Teas v. Third Nat. Bank & Trust

• Decision Date: 06 February 1939
• Docket Number: No. 226.,226.
• Citation: 125 N.J.Eq. 224,4 A.2d 64
• Parties: TEAS v. THIRD NAT. BANK & TRUST CO.
• Court: New Jersey Supreme Court

4 A.2d 64

125 N.J.Eq. 224

TEAS

v. THIRD NAT. BANK & TRUSTCO.

No. 226.

Court of Errors and Appeals of New Jersey.

Feb. 6, 1939.

CASE and DONGES, Justices, and HETFIELD, RAFFERTY, and WALKER, Judges, dissenting.

Appeal from Court of Chancery.

Suit by Rutherford Thompson Teas, executor under the last will and testament of Elizabeth M. Teas, deceased, against the Third National Bank & Trust Company to enjoin the defense of the statute of limitations set up in an answer in an action at law. From an adverse decree, defendant appeals.

Affirmed.

Harold W. Bennett, of Camden, for appellant.

Bleakly, Stockwell & Burling, of Camden (Henry F. Stockwell, of Camden, of counsel), for respondent.

PORTER, Justice.

A decree of the Court of Chancery advised by Vice Chancellor Davis is appealed from.

The prayer of the bill of complaint was to enjoin the defense of the statute of limitations set up in an answer in an action at law.

The court below granted the injunction and we think properly so.

The facts are that the complainant-respondent is the executor under the last will and testament of his deceased mother Elizabeth M. Teas. He retained Joseph H. Carr, an attorney in Camden, to represent him. Carr had represented his father's estate and he considered him entirely trustworthy and a lawyer of high standing and fine reputation. Respondent was an engineer who resided in Chicago and whose profession required considerable traveling.

He considered it advisable to liquidate some mortgages held by the estate and instructed Carr to dispose of two certain mortgages on properties in Delaware County, Pennsylvania. Carr suggested that both mortgages be assigned so that they could readily be disposed of. He complied with that suggestion and executed assignments in Chicago, one dated December 16, 1929, and the other one dated December 23, 1929, and mailed them to Carr.

Carr collected the amounts due on both mortgages and converted the proceeds to his own use in the manner presently shown. He kept respondent in ignorance of his fraud and, in fact, remitted sums to him which he stated were the interest on the mortgages, and made other false statements as to why he had been, as he claimed, unable to collect the principal sums due. On May 23, 1935, Carr sent an attorney from Camden to respondent in Chicago with the information that he had collected the monies due on both these mortgages and had appropriated same to his own use. Respondent then came to Camden and saw Carr who repeated his confession and offered to make restitution, paying on account thereof $200 and later $1500. Carr did not tell respondent nor did respondent have any knowledge of the method used by Carr in obtaining the mortgage money.

In the fall of 1936 respondent asked a friend who was a Philadelphia attorney to investigate the matter and as a result he then for the first time learned how the money had come into Carr's possession.

It developed that two checks were delivered to Carr in payment of the mortgages; both issued by the Real Estate-Land Title and Trust Company of Philadelphia: The first one dated December 23, 1929, to the order of Rutherford Thompson Teas, Ancillary Executor, in the sum of $5591.08. The second check dated January 2, 1930 to the order of Estate of Elizabeth M. Teas in the sum of $5605.10.

Both checks have printed on their faces these words: "Payable upon proper identification of payee." Both were endorsed by Carr in the name of the payee and under same: "Joseph H. Carr, Atty." and "Joseph H. Carr," and deposited by him in his own private bank account to his own order and, as later confessed by him, as aforesaid, the proceeds appropriated to his own use. Respondent had no account in the defendant-appellant bank nor any business relations with it.

Promptly upon receiving this information respondent consulted New Jersey counsel and a notice and demand was at once served upon appellant bank, dated November 16, 1936.

Carr at the time these checks were deposited by him was a director and counsel for the appellant bank. No question was raised as to the propriety of the transaction by anyone and no notice of any kind was given by the bank to respondent nor was any investigation or inquiry made by the bank. The checks were cleared in due course and the proceeds paid to the bank.

Promptly after the service of the notice and demand on the appellant by respondent and payment refused, suit was instituted by him against the bank to recover the proceeds of these checks in the New Jersey Supreme Court.

The answer filed by the bank, among other things, set up the statute of limitations as a bar to the action. The bill in Chancery followed to permanently enjoin the bank from availing itself of that defense.

It is not disputed that the proceeds of these checks belonged to respondent. He at no time authorized Carr to endorse his name to them. It follows that there was conversion of the funds. The possession of the checks by the appellant bank was unlawful with these unauthorized endorsements thereon. Negotiable Instruments Law, R.S. 7:2-23.

There is no substantial difference between an unauthorized endorsement and a forged endorsement, the result being the same in so far...