Boles v. Harding

87 N.E. 481, 201 Mass. 103, 1909 Mass. LEXIS 681

• Court: Massachusetts Supreme Judicial Court
• Decided: February 25, 1909
• Status: Published

Opinion

Braley, J.

It is sufficiently plain that the defendants issued and delivered the check to an impostor who falsely claimed to represent an association of “ freight handlers ” to which the defendants wished to make a donation. But while not conceded, the undisputed evidence would support a finding that the plaintiff was a holder of the check for a valuable consideration, without notice or knowledge of any facts which would impair its validity. If this were the only defense, it would follow that upon proof of the defendants’ signature he could recover, although between the original parties the check was procured through fraud and misrepresentation, as the defendants would be estopped from denying the existence of the payee or his capacity to indorse. Pettee v. Prout, 3 Gray, 502. First National Bank of Rochester v. Harris, 108 Mass. 514. Robertson v. Coleman, 141 Mass. 231. White v. Dodge, 187 Mass. 449. Fillebrown v. Hayward, 190 Mass. 472, 480, and cases cited. R. L. c. 73, §§ 18, 25, 69, 74; c. 173, § 86.

But, although there was evidence of the signature of the makers, the issuance of the check and the good faith of the plaintiff, the answer having aptly raised the issue, there could be no recovery without proof of the genuineness of the indorsement by the payee, for until this appeared the check would not have been negotiated, and the exceptions fail to disclose any testimony from which this essential fact could have been found. Bryant v. Abington Savings Bank, 196 Mass. 254. True v. Dillon, 138 Mass. 347. Estabrook v. Boyle, 1 Allen, 412. Dana v. Underwood, 19 Pick. 99. R. L. c. 173, § 86.

The plaintiff, however, relies upon the well settled rule that where an instrument containing all the other elements of negotiability is knowingly made payable to the order of a fictitious or non-existing person, the instrument becomes negotiable without indorsement, and is to be treated as if in terms made payable to bearer. Dana v. Underwood, 19 Pick. 99. Bryant v. Eastman, 7 Cush. 111. Shaw v. Smith, 150 Mass. 166,167, and eases cited. Gibson v. Minet, 1 H. Bl. 569. Gibson v. Hunter, 2 H. Bl. 187, 288. Bennett v. Farnell, 1 Camp. 130,133, n., 180.

In England since the bills of exchange act of 1882, 45 & 46 Viet. c. 61, § 7, cl. 3, proof of knowledge by the maker who issues the instrument that the payee is fictitious or non-existent is not required. A lawful holder may treat the instrument as payable to bearer, whenever it appears that the name of the payee is inserted merely as a pretense, without any intention that payment should be made in conformity with the promise, whether the name be that of an existing or a non-existing person. Bank of England v. Vagliano Brothers, [1891] A. C. 107, 153. Clutton v. Attenborough, [1897] A. C. 90. But under our negotiable instruments act, formerly St. 1898, c. 533, § 9, now R. L. c. 73, § 26, as well as at common law, while the same rule as to what constitutes a fictitious payee obtains, the bearer as such cannot recover unless it is shown that the maker knew of the fiction. Gibson v. Hunter, 2 H. Bl. 187, 288. Phillips v. Mercantile National Bank, 140 N. Y. 556. Shipman v. Bank State of New York, 126 N. Y. 318. Armstrong v. Pomeroy National Bank, 46 Ohio St. 512. If the e'ament of knowledge is wanting there is no estoppel, although the fact that the payee is fictitious may have been fully established. The issue is one of fact, upon proof of which, by force of the statute the instrument becomes payable to bearer.

But, the plaintiff having declared only upon the check as payable to order, it becomes unnecessary to decide whether there was evidence which warranted a finding in his favor, as this issue was not open. The third, fifth and seventh requests, that upon the evidence the plaintiff could not recover, should therefore have been given.

Exceptions sustained.