[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.]
The evidence was abundant to authorize the jury to find that the amount standing to the credit of "William Boswell, Agt. Glass Buildings," in the Corn Exchange Bank belonged to the plaintiffs, and that by means of the check the sum represented by it was, by the fraud of Boswell, withdrawn from the account and paid to and received by the defendant.
The remaining question is whether the evidence authorized the court to submit to the jury the question of good faith, or was sufficient to authorize the jury to find that the defendant had notice that the check was drawn against an account not owned by Boswell.
The defendant testified, and his evidence was not disputed, that he received the check from Boswell in payment of $500, loaned August 31, 1882, and at the same time surrendered securities pledged as collateral to the loan. He was a holder of the check and of the money received by it, for value. The defendant also testified that he took the check in good faith, and there is nothing in the case which tends to raise any question about his personal good faith except that he received a check from Boswell in payment of his individual debt, signed "William Boswell, Agt. Glass Buildings," without inquiry as to the right of Boswell to so use the fund. The learned counsel for the appellants cites Ford v. Union National Bank (13 N.Y.W. Dig. 352; aff'd, 88 N.Y. 672), as decisive of the case at bar. That case arose out of the following facts: An account was kept by "C.F. Norton, Agt.," with the defendant bank, whose cashier knew that it belonged to some principal whose name was to him unknown, for whom Norton was acting as agent, Norton being indebted to the bank, drew his check signed "C.F. Norton, Agt.," in its favor on this account for $1,000. The check was charged to the account and the sum represented by it applied on Norton's debt. When Norton's principal learned of this misappropriation he sued the bank and recovered a judgment for the sum on a trial before the court without a jury, which was reversed by the General Term and a new trial granted. On an appeal from the order it was affirmed by the Court of Appeals, without an opinion and without making any reference to the opinion of the court below. (88 N.Y. 672.) The learned General Term correctly stated the abstract rule: "That to entitle a principal to recover his money wrongfully paid by his agent upon the agent's debt, the person receiving the money must have known that the agent was acting in violation of his authority." But the court overlooked the rule that a person who knowingly receives the money or property of a principal from an agent in payment of the latter's debt, does so at his peril; and if the agent acted without authority, the principal may, on proof of these facts, recover his money. (National Bank v. Insurance Company, 104 U.S. 54, and the cases there cited; Wright v. Cabot, 89 N.Y. 570;Baker v. N.Y. National Exchange Bank, 16 Abb. [N.C.] 458.) Story states the rule as follows: "Thus, a person dealing with a factor or broker is bound to know that, by law, a factor or broker, although a general agent, is not clothed with authority to pledge, deposit or transfer the property of his principal for his own debt; and if he receives such a deposit or pledge, the title is invalid, and the property may be reclaimed by the principal." (Story's Agency, § 225.) The affirmance of the order by the Court of Appeals in Ford's case, there being exceptions in the record, cannot be regarded as an approval of the opinion of the General Term, as applied to the facts of that case.
It is a legal though a rebuttable presumption, that one who holds money or property as agent, trustee, executor, administrator, guardian or partner, has no authority to dispose of it in payment of his own debt.
This brings us to the question whether the form of the check was sufficient to put the defendant upon inquiry as to the authority of Boswell to use the money in payment of his debt.
A certificate for shares of stock running to "A.B., trustee," or to "A.B. in trust," without disclosing the names of the beneficiaries of the particulars of the trust, is notice to a purchaser of the shares that "A.B." does not hold them in his own right, but as a trustee. (Sturtevant v. Jaques, 96 Mass. [14 Allen] 523; Shaw v. Spencer, 100 Mass. 382; Budd v.Munroe, 18 Hun, 316; Gaston v. American Exchange Natl.Bank, 29 N.J. Eq. 98; Perry on Trusts, §§ 225, 814; Lowell Trans. Stock, § 69; Mor. Corp. [2d ed.] §§ 181-184; Cook S. S. § 325.) In Fellows v. Longyor (91 N.Y. 331), it was said: "The words `guardian, etc.,' in the securities in question operated as notice to the defendant Longyor of the rights of the wards, of whom Downer was guardian." In California it is held that a certificate for shares running to "A.B., trustee," without disclosing the beneficiaries, or the particulars of the trust, is not sufficient to put a proposed purchaser
upon inquiry. (Brewster v. Sime, 42 Cal. 139; Thompson v.Toland, 48 id. 99.) The two cases last cited are not in accordance with the current of authority, and do not, as we think, lay down a rule best adapted to protect the interests of owners, as well as dealers in such securities. The check gave the defendant notice that William Boswell did not assume to be the beneficial owner of the account against which he drew, but that he held it as agent, and also as agent for the Glass Buildings. Had he signed as agent for Sarah M. Gerard and others, owners of "Glass Buildings," the efficiency of the notice that the drawer of the check was not the owner of the fund against which it was drawn, could not be questioned under any well-considered authority. We think that the form of the signature to the check was sufficient to put the payee on inquiry as to the right of the agent to pay his personal debt out of the fund. The buildings and the bank were both well known, were in the same city and very near to the place where the check was received by the defendant, and had an inquiry been made at the bank or at the buildings, it would have been ascertained that the account was held by William Boswell, not as owner, but as agent for these plaintiffs.
In case a person having notice that money or property is held by another in a fiduciary capacity, receives it without inquiry from the agent, in satisfaction of his personal debt, the sum or property so received may be recovered by the true owner, unless the agent was authorized to so dispose of it. The court did not err in refusing to nonsuit, or in submitting the case to the jury.
None of the exceptions to the admission or exclusion of evidence require consideration.
The judgment should be affirmed, with costs.
All concur.
Judgment affirmed.