
    Morgan v. Bank of State of New York.
    A bank paying a cheek, payable to order, upon a forged endorsement of the payee, is liable for the amount, either to the payee or to the drawer, whose . funds are so applied, if the cheek was the property of the payee, the bank is liable to him. If the check never passed to him by a delivery, and he had no interest in it whatever, the liability of the bank is to the drawer.
    Such a check cannot be treated as payable to a fictitious person, or to bearer; but the payee, being a real person, the presumption of law is that it was drawn with the intent of vesting a title in him, and in him alone.
    
      (Before Oakley, Ch. J., Paine and Emmett, J.J.)
    Jan. 20;
    Jan. 29, 1853.
    Henee, it is only from the payee that a third person can derive a valid title.
    If the cheek never became the property of the payee, it is a necessary inference that it was obtained and put into circulation by fraud.
    
      Held, upon these grounds, that the plaintiff was entitled to recover the amount of two cheeks, drawn by him and paid by the defendants, upon the forged endorsement of the payees.
    Judgment accordingly.-
    The plaintiff, by Ms complaint, demanded judgment for the sum of $916t/7, as moneys deposited by him with the defendants, and which, upon request, they had refused to pay.
    The defence was, that the defendants had paid to the order . of the plaintiff, upon two checks drawn by him, one dated April 29th, 1852, for the sum of $291Tf„ ; the other dated Hay 3d, 1852, for $445tW ; the whole sum demanded by the complaint.
    The cause was tried before Hr. Justice Duer and a jury on the 10th of November, 1852.
    Upon the trial the plaintiff’s counsel read in evidence the following stipulation, signed by the attorneys of the parties:—
    This action being brought to determine the disputed question of the defendants’ right to charge the plaintiff in account Avith the amount of two checks drawn by him upon the defendants to the order of G. W. Corlies & Co., one dated April 29, 1852, for two hundred and seventy-one dollars and four cents, and one dated Hay 3,1852, for four hundred and forty-five dollars and eighty-eight cents, the endorsements upon wMch are alleged to be forgeries, it is stipulated by the defendants that they will admit upon the trial the deposit by the plaintiff Avith them of the sum of seven hundred and sixteen dollars and ninety-two cents, as averred in the complaint, and a request made of them by the plaintiff, before the commencement of this action, to pay him the said sum, and their refusal so to do by reason of their claim to charge him with such checks, and that at the time of such request, the said sum of seven hundred and sixteen dollars and ninety-two cents remained on deposit to his credit, unless he is properly chargeable with such checks. And the plaintiff stipulates tq admit, for the purposes of tMs action, that if he is chargeable with such checks, he had no funds on deposit with the defendants at the time of such request.
    The plaintiff thereupon rested.
    The defendants’ counsel then produced two certain checks,' in the words and figures following:—
    “Hoi 498.
    “ Hew York, April 29th, 1852.
    “ Bank of the State of Hew York.
    “ Pay the order of G-. W. Corlies & Co., Two hundred and seventy-one T°„\ Dollars. , °
    “ M. Morgan.
    “ $271T°/o •
    (Endorsed)
    “G. W. Coretes & Co,”
    “Ho. 519. '
    “ Hew York, May 3d, 1852 “ Bank of the State of Hew York. ■
    “ Pay the order of G. W. Corlies & Co. Four hundred and forty-five TW Dollars.
    “ M. Morgan.
    “$445tW
    (Endorsed)
    “ G. W. Coretes & Co.”
    ' The plaintiff’s counsel admitted that said checks were signed by the plaintiff, but did not admit that said checks had been endorsed by the payees thereof, and contended that the defend- ' ants were bound to prove the genuineness of "the endorsements ■ appearing thereon.
    The presiding justice, however, ruled and decided, for the purposes of the trial, that in respect of the genuineness of such endorsements, the burden of proof was upon the plaintiff to show, that they were not genuine, to which decision the plaintiff’s counsel excepted.
    
      The plaintiff then called as a witness*
    George W. Corlies, who, being duly sworn, testified as follows :—I am a member of the firm of G. W. Oorlies & Co., which is composed of myself and Royal H. Waller, and was so in May and April, and up to first November. (Checks shown to him.) These signatures are not in the handwriting of our firm, or of any clerk thereof.
    Oross-exanvMied^We never had any dealings with Matthew Morgan; he did not owe us anything; the checks were never in our possession* and were never delivered by anybody to us, or for our firm.
    The jury, thereupon, by direction of the court, found a verdict for the plaintiff in the sum of seven hundred and thirty-nine dollars and ninety-one cents, subject to the opinion of the court, on a case to be made, with liberty to either party to turn the same into a bill of exceptions
    
      W. M. Evarts, for plaintiff.
    The judge upon the trial stated that he had no doubt of the right of the plaintiff to recover, and it Was at the request of the counsel that he took the verdict subject to the opinion of the court. He said then all* that I deem it necessary to say now, that there was nothing in the case to prevent the application of the general rule * that a bank can only justify the payment of a check payable to order, by proving the endorsement of the payee, as well as the signature of the drawer, to be genuine. When either is shown to be forged, the bank must be liable to the person entitled to the funds wrongfully paid—generally the payee is the person so entitled—but the proof in this case establishes the right of the plaintiff. He therefore demands judgment upon the verdict.
    
      A. W. Clason, jun., contra.
    The issue to be tried was the forgery of the endorsements, and it was rightly held that the affirmative rested upon the plaintiff. I say rightly held, because the plaintiff is substantially the party averring the fact in dispute; because the person for whom the checks were drawn is a matter within his cognisanee, and not within the cognisance of the defendant, finally, because the checks bearing endorsements according to their tenor, and being paid by the defendants, the presumption of law is in favor of their being honest endorsements.
    Banks are responsible. for forgeries and alterations, but it would be as reasonable to require them to prove the sum in a check to be that originally written, as to prove the party to whose order a check is drawn.
    The plaintiff proved by GL W. Corlies, that the endorsement was not that of his firm; the defendants proved by the same witness, that the check was not theirs. So far there was no proof of forgery, but some proof of the payee being a fictitious person; in which case the check was payable to bearer. (1 Coms. 113.)
    If G-. W. Corlies & Co. were the payees, as they had no interest in the checks, the holder and the bank had a right to treat the bill as payable to bearer; or, if the check was given by the plaintiff to a third party, not Gr. W. Corlies & Co., the plaintiff thereby authorized him to endorse it, and is estopped from denying the genuineness of the endorsement.
   By the Court. Paine, J.

Although no explanation was given upon the trial of the purposes for which the checks were drawn, nor of the circumstances under which they passed from the possession of the plaintiff,-it seems to us, there is no reasonable ground upon which his right to recover in this action can be doubted. When a bill'or check is payable to order, to justify the application to its .payment of the funds of the drawer, ■ it must be proved that the required order was in fact given—in other words, it must be proved that the endorsement was genuine—and the burden of this proof rests upon the person, or bank upon whom the bill or check is drawn. Where the endorsement of the payee is shown to be forged, the payment of a check by the bank is in its own wrong, and can never be set up as a defence against the person whose rights it violated, or whose funds are misapplied. In all such cases, the bank must be liable to some person to the extent of such wrongful payment. If the check at the time was the property of the payee, it is to him that the bank is liable ; but if it had never passed into his hands, and he had no interest in it whatever-—and such are the facts in the ease before ns—they are the funds of the drawer that have been misapplied, and which the bank is bound to replace. It is the plaintiff, therefore, who is entitled to maintain this action.

It is impossible for us to treat these checks as payable to bearer or to a fictitious person; as the payees are real persons, the presumption of law is, that the checks were drawn with the intent of vesting the title in them,' and in them alone. Consequently, it was only from them that a title could be derived, and only upon a title given by them, and evidenced by their endorsement, that a valid payment could be made. As the checks were never delivered to them, and they were not the holder’s of them at any time for value, or otherwise, it seems to us a necessary inference that it Was by the fraud of some third person that the checks were obtained and put into circulation. The loss resulting from this fraud the defendants must sustain, and against its perpetrator must seek their remedy.

The supposition that the plaintiff delivered the checks to some third person, to whom he gave an authority to put them into circulation by endorsing the name of the payees, is something worse than gratuitous. We reject it wholly—there is no proof of such a delivery, and the plaintiff could give no such authority;—and, assuredly, we shall not impute to him, in order to protect the defendants, the design of enabling a third person, by means of a forgery, to effect a fraud.

The plaintiff must have judgment upon the verdict.  