"Plaintiff always remained the owner of the certificate; has never assigned it, or any part thereof, or in any way indorsed or transferred it, or any interest therein. Before August 9, 1901, she lost or inadvertently destroyed the certificate, and though she has diligently searched, she has been unable to find it, and on August 9, 1901, she notified defendant of the loss of the certificate. She has duly demanded of defendant the issue of a new certificate or the payment of the amount of the deposit. The demurrer is stated to be interposed merely for the purpose of enabling the defendant to insist that the plaintiff shall be required to give the security specified in section 1917, Code Civ. Proc. That section refers to lost negotiable paper, and the question which presents itself is, therefore, whether or not the certificate of deposit given by defendant is negotiable. Section 20, c. 612, Laws 1897, known as the 'Negotiable Instruments Law,' declares that an instrument, to be negotiable, 'must be payable to order or to bearer' and in this respect is merely declaratory of the law of negotiable paper as it existed before the passage of the statute. The papers which were before the Court in the cases principally relied upon. by defendant conformed to the foregoing definition, and in each case the decision turned upon the fact that the lost receipts were payable to 'order,' which circumstances was held to render them negotiable instruments, and to require that indemnity be given before judgment upon them could be rendered. Frank v. Wessels, 64 N. Y. 155; Read v. Bank, 136 N. Y. 454, 32 N. E. 1083, 32 Am. St. Rep. 758. The receipt or certificate in the present case is not negotiable. The money represented by it is payable, not 'to order or bearer,' but to the plaintiff ‘or her assigns.' It is therefore what is known to the law as a 'non-negotiable instrument.' In an action upon a lost or destroyed instrument of this description, it is not necessary that the plaintiff should give or tender indemnity." Question 434: (1) Why was it material in this case to consider whether this instrument was negotiable? What was its alleged defect as a negotiable instrument? What did the court decide? (2) Why should the law provide that the holder of negotiable paper should give bond in case of loss thereof, and not the holder of non-negotiable paper? § 417. (Nego. Instru., Sec. 26.) When instrument payable to bearer. Case 435. Uniform Negotiable Instruments Act, Sec. 9. "The instrument is payable to bearer: "1. When it is expressed to be so payable; or "2. When it is payable to a person named therein or bearer; or "3. When it is payable to the order of a fictitious or non-existing person, and such fact was known to the person making it so payable; or "4. When the name of the payee does not purport to be the name of any person; or "5. When the only or last endorsement is an endorsement in blank." Question 435: When is an instrument payable to bearer? Case 436. Willetts v. Phoenix Bank, 2 Duer, 121. Facts: Suit on four checks, one being "to the order of 1658," and three to the order of "bills payable." OAKLEY, C. J.: "* The law is well settled that a draft payable to the order of a fictitious person, inasmuch as title cannot be given by indorsement, is in judgment of law payable to bearer. * * *99 Question 436: How were these checks payable? Were they negotiable? Why? Case 437. Bartlett v. First Nat. Bank, 247 Ill. 490. Facts: This was a suit commenced by Bartlett, Frazier & Carrington against the First National Bank of Chicago, to recover the amount of 135 drafts drawn by B. F. & C. by their agent, R. L. Walsh, upon themselves, to the order of various persons, and fraudulently indorsed by said Walsh in the names of the payees and paid to Walsh by State Bank of Reddick and to said Bank by First National Bank of Chicagó, and to First National Bank of Chicago by B. F. & C., plaintiffs herein. Point Involved: Whether an instrument drawn to the order of a payee by a name which represents an actual person, but who was not intended to have and never had any interest in said instrument, is payable to a fictitious person and therefore payable to bearer. MR. JUSTICE HAND: 66* It appears from the record that Bartlett, Frazier & Carrington were engaged in the buying of grain in the city of Chicago, and at numerous places in the country; that in 1904 they were running an elevator at Reddick; that R. L. Walsh was the manager of the Reddick elevator; that he bought grain from the farmers residing in that vicinity and paid them for their grain by delivering to them drafts drawn upon banks in the following form, which were furnished R. L. Walsh by Bartlett, Frazier & Carrington: Bartlett, Frazier & Carrington. 'No... Pay to the order of Bartlett, Frazier & Carrington, By $...... ... lbs. of To Bartlett, Frazier & Carrington, Chicago, Illinois.' "The blanks were filled up by R. L. Walsh with the farmers' names, the amount due them for grain and the kind of grain purchased. The drafts were cashed by the State Bank of Reddick, and by that bank forwarded to the First National Bank of Chicago, and by that bank collected of Bartlett, Frazier & Carrington. In the year 1905, to accommodate the farmers and to meet competition, R. L. Walsh would fill out the drafts, as above indicated, for grain and pay the farmers for their grain in cash, and then, without authority, endorse the drafts with the farmers' names and obtain the amounts of the drafts from Bartlett, Frazier & Carrington by putting the drafts through the banks. "In November, 1906, it was discovered by the appellants that R. L. Walsh, by means of issuing drafts without receiving any grain therefor and endorsing them in the names of the payees and procuring the cash thereon from the State Bank of Reddick and passing them through the First National Bank of Chicago, had obtained some $12,500 in cash, which he converted to his own use. "The appellants base their claim of liability against the First National Bank of Chicago upon the contention that the drafts by R. L. Walsh were forgeries. It is undoubtedly the general rule that when a drawee pays a draft to an endorser who derives title to the draft through a prior forged endorsement he may recover back the money so paid. (First Nat. Bank v. Northwestern Nat. Bank, 152 Ill. 296.) "The drafts drawn by R. L. Walsh in the name of the appellants against themselves were all made payable to some person who resides near Reddick, or bearer, and in the sense that there were such individuals as payees the payees named in the drafts were not fictitious persons. At the time, however, Walsh drew said drafts he did not intend that the persons whose names he inserted as payees in said drafts should have any interest in said drafts, or that said drafts should ever be delivered to said payees, or that said payees should endorse said drafts in order to receive payment therefor or for the purpose of negotiating the same. In the eye of the law, therefore, the payees named in said drafts were not bona fide payees but mere fictitious persons. Said drafts were therefore, in law, payable to bearer, and were transferable, therefore, by delivery, and upon their receipt by the appellee payment thereof could be enforced against the appellants by the First National Bank of Chicago without claiming through the said forged endorsements but as the holders of negotiable paper made payable to bearer. The First National Bank did not, therefore, make out its title to said drafts through a forged endorsement, and, appellants could not, therefore, recover back the money paid to the bank on said drafts. Question 437: Were the above instruments payable to bearer? Why? Why? What effect did this have on the question whether the indorsements were forgeries? (Note: If paper is order paper it cannot be negotiated except upon the indorsement of the payee of the instrument or the payee of the indorsement. If bearer paper it may be negotiated by delivery. And in that connection it is to be always remembered that paper is bearer paper no matter whether it is order paper on its face or not, if the only or last indorsement is an indorsement in blank. See further of this, under the subject of negotiation.) F. "Where the Instrument is Addressed to a Drawee he Must be Named or Otherwise Indicated Therein with Reasonable Certainty." § 418. (Nego. Instru., Sec. 27.) Meaning of provision. (No cases.) |