26 Kan. 691 | Kan. | 1882
The opinion of the court was delivered by
Upon the record of this case two different questions are presented for our decision. The first is, whether a draft or bill of exchange payable to) a real person known at the time to exist, and present to the mind of the drawer when-he made it, as the party to whose order it is to be paid, must bear the genuine indorsement of such payee in order that a bona fide indorsee may recover thereon, when such bill has-been drawn without the knowledge or consent of the person named therein as payee, through the false representations of a party forging the indorsement, who obtains it from the drawer by fraud and without consideration? Second, if a drawer be induced by the fraudulent representations of a party seeking to defraud him, to make a draft or bill of exchange payable to a fictitious person, not knowing the payee to be fictitious when he makes the bill and intending that such bill
The first inquiry arises upon the findings of the trial court in relation to the bill payable to the order of Michael A. Becker. It appears that he was a former resident of
The second inquiry presents more difficulty. No such persons as Henry Greer or Geo. W. Cobb, the payees mentioned
“In the case of a note payable to a fictitious person, it appears to be well settled that any bona fide holder may recover on it against the maker as upon a note payable to bearer. It will be no defense against such bona fide holder for the maker to set up that he did not know the payee to be fictitious. By making it payable to such person he avers his existence, and he is estopped, as against the holder ignorant of the contrary, to assert the fiction.”
The authority to sustain the rule announced is, Lane v. Krekle, 22 Iowa, 399. This authority, so far as the actual points necessary to have been decided in that case, hardly goes so far as the text of the author, because the note in that action was made payable to bearer, and Dillon, J., remarks at the commencement of the opinion, “That this fact relieves the case of some difficulties that would arise were it payable to the person named, or order.” Yet that learned judge, in the opinion, presents a strong argument in support of the proposition stated by Daniel. He says:
“ Upon reason and principle we are clear that, if the plaintiff is a bona fide holder for value and without notice, the fact that the note is made payable to a fictitious person, is no defense. In such case, the defendant would be estopped, as against the plaintiff, from setting up the fact. It was the defendant who made the note. By making it payable, as he did, he affirmed the existence of such a person as the payee therein named; and he should not, against a person ignorant of that fact — one who may reasonably be presumed to have acted upon the faith of the fact thus represented — be allowed to assert the contrary. This principle of estoppel in pais has a very extended and just application in the law of bills and notes, the doctrines of which are designed to give credit and circulation to negotiable paper, and to that end throw its protection around the honest and fair holders thereof. In respect to such a holder, the maker is bound to know that the payee is a real person, or thereafter hold his peace.”
In the case of Phillips v. Im Thurn, 114 Eng. C. L. 694, the defense was that the payee was a fictitious person, in
Passing from these cases, and the authorities therein cited, to the reasons for these two drafts being held as payable to fictitious payees, we add, that of course if Watkins had not intended that such payees should become parties to the transaction, or, in other words, had knowledge of their non-existence, there could be no question as to error in the judgment of the court below. (1 Parsons on Bills, 32, 560, 591, 592, and notes; 2 Parsons on Bills, 40, 50; Story on Bills, §§ 56, 200; 4 E. D. Smith, 83.) Ought the defendant, who made the bills in ignorance of the fact that the persons named as payees are fictitious, and thus parted with them to a correspondent, be permitted to aver and prove this as against the innocent holders for value? Either plaintiffs or defendant must lose in this transaction. Watkins transmitted these drafts to his correspondent McLain, and McLain was thereby
Counsel for defendant refer to cases making the indorsement by McLain upon the bills at the time he delivered them to plaintiffs a forgery. Even if this be so, we do not think it prevents the recovery by plaintiffs, because the principle of estoppel in pais is to be applied to the defendant, and as between the plaintiffs and the defendant these drafts are to be treated as if drawn payable to bearer. The case will be remanded, with directions for the court below to render judgment upon the findings of fact for plaintiffs upon the drafts payable to Greer and Cobb, and judgment for the defendant upon the draft payable to Becker.