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Jacobson v. First Nat'l Bank

Court of Chancery of New Jersey

May 15, 1941, Decided

Docket No. 129/90


 [*440]  [**19]   LEWIS, V. C.

Complainant Gerald F. Jacobson, through a concern known as the Mortgage Service Bureau, arranged with the defendant The First National Bank of Bloomingdale for a Federal Housing Administration loan in the amount of $ 5,800 for the purpose of erecting a house. Twenty per cent., or $ 1,160, was to be lent to complainant when the roof was on, thirty per cent., or $ 1,740, when the house was brown-plastered, and the balance when the house was completed. When the first portion of the loan was to be made, the bank, on July 24th, 1939, delivered its check to the order of "Geraldine F. and  [*441]  Adrienne O. Jacobson & Mortgage Service Bureau," to the Bureau. Someone connected with the Bureau forged the endorsement of the names of complainants on the check and it was cashed by the Bureau and the proceeds divided between complainants and the Bureau, the complainants receiving the sum of $ 900 and the balance being retained by the Bureau [***2]  as its commission in the transaction. The complainants received what they were entitled to on this first transaction. They were in ignorance as to how the check was drawn and that the check was forged. On August 24th, the bank  [**20]  turned over to the Bureau a second check in the amount of $ 1,740 made out to "Gerald F. Jacobson, Adrienne O. Jacobson and Mortgage Service Bureau." This second check was drawn by the bank on the Manufacturers Trust Company of New York. Again the signatures of complainants were forged as endorsements on the check and the check was cashed by the Bureau through the First National Bank of Paterson, and the entire proceeds appropriated by the Bureau, the complainants receiving none of it. Meantime, the complainants had executed notes aggregating $ 2,900 and executed a mortgage to the bank in that amount, which was recorded by the Bureau.

In November, for the first time, complainants discovered that the bank was claiming the amount of $ 2,900. An investigation disclosed the forgeries and that the second installment had never been received by complainants, but had been taken by the Bureau. The Bureau is out of business and insolvent.

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129 N.J. Eq. 440 *; 20 A.2d 19 **; 1941 N.J. Ch. LEXIS 49 ***

GERALD F. JACOBSON and ADRIENNE O. JACOBSON, complainants, v. THE FIRST NATIONAL BANK OF BLOOMINGDALE, a banking institution, and MANUFACTURERS TRUST COMPANY, a banking institution, defendants.



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