50 N.Y. 531 | NY | 1872
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *533
The plaintiff insists that the referee erred in his legal conclusion that upon the facts found he was not entitled to recover. That from these facts it appears that the defendant converted the notes to his own use by tranferring them to a bonafide purchaser, thereby making the plaintiff liable to pay the amount. This depends entirely upon the further question, whether the notes, at the time of the delivery thereof by the plaintiff to the defendant, became valid securities *534
in the defendant's hands against the plaintiff. If they did, the defendant had the right to procure the indorsement of Chamberlain and transfer the same at his pleasure, and such transfer would give the plaintiff no right of action for their conversion. If they did not upon delivery by the plaintiff to the defendant become valid obligations in his hands, he acquired no title, and the subsequent transfer by him to purchasers in good faith, thereby making the plaintiff liable for the payment thereof, was an unlawful conversion by the defendant, and rendered him liable to the plaintiff for the damages thereby sustained. (Decker v.Mathews,
It is also insisted that the plaintiff sustained no damage by the course taken by the defendant, as he would have been equally liable upon the notes had they been delivered by the defendant to Chamberlain upon a settlement of the suit. The answer to this is that had he known that the suit had been settled by the defendant in pursuance of his agreement with Stetson, he would not have indorsed the notes and would not become liable at all. It was for him to determine whether he would become the surety of Stetson upon his promise to indemnify the defendant for paying the drafts. It is enough that it does not appear that he intended or agreed to do this. My conclusion is that the purpose for which the plaintiff indorsed and delivered the notes to the defendant, never having been accomplished by them, the defendant acquired no title to them. That he had no right to use them as security for what he had before paid to Chamberlain on account of Stetson, and therefore the defendant was liable for a conversion by transferring them to a bona fide purchaser, thus making the plaintiff liable for their payment.
The finding of the referee, that the defendant did not by withholding information from the plaintiff that he had already settled the suit with Chamberlain intend to perpetrate any fraud upon him, is not material. Had this information been given, and the plaintiff had then indorsed and delivered the notes for the purpose of becoming surety for Stetson to him for the payment he had made, he would have been bound by the indorsement.
It is also claimed that the plaintiff ratified the acts of the defendant by his subsequent receipt of the drafts as paid. But this receipt by him was as agent for Stetson, and for the purpose of delivering the same to him. This was no ratification. Evidence was given tending to show that the plaintiff assented to the transfer of the notes by the defendant, and some evidence in answer thereto that such assent was procured fraudulently. *538 As the referee made no finding upon this evidence, I shall not determine as to the effect that should have been given to it.
The judgment must be reversed and a new trial ordered, costs to abide event.
All agree.
Judgment reversed.