Susquehanna Valley Bank v. Pickering

dissenting:

The obligation of the pax'ties to. commercial paper, makers and indorsers, is presumably in the order in which their names appear thereon. The paper, in theoiy, passes to the holder through the hands of the indorsers in that order. In this case, the defendant did not receive the money on the draft. Still the money was advanced by the plaintiff upon the faith of his indorsement. Hence, the defendant must be hold to have indorsed the paper to the plaintiff, and their relation became and was strictly that of indorser and indorsee. The defendant then, by his indorsemexit, guaranteed to the plaintiff, not only the genuineness of the signatures on the paper antecedent to his own, but also that the instrument itself was genuine. He then could not deny his liability to the plaintiff, on the ground- that the draft had been raised from twenty-five dollars to $1,200, and must be held responsible the same as if he had received the moiiey from the plaintiff on the spurious paper. Then, holding the defendant to the genuineness of the draft, has he been legally charged according to his liability on the facts found ? He was not charged in the usual mode by making demand of payment and giving notice of dishoxior. But the learned judge held him liable, on the ground that due diligence was used in forwarding and presenting the draft for payment axid in discovering the alteration, and notifying the defendant of the fact; that having received the money from the plaintiff, as in law he must be held to have done, on spurious paper, ho will be held bound to its return in case of due diligence in discovering the -character of the paper and informing him of its invalidity. This ruling seems well suppox’ted by the decision in Bank of Commerce v. Union Bank (3 N. Y., 230). It is there said, in substance, that in a case like this, due diligence in detecting the spurious character of the paper, and in giving xiotice of its invalidity to the indorser, was all that was required of the indorsee to establish the liability of the former to l’espond. The language of the court in that case is appropriate here. As is there said, the action is xxot founded on the bill as an ixxstrument containing the contract on which the suit is brought. The defendant has obtained the money of the plaintiff, without right, on the exhibition of spurious paper as genuine ; its invalidity being unknown to both. The defendant *234ought not, in conscience, to retain the money, because it does not belong to him ; and, for the further reason, that the defendant and the previous indorsers have, each, on the same principle, their remedy over against the party to whom they respectively paid the money, until the wrong-doer is finally made to pay. If that party should be irresponsible, or if he cannot be found, the loss ought to fall on the party who, without due caution, took the bill from him. In cases where no negligence is imputable to the transferee or holder, in failing to detect the spurious character of the paper, the want of notice, within the ordinary time, to charge the previous parties to the bill, is excused, provided notice of the invalidity of the paper be given as soon as it is discovered. Such is the reasoning and, in general, the precise language of the court in the case cited. (See page 237.) • It cannot, with fairness, be claimed that due dilligence is not shown in this case in the par* ticulars above suggested.

The judgment should be affirmed, with costs.

Judgment reversed, new trial granted, costs to abide event.

It is not pretended that Pickering was guilty of any fraud, or that he was a party to the fraud done by another person.

By indorsing the note he became liable, if charged as an indorser, whether the note was genuine or not. But he has never been charged as an indorser, and is, therefore, not liable as such.

Nor did he receive any of the money. In the case of Bank of Commerce v. Union Bank (3 N. Y., 230), the recovery was not on the bill or note, but was for money paid to the defendant by mistake. So, also, in the case of White, v. Continental Bank (64 N. Y., 316). But, as Pickering did not receive any of the money, he is not liable to an action as for money paid by fraud or mistake. That is always an action, equitable in its character, based on the fact that the defendant has money which, in justice, he ought not to retain as against the plaintiff. No such claim can exist against Pickering.

The judgment should be reversed and a new trial granted, costs to abide the event.