Stedman v. Carstairs

Mr. Justice Mercur delivered the opinion of the court May 2d 1881. [237] This contention is between two innocent parties, arising from the fraudulent acts of a third person. A statement of the facts and the order of events is necessary to” a clear understanding of the case. On the 27th of May 1876, one Heilbron, of the firm of Tobias & Ileilbron, gave to the defendants the check of his firm for $3500, and at the same time the defendants gave to Heilbron their check for the same sum. Two days thereafter, Heilbron also gave to the plaintiff the check of his firm for $3500, and the plaintiff gave his check to Heilbron for the like sum. At the time these checks of Tobias & Heilbron were drawn and transferred the firm was in good credit, but did not have the money in bank to meet either of them. Each transaction was an exchange of checks. The check given to the defendants was returned to them protested. On Heilbron being notified of this fact, he alleged he had been disappointed in getting the money from a person who owed him, but he expected to get it, and would pay them. After that he brought and gave to the defendants the check of the plaintiff for the $3500. He asked for his own check, and the defendants gave it up to him. The defendants then drew the money on the check drawn by plaintiff thus given to them. The check of Tobias & Heilbron, given to the plaintiff, went to protest, and he seeks to recover from the defendants the money they obtained on the check he gave to Heilbron. The first assignment is to the affirmance of the first point submitted by the 'defendant. It is in these words: “If you believe that defendants, on the 29th of May 1876, were the owners of a check of Tobias & Heilbron; that said firm was at that time in fair financial standing; that defendants were ignorant that any fraud had been perpetrated upon plaintiff; that in good faith they surrendered the said check of Tobias & Heilbron, and accepted in lieu and payment thereof the check of the plaintiff, then, although the latter was defrauded by Heilbron, he cannot recover from the defendants.” We discover no error in the affirmance of this point. The numerous authorities cited, applicable to the acquisition of commercial paper in bad faith, or when it is taken merely as collateral for a pre-existing debt have no application to the facts stated in this point. The jury has found the defendants were guilty of no fraud, but acted in entire good faith ; they took the check of the plaintiff, not as collateral, but in payment of the check of Tobias & Heilbron. The latter were in fair financial standing. The defendants gave up their check, and released them from all obligation. They thus gave a valuable consideration for the check of the plaintiff. This, under numerous authorities, constituted the defendants holders for value. They therefore took the plaintiff’s check discharged of equities between them and Ileilbron, of which they had no notice. [238] The point covered by the second assignment appears to have been framed - on the assumption that the defendants did not draw, on the plaintiff’s check, money which belonged to him, but that they drew money which was the property of the bank. If such was the fact, the point was correctly affirmed. The right of the plaintiff to recover cannot be sustained, unless the defendants received his money. On the argument it was said there was no evidence on which to submit that point, yet that it was submitted without evidence is not assigned for error. The assignment is only to alleged error in stating the law. There is no assignment that it was submitted without evidence. We deem it unnecessary to further discuss the questions. Holding as we do that there was no error in the first or second assignment, it follows there is none in the third. Judgment affirmed. Trunkey, J., dissented.