
    SUPREME COURT—APP. DIVISION—FOURTH DEPARTMENT,
    Dec. 18, 1914.
    LEWIS H. NASH, TRUSTEE, v. KATE MOORE. LEWIS H. NASH, TRUSTEE, v. JOHN ZIMMER.
    (165 App. Div. 67.)
    (1.) Forgery—By attorney of assignment of bonds and mortgages PLACED IN HIS POSSESSION FOR SALE.
    A trustee who places bonds and mortgages In the possession of his attorney, who forged assignments thereof, and also as notary public made false certificates of acknowledgment, should not be held liable for the misconduct of his attorney, and is entitled to have the assignments set aside and the record thereof canceled.
    (2.) Same—Estoppol in pais.
    
    The trustee was not concluded by an estoppel in pais.
    
    (3.) Same—Liability where one of two innocent persons must suffer.
    The doctrine that where one of two innocent persons must suffer from the act of a third" person, the loss must fall upon him who has enabled the third party to do the injury, is inapplicable to cases where the wrong was accomplished through the instrumentality of a criminal act.
    Appeals by the plaintiff, Lewis H. Nash, as trustee, etc., from two judgments, one in each case, of the Supreme Court in favor of the defendants, entered in the office of the clerk of the county of Kings on the 23d and 24th days of June, 1914, respectively, dismissing his complaint in each action upon the merits, upon the decision of the court after a trial at the Kings County Special Term.
    
      
      Edward P. Lyon [ William R. Hill and William B. Shelton with him on the brief], for the appellant.
    
      William B. Hurd [Walter R. Davies with him on the brief], for the respondent Kate Moore.
    
      Robert J. Robeson, for the respondent John Zimmer.
    
   Putnam, J.:

These were equity suits, tried together, to set aside and cancel of record three assignments of mortgages, purporting to have been made by plaintiff, one to the defendant Zimmer, and two to the defendant Moore.

Plaintiff, as trustee of the estate of Lewis Hallock, deceased, employed Augustus M. Price (now under a prison sentence) as his attorney. Price had in his possession three bonds and three mortgages to secure $3,500 each, made by one Williams to the plaintiff as trustee. Price had made the loans for the estate for which the bonds and mortgages were given-several years before, and indeed had general charge of the investments and accounts of the Hallock estate. Plaintiff lived in Connecticut, and Price collected the interest on these securities, giving receipts therefor.

The defendant Zimmer knew Price, having in one or two instances employed him as attorney. Mr. Zimmer was deaf, and his brother Charles transacted his business. In August, 1913, Price stated that the plaintiff, a client of his, had a mortgage to sell, and defendant Zimmer bought it for $3,500, receiving the bond and mortgage, with a paper purporting to be an assignment.

Price had also been attorney for the defendant Mrs. Moore. She had known Price for twenty years. He had invested $50,-000 for her on bond and mortgage, collected the interest when due, turning it over to her with a statement every six months. Mrs. Moore had money to invest, which was in Price’s possession, and in August, 1913, Price informed Mrs. Moore that he had invested $7,000 in two bonds and mortgages made to the Hallock estate. When Mrs. Moore requested Price to return to her her securities, she found that the two mortgages, which are among the subjects of this litigation, were not with those returned. She called on Price and he gave her these Nash mortgages. Mrs. Moore, discovering that her name did not appear on these securities, again saw Price, who informed her that he had recorded an assignment in her favor.

The signature of plaintiff on both assignments was forged by Price, who also, as notary public, made false certificates of acknowledgment for these assignments. The suits raised the question: Who is to suffer for this misconduct by Price?

The learned trial justice decreed against the plaintiff as concluded by an estoppel in pais. He held plaintiff liable for Price’s acts, under the doctrine that where one of two innocent persons must suffer from the act of a third person, the loss must fall upon him who has enabled the third party to do the injury. Such a rule, however, is inapplicable to cases where the wrong was accomplished through the instrumentality of a criminal act, as in such cases the crime, and not the negligent act, is held to be the proximate cause of the injury. (16 Cyc. 773.)

The settled principle is that if one who has had confidence reposed in him has availed himself of his opportunity to defraud others by means of a forgery, such loss is not a natural or probable result of the confidence thus reposed. (Hill v. Jewett Publishing Co., 154 Mass. 172; Big. Estop. [5th ed.] 658.)

An estoppel cannot be thus raised against the real owner upon a forged instrument. The assignments upon which defendants rely were the results of a felony, and if defendants were thereby deceived, still, their loss cannot fall on the plaintiff. (Marden v. Dorthy, 160 N. Y. 39, 58; Nahe v. Bauer, No. 1, 141 App. Div. 115.) The respondents cannot support their title to these securities through the mere delivery of a bond and mortgage, without this forged assignment. (Strause v. Josephthal, 77 N. Y. 622; Mallock v. Robinson, 19 N. Y. Wkly. Dig. [Third Dept. 1884] 229.)

The judgments must, therefore, be reversed, the sixth and seventh findings of fact, requested by plaintiff, found in each case, and final judgments directed for plaintiff, but without costs.

Jenks, P. J., Thomas and Stapleton, JJ., concurred; Care, J., not voting.

In each case judgment reversed on questions of fact as well as of law, and sixth and seventh findings of fact, requested by plaintiff, found, and final judgment directed for plaintiff, without costs.  