153 Mich. 73 | Mich. | 1908
(after stating the facts). The facts in this case are not in dispute, and are sufficiently above stated. The conclusion to be drawn from them is that a trusted employe of the railroad company erased or caused to be erased, with the aid of others, the name of the real payee and the substitution of another payee, and thus caused to be issued a forged warrant or voucher. The payee in the forged instrument was either a fictitious person or a real one unknown to the drawer. The plaintiff made a prima facie case of a fictitious payee. The defendant introduced no evidence that the payee was a real
As between the depositor and the bank, the burden of proving payment by valid check or other voucher is upon the bank. No citation of authority is needed that he who receives money of another must account for its payment. As between the plaintiff and the defendant, the question is, Upon whom must the loss fall ? There is no claim of bad faith on the part of either. The facts being conceded, the question is one of law.
Plaintiff contends that the fraud or negligence» of plaintiff’s employé does not relieve the bank of its burden of proving that payment was made to the payee named in the warrant. Defendant insists that the officers of the company were negligent in not ascertaining that the voucher was forged; that it exercised due care in honoring it, bearing as it did the genuine signatures of the officers of the company. If the payee named in this voucher, the G. E. Fairbanks Coal Company, Pay G. E. Fairbanks, treasurer, had been presented to the defendant by one claiming to be G. E. Fairbanks, the treasurer of the Fairbanks Coal Company, would the defendant have been protected in payment without any investigation to determine the identity of the presenter with the payee named in the warrant ? It seems to us clear that it would not. The same rule must apply when the warrant or check is presented to it, coming through other banks. If the drawee chooses to rely upon the identification by the bank which cashed the check, it does so at its own risk, and its recourse is upon that or some intermediate bank. If the G. E. Fairbanks Coal Company was a fictitious payee the bank cannot defend under the statute (2 Comp. Laws, § 4870) that the check was payable to bearer. That statute applies only to cases where the drawer knowingly
In Shipman v. Bank of New York, it is said:
“We are of the opinion, upon examination of the authorities cited by counsel on both sides, that this rule applies only to paper put into circulation by the maker with knowledge that the name* of the payee does not represent a real person. The maker’s intention is the controlling consideration which determines the character of such paper. It cannot be treated as payable to bearer unless the maker knows the payee to be fictitious and actually intends to make the paper payable to a fictitious person,” citing authorities.
There are authorities to the contrary in this country, but the clear weight of authority in both England and the United States is in favor of this rule. If this warrant had been changed so as to make it a forged instrument after it had been issued by the railroad company, under all the authorities the defendant would not have been justified in paying the forged instrument. The time and place of the forgery are immaterial, unless the forgery was committed under such circumstances as to show negligence on the part of the drawer. But the drawee’s duty to use due diligence in identifying the payee of the check or warrant is not changed by the time and place of the forgery. This is not the case of U. S. v. Exchange Bank, 45 Fed. 163. In that case the drawer of the check, the postmaster, went with the fraudulent payee to the bank and identified him as the payee named in the check. In that case the fault was, of course, with the drawer and not with the drawee. To render that case applicable to this, it should have appeared that the proper officer of the railroad company went to the bank and identified the payee.
It was held in Roharts v. Tucker, 16 Q. B. 560:
*80 “That a banker cannot debit his customer with the payment made to one who claims, through a forged indorsement and so cannot give a valid discharge for the bill; unless there be circumstances amounting to a direction from the customer to the bankers to pay the bill without reference to the genuineness of the indorsement, or equivalent to an admission of its genuineness, inducing the banker to alter his position, so as to preclude the customer from showing it to be forged.”
It is held in Murphy v. National Bank, supra:
“The ordinary rule is 'well established that a banker, on whom a check is drawn, must ascertain at his peril the identity of the person named in it as payee. It is only when he is misled by some negligence or other fault of the drawer, that he cqn set up his own mistake in this particular against the drawer,” citing authorities.
In this case the defendant took no precautions before paying the warrant to ascertain the identity of the payee. It did not show that it paid the warrant to the payee named therein. It evidently relied upon the identification made by the bank in Denver, Colorado, where the warrant was cashed, and whether that bank took the requisite precaution we do not know. It would naturally excite suspicion that, a check, drawn in Detroit, payable to a corporation in Chicago, on a bank in Detroit, should be presented to a bank in the distant city of Denver. It was clearly the duty of the Denver bank to take proper means to assure itself that it was paid to the proper party; in other words, to take proper means to identify the payee. 2 Morse on Banks and Banking (4th Ed.), § 466 (6); Ellis & Morton v. Trust Co., 4 Ohio St. 628. The court in that case said:
“ Where negligence reaches beyond the holder and necessarily affects the drawee, and consists of an omission to exercise some precaution, either by the agreement of the parties or the course of business devolved upon the holder, in relation to the genuineness of the paper, he cannot, in negligent disregard of this duty, retain the money received upon a forged instrument.”
The negligence of the Denver bank is imputable to the defendant.
It was held in Third Nat. Bank v. Merchants' Nat. Bank, 76 Hun (N. Y.), 475, that it is the signature of the payee that transfers title to a check; that the signature of another person by the same name as the one to whom it was drawn, is just as much a forgery as if the names had been different. It is the signature of the payee that transfers title to the check. A similar holding is in Indiana Nat. Bank v. Holtsclaw, 98 Ind. 85.
It was held in First Nat. Bank of Chicago v. Pease, 168 Ill. 40, that the fact that the drawer of a check delivers it to a party representing himself as the payee’s agent, without investigating the alleged agent’s authority, is not such negligence as will relieve the bank from liability for the payment of the check on a forged indorsement of the payee’s name by the alleged agent.
If the payee named in the paid warrant was a fictitious person, the indorsement in the name of such fictitious party is in effect a forgery. Hatton v. Holmes, supra. If the G. E. Fairbanks Coal Company, and G. E. Fairbanks, treasurer, were fictitious parties, the indorsement was a forgery. If they were real parties the indorsement by any other without authority would be a forged indorsement and would not excuse defendant’s payment. It was incumbent upon it to show the existence or nonexistence of such a payee, and that the Denver bank took the proper means to identify the payee. It failed to sustain this burden, and therefore the verdict and judgment are set aside and a new trial ordered.