Bills and Notes, Material alteration. Equity Jurisdiction, Unjust enrichment. Contract, Implied: common counts.
In a suit in equity against an individual defendant and an insurance company seeking to recover the amount of a certain promissory note which was made by the individual defendant payable to the defendant insurance company, and, after a forged alteration of the payee's name by a fraudulent agent of the insurance company, was sold by such agent to the plaintiff, under R.L.c. 73, § 141, there can be no recovery on the note against the individual defendant because the alteration was a material one, and there can be no recovery on the altered note "according to its original tenor," because such a restoration would make it payable to the insurance company, and in the present case that company could not be compelled to enforce the note as trustee for the plaintiff, because it appeared that the original note never was delivered to that company and that the fraudulent agent had no authority to receive the note in its behalf.
In a suit in equity seeking to recover the amount of a certain promissory note which the defendant made payable to an insurance company, intending to pay certain premiums on policies held by him, and which, after a forged alteration of the payee's name by a fraudulent agent of the insurance company, had been sold by such agent to the plaintiff either for cash or for notes of the agent, it appeared that, some weeks after the sale of the altered note to the plaintiff, the fraudulent agent, who wished to obtain possession of the defendant's policies, in rendering an account to the insurance company charged himself with the receipt of the money for the premiums which the defendant thought he had paid with the note and sent a check to the company for the balance shown by the account to be due from him, but it did not appear what this balance was or whether it amounted to as much as the premiums and it was not shown that any money which was paid by the plaintiff for the note, if he paid any money at all for it and did not merely surrender certain notes of the fraudulent agent, was used by the fraudulent agent to pay the defendant's premiums to the insurance company. Held, that the plaintiff had failed to prove that money wrongfully obtained from him had been used to pay debts of the defendant and so could ask for no relief on that ground.
De COURCY, J.
It appears from the agreed statement of facts that the promissory note which the defendant Sibley delivered to George E. Williams was payable to the defendant insurance company one year from date, and was for the amount of the premiums due September 8, 1912, on Sibley's insurance policies. Shortly afterwards Williams altered the note by erasing the name of the insurance company as payee and inserting his own in place thereof. After this alteration and during the month of September, he negotiated the note by indorsement and delivery to the plaintiff, who now seeks to recover the amount thereof.
1. The plaintiff cannot recover from Sibley on the note. It is conceded that the unauthorized change of the payee's name was a material alteration. The note was thereby avoided as against Sibley, by § 141 of the negotiable instruments act, R.L.c. 73. The last sentence of that section, allowing a holder in due course to enforce payment of an altered note "according to its original tenor," even if applicable, cannot avail the plaintiff, as such a restoration would make the note payable to the order of the defendant insurance company, which never has indorsed it. The suggestion that the plaintiff might recover in the insurance company's name, or that the company might be compelled to enforce it as trustee for the plaintiff, loses sight of the facts that the original note never was delivered to the company; that Williams had no authority to receive the note in its behalf, that all his dealings with the instrument were without its knowledge, consent or authority; and that consequently the company itself could not recover upon the note even if it were reformed and restored to its original tenor.
The further contention that Sibley authorized Williams to borrow money with which to pay premiums on the insurance policies, and consequently is bound by the acts of Williams under the general doctrines of agency, finds no support in the agreed facts.
2. It is urged that Sibley should be compelled to pay the plaintiff in equity and good conscience. The plaintiff argues that Williams, if he were alive, could not recover the money, because he was an officious volunteer in paying the premiums. Assuming that to be true, it is equally true that the plaintiff himself never was requested by Sibley to confer any benefit upon him. Foote v. Cotting, 195 Mass. 55. Further, it does not appear as matter of fact that the plaintiff did confer a benefit upon Sibley, on which a quasi-contractual claim for money had and received might be based. So far as the agreed facts disclose, what the plaintiff gave for the altered Sibley note was not money but other notes of Williams, which were held by him and then were due and payable. And, even assuming that some cash was paid by the plaintiff, he does not show that it was used by Williams to pay Sibley's premiums to the insurance company. It was some weeks afterwards that Williams, in settling with the company his accounts for collections, expenses and commissions, charged himself with the receipt of these premiums, and sent a check for the balance due as shown by the account. What that balance was does not appear, nor whether it amounted to as much as these premiums. On the facts disclosed it is impossible to say that money of the plaintiff actually was used to pay the company for the premiums owed by Sibley. In short, he fails to prove that money wrongfully obtained from him has been used to pay the debts of the defendant Sibley, and the principle on which equitable relief was granted in cases like Newell v. Hadley, 206 Mass. 335, and Bannatyne v. MacIver, 1 K.B. 103, is not applicable. The difficulty here is more than a mere absence of technical proof. The scheme of Williams, disclosed later, to secure a much larger sum by assigning Sibley's policies and forging his name to a note, suggests that in order to retain possession of the policies for a year Williams was compelled to pay these premiums, regardless of whether he obtained money from the plaintiff on the altered note.
It is urged finally that unless the plaintiff is allowed relief the result will be that he is without remedy, and that Sibley holds the money without any consideration moving from him. As to the former, he still has his remedy against the estate of Williams. Sibley never was liable on the note, notwithstanding the plaintiff's mistaken belief to the contrary. And no relation of cause and effect is shown between the plaintiff's loss and Sibley's gain.
The question is not now before us as to Sibley's liability to reimburse the Williams estate. Nor is it settled that some other creditor of Williams has not a real equity in his favor, based on the use of his money, wrongfully taken, to pay his premiums. The fraudulent transaction here disclosed is but one of many in which Williams was involved. See Herman v. Connecticut Mutual Life Ins. Co. 218 Mass. 181. In any event the plaintiff must stand upon his own rights and show affirmatively that he has an equitable right to be paid by Sibley; and this he has failed to establish.
Decree affirmed.