97 Misc. 694 | N.Y. App. Term. | 1916
The plaintiff has brought an action to recover from the defendant the amount of a check drawn by the firm of Homans & Co. upon their account in the defendant bank and certified by it. It appears undisputed that on the 16th day of March, 1916, the stock brokerage firm of Homans & Co. drew its check for the sum of $.1,990 to the order of the plaintiff and gave the check to one of their clerks with instructions to take the check to the defendant bank for certification and, after certification, to use the check for the purchase of $2,000 par value of revenue
I have serious doubts whether the jury could reasonably find that the plaintiff was guilty of bad faith. The plaintiff was probably not vigilant when it accepted the check and forged requisition; possibly it may even have been, in a sense, grossly negligent, but
The check made by Homans & Co. was never delivered by them to the payee, and until delivery an instrument has no legal inception. It was stolen from their possession. The thief never had any title to the check and, therefore, could not transfer title to the plaintiff. If the plaintiff can maintain an action upon an instrument which was never delivered by the maker, and by virtue of a title received from a person who himself had no title to the instrument, /then this result must be due to the peculiar rules of the law merchant governing negotiable instruments, now embodied in the Negotiable Instruments Law. Section 35 of that law provides: “ Every contract on a negotiable instrument is incomplete and revocable until delivery of the instrument for the purpose of giving effect thereto. As between immediate parties, and as regards a remote party other than a holder in due course, the delivery, in order to be effectual, must be made either by or under the authority of the party making, drawing, accepting or indorsing, as the case may be; and in such case the delivery may be shown to have been conditional, or for a special purpose only, and not for the purpose of transferring the property in the instrument. But where the instrument is in the hands of a holder in due course, a valid delivery thereof by all parties prior to him so as to make them liable to him is conclusively presumed. And where the instrument is no longer in the possession of a party whose signature appears thereon, a valid and intentional delivery by him is presumed until the contrary is proved.”
There is no doubt that by virtue of the rule embodied
The defendant claims that the payee is an “ immediate party ” to the instrument and that, therefore, in an action brought by the payee, evidence is always admissible to show that there was no valid delivery of the instrument. There seems to be some, diversity of authority in the various states as to whether the payee of a negotiable instrument can ever be a “ holder in due course ” within the meaning of the statute. See Boston Steel & Iron Co. v. Steuer, 183 Mass. 140; Liberty Trust Co. v. Tilton, 217 id. 462, which hold that a payee is not necessarily a remote party and may be a holder in due course. See also Vander Ploeg v. Van Zuuk, 135 Iowa, 350; Long v. Shafer, 185 Mo. App. 641, which hold that a payee is an immediate party and cannot be a holder in due course and does not take free from any defenses which the maker could interpose if the instrument were non-negotiable. It is quite impossible to reconcile these decisions, but it seems to me that, even though we adopt the views expressed by the Massachusetts courts, the plaintiff has not established that in this case the'payee is not an immediate party and is a holder in due course.
In the case of Boston Steel & Iron Co. v. Steuer, 183 Mass. 140, the facts were that the defendant, a married woman, delivered to her husband her check for
These views are somewhat strengthened by the “opinion of the Supreme Court of Massachusetts in the case of Liberty Trust Co. v. Tilton, supra, upon which the plaintiff seems largely to rely. In that case the payee of the note sued an accommodation indorser who signed the. note in blank, upon the express condition that the/ maker should fill in the note and deliver it only after certain conditions were met. The court there held that the payee was a purchaser for value. In that case the court again reviewed the authorities on the point of whether the payee of a note could ever be a holder in due course and especially its earlier decision in Boston Steel & Iron Co. v. Steur, supra. It stated that the effect of that decision was to hold that the words “immediate parties” as used in the Massachusetts Negotiable Instruments Law which is similar to our own statute, “did not necessarily include the payee. Hence ‘ immediate parties ’ in that connection excludes a party who is a holder in due course. In such case these words must be confined to parties who are ‘ immediate ’ to the conditions or limitations placed upon the delivery in the sense of knowing or being chargeable with notice of them. A payee who is a holder in due course is not an immediate party in the sense of that section. This result follows from holding that a payee may be a ‘ holder in due course ’ as defined in
It follows that the judgment should be affirmed, with costs.
Whitaker, J., concurs; Finch, J., not sitting.
Judgment affirmed, with costs.