Wolfin v. Security Bank

Scott, J.: Plaintiff, claiming as owner of a check indorsed to his order, upon which his signature was forged, sues defendant into [520] whose hands the check subsequently came, and who collected the amount thereof from the bank upon which it was drawn. The facts are as follows: One Robert M. Bergman drew his check upon the Twenty-third Ward Bank for $450, payable to the order of Samuel Litt. He then caused Litt to indorse the check payable to the order of Jacob Wolfin, this plaintiff, and delivered the check thus indorsed to Litt with instructions to deliver the same to Wolfin, which Litt promised to do. He did not so deliver it, however, and the check never came into Wolfin’s hands. Someone, the case does not disclose who, forged Wolfin’s signature on the back of the check, and in this condition it came into the hands of one Grossman, who deposited it to his own account with defendant, the Twenty-third Ward Bank, on which the check was drawn. There is no explanation why the check was originally drawn in favor of Litt, instead of Wolfin, nor does it appear that Bergman, when he drew the check, was indebted to Litt. The question involved turns, as we think, upon plaintiff’s ownership of the check, and it is to that question that appellant directs its argument. The defendant bank could acquire no title to the check, nor right to collect it through forgery of the indorsement of one of the owners in the chain of title, and having collected the proceeds it may not retain the money against the true owner. (Seaboard National Bank v. Bank of America, 193 N. Y. 26, 30; Graves v. American Exchange Bank, 17 id. 205, 208.) We consider that upon the evidence as it comes before us, it must be held that Wolfin became the owner of the check. Section 60 of the Negotiable Instruments Law (Consol. Laws, chap, '38; Laws of 1909, chap. 43) provides as follows: “ An instrument is negotiated when it is transferred from one person to another in such manner as to constitute the transferee the holder thereof. If payable to bearer it is negotiated by delivery; if payable to order it is negotiated by the indorsement of the holder completed by delivery.” And section 2 of the same act provides: “ ‘Delivery ’ means transfer of possession, actual or constructive, from one person to another.” Here there was no actual delivery to Wolfin, but there was, as we think, a constructive delivery. Such a delivery has been [521] defined as one which is effected “ by direction to a third person in actual possession of the instrument to deliver it to, or to hold it for, the payee.” (Norton Bills & Notes [3d ed.], 67.) The precise question was passed upon by the Court of Appeals in Worth v. Case (42 N. Y. 362), in which the court said (at p. 367): “ There is no doubt that a delivery of a deed or note or other obligation to one person in favor of and for the benefit of another, constitutes a valid and binding delivery as against the party who delivers it, whether the party in whose favor it is delivered is the owner of it, or not; and for the purpose of protecting his interests, the law holds the party receiving the delivery as his trustee, and makes his acceptance of it the acceptance of the beneficiary. And this, too, whether the person receiving the delivery knows the contents of the instrument or not, and whether he does anything more than merely receive it or not.” And the same rule has frequently and uniformly been applied in this and other jurisdictions. Applying these principles to the case at bar it seems clear that Wolfin became the owner of the check when the maker intrusted it to Litt for delivery to plaintiff. Up to that moment, so far it appears, the check had not become negotiable, for although drawn to Litt’s order, it had not been transferred to him in such manner as to constitute him the owner thereof. Until the indorsed check was delivered to Litt for the sole purpose of delivering it to Wolfin, the maker retained domination and control over it. The transfer which under the statute was necessary to impart negotiability to the check was the delivery to Litt for the sole purpose of delivery to plaintiff. Why the maker adopted the form of drawing the check to Litt’s order and causing him to indorse it we do not know and need not inquire. It is significant that it was never transferred to Litt for the purpose of constituting him the holder and owner thereof. It is of no consequence that Litt was the maker’s agent to make delivery to Wolfin. It may be that Wolfin need not have elected to assert ownership to the check, and might have preferred to resort to the original debt which the check represented. The fact is that he elected to accept and stands on the transfer to himself. It really is of no consequence to defendant whether it pays the [522] amount it collected to Wolfin, or to some one else. In any event it never gained title to the check, and if it he not required to pay the money collected back to the real owner of the check, it would remain liable to repay it to the bank from which it collected the amount. The determination appealed from is affirmed, with costs. Clarke and Dowling, JJ., concurred; Ingraham, P. J., and Laughlin, J., dissented.