Time Loan Service, Inc. v. Bukowitz

⁵⁶⁴ Henderson, J., delivered the opinion of the Court. This appeal is from a judgment for $7,790, the face amount of four checks dated February 20 and 21, 1953, drawn on the Fidelity Trust Company by Time Loan Service, Inc., payable to the order of Towson Auto Sales, and endorsed by “Towson Auto Sales, James H. Marvel, Prop.” Bukowitz, who conducted a check cashing service, cashed them for Marvel for a small consideration. He testified that he had previously cashed checks for Marvel drawn by the appellant to Towson Auto Sales and endorsed in the same way; and that they were duly paid. Between October, 1952, and February 21, 1953, he had cashed some 60 of these checks, aggregating about $90,000.

On the occasion of his first dealing with Marvel he called the drawer, Time Loan Service, Inc. and talked to a Mr. Kirson, who told him “Marvel is the man who can cash them.” Kirson’s version of this conversation was that Bukowitz simply asked him if he knew “James Marvel connected with Towson Auto Sales” and did business with him, to which he replied that he did. Bukowitz testified he never knew that Marvel had a partner. Kirson testified he knew that Marvel had a partner, one Gabrielson, but he did not testify that he so informed Bukowitz, or, in fact, that he ever saw Gabrielson. All of his business dealings were with Marvel.

The appellant offered in evidence a trader’s license issued to Towson Auto Sales, showing it to be a partnership conducted by Marvel and Gabrielson. Marvel had signed the application for this license. The checks in question were duly presented for payment, two legal holidays intervening. They were not paid because payment was stopped by the drawer on February 25.

It was admitted that at the time it issued the checks, Marvel had produced chattel mortgages securing repayment of the moneys advanced, either executed by Marvel or his customers. This was in the regular course of business whereby Time Loan Service, Inc. was financing Towson Auto Sales in the sale of automobiles. It was apparently not until February 25 that the drawer ⁵⁶⁵ discovered that Marvel had defrauded the company of a large sum of money, for on that date it lodged a complaint with the police that Marvel had given them certain bad checks and had removed from the State without authority certain “mortgages to property”. The appellant contended in the court below, although the point seems to be abandoned here, that Bukowitz was not a holder in due course because he should have known that he was dealing with a partnership.

Even if he had known that Marvel had a partner, he would not be charged with notice of the fraudulent conduct of Marvel toward the drawer, in regard to other transactions. Cf. Section 72 and 76, Article 13, Code of 1951, and Lebrun v. Prosise, 197 Md. 466, 476 . It is not contended that