortgage signed in the same way, and made out a certificate that the mortgagors were the owners of the mortgaged property, free from all incumbrances. In truth, there were no such persons. The owner was Bushnell, and his supposed clients were fictitious. He told the plaintiff that he had once been the owner of the property, but that he had sold it two years before the Remsen, and owned it no longer. The draft was paid by the bank upon the indorsement of the attorney in the name of the fictitious client. His suicide a few days afterwards laid bare his crime. The plaintiff notified the bank that the draft had been paid without right, and sued to recover the money charged to her account. The Trial Term gave judgment in her favor. The Appellate Division reversed and granted a new trial. An appeal to this court followed.

[1][2][3][4] We think the appeal must be sustained. The defendant was without authority to disburse the plaintiff's money except in accordance with her orders. It acted at its peril if it paid upon a forged indorsement. Shipman v. Bank of State of N. Y., 126 N. Y. 318, 27 N. E. 371, 12 L. R. A. 791, 22 Am. St. Rep. 821. It did pay upon such an indorsement, and must answer for the consequences. A different case would be here if the plaintiff had dealt with Bushnell in the belief that he was Remsen, intending to make payment to the person then before her, though lured into that intention by his assumption of a fictitious name. In such circumstances nice distinctions would have to be drawn to determine whether the crime was forgery or something else. Phelps v. McQuade, 220 N. Y. 232, 115 N. E. 441, L. R. A 1918B, 973;Mercantile Nat. Bank of the City of N. Y. v. Silverman, 148 App. Div. 1,132 N. Y. Supp. 1017, affirmed on opinion below 210 N. Y. 567, 104 N. E. 1134;First Nat. Bank v. Am. Ex. Nat. Bank, 170 N. Y. 88, 62 N. E. 1089; 3 Williston on Contracts, § 1517. That is not what happened. The plaintiff did not intend to deal with Bushnell, either under that name or any other. She did not know Remsen, who was represented to be the owner, but she knew that he was not Bushnell, for Bushnell so informed her. He told her, as we have seen, that the property had once been his, but that he had parted with his ownership. In these circumstances the crime of forgery was committed when he signed the names of Homer and Alice Remsen to the bond which charged them with the debt. United Cigar Stores Co. v. American Raw Silk Co., Inc., 184 App. Div. 217,171 N. Y. Supp. 480, affirmed 229 N. Y. 532, 129 N. E. 904;Nat. Surety Co. v. Nat. City Bank, 184 App. Div. 771,172 N. Y. Supp. 413; Mercantile Nat. Bank v. Silverman, supra; Phelps v. McQuade, supra. The crime was committed again when he signed their names to the mortgage, adding a certificate of acknowledgment in the name of a fictitious notary. It was committed once again upon his indorsement of the check. What he did was none the less a forgery because it has turned out in the end that the borrower was a myth. Shipman v. Bank of State of N. Y., supra; Seaboard Nat. Bank v. Bank of America, 193 N. Y. 26, 85 N. E. 829,22 L. R. A. (N. S.) 499; United Cigar Stores Co. v. American Raw Silk Co., Inc., supra; People v. Browne, 118 App. Div. 793, 799,103 N. Y. Supp. 903; Penal Law, § 883; Consol. Laws, c. 40. The myth did not exist with the consent or knowledge of the lender. Neg. Inst. Law (Consol. Laws, c. 38) § 28.

[5] The argument is made that the bank acted within its rights when it paid the check to Bushnell, because Bushnell was in truth the owner of the mortgaged land. The record does not tell us whether his title was unincumbered, but ownership, though absolute, would not change the nature of his crime. The plaintiff did not loan her money to Bushnell, content to accept him as a borrower. He of all men was excluded. She loaned it upon the bond of Homer and Alice Remsen, with a mortgage as collateral. Undoubtedly she believed, when she drew her check upon the bank, that Remsen was an owner of the property, and that the mortgage was a valid lien. This belief did not mean that some one else who had been expressly excluded as a borrower had the right, because he was the owner, to step into the borrower's shoes. Remsen, if a real person, might have indorsed the draft without liability as a forger, however fraudulent the statement that he was the owner of the land. Phelps v. McQuade, supra. Bushnell, having asserted that the borrower was some one other than himself, was not at liberty to indorse, whether he was the owner of the land or not. No doubt there are border cases where the line is hard to draw between the imposter who appropriates what is intended for another, and the imposter who deceives by misrepresenting his responsibility or character. We have an illustration in Hartford v. Greenwich Bank of City of N. Y., 157 App. Div. 448,142 N. Y. Supp. 387, and 215 N. Y. 726, 109 N. E. 1077, a case which later opinions have said is not to be extended. United Cigar Stores Co. v. American Raw Silk Co., Inc., supra; Nat. Surety Co. v. Nat. City Bank of Brooklyn, 184 App. Div. 771,172 N. Y. Supp. 413. In the case at hand the line of division is reasonably clear. The plaintiff had no thought that she was accepting Bushnell's bond. The maker of the bond was to be the holder of the check.

The order of the Appellate Division should be reversed, and the judgment of the Trial Term affirmed, with costs in this court and in the Appellate Division.

McLAUGHLIN, J. (dissenting).

For some time prior to the 20th of October, 1916, the plaintiff, at various times, had invested different sums of money through her agent in peekskill, one Bushnell, a lawyer. Shortly prior to the date named he asked her if she cared to loan $1,200 on a lot situate on Constant avenue in Peekskill. She told him, if satisfied with the value of the lot, she would make such loan. He showed her the lot, told her he had formerly owned it, but it was then owned by Homer E. Remsen. After looking it over she decided to make the loan, same to be secured by a bond and mortgage. At that time she did not know and had never heard or had any knowledge of Remsen, except such as was given to her by Bushnell in connection with the transaction under consideration. She was a depositor in the defendant bank and then had something like $1,100 to her credit. She drew a draft for that amount on the bank, payable to her own order, took it to the office of her agent Bushnell, at his suggestion indorsed it payable to the order of Homer E. Remsen, and left it with Bushnell to be delivered to him. The balance of the $1,200 was made up as follows: She gave to Bushnell $50 in cash and also her promissory note for $50 payable to his order, which amount he was to advance and deliver with the draft for $1,100. He agreed to deliver the draft and the $100 in cash to Remsen, and in exchange for which Bushnell then gave her a bond purporting to be signed by Remsen, and exhibited to her a mortgage upon the lot which had previously been shown her, but which he retained for the purpose of having recorded. A fire insurance policy on the building upon the lot was also delivered to her at the same time, as was a certificate by Bushnell to the effect that Remsen had good title to the lot in question. Bushnell himself was the owner of the lot. Remsen...