IRVING TRUST CO. v.

LEFF
The Irving Trust Company sued Leff for the balance of $4,933 on a promissory note for
$10,000 executed by Leff to his own order and indorsed to the plaintiff. By way of
counterclaim defendant alleged that he had theretofore delivered to one Bragin a so-
called check for $1,000 drawn on the plaintiff bank which recited:

“Void unless and until title to premises 502-14 Liberty Street, Camden, New Jersey, is
taken by Joe Leff.”

Leff further alleged that instrument was stolen from him by Bragin and that the same
had been paid by the plaintiff bank without inquiring as to whether the condition had
been met and therefore defendant demanded judgment against the plaintiff for $1,000.

POUND, J. The Appellate Division, reversing the Special Term, granted plaintiff’s
motion to strike out the counterclaim set up in the answer and for summary judgment on
the pleadings. The only question presented on this appeal is as to the sufficiency in law
of the defendant’s counterclaim.

This order on the bank was a non-negotiable instrument, which we will for convenience
continue to refer to as a check. It did not “contain an unconditional promise or order to
pay.” NIL, Sec. 20, par.2. The bank, of course, took the chance in paying that the
condition expressed on its face had been performed. It might have obtained this
knowledge from Bragin or from any other available source. No duty rests on a bank o
call up its depositor when a genuine check comes in to inquire whether it should be
paid. The defendant’s signature was genuine. The instrument was complete in form.
The condition precedent to payment had been fulfilled.

To sustain plaintiff’s recovery herein, the non-negotiable check must have had a valid
inception. A check has no valid inception until delivery. Delivery means transfer of
possession, actual or constructive from one person to another. NIL,Sec.2. Delivery is
sometimes presumed, conclusively or subject to rebuttal, for the protection of negotiable
paper. NIL (Sec. 35) provides: “Where the (negotiable) instrument is in the hands of a
holder in due course, a valid delivery thereof by all parties prior to him so as to make
them liable to him is conclusively presumed. And where the instrument is no longer in
the possession of a party whose signature appears thereon, a valid and intentional
delivery by him is presumed until the contrary is proved.”

But this provision is peculiar to negotiable instruments. In the case of non-negotiable

instruments, the thief has no title and can give none.
An allegation of theft puts in issue the delivery of the check. In cases where the law
does not protect holders in due course, inquiry by the bank of the maker is necessary
precaution for protection against imposition by a thief.

The judgment should be reversed, with costs in this court and in the Appellate Division;
the motion for summary judgment for plaintiff is granted for $ 3,933, with interest from
March 18, 1929; the order of Special Term so far as it denies the motion to strike out
counterclaim affirmed, and the plaintiff given twenty days to serve a reply.