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Russell v. Second National Bank of Paterson

Decided: October 21, 1947.

GRACE L. RUSSELL, PLAINTIFF-RESPONDENT,
v.
THE SECOND NATIONAL BANK OF PATERSON, DEFENDANT-APPELLANT



On appeal from the Supreme Court.

For the plaintiff-respondent, Randal B. Lewis.

For the defendant-appellant, John P. Nugent and Frederick M. Rollenhagen.

Case

The opinion of the court was delivered by

CASE, CHIEF JUSTICE. Miss Russell, a retired school-teacher, suffered material losses as a result of a fraud practiced upon her by Fred Baron, alias Fred Bloom, and Ernest T. Brasch, alias Henry Williams. Baron and Brasch were indicted for the fraud, entered pleas of non vult and are serving sentences thereunder in the State Prison. The appellant

bank honored the checks which had been fraudulently obtained but which, drawn and signed by Miss Russell against her account in that bank, came to it in the course of business from a correspondent bank. Judgment, here under appeal, was entered against the bank for the total amount of the checks, $22,170, plus $4,887.86 interest calculated from the several dates when the checks were charged to Miss Russell's account.

The method by which the fraud was accomplished was that Baron, one of the swindlers, called Miss Russell by telephone, represented himself to be a man well known locally, asked for contributions toward some worthy cause, and induced Miss Russell, not only to make numerous gifts, but to draw the checks to a fictitious name and deliver them to a caller.

In early June of 1942 Miss Russell was addressed on the telephone by a voice which said that the speaker was Herman Geller. A prominent resident of Paterson bore that name. He was not known to Miss Russell personally but was by reputation. The speaker said that he was interested in a project for the rehabilitation of disabled soldiers, that he would like Miss Russell to help, that he did not want his name to appear and that he would like the contributions to be made by check payable to his secretary, Henry Williams, who would call for the same. Shortly thereafter a man called at Miss Russell's home, said that he was Henry Williams, asked for and received Miss Russell's check which, dated June 15th, 1942, in the amount of $500, drawn on the defendant bank to the order of Henry Williams, was delivered to him by Miss Russell in person. The telephone voice was that of Fred Baron. The caller at the house was Ernest T. Brasch. There was no one answering to the name Henry Williams except Brasch, who assumed it for the purposes of the fraud. Brasch delivered the check to Baron who endorsed it "Henry Williams." The check was then further endorsed by Brasch in his own name and either cashed or deposited at a bank other than the defendant. That performance was repeated without material variation on seventeen other occasions until September 28th, 1944, and in amounts varying from $100 to $500. The checks were all cleared through banking channels.

As to the six remaining payments in the Williams series there was a variation in that after the endorsement of the Williams name by Baron the checks were cashed without further endorsement by Brasch.

At about the same time Miss Russell received a telephone message from a man who said he was John Grimshaw. Mr. Grimshaw was a well known lawyer of Paterson. He had for a long time been acquainted with Miss Russell, although he had not been seen by her for several years. The impersonator stated that Miss Russell's help was wanted for a boys' camp but that he did not want any publicity for himself and would like Miss Russell to make payments by checks drawn to the order of his secretary, whose name was given as George Wilson. So started a line of thirty-four checks by Miss Russell to the order of George Wilson, the first dated June 29th, 1942, in the amount of $650 and the last drawn and delivered the latter part of August, 1944, in the amount of $200. The person speaking as John Grimshaw was Fred Baron. Baron, in giving the name George Wilson as the payee on the check, knew there was no person bearing that name and planned to sign, as he actually did sign, the name by way of endorsement. The modus operandi was that Miss Russell would receive a telephone request from a man (Baron) who said he was John Grimshaw; she would then draw a check to the order of George Wilson, place it in an envelope addressed to John Grimshaw and deliver it at her door, either in person or by her housekeeper, to a messenger, a boy about fifteen years of age, who called and asked for "the letter for Mr. Grimshaw." Baron then endorsed the name "George Wilson," and, in most instances, Brasch endorsed beneath with his own genuine signature and the check was cashed or deposited at a bank.

A third phase of the fraud was a check for $350, properly in the George Wilson series, which, on September 11th, 1943, Miss Russell inadvertently drew to the order of John Grimshaw instead of to the order of George Wilson. That check was endorsed by Fred Baron with the name, wrongfully purporting to be the signature, of John Grimshaw, and also was endorsed and banked by Brasch. In the usual course of bank

clearances the check was forwarded to the defendant bank and charged against Miss Russell's account. The Grimshaw endorsement is conceded to be a forgery, and the appeal is ...


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