
    The Central National Bank of the City of New York, Resp’t, v. The North River Bank of the City of New York, App’lt.
    
      (Supreme Court, General Term, First Department,
    
    
      Filed March 31, 1887.)
    
    1. Bills and notes — Fraudulent endorsement—Recovery of payment.
    Money paid to an innocent holder whose title is derived through a fraudulent endorsement, can be recovered by the payee, and it is immaterial whether or not the payees have first been obliged to reimburse the lawful owner.
    2. Same—Fraud—Laches.
    After the discovery of fraud the parties are hound to proceed diligently, hut no laches can be imputed prior to its discovery.
    Appeal from judgment entered upon verdict of a jury.
    
      E. L. Bushe, for app’lt; F. C. Reed, for resp’t.
   Van Brunt, P. J.

The defendant in this action presented for payment to the plaintiff, certain checks payable to the order of the National Suspender Company, which certain depositors of the plaintiff had drawn upon the plaintiff to the order of said suspender company, which checks purported to be endorsed in blank by the duly authorized agent of the suspender company, and such checks were paid by the plaintiff to the defendant.

The endorsements upon these checks were made without authority, and the checks appropriated by a clerk of the suspender company.

Upon learning these facts the plaintiff paid the amount of said checks to the suspender company, and brought this action to recover the amount paid to the defendant upon these stolen unendorsed checks.

The defendant by presenting these checks for payment asserted its ownership of the same, or its right to collect, and the plaintiff in making the payment had the right to rely upon this assertion of right or title.

It subsequently appearing that these checks had been stolen from the payees thereof, the true owners, and that they were never endorsed by them, it seems too clear for argument that the plaintiff had a right to recover back the money which it had been induced to pay by the false assertion of ownership or right to collect made by the defendant.

The defendant in presenting this check for payment guaranteed the endorsement, and it is immaterial whether the plaintiff had actually paid the money again to the payees of the check or not; the liability to pay existed, and the defendant has no right to retain money obtained by the false pretense that it was entitled to receive the money.

It is sought to defeat the plaintiff because of some alleged laches of somebody.

That the position of the defendant with reference to the depositor from whom the defendant received these checks has been changed, and that therefore it would have been inequitable to allow recovery, and our attention is called to the case of Mayer v. The Mayor, etc., 63 N. Y., 455.

This case, however, is no authority in the case at bar.

In the case cited, the rule is being laid down in a case where the person making the payment who seeks to recover it back is negligent, not the case where if there is any negligence it is the party receiving the payment and who refuses to pay it back.

The parties were bound to proceed diligently after discovering the fraud, but no laches can be imputed prior to its discovery.

The claim that the clerk of the National Suspender Company had any right to endorse these checks is entirely unsupported by the evidence, unless every merchant, by the employment of a bookkeeper, thereby gives him authority to endorse commercial paper hi his name.

With the condition of the account between Morse and the suspender company, neither the plaintiff nor defendants have anything to do.

Morse had stolen these checks, and the owners had the right to recover them back and collect them even if they did owe him some money.

The defendant had received from the plaintiff the amount of these stolen checks, representing that the payees had endorsed them, and they had the legal title to the same, and the plaintiff is entitled to recover its money back upon proof that they were stolen property, and that the payees had never endorsed the same, and this claim cannot be complicated by an attempt to show that the thief had a counter-claim which he himself could not set up. But the evidence conclusively shows that the suspender company owed Morse nothing.

The proof by Mr. Bernheimer, supported by his books, proves conclusively that cash was advanced when the check was received. It may be that if there had been only the verbal testimony of Mr. Bernheimer the defendants might have had the right to have the question submitted to the jury, but supported as it was by entries made at the time of the transaction in his check book, there was no question for the jury.

It is, besides, doubtful if any sufficient request was made to go to the jury upon this point.

Judgment affirmed, with costs.

Bartlett and Macomber, JJ., concur.  