Summary
The Utah Supreme Court held that an indorser could be sued to recover consideration paid for a forged or materially altered bill of exchange on a theory of failure of consideration and mistake. Because the action was not based on the indorsement’s conditional promise to pay, demand and notice were not required. The court affirmed the judgment for the plaintiff.
Topics
Practice areas
Questions Presented
- Whether an indorsee who paid consideration for a forged or materially altered bill of exchange may recover the consideration from the transferors on a theory of failure of consideration and mistake without proving demand and notice.
- Whether the evidence supported the jury's verdict for the plaintiff.
Holdings
- When an action against an indorser seeks recovery of the original consideration because the instrument was not genuine or was otherwise void, rather than enforcement of the indorser's conditional promise to pay, demand and notice are not necessary to be averred or proven.
- The evidence supported the plaintiff's recovery of the amount paid to the defendants, and the judgment entered on the verdict was not erroneous.
Key quotations
“This is not an action based upon the assignment. It is an action to recover the amount paid by'the plaintiff to the defendants without any consideration and under a mistake.” (247)
“Under the facts of this case we hold that an offer to return tbe bill or a demand and notice was not necessary to be averred and proven.” (249)
Factual background
Zion's Savings Bank & Trust Company drew a bill of exchange for $6.50, but the bill was raised to $600 before Brainerd & Robinson transferred it to Hamer. Hamer paid the defendants $500 in cash and gave $100 in a real-estate transaction, later assigned the bill, and refunded $500 to his assignee after the forgery was discovered and payment was refused. Hamer then sued the defendants to recover the amount paid to them.
Procedural history
Hamer sued the defendants to recover money he had paid for a forged and altered bill of exchange. The jury returned a verdict for Hamer, the trial court denied a new-trial motion and entered judgment, and the defendants appealed, arguing that the evidence was insufficient without proof of demand and notice.