American Exchange National Bank v. Sedgwick — 54 N.Y. Super. Ct. 55

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AMERICAN EXCHANGE NATIONAL BANK v. GEORGE S. SEDGWICK, et al.

Headnote

Exchange of worthless cheeks with intent to defraud bank.—Fraud, what sufficient to raise presumption of in such case.

Where it appears that the defendants exchanged checks between themselves, and that the check drawn by one of them came into the hands of plaintiff bank just in time to create an apparent balance to meet the check drawn thereon by the other, payable to the party whose check was so deposited; that the check drawn on plaintiff bank was paid by it; that the check deposited with it was dishonored for lack of funds; and that each of the defendants knew that at the time the checks were drawn neither one of them had the money in bank with which to meet his check,

Held, sufficient to call for a submission to the jury of the question whether or not the defendants or either of them intended to defraud plaintiff; this though one of the defendants testified that he gave his check as an accommodation to the other, and without any fraudulent intent.

Before Sedgwick, Ch. J., Truax and O’Gorman, JJ.

Decided November 11, 1886.

Motion on the part of the defendants for judgment on a verdict. The court below ordered the plaintiff’s exceptions to be heard in the first instance- at general term.

The action was brought for money alleged to have been wrongfully obtained from the plaintiff by the defendants by means of a fraudulent trick or device, and under an alleged agreement which amounted to a conspiracy to defraud the plaintiff of his money by means of an exchange of' checks.

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Further facts appear in the opinion.

L. B. Bunnell, for plaintiff:

I. If Howland knew that Sedgwick intended to attempt to collect the check he had given to him, and that Sedgwick’s check was good for nothing, it was a fraud on his part to deposit it, and thus create a fictitious credit which would directly tend to deceive the bank. The issue thus raised presented a question of intent which should have been submitted to the jury.

II. The ground upon which the court directed a verdict for the defendants was, that there was no proof that Sedgwick’s check was not good at the time he gave it. This ground was not good for (1) it was dated ahead and the presumption is, therefore that it was not. good, and (2) Sedgwick admits in his answer that it was not good.

HI. It is not ¿necessary to prove that there was a verbal or written agreement that two persons set about deliberately to swindle another, when the course they pursued tended all that way. In the absence of a satisfactory explanation, a person is presumed to intend just the results which flow naturally and inevitably from the course he pursues. The conduct of these two persons was such as to imply fraudulent intent. So far as Sedgwick is concerned there cannot be the slightest doubt, and the course pursued by Howland tended directly to facilitate Sedgwick’s intent to fleece the bank. Sedgwick wished to be accommodated, and his dating his check ahead, advised Howland that he had no money, and good faith and honest intention on his part, required him to know that Sedgwick’s check was good before he put the bank in a position to be robbed. He had no reason to expect that Sedgwick intended to make his check good before the 9th. Fraud consists as much in suppressing the truth as in stating what is not true.

IV. Howland was not in the position of a depositor,

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who deposits a check taken in the course of business. He knew that his check was on its way to his bank with nothing but Sedgwick’s check to meet it, and it was a fraud on his part, to have that check passed to his credit as cash until he knew that it was good,' and thus expose the bank to a swindler’s design.

Samuel H. Lyman, attorney, and William H. Stanley, of counsel, for defendants:

I. No evidence was given of the alleged agreement, nor of any conspiracy to defraud nor of any fraud. Fraud must be proved and will not be inferred from facts which are consistent with good faith (Morris v. Talcott, 96 N. Y., 100 ; Henry v. Henry, 8 Barb., 592 ; Ward v. Center, 3 Johns, 281 ; Jackson v. King, 4 Cow., 207 ; Nichols v. Pinner, 18 N. Y., 295 ; 23 Ib., 264; Wright v. Brown, 67 Ib., 9; People’s Bank v. Bogard, 81 Ib., 108).

“ A condition of known insolvency on the part of an intending purchaser of property, accompanied with an intention to acquire the property of his vendor without paying for it, constitutes such a fraud as will make the vendee liable to arrest in an action for the debt; but the intention not to pay can no more be inferred from the mere fact of insolvency, than the fact of insolvency can be inferred from the existence of an intention not to pay. In either case it is essential that the necessary facts be.made out by competent evidence ” (Morris v. Talcott, supra).

H. The defendant Sedgwick kept no account with and made no representations of any kind to the plaintiff, and owed to the plaintiff no duty or obligation whatever. There is no evidence that he had any knowledge that his check would be deposited with the plaintiff, nor that Howland had an account with the plaintiff.

HI. The plaintiff passed the check of Sedgwick, which Howland had deposited with it, to the credit of Howland. It was optional with plaintiff to credit How-

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land with this amount on the strength of Sedgwick’s uncertified check.

It is evident from the testimony of the plaintiffs themselves that the course pursued in respect to this check was unusual, and it can not be presumed that Howland and Sedgwick would have predicated their acts upon and “concocted” a scheme which, to have any chance of success, must have assumed that their checks would be treated in an unusual way.

The plaintiff elected to pay Howland’s check for $350 before the $400 check of Sedgwick had been presented to the Trust Company for payment. It was entirely optional with plaintiff whether or not it would pay that $350 check before the $400 check had been collected. But having concluded to do so the transaction was at its risk and was in effect a mere loan to Howland of that amount in anticipation that Sedgwick’s check would be paid. But this action is not on that check, nor on contract, and plaintiff cannot in this action recover on that loan or check, but is limited by the allegations of its complaint to a recovery on an action for fraud and conspiracy.

The defendants admit in their pleadings that at the time the checks were drawn neither one of them had the money in bank with which to meet his ’ check. The defendant, Howland, in his testimony said that he knew his check was not good when he drew it, and also that he knew that Sedgwick desired to raise money, and that he, Howland, gave Sedgwick his check, because Sedgwick wanted to borrow money; and for that reason he must have known that Sedgwick at that time did not have the money in bank with which to meet his check.

It is true Howland says that his check was given for Sedgwick’s accommodation, and that he believed that Sedgwick’s check would be good; but the whole transaction is of such a nature that it should have been left to the jury to determine whether there was, as a matter

Concurrence

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of fact, an intention on the part of the defendants, or either of them, to defraud the plaintiff.

The court below seems to have ordered a verdict for the defendants upon the ground that it did not appear from the evidence but that Sedgwick’s check was good when it was given; but, as before stated, Sedgwick admitted that his check was not good and, therefore, it was unnecessary to prove that fact.

Plaintiff’s exceptions are sustained, and the verdict is set aside, and a new trial is ordered, with costs to plaintiff to abide the event.

The question here is whether evidence was given at the trial sufficient to sustain a verdict that the defendants had conspired to cheat the plaintiff. If there were such evidence the case should have gone to the jury.

In Morris v. Talcott ( 96 N. Y., 104 ), the authority on which defendants mainly rely, it is held tha,t a condition of known insolvency on the part of the intending purchaser of property, accompanied with the intention to acquire property of his vendor without paying for it, constitutes fraud; but this intention can no* more be inferred from the mere fact of insolvency, than that fact can be inferred from the existence of an intention not to pay.

In the case at bar, neither of the defendants had any reason to believe that either of the checks exchanged between them was good when made, although defendant Howland testifies that he believed that the check made by Sedgwick was good when made, and that he, Howland, was not party to any trick or device in the transaction, and had no intention to have Sedgwick wrongfully obtain money from the plaintiff.

On the other hand, there were circumstances and coincidents in the case, which indicated the existence of fraudulent intent on the part of both the defendants.

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and tended to shake confidence in the truth of How-land’s testimony.

The fact that, at the time the check was drawn by Howland dated June 7, for $350, on the plaintiff bank, he had only an actual balance of $7 to meet the check, and that Sedgwick’s worthless check for $400, payable to the order of Howland, came into the hands of the plaintiff bank on the morning of June 9, just in time to create an apparent balance to the credit of Howland sufficient to meet the $400 check payable to Sedgwick, which was then paid, is one of these coincidents, the explanation of which by Howland would be a proper subject for the consideration of a jury.

If they saw good reason to discredit the testimony of Howland, and it ceased to have any important effect in the case, then there was enough of evidence to support the inevitable inference that the whole transaction was tainted with a fraudulent intent, in which both defendants shared.

On the whole, I am disposed to agree with Judge Truax that there should be,a new trial.

Sedgwick, Ch. J., not voting.