General Cigar Co. v. First Nat Bank of Portland

290 F. 143 | 9th Cir. | 1923

RUDKIN, Circuit Judge

(after stating the facts as above). [ 1 ] The plaintiff in error earnestly insists that the charge of the court, based on the canceled checks returned' and the monthly statements rendered by the several banks was, in effect, a peremptory instruction to find for the defendant in error. We do not so construe the charge. The jury were simply instructed that, if they found as a fact that the plaintiff in error was advised of the misappropriation of funds by the cashier, and failed to notify the defendant in error of such misappropriation within a reasonable time, the plaintiff in error was not entitled to recover, and this we believe to be a correct statement of the law. If the charge is objectionable from any standpoint, it is because of the fact that it authorized the jury to find that the canceled checks and bank statements advised the plaintiff of the defalcation, and this is the burden of the argument in support of the exception to the instruction complained of. The plaintiff in error contends that the checks returned and statements rendered by each of the banks, when considered and examined separately, disclosed no irregularity, and that beyond this it was not required to go. In other words, that it was not required to examine the statements rendered by the Portland bank, for the purpose of ascertaining whether checks drawn by itself on the Seattle and Spokane banks and indorsed to the Portland bank had been deposited in the latter bank. Much reliance in this connection is placed on National Bank of Commerce v. Tacoma Mill Co., 182 Fed. 1, 104 C. C. A. 441, decided by this court. The following extract from the opinion in that case will sufficiently disclose the point decided:

“But it is strenuously urged that, as the Mandan Mercantile Company received a credit on the 5th of April, 1907, and the item went into the cash account of the mill company, it being an item of payment which in the usual course of business should have passed to the credit of the mill company in the bank, the mill company should have taken note of the fact, and that, by pursuing the further inquiry which was subsequently pursued, and sending out to customers for their statements of account, the peculations of Pinkham would have been disclosed, and thus the mill company would have been enabled to protect the bank from further cash payments, and ought to have done so. We think, however, the duty of a depositor towards his bank in relation to the examination of the bank statements, made in connection with its writing up and balancing the depositor’s passbook, does not reach to that extremity. The statements, as we have shown, are rendered for the purpose of advising the depositor of the state of his account. If those statements tally with the deposit slips made up by the depositor and the checks drawn against the bank,-and if the balances agree one with the other, the depositor is not obliged to look further, nor to bear in mind some irregularity that may appear elsewhere in his general books, although a searching inquiry might lead to a discovery of the fraud.”

There is a wide difference between the two cases. In the Tacoma Mill Co. Case this court held as a matter of law that the depositor was not required to go to his general books of account to ascertain whether a customer had paid his bill, and then pursue the inquiry further by consulting the customer. Here the plaintiff in error was not required to look beyond the bank statements and canceled checks. An examination of these would disclose the fdllowing information: First, that the check had been drawn on the Spokane bank; second, that the check bore the rubber stamp indorsement to the Portland bank; third, that the check was paid by the Spokane bank; and, finally, that the proceeds of the check had not been deposited in the Portland bank, or otherwise accounted for. The plaintiff in error contends that the rubber stamp indorsement authorized a deposit of the check in the Portland bank, and nothing more, and if this be true the rubber stamp indorsement on the Spokane check was tantamount to a deposit slip of the Portland bank, and the statement rendered by that bank disclosed no such deposit.

For these reasons, we are of the opinion that the plaintiff in error was chargeable with notice of the defalcation as a matter of law, and its failure to object or notify the defendant within a reasonable time is a complete bar to a recovery. If we are correct in this conclusion, any error in the instructions is necessarily without prejudice, and we are not called upon to approve or disapprove the instructions complained of.

Finding no prejudicial error in the record, the judgment is affirmed.