McDonald v. Muscatine National Bank

27 Iowa 319

• Court: Supreme Court of Iowa
• Decided: June 22, 1869
• Status: Published

Opinion

Cole, J.

l. promissory bííuüii^forgery and irand. This case is in some respects ■ like the case of Lane v. Krekle, 22 Iowa, 399. It has its origin in a contract for the sale of the same pretended patent, and possibly by the same agent, who manifests his claim to genuis by adopting his mode of operation to the peculiar fancy or gullibility of each successive customer. The counsel for the appellee claim in their printed argument, that there is this difference in the two cases. ICrekle admitted the giving of the note, but sought to defend on the ground of fraud; while this plaintiff denies the making of the note, and shows that it is a forgery, and the absence of such default on his part as would make him liable to third persons.

If it should be admitted that this note was obtained by Henly, of the plaintiff, under such circumstances as would make him guilty of forgery; yet it does not necessarily follow that the plaintiff would not be liable on the note to a bona fide indorsee or holder for value. Mr. Parsons says, that filling up a blank by a clerk, in which his employer had directed him to write a specific sum, with a larger sum, is a forgery, though-it might bind the master to pay a bona' fide indorsee for value. And tliis example may serve in general for blanks wrongfully filled out. 2 Pars. on N. and B. 584; Byles on Bills, 262.

But it seems to us that the circumstances under which this note was procured amount to a fraud, and although, according to plaintiff’s testimony, it was a gross fraud, yet it will not exempt the maker from liability to a bona fide holder of the note who has paid value therefor before maturity. This conclusion is based upon the fact, as shown by plaintiff’s own evidence, that the signature of the plaintiff was placed to the blank instrument, and it was delivered and intrusted by him to the payee, Henly, for some purpose. In such case the rule may well be applied, that, where one of two innocent persons must suffer by the wrongful act of a third, he must suffer who placed it in the power of such third person to do the wrong. I Pars. on N. and B. 114, and notes to 110; Fullerton v. Sturges, 4 Ohio St. 529.

The plaintiff, as he testifies in effect, signed the instrument to be filled up as an order for an evaporator, and intrusted it'to Iienly for that purpose ; Henly fraudulently filled up the instrument as a promissory note, and it came to the hands of an innocent holder for value. Either the innocent holder or plaintiff must lose the amount; and since the plaintiff placed it in the power of Henly to do the wrong, he must suffer the loss.

The case would be very different if Henly had found the signature of plaintiff on a paper, and written the note over it; or if he had procured it otherwise, and without its being intrusted to him for any purpose. Nance v. Lary, 5 Ala. 370. The District Court erred in overruling the motion to set aside the verdict and grant a new trial.

^Reversed.