Lamberton v. Dunham

Opinion by Mb. Justice Fell, This action was founded upon the allegation that the defendant had falsely and fraudulently represented that the forged indorsement of a check was genuine. The error which appears in the charge and in the answers to points is that the defendant was held not only to have acted in good faith, but to-have had adequate reason for his belief. It was shown at the trial that a stranger, representing himself to be Charles H. May, called at a store in Oil City where the defendant was employed and examined machinery which he expressed a desire to purchase. During the course of his pretended negotiations he inquired for a competent judge of oil property, and was referred by the defendant to George W. Eaton. In the light of after events it became evident that his purpose was to lay the ground for a correspondence with Mr. Eaton in order to obtain his signature. Having done that he forged two notes purporting to have been made by Mr. Eaton and presented them at the Lamberton Bank at Franklin [132] for discount. The cashier of the bank, who knew the signature of Mr. Eaton, did not discover the forgery, but took the precaution to make payment by check to his order. May forged an indorsement of the cashier’s check, and presented it for payment at a branch of the bank at Oil City. The cashier there, not knowing the signature of George W. Eaton, required proof of it, and also the identification of Charles H. May. At May’s request the defendant, who was familiar with Mr. Eaton’s signature, went to the bank and in reply to inquiries made said : “ This is Charles H. May,” and identified the signature as that of George W. Eaton. Whether the person who planned and committed the forgery was Charles H. May did not appear at the trial and is of no importance in any aspect of the case, as no credit was given him as an individual. The right of recovery against the defendant, if any, was based entirely upon the identification of the signature of George W. Eaton. The action was for deceit, and the primary question was whether the defendant had acted in bad faith in making the statement which led to the payment of the check. He acted in bad faith if he knew that the statement was untrue. If it appeared that he knew nothing about the matter, and made the statement without any belief as to its truth or untruth, he was guilty of a moral wrong not less serious than deliberate falsehood, and the jury might well have found that he acted in bad faith and with a purpose to defraud. But he could not be convicted of fraud because he entertained a belief which was not well founded. Whether he had a belief and honestly expressed it was in issue, but the reasonableness of his ground for that belief could not be called into question. As was said by Sharswood, J., in Dilworth v. Bradner, 85 Pa. 288: “ It would introduce a new and very dangerous element into the case to say that the jury must decide whether the defendant had reasonable grounds for his belief.” That the scienter must be proved, and that the only ground for recovery in an action for false representations is the bad faith in making them, is settled in a long line of eases including Boyd v. Browne, 6 Pa. 816; Huber v. Wilson, 23 Pa. 178; Bokee v. Walker, 14 Pa. 139; Duff v. Williams, 85 Pa. 490; Cox v. Highley, 100 Pa. 252; Iron Works v. Barber, 106 Pa. 125; Kern v. Simp [133] son, 126 Pa. 42; Griswold v. Gebbie, 126 Pa. 353. The subject has been so fully considered in some of the later decisions that its further discussion is unnecessary. The offer of letters containing the signature of George W. Eaton should have been admitted. The defendant testified that he had séen Mr. Eaton write, and was familiar with his signature, and that his statement to the cashier was based upon his belief founded upon this knowledge. The resemblance of the admittedly genuine writing to the forgery on the check went directly to the question of his good faith. The first, third, fourth and fifth assignments of error are sustained and the judgment is reversed with a venire facias de novo.