Jaffe v. . Weld

Cardozo, J. This is an action to enforce a constructive trust. The plaintiffs say that moneys, taken from them by fraud and theft, have been converted into merchandise, and traced into the defendants’ hands. They ask the aid of equity to charge the defendants as trustees (Newton v. Porter, 69 N. Y. 133; Am. Sugar Ref. Co. v. Fancher, 145 N. Y. 552). The plaintiffs are bankers in the city of New York. They bought foreign drafts with bills of lading attached. The bills of lading were forged. The sellers of the drafts, Steele, Miller & Company of Corinth, Mississippi, were also the forgers. After issuing the foreign drafts and the accompanying bills of lading, the forgers drew another draft, styled a “ currency ” draft, on an agent in New York. This “ currency ” draft they deposited “for collection” in their bank in Corinth, Mississippi. The allegation, in substance, is that title to the draft remained in the depositors until collection. The draft was presented in New York and paid. The moneys which paid it were those procured from the plaintiffs through the false pretense and forgery. The proceeds of the collection were then remitted to the bank in Corinth. They were used by Steele, Miller & Company, the forgers, to release cotton which till then had been held by the bank in pledge, and also to buy new cotton. The cotton so redeemed and the cotton so purchased were turned over by Steele, Miller & Company to the defendants Weld & Company, who are charged to have taken it without con *446 sideratio'n and with guilty knowledge. The trustee in bankruptcy of Steele, Miller & Company, claiming some interest in the cotton, is also joined as a defendant. That is the outline of a complaint which covers about twenty printed pages. Its “prolix and vagrant statements” (Kn auth v. Latham & Co., 242 U. S. 426, 428) make paraphrase no easy task. It is the fourth complaint in this action. Three others yielded to demurrers. One of them was considered by this court (208 N. Y. 593; 155 App. Div. 110). Obscure and inartistic the complaint remains, but we can no longer say that it lacks the essentials of a cause of action. The earlier complaint was bad because it failed to show that the plaintiffs’ moneys had been used to redeem or buy the cotton. Indeed, it showed the contrary. The allegation then was that the forgers, having deposited the currency draft with the bank in Corinth, redeemed their pledged cotton with the “ credit ” thus obtained. There was no allegation that the deposit was for collection. In the absence of some restriction in the indorsement, the bank became the owner (Heinrich v. F. N. Bank, 219 N. Y. 1, 5). The cotton was released, as it then appeared, not through the use of any moneys belonging to the plaintiffs, but through the use of a credit already given by the bank. That was the basis of the decision both in the Appellate Division (155 App. Div. 110) and in this court (208 N. Y. 593). A different situation is before us now. The complaint says that the currency draft was deposited for collection; that alike by the law of Mississippi and by the agreement between the bank and the depositors, no title to the draft was to pass until collection; and that with the proceeds of collection, and not with an antecedent credit,, the plaintiffs bought and redeemed cotton, which they trace to the defendants. These are the very allegations that were lacking before. The defendants criticize many statements of the complaint as violently improbable. We have nothing to do *447 with that question at this time. The plaintiffs may not be able to prove what they charge, but they must be given the opportunity to prove it if they can. The order of the Appellate Division should be reversed and that of the Special Term affirmed, with costs in the Appellate Division and in this court, and the question certified answered in the affirmative. Hiscock, Oh. J., Chase, Collin, Hogan and Crane, JJ., concur; McLaughlin, J., not sitting. Order reversed, etc.