161 N.E. 449 | NY | 1928
Plaintiff purchased from Max Hart a note for $4,185 payable by defendant to the Jeavons Company and purporting to bear that corporation's indorsement by J.L. Huston as treasurer. Two issues of fact were submitted to the jury, first whether defendant gave the note by reason of a false representation of fact upon which he relied, and second whether plaintiff, innocently and in good faith, paid valuable consideration for it. The judgment entered upon the verdict in *143 plaintiff's favor has been affirmed by a divided court. Our conclusion is that an error of law requires a new trial.
Defendant, residing at Allentown, Penn., fell among thieves in New York. A group of swindlers calling themselves the Julian Trade Finance Corporation arranged with him to give his note to a reputable and financially sound corporation, the Chicago Rubber Clothing Company of Racine, Wis., for $4,185 in return for notes payable to him by the rubber company in an equal amount. His credit was good, but he had already borrowed from his local bank and wished to raise additional funds for the conduct of his business. The band of swindlers represented to him that the rubber company was in the same condition and that an exchange of notes by two reputable business organizations would enable each to extend its credit. The evidence is that Huston and Hart were among those who operated under the name of the Julian Trade Finance Corporation. Upon Huston's assurance that the name of the Chicago Rubber Clothing Company of Racine would be inserted as payee, defendant delivered to Huston his signed note for $4,185 with the payee's name left blank. Instead, the name of the Jeavons Company was inserted and defendant received notes purporting to bear the signature of the Chicago Rubber Clothing Company. This corporation, bearing a name similar to that of the corporation located at Racine, was without credit and its notes were worthless. Hart, from whom plaintiff purchased defendant's note to the Jeavons Company, had been convicted with a man named Fowler for fraud. Plaintiff and Hart had long maintained financial relations and she and Fowler had known each other for several years. It was Fowler who, testifying on the trial of this action, identified the signature of Huston as treasurer of the Jeavons Company purporting to indorse defendant's note. Neither Hart nor Huston appeared as a witness.
Unless the note had been indorsed by the payee, the purchaser acquired no better title than that vested in *144
the payee and no better than that possessed by Hart. (Negotiable Instruments Law [Cons. Laws, ch. 38], section 79; G.N. Bank v.Bingham,
The judgments should be reversed and a new trial granted, with costs to abide the event.
CARDOZO, Ch. J., POUND, CRANE, ANDREWS, LEHMAN and KELLOGG, JJ., concur.
Judgments reversed, etc. *145