The plaintiff, a corporation, was a depositor in the Germania Bank of the City of New York, the defendant. On May 21, *2851912, plaintiff drew a check upon the defendant payable to the order of the Queensboro Corporation for $1,000. That check was indorsed: “Pay to order of R. W. Birchard” by the Queensboro Corporation; “Pay to the order of Stripe-Hodges Co. R. W. Birchard; ” and also indorsed by the Stripe-Hodges Company and. deposited- by it to its credit in the New Nether-land Bank of the city of New York, by which it was presented to the defendant, and was paid on June 13, 1912. It is alleged that the indorsement of R. W. Birchard was forged, and upon the fact that the indorsement of the check by the payee was a forgery the plaintiff seeks to recover.
There was no serious dispute about the.facts, which are substantially as follows: Plaintiff was desirous of purchasing some property in the borough of Queens, and the Queensboro Corporation was acting as its representative in procuring the property that the plaintiff required. A Mr. Robinson, who was a representative of the Queensboro Corporation, received information from one Stripe, who was connected in business with a person calling himself A. H. Hodges, that they had a' plot of land for sale which would answer the plaintiff’s purposes. Robinson went to the plaintiff’s president and submitted to him this proposition to purchase the land, and an offer for it was made. Robinson and Stripe and Hodges then had negotiations about the property; prices were discussed, and finally Stripe said that he thought $16,500 might buy it. This statement was communicated to the plaintiff’s president by Robinson, who said that he thought they could make the deal at $16,500 and that if plaintiff’s president would give Robinson a deposit subject to approval, they would let him know in a few days whether the deal could be made or not. The plaintiff’s president thereupon gave to Robinson this check for $1,000 payable to the order of the Queensboro Corporation. Robinson went back to his ofeee and notified Stripe that he had a check for $1,000 subject to approval. Stripe asked Robinson whether the check was certified; Robinson said no, and Stripe suggested that he get it certified so that if they were in a position to make the deal it could go through without delay. Acting on this suggestion, the next day Robinson went to the bank, had it certified, and retained it. The nego*286tiations continued between Bobinson and Stripe and Hodges until the tenth day of June, when he received a telephone message from Stripe that he had the contract ready and to come in for it. Bobinson took the check and went to the Stripe-Hodges Company’s office, when Stripe presented to Bobinson a contract dated the 10th of June, 1912, whereby one B. W. Birchard agreed to sell and convey this property in Long Island City, borough of Queens, to the plaintiff in consideration of $11,500, payable, $1,000 on the signing of the contract, and provided that the deed was to be delivered on July 11, 1912 This contract purported to be signed by Birchard. Bobinson took this contract to plaintiff’s president and said that $11,500 was the best he could do, as Stripe had said that nothing less would buy the property. Bobinson then took plaintiff’s check out of his pocket book and told him he would have to pay $11,500 or take his check back. The plaintiff’s president would not sign the contract that day, but said he would make up his mind the next day, and Bobinson kept the check and the two contracts. The next day Bobinson went back with the check and the contracts to the plaintiff’s president, when the plaintiff’s president signed the contracts and gave them back to Bobinson and told .him to go ahead and close the matter up as soon as he could, and to indorse the check over to Birchard, who was the contracting party and who had agreed to convey. Bobinson followed those directions; had the Queensboro Corporation indorse the check to Birchard, and delivered, the check, indorsed to Birchard, and the contract signed by Birchard and plaintiff, to Stripe or Hodges. Thereafter Hodges indorsed the name of Birchard on the check, making it payable to the Stripe-Hodges Company, deposited the check in the Hew Hetherland Bank to the account of that firm or corporation, and the money was subsequently withdrawn from that account. It subsequently appeared that Birchard was a real estate dealer living in Connecticut; that he knew nothing about the transaction, his name to the contract being forged by Hodges, who also forged his name to the check; that he had never heard of the property, had no interest in it, had made no offer to sell it and had not negotiated in relation to it, and that Stripe or Hodges had used his name *287without his authority, hoth in making the contract and in receiving and indorsing the check.
I think, throughout all this transaction, that the Queensboro Corporation and Robinson were acting solely as agents for the plaintiff. Neither Robinson nor the company had any interest in the check, but merely received it from plaintiff to apply on the purchase of the property when the contract was made. The check, therefore, first acquired validity when indorsed by the payee, the Queensboro Corporation, plaintiff’s agent, over to Birchard, who was assumed to be the contracting party and to whom the money was to be paid. The certification of the check was, therefore, a certification at the request and for the benefit of the drawer, and I think the transaction must be treated as if the drawer himself had the check certified. The check, therefore, having been drawn by the plaintiff and certified by its agent, remained in its possession until Robinson delivered the check, at the direction of plaintiff’s president, to the Stripe-Hodges Company for the account of the plaintiff.
It is entirely clear from this transaction that this check was obtained from plaintiff and its agent Robinson by fraud. It was based upon a contract purporting to be signed by Birchard, which was not in fact signed by him and of which he had no knowledge. It purported to be an obligation of Birchard to convey this property to plaintiff, when Birchard had no title to the property, had no means of acquiring it and knew nothing of the transaction, and his name had been forged to the contract. The plaintiff had directed that the check should be indorsed to Birchard, who was the contracting party; and, therefore, it was to Birchard, who made the contract, that the plaintiff directed the bank to pay the money. The check having been thus obtained by fraud, it never had a valid inception in the hands of Stripe or Hodges. What plaintiff intended to do was to assume the payment of this $1,000 to the Birchard who had executed the contract to convey the property to it, and never intended that the money should be paid to Stripe or Hodges. The delivery of the check payable to the order of the person who had made the contract to convey the property was based entirely upon the validity of the contract, and that it was a bona fide contract which would insure to the *288plaintiff a conveyance of the property. The contract itself was a fraud and a forgery. The check was obtained from plaintiff and its agent Robinson by fraud; and I do not think that either Stripe or Hodges ever obtained, as against the plaintiff, any title to the check or right to collect it.
I think the decision of this court in Anglo-South American Bank, Ltd., v. Nat. City Bank (161 App. Div. 268, 278) is applicable to this case. This court in deciding that case said: “ Undoubtedly if this check had lawfully come into the hands of 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. * * * 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 *289plaintiff’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.”
It seems to me that what was said in that case directly applies to the case at bar. The check was procured from the plaintiff’s agent, the drawer, by fraud, based upon a contract that was forged, and which contract purported to be an agreement to convey real property to the plaintiff, the maker of the check. ' The person purporting to make such a contract had no relation to the property and no means of acquiring it. He knew nothing of the transaction, and had never undertaken to convey; and when plaintiff’s president directed that the check should be drawn to the maker of that contract, he certainly did not intend that it should be paid to Stripe or Hodges, but to the person, whoever he was, that was acting as principal and who had purported to execute the contract. If that check had actually come into the possession of Birchard, to whom it was payable, and he had actually indorsed it, and it had then come into the hands of a third party who received it for value, an entirely different question would have been presented. But here, Stripe or Hodges procured the check by fraud; the name of the payee was forged; and by them the check was collected through the agency of the New Netherland Bank, with which they deposited it for their own account, and which in express terms guaranteed the indorsements. It seems to me that if the defendant had refused to pay the check on the ground that the indorsement of Birchard was forged, and the check had been obtained by fraud, the New Netherland Bank could not have enforced payment; and the defendant having paid it on the faith of the New Netherland Bank’s guaranty of prior indorsements, I do not think that the defendant can resist the demand of the plaintiff, who had its money on deposit with defendant to pay this check when properly indorsed by the holder, and when it had never been so indorsed. By the certification, undoubtedly the bank became indebted to the holder of the check when properly indorsed; but on the facts here *290found no one ever obtained a good title to the check, and it was not indorsed by Birchard, to whom it was made payable.
It seems to me to be entirely beside the mark to say that the plaintiff intended to pay the check to the person who actually signed the contract to convey the property; that Hodges was that man, and, therefore, that the indorsement of the check in Birchard’s name by Hodges was the indorsement by the person intended by the plaintiff as the person to receive the $1,000. In this case the fraud in the whole transaction vitiated the contract to buy the property, and, therefore, there never was a valid delivery of the check. Plaintiff having directed the check to be indorsed by Birchard, and there being a Birchard whom Robinson, plaintiff’s agent, knew as a real estate dealer, there certainly was never any intention on behalf of the plaintiff that the check should be payable to anybody but Birchard who, it was assumed, had signed the contract for the sale of the property. If Hodges had signed the contract, it could not be assumed that plaintiff would have willingly delivered a check payable to his order without some inquiry as to his responsibility or ability to fill his contract. I think it may well.be assumed that the plaintiff, when ordering the check to be indorsed over to Birchard, the contracting party, understood • that he was dealing with some third party for whom the" (■ Stripe-Hodges Company was acting as agents, and that he | had, therefore, the responsibility of a third party, and was not \ relying solely upon the responsibility of the Stripe-Hodges X Company.
^ I am also of opinion that the principle established in Critten v. Chemical Nat. Bank (171 N. Y. 219) should be applied in this case. In that case the plaintiffs sued to recover from their banker an alleged balance of deposit due to them from the bank. The bank in that case had paid out of the plaintiffs’ account certain checks altered by one Davis, an employee of the plaintiffs. On the trial the alteration of the checks by Davis was established beyond contradiction, and the substantial issue litigated was that of the plaintiffs’ negligence. The court below found that the plaintiffs were not negligent and directed a judgment for the plaintiffs. In" deciding that case the court said: “Moreover, we see no reason why the bank should be *291entitled to anything more than indemnity for the loss the depositor’s negligence has caused it. In the present case a check altered by Davis from the sum of $22 to $622 was paid by the defendant to the Colonial Bank, in which Davis had deposited it. Against that bank the defendant has ample recourse. If it were to be held that the plaintiffs are estopped from denying the genuineness of that check as against the defendant, the latter could have no claim against the Colonial Bank, nor is it clear that the plaintiffs would have any direct right of action against that bank. The Colonial Bank took the check solely on the responsibility of Davis. To it the plaintiffs owed no duty. If the plaintiffs and the defendant had never settled their accounts the Colonial Bank could have had no complaint against either party for that cause. A rule which might operate to relieve that bank from the liability it assumed when it collected an altered check merely because the plaintiffs failed in their duty, not to it, but to a third party, should not be upheld. Nor would it operate justly in a case in which the bank had paid a single forgery unless by the depositor’s default and delay the bank had lost its opportunity to secure restitution.”
I cannot see why this rule should not apply to the facts in this case. Here this check, having been obtained by fraud from the plaintiff, was paid to the New Netherland Bank upon a forged indorsement. The defendant has a remedy against the hank to whom it paid the check, and it is sought to relieve the defendant from liability because of some assumed intention on the part.of the plaintiff to deliver the check to the person who actually signed the contract for the conveyance of the real property. The check was drawn to the order of the person who was the assumed party to that contract. There was such a person in existence who was connected with the brokers who assumed to represent him, and that was known to the agent of the plaintiff when the check was delivered. The check was then deposited with the New Netherland Bank, not to the credit of the person to whom the check was payable, but to the credit of the Stripe-Hodges Company, and their title to the check appeared on its face to be through an indorsement of the person to whom the check was payable. The New *292Netherland Bank presented the check to the defendant and guaranteed the- indorsers; and in consequence of that guaranty, and relying upon it, the defendant paid the check. If Hodges had presented the check at the counter, and asked the defendant to pay it in cash, it is clear that the defendant would not have paid it without a responsible guaranty. It received that responsible guaranty from the New Netherland Bank, and, relying upon that guaranty, paid the check. Certainly, as between the plaintiff and the New Netherland Bank, the latter bank should suffer the loss, and not the plaintiff; and, as the defendant is protected by the guaranty of the New Nether-land Bank, I do not think that upon these facts it is in a position to resist the claim of the plaintiff to refund the amount of the check.
I am, therefore, in favor of affirming this judgment. Hotchkiss, J. (dissenting):
I think it is quite impossible to say that the drawer of the check meant that it should be paid to Hodges. It seems to me that was the very opposite of the drawer’s intention. The evidence is uncontradicted that Hodges did not pretend to be ‘'Birchard, but represented himself as having authority to act fot Birchard as broker. I think the present case is controlled by the principles of Shipman v. Bank of State of N. Y. (126 N. Y. 318); Seaboard Nat. Bank v. Bank of America (193 id. 26), and Phillips v. Mercantile Nat. Bank (140 id. 556). (See North British & Mercantile Ins. Co. v. Merchants' Nat. Bank, 161 App. Div. 351-354.)
The judgment should be affirmed.
Judgment reversed, new trial ordered, costs to appellant to abide event. Order to be settled on notice.