On appeal from the Camden City District Court.
For the plaintiff-appellee, Rose & Epstein.
For the defendant-appellant, Kenworthy & Clark (Bennett Clark, of counsel).
Before Justices Trenchard, Parker and Perskie.
The opinion of the court was delivered by
TRENCHARD, J. This is the appeal of the defendant below from plaintiff's judgment rendered by the trial judge, sitting without a jury, in a suit to recover $270 alleged to have been improperly paid by the defendant trust company upon a forged endorsement to a check made by the plaintiff.
The sole ground of appeal is the denial of the motion made at the conclusion of the case for a directed verdict in favor of the defendant (i.e., a motion for judgment on the ground that no issue of fact was presented justifying a finding of liability of the defendant), it being asserted in the motion (1) "that under the Negotiable Instruments act" the instrument was made payable to bearer; (2) that "under the facts an estoppel has been worked and plaintiff is deprived of his right of action;" and (3) that there was "no proof that the endorsement of the payee is a forgery."
We believe that the motion was properly denied.
Generally, a bank is liable to the drawer of a check for paying it on a forged endorsement, in the absence of estoppel, contributory negligence, or ratification, or unless the money has reached the intended person. 9 C.J.S. 734, § 356; Board of Education v. National Union Bank, 121 N.J.L. 178; 1 A.2d 383; Harter v. Mechanics Bank, 63 N.J.L. 578; 44 A. 715; Pratt v. Union National Bank, 79 N.J.L. 117; 75 A. 313; Pannonia Building and Loan Association v. West Side Trust Co., 93 N.J.L. 377; 108 A. 240.
At the outset of the trial the following admission in the nature of a stipulation was made: "The defendant admits that there was cash there to cash the check, and they claim that this was practically a bearer check because of the peculiar spelling of the payee's name, and, therefore, they had a right to cash it, and that it was not the Gordon O'Neill, Inc., for whom it was intended."
Now we think that such admission and other substantial evidence at the trial to the effect that the plaintiff delivered the check to a stranger who falsely represented himself to be from Gordon O'Neill Co., Inc., a creditor of the plaintiff for whom the check was intended, and that such check was cashed by the bank by paying it to such stranger after the latter had endorsed it, justified the trial court, sitting without a jury, in finding as a fact that the endorsement was a forgery, and such finding is conclusive on appeal.
Also, we think that on the proofs the trial judge was justified in finding that the check was not a "bearer check." The statute, R.S. 7:2-9, P3, provides: "The instrument is payable to bearer * * * when it is payable to the order of fictitious or non-existing person and such fact was known to the person making it so payable * * *."
The early English cases which first formulated the rule that a bill payable to a fictitious person is by legal intendment payable to bearer, and may be transferred without endorsement, clearly make the knowledge on the part of the drawer of the fictitious character of the payee a condition of the rule. 7 Am. Jur. 841.
It will be observed that the drawer's belief that the payee is a real and not a fictitious person makes inapplicable the rule of the law merchant, embodied in the Uniform Negotiable Instruments act, that an instrument made payable to the order of a fictitious or non-existent person is in legal effect payable to bearer, since that rule only applies when the fictitious character of the payee is known to the drawer. 7 Am. Jur. 843, § 101, citing many cases among which are: Los Angeles Invest. Co. v. Home Sav. Bank, 180 Cal. ...