151 Minn. 485 | Minn. | 1922
Appeal by defendant from an order denying its motion for a new trial. The action was brought for the recovery of $8,222.01, paid by defendant upon vouchers issued by the plaintiff against its deposit account with the defendant, upon which the payees’ names were forged and which were spurious when issued.
The Merchants National Bank, during the years 1917 to 1920, both iu elusive, was a depository of city funds of the city of St. Paul. The city kept a large account with the bank subject to check during that time. Frank F. Roeller was, and for a number of years prior thereto' had been, employed as chief clerk in one of the bureaus of the department of public works of the. city. He had charge of a large number of men employed by the city. It was his duty to make out the time slips for the men. He conceived of the idea of padding the payroll to his own advantage. To this end he issued time slips in the names of persons not then in the employ of the city and included them with the regular slips. The payrolls were made up from the slips and signed by the commissioner of public works, then sent to the comptroller who made out the pay checks or vouchers, which were signed by the commissioner of finance. Roeller would then receive the checks for delivery to the men and in this manner obtain the spurious checks issued in the names of nonemployes. He would indorse the name of the payee on each of the spurious checks and
Plaintiff bases its right to recover squarely upon the proposition that it was the duty of the bank to account for all funds received by it as such depository, and that the city is not limited or controlled by the fact that it might also look to the officials Avho issued the checks, or to their bonds; that the bank is liable for the amount so paid and that its negligence in failing to ascertain Avhether the in-dorsements of the payees’ names upon the checks were genuine, was the proximate cause of the loss, the same as though the checks had been properly issued. TJpon the other hand, it is contended by defendant that the burden is upon the plaintiff to show' that it did not negligently suffer or permit any course of conduct upon its part or that of its officials which materially contributed to the payment of the money in controversy, and that if the plaintiff were negligent in this regard it cannot recover in this action. It is further contended that the issue of defendant’s negligence in the first instance and that of the plaintiff’s contributory negligence in the second, were questions of fact which should have been submitted to the jury. There is no controversy as to the relation of the parties; the character and amount of the deposit account; the number and amount of the checks in question; their description and method of creation, nor the manner of their indorsement and payment.
As between a bank and its customers the general rule is that, in order to charge the account of a depositor, a bank must pay a check only to the payee named, or his order, and payment made otherwise is at its peril, unless it can claim protection upon some principles of estoppel or negligence, chargeable to the depositor. The rule is that a banker on whom a check is drawn must ascertain at his peril
It is urged that the larger portion of the checks in controversy was issued to fictitious or nonexisting persons. Eoeller testified that such checks were issued to persons not at the time in the employ of the city; that he knew certain of them and could not say that any of the checks were to fictitious persons. If such were the facts, the burden of proof was upon appellant. The testimony discloses that the city had no knowledge that the checks were improperly issued. However, where by the fraud of a third person a depositor of a bank
Affirmed.