Dedham National Bank v. Everett National Bank

177 Mass. 392 | Mass. | 1901

Holmes, C. J.

This is an action to recover the amount of two forged checks on the plaintiff bank paid by it to the defendant. Both checks were drawn payable to cash and were without indorsement. Both were presented for deposit to the account of Fenno, a depositor in the defendant bank, by the depositor’s clerk, who is found to have been the forger, the first on July 31, the second on September 4, 1897. At the time of depositing the first, which was for $150, the clerk asked for and received $50 cash, for Fenno, as he said, and on depositing the second, which was for $200, he got $100 in the same way. The residue of the two checks was credited by the defendant to Fenno on his account. Fenno afterwards overdrew his account but subsequently made the overdraft good and his deposit has exceeded the amount of the credit on these checks since the defendant was notified of the forgery. Both checks were paid by the plaintiff through the clearing-house, and it is found that if the plaintiff’s servant who paid them had compared the signatures on the checks with a genuine signature of the supposed maker which it had on file, he would have discovered the forgery. Owing to an examination of Fenno’s deposit the defendant was led to inquire by telephone shortly after the second check was paid, whether the signatures were genuine, and was answered that they were all right. The plaintiff did not demand repayment until February 25, 1898. The judge found and ordered judgment for the defendant. The plaintiff asked rulings in favor of its right to recover either the whole amount or all but the sums actually paid out to the clerk, and the case is here on exceptions to the refusal to give them.

The plaintiff’s argument is directed to proving that we should not adopt the rule laid down in Price v. Neal, 3 Burr. 1354, according to which a drawee paying a forged draft or check to a Iona fide purchaser cannot recover back the money paid. We are aware that this rule has been questioned by some text writers. But it is of such universal or nearly universal acceptance that we shall go into no extended discussion. Gloucester Bank v. Salem Bank, 17 Mass. 33, 42, 43. National Bank of North America v. Bangs, 106 Mass. 441, 444. Welch v. Goodwin, 123 Mass. 71, 77. First National Bank of Danvers v. First National Bank of Salem, 151 Mass. 280, 283. Bank of United States v. Bank of Georgia, 10 Wheat. 333, 348. 2 Dan. Neg. Instr. (3d ed.) §§ 1359-1361.

Probably the rule was adopted from an impression of convenience rather than for any more academic reason; or perhaps we may say that Lord Mansfield took the case out of the doctrine as to payments under a mistake of fact by the assumption that a holder who simply presents negotiable paper for payment makes no representation as to the signature, and that the drawee pays at his peril. See Wilkinson v. Johnson, 3 B. & C. 428, 436; Bernheimer v. Marshall, 2 Minn. 78, 84; Bank of St. Albans v. Farmers’ & Mechanics' Bank, 10 Vt. 141, 145, 146; Ellis v. Ohio Life Ins. & Trust Co. 4 Ohio St. 628, 662.

The ground of a recovery for a payment under a mistake of fact is that the existence of the fact supposed was the conventional basis or tacit condition of the transaction. If parties are so far at arm’s length that each takes the risk of what he does, of course one of them cannot recover money paid because he finds that he has made a mistake. We believe that, now at least, especially in the case of a bank, it is a matter of general understanding that, when the holder of a check in no way contributes to the deception, the bank does take the risk of paying, so far as the signature is concerned. But if this is so mistake disappears as a ground for recovery, and there is no other. It is vain to ' point out that in other cases more or less analogous there is an implied representation, e. g. Boston & Albany Railroad v. Richardson, 135 Mass. 473. The grounds for difference in understanding may be very nice, but even if the decisions had originated the difference without adequate ground, when once it exists its existence is a sufficient reason for continuing to decide in accordance with it.

The plaintiff attempts to make out that the defendant led the plaintiff to make the payment by requiring no indorsement of the checks, on the ground that its officer was led by that fact to suppose that they were cashed for the man who appeared to have been their maker. The attempt to prove a custom that would justify such an inference failed, and the judge may not have believed even that the officer was influenced in his conduct by the absence of an indorsement. But if he was, the evidence did not show any duty on the part of the defendant to anticipate such a result.

The indorsement of the check by the defendant was not an indorsement by the payee. It was not an indorsement for purposes of transfer, and contained no representations beyond what would have been imported by a presentment in person. National Bank of North America v. Bangs, 106 Mass. 441, 444.

In view of the ground on which we put the case, it does not seem to be necessary to consider further objections to the plaintiff’s recovery, or to examine more precisely the position of the defendant as a purchaser for value. Fox v. Bank of Kansas City, 30 Kans. 441. Market Bank v. Hartshorne, 3 Abb. Ct. of App. 173.

Judgment affirmed.