Fajen v. Hudson Transportation Co.

Philbin, J. Appeal is taken from a judgment of the City Court of the city of New York, entered upon a verdict by a jury, in favor of the plaintiffs for the — 630 — sum of $485.51, damages and costs, and from an order denying the defendant’s motion to set aside the verdict and for a new trial. In the year 1913, one William H. Nottage was in the employ of the defendant as master of a barge owned by it and known as “John D. Paige.” Nottage received from the Barker Bond Lumber Company a check bearing date the 10th of October, 1913, for $297.74, in payment of freight due on a cargo carried by the barge. The check was drawn on the National Produce Exchange Bank and was made to the order of “ Barge John D. Paige & owners.” It was endorsed by Nottage, but there was added to the endorsement: “ William H. Nottage, Master.” The plaintiffs cashed the check by paying the amount thereof to Nottage, at his request. Thereafter, the check was deposited by plaintiffs to their credit in the Corn Exchange Bank, which later, in due course, collected the amount from the National Produce Exchange Bank, where the drawer, Barker Bond Lumber Company, had an account. The defendant, on or about the 6th of January, 1914, procured the cancelled check and submitted it, together with an affidavit, to the National Produce Exchange Bank and requested payment of the amount of the check. The affidavit was made by the vice-president and treasurer of the defendant and set forth, that Nottage was never authorized to cash or endorse the said check or any negotiable paper payable to the barge John D. Paige and owners on behalf of the Hudson Transportation Company and that he had no authority to do so. Thereupon, that bank delivered the check and affidavit to the Corn Exchange Bank, and upon the latter presenting those papers to the plaintiffs they repaid the amount of the check to the Corn Exchange Bank and later, through the National Produce Exchange Bank, the money was paid to the defendant. — 631 — The plaintiffs conducted a liquor saloon and never had had any business transactions with the defendant or Nottage, except that they had cashed similar checks for the latter. They knew Nottage only as an occasional patron of their establishment, and did not know by whom he was employed. Plaintiffs did not know who were the owners of the barge John D. Paige. They never had any communication with defendant prior to the payment of the money by them to Nottage. The plaintiffs proceeded on the theory of an action for money had and received arising out of a mistake of fact. It is claimed by the plaintiffs that the alleged mistake occurred when they paid back to the Corn Exchange Bank the money paid to Nottage on the check. It is said that plaintiffs were caused to make the mistake by the averments in the foregoing affidavit as to Nottage’s absence of authority, the averments being contrary to the fact. It is admitted by plaintiffs .that if the statements in the affidavit were true they made no mistake in refunding the money. The absence of any allegation of fraud, committed by defendant, leads to the inference that by mistake plaintiffs meant a mutual mistake of fact. The circumstances, however, preclude acceptance of a suggestion that defendant made an incorrect statement through mere mistake, as defendant was in a position to know whether Nottage had received authority from it. The theory of a mistake cannot be sustained and, therefore, if the plaintiffs were entitled to recover, it must be on the ground that they were wrongfully inducéd to part with their money because of untrue representations made by defendant. It is necessary in any event to ascertain just what the relations of Nottage and defendant were in order to determine whether the former had no right, as claimed by the defendant, to endorse and cash the checks. As master of the barge Nottage conducted voyages — 632 — from Norfolk, Va., defendant’s place of business, to New York city, and other ports. He employed a crew and also men to discharge the cargo that was usually carried. He likewise collected the freight charges. In short he conducted all the business of the defendant in each port in relation to the cargo which the barge brought. Nottage, when examined on behalf of the plaintiffs, testified that he would make remittances from time to time for the freight collected, less the expenses incurred. Plaintiffs conceded on the trial that Nottage was never told by defendant that he could endorse or cash checks. About five months before the occasion in question the defendant wrote him a letter, in which the following appeared: “ You will please draw as much freight as you can and send us at as early a date° as possible. Have all checks made payable to the Hudson Transportation Company.” It is a fair inference that by freight was meant the money due therefor. It was shown that he had at times received and forwarded checks for freight to the defendant. He testified that the Barker Bond Lumber Company, the maker of the check in question, always paid for freight by check, and that at least on one occasion the check was not made to the order of the defendant but was drawn to pay stevedores on defendant’s account. It does not appear that if such was the custom it was known to the defendant. Nottage did business with a concern known as the Cahill Towing Line which towed the barge from time to time, when necessary. The manager of the company stated that he had cashed checks for Nottage and had drawn checks for a part thereof to the order of the defendant. It further appeared that the stevedores’ expenses were paid by Nottage by orders on the Barker Bond Lumber Companv. This was done pursuant to directions of the defendant’s vice-president who also told Nottage that if — 633 — he wanted money the company would send it to him and that all checks should be made payable to the defendant. Defendant likewise instructed Nottage not to forward money through Cahill, but to send the check received itself to the defendant. It accordingly appears that it was not necessary in the course of business that Nottage should cash checks received for defendant in order to pay the required expenses and, therefore, there was nothing that would justify the finding that the nature of his employment was one from which an inference of such a right could be correctly drawn. In other words, the record is barren of any proof that the defendant ever knew or had reason to believe that Nottage endorsed or cashed a check before he did so as to the one in question. It is true that he had before induced plaintiffs to cash checks in all respects similar, except as to the amounts and dates, but there is nothing upon which knowledge of the transactions by the defendant could be predicated. It will, therefore, be seen that the only ground upon which it could be properly insisted that he had authority is that the character of his agency conferred it upon him, even though his employer, the defendant, did not know he was exercising it. In taking up this point for consideration, the peculiar circumstances should not be overlooked. The attitude taken by the courts in cases where a dishonest agent has misappropriated the proceeds of a check and the employer has not been allowed to evade responsibility and deny the agent’s authority is not applicable. The counsel for the plaintiffs correctly says that the test is to be applied as of the time when the plaintiffs refunded the money for which they .are now suing, and not the time they cashed the check for Nottage. It is, therefore, in the instant case, the act of the principal in making the alleged false statement upon which the — 634 — liability is placed, and not the act of the agent proceeding undér ostensible authority. It was the alleged wrongful act of the defendant that caused the plaintiffs to part with their money and not the wrong originally done by Nottage. For these reasons, the line of cases that have held the employer responsible for the acts of a dishonest servant is not pertinent. The power to collect a debt does not involve authority to endorse or cash checks given in payment of it and, as appears from what has been said, Nottage had no other power. The fact that he had been given discretion to expend money for labor and other incidental things in the business did not give him the right to procure the necessary money by signing or endorsing checks or other negotiable paper. It has been shown that even as to that he was furnished with moneys by customers and the defendant itself. It must be held that the statements made in the affidavit that Nottage had no authority to endorse checks were founded on fact and that no false representation was made. The plaintiffs under these circumstances having willingly and without any improper inducement paid the money are not entitled to recover. Guy, J., concurs in result. Judgment and order reversed, with costs, and complaint dismissed, with costs.