I concur in the affirmance of this judgment. The plaintiff was induced to deliver to one Levick a check drawn on the defendant to the order of the National Protective Association, a Pennsylvania corporation, for $15,000 by the false and fraudulent representation that this National Protective Association had applied to the plaintiff for a loan and had executed a note which was signed on behalf of the corporation by one Moyer as trustee, and which Levick delivered to the plaintiff and received a check payable to the order of the corporation for that amount. The National Protective Association had made no application for a loan and knew nothing about the transaction. Moyer had no authority to apply for the loan or to execute promissory notes for the corporation; and the whole transaction was a fraud upon the plaintiff. After Levick got this check he procured its certification by the defendant, induced Moyer to indorse it on behalf of the payee, and then Levick or his associates deposited it with a trust company, which collected it from the defendant and paid the proceeds to Levick or his associates. This note, purporting to be signed on behalf of the *278National Protective Association; was renewed by the plaintiff, but when it was finally presented to the National Protective Association for payment that association repudiated the whole transaction, and plaintiff then demanded of the defendant the return of the amount which it had paid upon this check. If this check had not been certified there could be no question but that the plaintiff would be entitled to recover. The only question presented is whether the certification of the check under these circumstances operated as an assignment of the funds to the credit of the drawer with the bank, and made the bank liable as a principal debtor to the one presenting the check for payment.
Under section 112 of the Negotiable Instruments Law (Consol. Laws, chap. 38; Laws of 1909, chap. 43) the acceptor, by accepting the instrument, engages that he will pay it according to the tenor of his acceptance. Section 325 of the Negotiable Instruments- Law provides that a check of itself does not operate as an assignment of any part of the funds to the credit of the drawer with the bank, and the bank is not liable to the holder unless and until it accepts or certifies -the check. In Freund v. Importers & Traders’ Nat. Bank (76 N. Y. 352) the court, after holding that Blun & Sons were the legal holders of the check, with such right as that they could enforce it against the makers, held that the certification of it by the defendant at their request had all the legal effect which the same certification would have had had it been indorsed by the payees; that the legal effect is the same as if the defendant had paid the money upon it, with the proper indorsement upon it of the payees; that “by the certification of a negotiable check, properly negotiated, the depositary of the fund checked upon becomes liable to the owner of the certified paper, and is bound to have in readiness the money to meet it, from the fund drawn upon. When the check is not negotiable, or has not been indorsed, but has by assignment come into the hands of a lawful owner, who has a right to enforce it against the maker, the effect is the same.” And this case was followed in Meuer v. Phenix Nat. Bank (94 App. Div. 331; affd., 183 N. Y. 511), but was distinguished in Goshen Nat. Bank v. Bingham (118 id. 349) and Lynch v. First Nat. Bank of Jersey City (107 id. 179).
Undoubtedly if this check had lawfully come into the hands *279of the payee and the payee or any indorsee or transferee thereof had presented the check to defendant, who had certified it, the bank would have become the principal debtor, the plaintiff as drawer would have been discharged, and the defendant would have become liable to the legal holder of the check. But, from the facts found by the referee, the check was never legally negotiated or delivered to the payee by the plaintiff; possession of the check had been obtained by fraud, not by the payee, but by the conspirators, who had been guilty of fraud; while in their hands they presented it to the defendant and it was certified; then by forging the indorsement of the payee they procured payment of the check. The certification was a part of the scheme by which the conspirators procured the check, had it certified, had the payee’s name forged and procured payment. This check in the hands of the conspirators was never a valid negotiable instrument. It had its inception in fraud; the certification was procured by fraud; the indorsement was forged and the payment was obtained by a fraudulent scheme to defraud the plaintiff. The plaintiff was entitled to repudiate the whole transaction, and the payee never having indorsed the check, the defendant was not justified in paying it and was under no obligation either to the payee or to the holder of the check, who had secured no title to it and who had no authority to negotiate it or collect it. By the certification of the check the certifying bank became indebted to the lawful holder of the check; but if there never was a lawful holder of the check or a person entitled to enforce the check or collect the amount thereof, I do not see that the certification of the check can affect the liability of the drawer, nor is the bank certifying it under any obligation to pay it. It seems to me clear, if defendant had refused to pay the check, that neither the trust company, in which it had been deposited, nor any other holder, in the absence of an indorsement by the payee, could have recovered the amount thereof from the defendant. That being so, the defendant had plaintiff’s money on deposit, which it had set aside to pay this check when presented properly indorsed by the payee, and, therefore, it never having been indorsed, it never could have been collected. The defendant having in its hands the plain*280tiff’s money set aside to pay the check, which had never been negotiated by the drawer nor indorsed by the payee, the defendant could not hold the money as against plaintiff’s claim for reimbursement.
For the reasons stated I concur in the affirmance of this judgment.
Clarke, Scott and Hotchkiss, JJ., concurred.
Judgment affirmed, with costs.