Chatham National Bank v. Hochstadter

| New York Court of Common Pleas | Jan 12, 1883

J. F. Daby, J.

[After stating the facts as —An attorney-at-law, employed to collect a claim, who receives in payment thereof a check payable to the order of his client, has no authority to indorse it in his client’s name and cash it. The power to indorse checks and bills must be expressly conferred (Filly v. Gilman, 34 Super. Ct. 339).

A power of attorney to collect moneys due and to compound, discharge and give releases therefor, does not authorize the attorney to indorse a bill drawn to the order of his principal (Hogg v. Snaith, 1 Taunt. 347 ; Murray v. East India Co., 5 Barn. & Aid. 204).

Nor does the power to receive a check in payment give the attorney the right to assign it or indorse it, if it be payable to the order of the principal (Holtzinger v. National Corn Ex. Bank, 6 Abb. Pr. N. S. 292 ; Graham v. U. S. Savings Inst., 46 Mo. 186" court="Mo." date_filed="1870-03-15" href="https://app.midpage.ai/document/graham-v-united-states-savings-institution-8002905?utm_source=webapp" opinion_id="8002905">46 Mo. 186 ; Millard v. National Bank Republic, 4 Nash. L. R. 209). There is nothing in the authority of an attorney-at-law, as such, that confers power to indorse checks, drawn to his client’s order, which he has received in payment of claims placed in his hands for collection. On the contrary, nothing is better settled than that an attorney-at-law employed to collect a demand has not even authority to receive a check, bill or note from the debtor in payment. How, then, can any authority to indorse such an instrument be implied? And if special authority were conferred on him by his client to receive such an instrument, he would not be permitted, as the cases cited show, to indorse it in his client’s name, if it were drawn to the order of the latter. It was suggested in the court below that the attorney of a non-resident or absent client might risk the loss of the debt if he had to send the check abroad or wait the client’s return. The sufficient answer is that the difficulty suggested need never arise; the attorney may always refuse to receive a check, and may insist upon payment of the claim in money. .

An objection to the recovery of the amount of the check in this action is made on the ground that the complaint alleges fraud on the part of the defendant in indorsing the check as attorney for George W. Bruce, and collecting it through his own bank; and it is claimed that the evidence shows that defendant indorsed the check in good faith, upon the supposition that he had the right to indorse his client’s name. The bad faith and fraud of the defendant are conclusively proved. As an attorney-at-law, he knew he had no right to indorse his client’s name, not being thereto authorized by his client. In indorsing as “ Att’y ” he purposely omitted to state that it was as attorney-at-law, but left it so in order to deceive the bank into the belief that he was attorney in fact for Bruce. His account was kept in the name of McEadden, from whom he' had a power of attorney, and he knew that such a power was necessary to indorse checks, and that the presumption was that he indorsed this check as attorney in fact, just as he drew or indorsed for McFadden.

But the strongest evidence of his bad faith is that he did not attempt at first to indorse and draw this check, but sent it repeatedly to Mr. Bruce, and only after the latter had refused to pay his bill resorted to the desperate step of indorsing it fraudulently as a pretended attorney in fact and drawing the money.

The judgment must be reversed, with costs of this appeal and of the General Term of the Marine Court to plaintiff, and a new trial ordered, with costs of the former trial to plaintiff to abide event.

Van Bbunt and Van Hoesen, JJ., concurred.

Judgment reversed, with costs, as directed in the opinion.