Opinion
June, 1904.
John O'Donnell and Riley Champlin, for the plaintiffs.
Louis F. Doyle, for the defendant.
Defendant admits its liability upon the matters specified in the 1st, 2d and 5th questions. It denies its liability either for the costs included in the judgment of Dunn-Salmon Company against the plaintiffs or for counsel fee paid by the plaintiffs in the defense of that action. These two, then, are the only disputed questions here for determination. In Corn Exchange Bank v. Nassau Bank ( 91 N.Y. 74) the plaintiff had paid a check to which the name of the payee had been forged, after which forged signature, however, the defendant had indorsed the same. The depositor, whose moneys had been wrongfully paid out by the plaintiff, procured judgment against the plaintiff for the amount of moneys thus paid out and for costs. In an action brought by the plaintiff against the defendant upon its indorsement made subsequent to the forged indorsement, it was held that the plaintiff might recover the amount of the checks with interest, but could not recover the costs included in the judgment which plaintiff had paid to its depositor. DANFORTH, J., in discussing the authorities cited in behalf of the plaintiff in that action, said (on p. 80): "In the other cases cited by the respondent the plaintiff had become liable to costs in actions in which he had a remedy over against the then defendant, but in none of them did it appear that the action in which the costs were incurred was caused in whole or in part by the wrongful act or omission of duty on the part of the original defendant. No case, I think, can be found in which the right to costs of defending an action so caused has been upheld, and that is precisely the position of the plaintiff here."
If in the case at bar the action had been brought by Westcott against the plaintiffs to recover his deposit instead of by Dunn-Salmon Company for the conversion of the checks, the cases would then have been hardly distinguishable, and the authority of the case cited would probably be unquestioned. Within the reasoning, however, of Judge DANFORTH in that case I am unable to see that the changed condition affects the force of the authority. In the case cited the plaintiff had failed in its duty to its depositor, and in the action brought to enforce that duty had been compelled to pay costs. These costs he sought to recover against a defendant who had guaranteed, by his subsequent indorsement, the forged indorsement. Nevertheless, the court held, because the costs were recovered in an action wherein he was charged with a violation of duty, he could not recover the same against the defendant therein who was only connected with the check by reason of his subsequent indorsement. In the case at bar judgment has been recovered against the plaintiffs for a wrong, for the conversion of a check which was the property of Dunn-Salmon Company. This is certainly no less a wrong than the payment of moneys belonging to a depositor upon a forged indorsement. If the case were a new one I should have grave doubt whether these questions could be raised by the defendant bank, who had warranted the genuineness of that indorsement by its subsequent indorsement. Under the authority cited, however, we feel bound to hold that, by the payment of the costs in the judgment of Dunn-Salmon Company, the plaintiffs have secured no right to indemnity as against the defendant.
It is unnecessary to discuss the various cases cited by the plaintiffs herein, as they are fully discussed in the case of the Corn Exchange Bank v. Nassau Bank ( supra), and we can see no facts which would take the case out of the principle there decided. That the defendant in this case approved of the defense interposed by the plaintiffs cannot alter its liability after having specifically declined to assume the defense. Nor can the plaintiffs' right be affected by their good faith in asserting the defense or their partial success in defeating a recovery upon one of the checks which was the subject of the action. The 3d and 4th questions must be answered in the negative and judgment ordered for the plaintiffs for the sum of thirty-three dollars and seventy-five cents, with interest from September 1, 1897; for the sum of eight and thirty-two cents, with interest from February 24, 1898, and for the sum of twenty-three dollars, with costs.
All concurred.
Judgment directed for the plaintiffs for the sum of thirty-three dollars and seventy-five cents, with interest from September 1, 1897; for the sum of eight dollars and thirty-two cents, with interest from February 24, 1898, and for the sum of twenty-three dollars. This judgment directed, with costs.