Douglass v. Matting

Beck, J. It will be observed that the answer substantially admits the execution of the note, but, as a defense, alleged that defendant’s signature was obtained thereto by fraudulent misrepresentations of the agent of the payee; that defendant, relying upon the representations of the agent, to the effect that the paper was a contract of the character described, signed his name thereto. Of these facts it is not averred that plaintiff had notice when the note was indorsed to him. We are required to determine whether the answer presents a sufficient defense. It is conceded, that if the transaction of the [500] agent of the payee in procuring the signature of defendant amounted to less than a forgery, the defense is not sufficient, as against a bona fide holder, receiving it for value before due. Plaintiff must be regarded as such a holder under the pleadings. We must determine, then, whether the note, according to the averments of the answer, is in law a forgery. In our opinion, upon principle, it is not. The defendant intrusted the one with whom he was dealing with the preparation of the instrument. The instrument as prepared was not what defendant had agreed to sign, but was voluntarily executed by him. The act of the agent was a fraud whereby defendant was induced to make the note, and not the false making of it, which is necessary to constitute forgery. There are authorities that hold differently, but this view appears to us in accord with principle and required by the wants of the commerce of the country, which deals so extensively in negotiable paper. Neither is it unsupported by authorities. See Putnam v. Sullivan, 4 Mass. 45; Commonwealth v. Sankey, 10 Har. (Pa.) 390. As between the bona fide holder, receiving the paper before due for value, and the maker, the equities are all on the side of the first. The maker puts his genuine signature to a note appearing upon its face fair and regular. In the regular course of business it comes into the hands of an innocent party, who has paid a valuable consideration for it and has no notice of any infirmities or defenses attaching to the paper. Now it would be manifestly unjust to permit the maker, wThile admitting the genuineness of his signature, to defeat the note, on the ground that, through his own culpable carelessness while dealing with a stranger, he signed the instrument without reading it or attempting to ascertain its true contents. The law will favor, as between the holder and maker in such a case, the more innocent and diligent. The maker had [501] it in his power to protect himself from the fraud, but failed to do so. When the consequences of his act are about to be visited upon him, he seeks to make another bear it, on the ground that he was defrauded through his own gross negligence. He can certainly claim protection neither on the ground of his innocence or diligence. The rule contented for by appellee would tend to destroy all confidence m commercial paper. It is better that defendant, and others who so carelessly affix' their names to paper, the contents of which are unknown • to them, should suffer from the fraud which their recklessness invites, than that the character of commercial paper ’should be impaired, and the business of the country thus interfered with and unsettled. In our opinion the demurrer of plaintiff to answer should have been sustained. Reversed.