White v. . Continental National Bank , 1876 N.Y. LEXIS 75 ( 1876 )

The principle is well settled that money paid under a mistake of fact may be recovered back, although the party paying the same has been negligent in making the mistake, unless the payment has placed the other party in such a position as would render it unjust to require him to refund.

Having this doctrine in view the question arises whether the defendant was liable to refund the avails of the altered draft within the rule stated, under the circumstances presented in this case. The draft in question was accepted by the plaintiffs upon the seventeenth day of August, and it is claimed that the defendant, relying upon the plaintiffs' acceptance, lost the means and opportunity of stopping payment of the sterling bill of exchange which had been issued in lieu of the forged draft, by the plaintiffs' omission to inform the defendant of the forgery, and that the question of fact whether such a change of position had taken place as affected the defendant's rights, was properly submitted to the jury by the judge upon the trial. The charge assumed that both parties acted in good faith, and that negligence could not be imputed to either in dealing with the forged draft, and in this respect the judge charged substantially that if the defendant, upon being advised on the seventeenth day of August, could have taken precautionary measures which would have prevented it from sustaining this loss, then the plaintiffs could not recover. This rule as the case stood was not erroneous, and can be upheld within the authorities. Conceding that the acceptance of the draft falls within the rule, that by a certification of a check the drawer is concluded only as to the signature of the drawee and his own certification, and that he is not bound to know the handwriting of the filling up, yet, when, by means of his omission to act, a loss is sustained, the party in fault shall bear that loss. This doctrine was upheld and is within the ruling in the case of The National Bank of Commerce v. The National Mechanics' Bank (55 N.Y., 211). In that case the check in controversy was altered after it was certified by raising the amount, and it was held that the sum paid could be recovered unless it was shown that the holder has suffered loss in consequence of the mistake. It is said in the opinion by Judge RAPALLO: "If the defendant had shown that it had suffered loss in consequence of the mistake committed by the plaintiff, as, for instance, if, in consequence of the recognition by the plaintiff of the check in question, the defendant had paid out money to its fraudulent depositor, then clearly to the extent of the loss thus sustained the plaintiff should be responsible." It appeared that the money was paid before the check was presented to the plaintiff, and that the loss had been fully incurred by the defendant before the plaintiff had made the mistake which it sought to have corrected. It will be observed that the case differs materially from the one at bar, for here the acceptance was made by the plaintiffs after the draft had been altered and not before, as in the case cited, and it cannot be doubted that the mistake committed by the plaintiffs by the recognition of the draft caused the defendant to pay the money. It was, therefore, a fair question for the jury whether the loss might not have been averted in season by notice of the forgery.

The case is also brought by the testimony within the distinction taken by some of the judges in The Union Bank ofTroy v. The Sixth National Bank of New York (43 N.Y., 452), that where the defendant necessarily sustains loss by the mistake, unless notice in time to prevent such loss is given, no recovery can be had. It was not necessary to establish that the defendant relied entirely upon the plaintiffs' acceptance to entitle it to claim the benefit of an estoppel; for even if, in consequence of it, he refrained from using means which he had in his power to prevent the loss finally sustained, the right of estoppel will be upheld and the loss must fall on the party who caused it. (Continental National Bank v.National Bank of the Commonwealth, 50 N.Y., 575.) The plaintiffs, by failing to take the means to advise the defendant, are brought directly within the rule that when the omission of a party affects the act of another, and he is thereby misled and influenced to his prejudice, the party in fault must bear the loss. The claim that the question submitted to the jury which has been discussed was not material, and that there was no evidence to guide the jury in determining it, is not well founded. It is not difficult to see that the draft given may have been stopped, the forger arrested, the acceptance in London have been prevented or some measures have been adopted which would have saved all parties from loss, if the defendant had been notified of the forgery, and it was proper for the jury to decide this question of fact.

While the instructions to the jury asked by the plaintiffs' counsel and refused contained legal propositions which were abstractly entirely correct in a proper case, neither of them were applicable to the question of fact, which was for the jury, and therefore each of them was properly refused.

There was no error in the admission of evidence or in any of the rulings upon the trial, and the judgment should be affirmed, with costs.

For reversal: ALLEN, RAPALLO, ANDREWS and EARL, JJ.

For affirmance: MILLER, J.; CHURCH, Ch. J., and FOLGER, J., not voting.

Judgment reversed