QUASI-CONTRACTS -- SUFFICIENCY OF TECHNICAL BENEFIT

Authors

Abstract

A brokerage house, the R. Co., having purchased stock on margin for the plaintiff, requested a payment of $1100 in order to protect themselves in carrying the account. Doubting the financial stability of R. Co. the plaintiff decided to transfer the account to another firm, the defendant, and accordingly delivered to R. Co. a personal check naming the defendant as payee, at the same time orally directing R. Co. to transfer the stock and check to the defendant and from them receive payment in full. R. Co., however, falsely represented that the check was really theirs and that the plaintiff had inadvertently named the defendant as payee, and so obtained the defendant's indorsement and cashed the check. A month later R. Co. failed. After the failure the. plaintiff learned for the first time of this fraud and brought an action against the defendant for money had and received. In the lower court judgment was given to the defendant on the theory that although the defendant might have incurred a liability in indorsing the check, still, on these particular facts, the proximate cause of the loss was the plaintiff's own negligence in not following up the transaction within the month in which R. Co. was still solvent. On appeal it was held that in order not to impose undue hardship on the users of commercial paper the plaintiff could not be held to any duty of following up his checks, and judgment was given to the plaintiff for the amount of the check, the court incidentally finding a benefit sufficient to maintain this form of action. Diamant v. Keane, Higbie & Co., 260 Mich. 261, 244 N. W. 467 (1932).

Recommended Citation

QUASI-CONTRACTS -- SUFFICIENCY OF TECHNICAL BENEFIT, 31 Mich. L. Rev. 1171 (1933).
Available at: https://repository.law.umich.edu/mlr/vol31/iss8/24