First National Bank v. Gerli

232 Pa. 465 | Pa. | 1911

Opinion by

Mr. Justice Moschzisker,

When this case was here before (225 Pa. 256), we said, “From the note itself it is clear that Ratti’s indorsement was not for the accommodation of Carpenter. . . . The instrument, without parol testimony to vary it, is an absolute promise of Carpenter to pay Ratti $5,000 for value received. At the time .... Ratti delivered the note to him Carpenter was the cashier of the bank, and the presumption would be that when the note was discounted it was for the benefit of Ratti, and that the proceeds ought to have gone to his credit.” It is now urged upon us that this conclusion of law should be reversed, for the reason that the proper legal presumption would be that Carpenter was the owner of the note and that Ratti was an accommodation indorser; and the appellant further contends that if this view is not taken, then, in the absence of evidence to show that the bank had actual notice of the fact that Carpenter was not the owner of the note, it should not be held liable for his wrongful diversion of the proceeds.

After a consideration of all the authorities called to our attention, the negotiable instrument Act of May 16, 1901, P. L. 194, and the rules of the law merchant, we discover nothing that requires a reversal of the view taken by this court upon the former appeal; in fact we find no written authority bearing directly upon the state of facts before- us, either upholding or denying the rule of presumption then announced.

It is for the courts not only to administer the written law, but to ascertain and apply the underlying principles of right and justice to conditions not expressly provided for when they appear. None of the cases cited by the appellant in support of the rule, that when a maker presents an indorsed note for discount it is to be presumed that the payee is an accommodation indorser, and that the maker has possession of the note with power to receive the proceeds (Parke v. Smith, 4 W. & S. 287; Eckert v. Cameron, 43 Pa. 120; Mullison’s Est., 68 Pa. 212; Mishler v. Reed, 76 Pa. 76; Connelly v. McKean, 64 Pa. 113; Helzer v. Helzer, 193 Pa. 217; Mass. Nat. Bank v. Snow, 187 Mass. 159), is an instance where the maker was the cashier and superior discount officer of the discounting bank, and where the payee and indorser was a depositor of the institution who would naturally present paper to ■such cashier in his official capacity for the purpose of discount; for that reason .the general rule announced in these cases has no application to the facts at bar.

If the mere possession of commercial paper by one who is cashier of a discounting bank would justify the application of the rule that, “where the instrument is no longer in possession of a party whose signature appears thereon, a valid and intentional delivery by him is presumed,” so that paper thus found would be presumed to belong to such a holder in his individual capacity, every man dealing with a banking institution would be obliged actually to take the currency from the bank, instead of having it credited on his account, for fear the cashier would make away with the proceeds of paper handed to him for discount. A rule of law which would admit of the possibility of such a situation, would be impracticable, intolerable and contrary to the dictates of right and justice; further, it would afford no adequate protection to the mercantile world, and such security is the guiding thought back of all the principles governing the rules.applicable to commercial paper. The provisions of the negotiable instrument act were never intended to be so applied.

When an ordinary person presents for discount, before maturity, a note made by himself and indorsed by the payee, the bank has the right to rely upon the presumption that he is the owner of the paper and that the payee is an accommodation indorser, and it may pay the money to the party in possession of the note, or credit it to his account with safety. But where a cashier of a bank presents such paper to his own institution for discount, and the payee and indorser is a depositor of the bank who has been in the habit of doing business with it, the possession of the note by the cashier raises no presumption that he is the owner of the paper; on the contrary the presumption is that it has been handed to him for the purpose of discount for the depositor’s credit. Such was the rule laid down on the previous appeal in this case, and there was no competent evidence produced at the trial under review sufficient to overcome this presumption.

It was admitted that Ratti never received any value for the note from the plaintiff bank, and that the bank knowingly credited the entire proceeds of the paper to the personal account of its cashier. Under the circumstances disclosed by the record, neither Chestnut St. Trust & Sav. Fund Co. v. Record Publishing Co., 227 Pa. 235, nor Gunster v. Heat & Power Co., 181 Pa. 327, governs the facts at bar. In these cases there was nothing on the face of the transaction to suggest scrutiny, and if an investigation had been made, ample apparent power to issue the paper and to receive or control the proceeds would have been found vested in the party who perpetrated the fraud; while here, under the law as we have ruled it, the note bore evidence that it belonged to the payee and indorser, and had the bank inquired it might have discovered that its cashier had no power to direct a diversion of the proceeds to his own credit. No more does United Security Life Ins. & Trust Co. v. Bank, 185 Pa. 586, control the present case; there we expressly said, “Of course it is to be noted that this is not the case of an act done by an agent authorized, or apparently held out to the world as authorized, to do it, such as the illustration in the argument of the appellee of the receipt of a depositor’s money by the receiving teller of a bank. There the act being within his authority is the act of the bank which would therefore be responsible though the teller subsequently embezzled the money.” None of the cases cited by the appellant rules the present one; on the facts in this case, the loss, if any, must fall upon the plaintiff bank and not upon the defendant’s estate.

Since the court below entered judgment in favor of the defendant, the question of the competency of Carpenter as a witness, to show that Ratti had waived notice of nonpayment, is not properly before us and will not be passed upon.

The assignment of error is overruled, and the judgment is affirmed.