174 P. 920 | Cal. Ct. App. | 1918
The California Vegetable Union is a Los Angeles concern having a branch house in San Francisco. Of this branch house during the period in which we are interested H. F. Ardery was the manager and Fred B. Weeks the cashier. During the years 1911 and 1912, and until the end of the year 1913, the plaintiff's branch house in San Francisco was a depositor of the defendant bank. The bank was instructed to pay checks of the plaintiff when signed by Fred B. Weeks, its cashier, and H. F. Ardery, its manager. Weeks became an employee of the plaintiff about the 1st of May, 1912, and continued in that employment until about September 1, 1913, when he "departed these quarters for parts unknown, leaving behind him a trail of forged checks." Between September 18, 1912, and August 28, 1913, Weeks forged the name of Ardery to 136 separate checks, all drawn upon the plaintiff's account in the defendant bank, and aggregating $3,972.65. The bank cashed these checks and charged their amount to plaintiff's account. The checks went through the bank during the various months of this period, and at the end of each month the forged checks paid during that month, together with all the valid checks of the plaintiff, were returned to it, with a list of all checks paid by the bank during that month. The statement accompanying the vouchers also showed the balance to the credit of the plaintiff at the end of the preceding month in each instance, the amounts of all deposits made by it during that month, and separately all checks of plaintiff paid by the bank during the current month, and the balance to the credit of the plaintiff on the defendant's books at the end of the month. These returned checks and these accounts for all of the months from August, 1912, to August, 1913, although regularly received in the course of business at the end of each month during that period, were never examined by the plaintiff, nor by its manager, Ardery, until some time in September, 1913, after Weeks had absconded. During the period in which the forgeries were perpetrated Mr. O'Neal, the president of the plaintiff company, visited the San Francisco *745 branch on several occasions. He had opportunity to examine the account of the plaintiff in the bank and the returned checks and vouchers, but he never did it. He did, however, see the general statement showing the bank balance of the branch house during that time. Other officials of the company visited the office in San Francisco during the period, but none of them ever examined or paid any attention whatever to the bank balances or to the written statements of the business of the branch with the bank. The plaintiff also employed an auditor in its Los Angeles office, whose duty it was to examine its bank balances and check up month by month the canceled checks and vouchers, but no examination of the checks and vouchers of the branch in San Francisco was ever made by this auditor during that time, nor by anyone performing similar duties.
Mr. O'Neal testified that he knew it to be a custom of banks to furnish to their depositors monthly statements showing their balances, together with the vouchers and canceled checks that had been paid and charged to the account during the month; that he never asked Mr. Ardery if he was having that done in San Francisco; that the checks were made up in blocks of one hundred each; that a check register was kept numbered to correspond with the various numbers of the checks, and ruled so that the purpose of the check is stated in the cash-book or check register; that the regular system of the plaintiff was that every time a check went out the company had a list or memorandum of the check in the office, and that it was possible when the checks came back from the bank at the end of each month to compare them with the check register by numbers and amounts, but this was never done. Had any of these precautions been taken, Weeks' rascality would have been discovered. Weeks was not without considerable skill in these forgeries. The forged signatures of Ardery were strikingly similar to his true signature. Several officers of the defendant bank, all skilled in the detection of forgeries, testified that this was so. Mr. Ebner, the assistant cashier of the bank, who has had thirty-three years' experience in examining signatures on bank checks, said that if the bank were to refuse payment of checks bearing signatures agreeing as closely with the authorized signature in the bank as did the forged signatures of *746 Ardery, the result would be a refusal of payment of about half the checks presented at banks.
Ardery excused his remissness in paying no attention to the bank account by the curt statement that it was none of his business; that "Weeks was under bond to take care of that end of the work." Generally speaking, the method of these parties in doing business may be said to have corresponded with the customs of metropolitan banks and their depositors in transacting business with each other; and it appears from the evidence that had Mr. O'Neal or Mr. Ardery or their auditor given any attention whatever to the returned checks or to the state of plaintiff's bank balances, they would have known that from the beginning of his transaction of business with the bank Weeks was forging the name of Ardery to checks, cashing them, and converting the money to his own use.
The court gave judgment for the plaintiff for $40, this being based on two checks of $20 each forged and uttered by Weeks prior to his disappearance on the last day of August, and paid by the bank in September about a week after it had been notified by Ardery of the other forgeries.
The principal problem in this case may be stated in the language of the supreme court in the case of Otis Elevator Co.
v. First Nat. Bank,
The exact question here involved has never been squarely decided in the courts of this state so far as we have been able to discover. An instruction in accordance with the contention of the appellant was expressly disapproved in the case ofJanin v. London San Francisco Bank,
The principle embodied in the case of Otis Elevator Co. v.First Nat. Bank, supra, and the general rule above stated, find emphatic approval and application in the leading case ofLeather Manufacturers' Bank v. Morgan,
In addition to the rule laid down very clearly after an able and exhaustive discussion in the case of Leather Manufacturers'Bank v. Morgan, supra, the question has been before the court of appeal of the state of New York in the case of Morgan v.United States Mortgage Trust Co.,
In Pennsylvania the leading case of Myers v. SouthwesternNat. Bank, 193 Pa. St. 1, [74 Am. St. Rep. 672, 44 A. 280], held in conformity to the views of the United States supreme court and of the court of appeals of the state of New York in the case above cited and other cases, upholding the same doctrine, and stated that if the plaintiff's duty to the bank had been performed at the proper time, the fact would have appeared that the bank had charged the plaintiff on his bankbook with the payment of two items for which no vouchers appeared among the checks handed to him by the clerk, and that no objection having been made at the time of the presentation of the statements by the bank, the latter had the right to assume that everything was correct, including the two checks purporting to have been forged, and that the silence of the plaintiff was tantamount to a declaration to that effect, and that in afterward honoring checks signed by the same person the bank had a right to consider the fact that these signatures had been at least tacitly recognized by the plaintiff as genuine. Further, the court in that case said: "In view of the uncontradicted evidence as to the foregoing facts, it cannot be doubted that as between the bank and the plaintiff the latter alone should be held responsible for the consequences resulting from the failure to examine the checks in question and approve or reject them within a reasonable time. In contemplation of law the delivery of the checks to plaintiff's clerk was a delivery by the bank to the plaintiff himself, as the basis on which its credits were claimed. The bank was, therefore, entitled to have them examined, and, if *751 rejected, returned within a reasonable time. That was not done, and because of plaintiff's failure to perform his duty in that regard he should not be permitted to recover. Any other rule would be inconsistent not only with general and long-established custom, but also with well-settled principles of law on the subject."
Without quoting further it may be said that the great weight of authority in the United States supports the conclusions arrived at in the cases above cited. It is true that those cases were based upon bank-books written up, but there is no distinction in principle between the old-fashioned bank-book and the modern statements furnished by a bank to its depositors from time to time upon the balancing of their accounts and the return of the canceled checks to them. Improved methods of bookkeeping in banks do not render inapplicable the rule of law here invoked and applied. To lay down any other rule than that hereinabove stated would be to add an unjust burden to the duties of paying officers of banks. The greatly increased volume of business consequent upon the development of modern commerce, and the almost universal use of checks in settlement of every conceivable obligation, make the post of paying teller of a bank — compelled as he is to know the signature of every depositor of a bank — an exceedingly difficult one. If depositors may regularly at frequent intervals receive their vouchers and be notified, as was the appellant here, of reduced balances of their accounts in banks consequent upon the unfaithfulness of trusted employees during a period of nearly a year, and by neglecting to exercise reasonable supervision over their own business fail to discover fraud which has been perpetrated upon them and the bank, and may thus leave the bank in ignorance of the frauds thus committed, and charge the bank with the losses thus occasioned, then banks and their paying tellers face hard conditions indeed. We do not feel justified in establishing any such rule in this state.
In the case at bar there is an additional reason for the application of this principle arising from the fact that the statements and returned checks were accompanied by the following written request on the part of the bank: "Please examine the inclosed account and return this at your earliest convenience signed by the principal, as this bank will not consider itself responsible for errors or discrepancies which *752 are not advised within fifteen days after delivery of the statement." The repeated failures of the appellant to heed this request speaks with much force in favor of the application of the principles above stated.
The claim that the plaintiff never received these statements is hardly worthy of notice, as its officers visited its branch house in San Francisco from time to time, as we have seen, and its manager, Mr. Ardery, was in charge of the branch house constantly during the time when these forgeries were being perpetrated. Their possession of and control over these statements and returned checks follow from their control of their branch establishment.
The final contention of counsel for the appellant is that the trial judge should, even in his view of the law, have given judgment for $140 in addition to the $40 in favor of the appellant to cover three checks in that amount forged by Weeks and paid by the bank in September, 1912, they being the first forgeries, and having been paid by the bank in September, 1912, and included in the bank's statement of October 1st following.
One of the defenses set up by the respondent was that provision of the statute of limitations embodied in subdivision 3 of section
There are three answers to this contention which seem to us conclusive. The first is that the action of plaintiff was not based upon the fraud, but rather upon the contractual relations of the parties. It is impossible to read into the *753
plaintiff's complaint anything else than a simple action upon the contract between them. The forgeries of Weeks are not therein mentioned. The second answer to plaintiff's contention is this: The bank committed no fraud against the plaintiff. It concealed nothing from the plaintiff. The section of the code providing that the time for beginning an action upon fraud is postponed until the discovery thereof does not apply between parties to this action, because the bank was not in any sense a party to the fraud. The third answer to this contention is found in the case of Masonic Benefit Assn. v. First State Bank,
We therefore hold that the action on these checks aggregating $140 was barred at the time the complaint herein was filed. For the foregoing reasons the judgment is affirmed.
Kerrigan, J., and Zook, J., pro tem., concurred. *754