Title Guarantee & Trust Co. v. Haven

• Decision Date: 13 April 1915
• Docket Number: Action No. 2.
• Citation: 214 N.Y. 468,108 N.E. 819
• Court: New York Court of Appeals Court of Appeals
• Parties: TITLE GUARANTEE & TRUST CO. v. HAVEN et al.

214 N.Y. 468

108 N.E. 819

TITLE GUARANTEE & TRUST CO.

v.HAVEN et al.

Action No. 2.

Court of Appeals of New York.

April 13, 1915.

Appeal from Supreme Court, Appellate Division. First Department.

Action by the Title Guarantee & Trust Company against Fanny Arnot Haven, individually, and Fanny Arnot Haven and another, as executors of Matthias H. Arnot, deceased. A judgment of the trial court dismissing the complaint on the merits was unanimously affirmed by the First Appellate Division (154 App. Div. 652,139 N. Y. Supp. 207), and the plaintiff appeals. Reversed, and final judgment rendered for plaintiff.

Harold Swain, of New York City, for appellant.

John Vernou Bouvier, Jr., of New York City, for respondents.

HISCOCK, J.

This action was brought seeking to have reinstated the lien of certain local assessments on property or the proceeds thereof formerly owned by the defendant Haven and the testator Arnot, situated in the city of New York, and to be subrogated to the lien of said assessments. This relief is asked because the appellant was induced to honor a forged check drawn on it in the name of a depositor and presented by or in behalf of the city which had received it in payment of said assessments.

[1] The case has been before this court once before on an appeal from the affirmance of a judgment dismissing the complaint. 196 N. Y. 487, 89 N. E. 1082, 1085,25 L. R. A. (N. S .) 1308,17 Ann. Cas. 1131. On that appeal it appeared that such dismissal had been granted because of the supposed application of the provisions of section 112 of the Negotiable Instruments Law (Cons. Laws, c. 38), which enacts that the acceptor of a negotiable instrument admits ‘the existence of a drawer, the genuineness of his signature, and his capacity and authority to draw the instrument.’ It had been believed by the trial court and Appellate Division that the appellant, as drawee of the check, was bound to know the signatures of its depositors, and that, when it honored the forged check, it was bound by its act and could not recover back the moneys paid thereon to the city and applied by the latter in discharge of the assessments, and therefore it could not be subrogated to any rights which the city might have had, if the check had not been honored, against the third persons whose assessments were paid by its proceeds.

This court, in reversing that judgment, held that the rule enacted by the statute in respect of the obligations of the drawee of a check had no application in behalf of one who had acquired paper in the absence of any consideration therefor, and that so far as appeared the forged check in this case was not given in payment of any indebtedness past or existing, due either from the purported maker or from the forger of the check, but amounted to or represented a purely gratuitous payment.

The issue thus outlined by our decision is the only one left for debate, and on this appeal it is insisted by the respondents that additional facts have been developed which establish that the forged check was given for a consideration, and that therefore the rule which was erroneously applied on the first trial has now been properly applied both within the words written by this court on the former appeal concerning this specific case and within principles established by other authorities.

In order to determine whether this contention is well founded, and whether respondents have so avoided the force of our former decision that they can uphold the present judgment, it will be necessary to summarize the important facts established on each trial and thus by comparison bring into prominence the additional ones which were proven on the last one.

On the first trial it appeared that one Marianna A. Ogden was the owner of the premises in question and had made a will devising them to her sister and brother, Mrs. Haven and Mr. Arnot. Shortly after the assessments in question had been laid, first one Andrew H. Green and then Mrs. Ogden died, and the premises passed, in accordance with the terms of her will already outlined, to the devisees therein named. Subsequently the forged check, purporting to be drawn by and in the name of the estate of said Green to the order of the collector of assessments of the city of New York, was delivered to the latter in payment of said assessments, and subsequently in behalf of the city presented to and paid by the plaintiff and charged by the latter to the account of the purported drawer; the amount so charged being afterwards restored.

On the present trial the additional facts of supposed importance which have been found are the ones that Mr. Green, who was her agent and attorney, notified Mrs. Ogden that the assessments on said premises had been laid and asked her to send him a check for the purpose of paying the same; that she did send to him a cashier's check payable to his order which was received by him and the proceeds deposited to his personal account and his own check given to a dishonest employé, Andrews, for the purpose of paying said assessments; that the latter embezzled the proceeds of the check and the assessments remained unpaid; that, after the death of Mr. Green and Mrs. Ogden, Andrews, apprehending discovery of his crime, drew upon plaintiff the forged check and sent it in payment of said assessments; that Mrs. Ogden died believing that the assessments had been paid, but that the defendants and their testator knew nothing of the making and presentation of the forged check or of the use which was made of it, and it was not delivered to the collector of assessments by or in pursuance of any directions by them or any of them.

It is earnestly argued that the opinion on the former appeal of itself gives to these additional facts an effect in establishing a consideration for the forged check in the possession of the city which is destructive of appellant's right to recover, and in support of that contention our attention is especially called to certain passages in the opinion. It is recalled that Judge Bartlett pointed out that the facts had been found by the referee substantially as pleaded by the defendants, ‘except that there is no finding of the receipt of any money by Andrew H. Green from Marianna A. Ogden with which to pay the assessments'; that ‘upon the facts, as found by the referee, we have here the case of a purely gratuitous payment of assessments, constituting at the time a lien in favor of the city of New York upon lands owned by the defendants, which payment was clearly induced by the fraud and forgery of some party unknown;’ and that therefore the provisions of section 112 of the Negotiable Instruments Law did not prevent subrogation; and further:

‘It must be distinctly understood that this view is predicated upon the assumption that the payment of the assessments was purely gratuitous and in no wise in discharge of any real or supposed obligation upon the part of the estate of Andrew H. Green or of the unknown forger, but was brought about solely by mistake induced by the forgery. Upon this assumption we think that the plaintiff on proof of the facts stated in the complaint would be entitled to be subrogated to the lien of the city as against the proceeds of the sale of the land in the hands of the defendants. If, however, it should be made to appear that the payment was not thus gratuitous, we are of opinion that the right of subrogation could not successfully be asserted.’

These passages have thus been repeated at length because they are thus quoted in the opinion of the learned referee, and upon them, as stated, the argument is made both by him and the respondents' counsel that the court must be regarded as having meant to say in advance that if it should appear that Mrs. Ogden had sent to Mr. Green the money with which to pay these assessments, as it now appears she did do, there would have been established a ‘real or supposed obligation’ on the part of the Green estate or the forger to pay them, the payment by the bank of the forged check would not have been a gratuitous one, and subrogation would not lie, and that therefore judgment has been correctly ordered for the respondents.

It seems to me that what was said in the opinion does not reasonably bear any such interpretation, and that the conclusion is not warranted that the court in advance of a trial undertook to forecast the precise evidence which might be given and bind itself to a construction of that evidence as settling the rights of the parties.

It was being decided that, as the facts them stood, the payment by the appellant was a purely gratuitous one induced by fraud and a new trial was being ordered. In doing this, and in summarizing the findings on which the decision was being reached, and certainly as tending to support it, reference was made to the circumstance that the respondents had not even proved the allegation of their answer that Mrs. Ogden had ever sent any money to Mr. Green to pay the assessments, and without such evidence we must all concede that they could scarcely make a start on their defense; and attention was also particularly called to the circumstance that the moneys had been paid by the appellant ‘without any request or authority from the defendants.’ But, of course, it was appreciated that on another trial there would be opportunity to amplify the evidence on both sides. This opportunity would not be bounded even by the pleadings as they then stood, but they might be amended, and nobody could prophesy but that it might appear, not only that the money was advanced by Mrs. Ogden to Mr. Green to pay the assessments, but that this was done by and with the knowledge of, or under some arrangement with, the city or proposed devisees which would create such an obligation on the part of the Green estate to pay the assessments at the time the forged check was honored as would subject appellant to the provisions of the Negotiable Instruments Law, already referred to. The court could...