
    The Royal Bank of New York, Appellant, v. The German-American Insurance Company, Respondent.
    (Supreme Court, Appellate Term,
    April, 1908.)
    Negotiable instruments: Indicia or requisites — Unconditional order to pay: Bona fide holders — What constitutes a bona fide holder—Notice of equities generally — Presumption and burden of proof — Burden on plaintiff; Sufficiency of evidence.
    Where -an .instrument directed to an insurance company by its adjuster states that, upon acceptance, a certain bank will pay to the person named a certain sum of money in settlement of the payee’s claim for loss under a fire insurance policy, and the instrument is not the usual unconditional order requiring the one to whom it is addressed to .pay irrespective of any contingency, in an action against said company on such instrument, by a bank which had taken it from the person to whom the payee endorsed it, the burden is on the plaintiff of showing by a fair preponderance of evidence that it acquired the draft in good faith, for value and without notice of any fatal infirmity.
    
      And, when it appears that the plaintiff was ignorant of the financial condition of either the payee or the person from whom it took the draft; that the latter had never met the payee until he introduced him to the plaintiff and was unacquainted with his occupation, that neither of them had any account with the plaintiff and the address of the payee was not ascertained, there were sufficient circumstances to put the plaintiff’s" officers upon inquiry which, if pursued to a reasonable extent, would have disclosed the fraud of the payee which was set up by the defendant; and, where the sole and only question submitted to the jury was whether or not the plaintiff was the holder in good faith and for value, their verdict for the defendant should be upheld.
    Appeal by the plaintiff from a 'judgment in favor of the defendant, entered upon the verdict of a jury in the Oity Court of the city of Hew York, and also from an order denying plaintiff’s motion for a new trial.
    Brush & Crawford (John J. Crawford, of counsel), for appellant.
    Shearman & Sterling (Carl A. Mead, of counsel), for respondent.
   Gildersleeve, J.

This action was brought upon the following instrument:

“ $544.50. Hew York, July 29, 1907. 98,256.

“ Upon Acceptance :

“ The Rational Bank of Commerce in Hew York will

pay to the order of F. Berg, .......... Five Hundred,

Forty-four & 50/100 Dollars which payment, evidenced by proper endorsement hereof, constitutes full satisfaction of all claims and demands for loss and damage by fire, which occurred on the 25th day of July, 1907, to property described in Policy Ro. 516,262, issued at the Bronx Borough Agency, and said policy is hereby canceled and surrendered to the company.

“ To German American Insurance Company, Rew York,

“ George II. Hallett.”

Indorsed:

“ F. Berg. S. W. Rosenthal. Pay to the order of the Liberty Rational Bank, The Royal Bank of Rew York, F. Cy. Straat, Cashier.”

On the margin of the said draft was the following:

Claim Ro. 141,173. Accepted Jul. 31, 1907.

“ German-American Insurance Company,

“ Wm. R. Eremer,

" President.

E. M. Cragin,

"A. Secretary.”

The draft, as appears upon its face, was in payment of a claim under a policy of fire insurance. It was drawn by George H. Hallett, the general adjuster of the defendant. The plaintiff made no claim upon the trial that the instrument was the personal draft of Hallett. The plaintiff’s president testified: “ I had, prior to that time, cashed drafts drawn by George H. Hallett on the German American Insurance Company. We had cashed thousands of dollars of these drafts.” It is clear that Hallett signed as agent and that the plaintiff had actual knowledge of that fact. It will be observed that the draft was signed on July 29, 1907, and issued to F. Berg, the payee, who was the beneficiary under the policy of insurance; indorsed by Berg and by S. W. Rosenthal who, as appears from the evidence, acted for Berg in adjusting the loss. Rosenthal took Berg to the plaintiff bank, introduced him to the officers, and the bank cashed the draft at its face, less two dollars and twenty-five cents charged as a collection fee, the payee not being a. customer of the bank. On July thirty-first, two days afterward, the draft was presented to the defendant and by it duly accepted. When the draft was presented through the Clearing House to the Rational Bank of Commerce, payment was refused because the acceptor had stopped payment. On the morning of August first, and before the presentation of the draft as just stated to the Rational Bank of Commerce, the defendant learned that Berg had been guilty of fraud in obtaining the same and for this reason stopped payment thereof. The fraud consisted in misrepresentation by Berg as to other insurance. The fraud of Berg was clearly established, and the court withdrew that question from the jury without objection by the plaintiff. ¡Neither party moved to take the case from the jury, and the learned trial judge in charging the jury very properly said: “The sole and only question that you are called upon to determine is whether or not plaintiff is a holder in good faith and for value.” Upon this issue the jury rendered a verdict for the defendant. The judgment is challenged upon the ground of alleged errors in the charge to the jury and upon the further ground that the verdict is against the weight of evidence. Should the verdict be disturbed for want of evidence to sustain it? We think it should not. The burden rested upon the plaintiff of showing by a fair preponderance of the evidence that it acquired the draft in good faith, for value and without notice of any fatal infirmity. It appears that the plaintiff was ignorant of the financial condition of either Berg or Bosenthal; that Bosenthal had never met- Berg until the day he introduced him to the bank, and was unacquainted with his occupation; that neither of these gentlemen had any account with the plaintiff; that the address of Berg was not ascertained; that every one of the plaintiff’s witnesses was interested in the outcome of the suit; that the draft had not been accepted by the defendant and was in satisfaction of a claim for loss and damage by fire; and, most significant of all, the draft, by its express terms, was conditional. It stated that “upon acceptance” the ¡National Bank of Commerce would pay. The draft is not the usual unconditional order by one to another requiring the one to whom it was addressed to pay irrespective of any contingency. Applying the well-settled rule that an appellate tribunal interferes reluctantly with the determination of a jury when inferences are to be drawn from facts and circumstances submitted to them, and that an order refusing to set aside a verdict should not be reversed if there is any evidence tending to sustain the verdict, we reach the conclusion that the verdict should not be set aside as against -the weight of evidence. We think there were sufficient circumstances to put the plaintiff’s officers upon inquiry which, if pursued to a reasonable extent, would have disclosed the fraud of Berg. The jury was justified in finding that the plaintiff had not sustained the burden of showing its good faith. The facts established bring the case within the rule laid down in Cheever v. Pittsburgh, S. & L. E. R. R. Co., 150 N. Y. 59, which is stated as follows: The holder of a note who has no actual knowledge or notice of a defect in the title, or other equities between the parties, when circumstances come to his knowledge sufficient to put him upon inquiry, is chargeable with knowledge of all the facts that such inquiry would have revealed.” The instructions to the jury, taken as a whole, constitute a concise and correct statement of the law applicable to the case.

The judgment should he affirmed, with costs to the respondent.

Seabury and Daytoe, JJ., concur.

Judgment affirmed, with costs to respondent.  