36 App. D.C. 159 | D.C. Cir. | 1911
delivered the opinion of the Court:
We will first determine whether said provision in said section demands the literal interpretation given it by the learned trial justice. The section reads:
“The payee of a money order may, by his written indorsement thereon, direct it to be paid to any other person, and the postmaster on whom it is drawn shall pay the same to the person thus designated, provided he shall furnish such proof as the Postmaster General may prescribe that the indorsement is genuine, and that he is the person empowered to receive payment; but more than one indorsement shall render an order invalid, and not payable, and the holder, to obtain payment, must apply in writing to the Postmaster General for a new order in lieu thereof, returning the original order, and making such proof of the genuineness of the indorsements as the Postmaster General may require.”
In the determination of this question, the nature of these money orders must be kept in mind. They are not, as suggested by the learned counsel for appellee, negotiable paper (United States v. Stockgrowers Nat. Bank, 30 Fed. 912), so that the rules applicable to that kind of paper are not controlling here. In the above cited case the opinion was written by Circuit Judge Brewer, subsequently Mr. Justice Brewer of the Supreme Court of the United States. If these orders were negotiable paper, it might be argued with much force that the statute contemplates a personal indorsement by the payee, that is, an indorsement by his own hand. The money order service is merely an incident of the postal system, and was inaugurated to enable the citizen to transmit safely through the mails small sums. United States v. Bolognesi, 164 Fed. 159. The statute in terms provides that more than one indorsement renders an order invalid, and, necessarily, whoever takes one is charged with knowledge of that fact. If an order is presented to a
In the case of State v. Holmes, 56 Iowa, 588, 41 Am. Rep. 121, 9 N. W. 894, the court had under consideration a provision of the Iowa Code as to the holding of terms of circuit courts, as follows: “If the judge is sick, or for any other sufficient cause is unable to attend court at the regularly appointed time, he may by a written order direct an adjournment to a particular day therein specified, and the clerk shall, on the first day of the term, or as soon thereafter as he receives the order, adjourn the court as therein directed.” A judge, not being able to be present, telegraphed the clerk on the first day of the term, “I have made and sent you a written order adjourning court until to-morrow morning at 9 o’clock. Adjourn it accordingly.” The clerk acted as directed, and the following day received the formal order. In its opinion the supreme court said: “The only question, then, is whether the telegram is a written order as contemplated by the statute, and its sufficiency. Contracts may be made by telegram, even where it is required they must be in writing, and it has been said, it makes no dif
A Vermont statute provided that the sheriff might depute any proper person to serve a writ or other precept by indorsing thereon a special deputation. The supreme court of Vermont ruled: “Although ho indorse’ means ho write on the back of’ ■yet it is not necessary under this statute that- the deputation ■should be written upon the very fabric of the process itself. It may be written on any other piece of paper and attached to the back of the process by the sheriff, or he may in certain circumstances authorize another to attach it for him.” In commenting on the facts of the case under consideration, the court said: “Indeed, it [the deputation] was put there by him [the sheriff] in the eye of the law; he performed the act by another as his instrument, and the requirement of the statute was fulfilled.” Cowdery v. Johnson, 60 Vt. 595, 15 Atl. 188.
In the present case we think the requirement of the statute is satisfied if the payee directs another to indorse his name on the order. It is none the less the payee’s indorsement because another has been his instrument.
A bank may arbitrarily select its customers, and its act in declining an account is not open to question. But once it accepts an account, the depositor eo instanti becomes its customer, and entitled as such to have his cheeks honored to the extent of his credits, until the relationship is terminated by the act of either or both of the parties. Of course, the relationship cannot be abruptly terminated without regard to existing liens and the rights of the parties. Morse, Banks & Bkg. 4th ed. sec. 178; 5 Cyc. Law & Proc. p. 513. And where the bank, without suf
It is well settled that a bank is not justified in closing an account and dishonoring checks drawn against it without reasonable notice. The reason is obvious. The depositor is entitled to sufficient notice to enable him, in the exercise of reasonable diligence, to protect his credit. Hart, Bkg. p. 220. The bank will not be permitted to set up as against its depositor the interests of a third party. “It is clearly against public policy to permit a bank that has received money from a depositor, credited him therewith upon its books, and thereby entered into an implied contract to honor his checks, to allege that the money deposited belongs to someone else. This may be done by an attaching creditor, or by the true owner of the fund; but the bank is estopped by its own act.” First Nat. Bank v. Mason, 95 Pa. 113, 40 Am. Rep. 632.
In England the rule seems to be that a mere notice from a third party that he claims the balance standing to the credit of the customer will not justify the bank in dishonoring a check. Hart, Bkg. p. 301; Tassell v. Cooper, 9 C. B. 509. In this country, however, there is authority for the proposition that where notice is given the bank that the money standing to the depositor’s credit belongs to another, the bank will be justified in withholding payment of the deposited amount. First Nat. Bank v. Bache, 71 Pa. 213; Arnold v. Macungie Sav. Bank, 71 Pa. 287; McEwen v. Davis, 39 Ind. 109; Zane, Banks & Bkg. ¶ 134; Morse, Banks & Bkg. 4th ed. ¶ 342. Of course, the bank is always protected when the deposit is attached or garnished. Citizens’ Nat. Bank v. Alexander, 120 Pa. 476, 14 Atl. 402. Mr. Morse suggests (¶ 342b) that if the bank “has reason to believe that the claim adverse to the depositor is well founded,” it should bring a bill of interpleader, and cites authorities to sustain the proposition. Mr. Zane concurs in this view (¶ 134), and adds that whenever there is a dispute as to the ownership of a deposit, the bank in essaying to settle it acts at its peril.
In the light of the foregoing what was the duty of the bank
We think, therefore, that it was clearly a question for the jury, under proper instruction from the court, whether the bank, taking into consideration the facts and surrounding circumstances as disclosed by the evidence, was justified in protecting itself from this adverse claim, and whether it performed its whole duty to the plaintiff in the matter of notice.
It was also a question for the jury to determine whether Nicola Jaselli authorized the indorsement of these orders as contended by the plaintiff.
Even assuming that the learned trial justice was correct in his view of sec. 4037, Rev. Stat. U. S. Comp. Stat. 1901, p. 2747, it by no means follows that the plaintiff would not have a right of recovery. If the jury should find that the payee of the orders, Nicola Jaselli, authorized indorsement thereof as contended by the plaintiff, the payment of these orders was, at most, a mere irregularity. The only person affected thereby was Nicola Jaselli. Obviously an action by him against the bank would fail, because he, having been responsible for the irregularity, could not take advantage of it. Surely the bank cannot be in any more favorable position in respect to these
Should it be established that the indorsement upon the orders in question was a forged indorsement, the right of the bank, upon’ discovering the fraud, to rescind the transaction and charge off its books the credit given, is not open to question. Flatow v. Jefferson Bank, 135 App. Div. 24, 119 N. Y. Supp. 861. In such a situation the bank would be liable to the true owner of the orders. But fraud may not be assumed. It must be proved, and the question must be determined by the jury.
Counsel for the appellee contend that the conduct of the plaintiff during his interview with its officials was such as to warrant the bank in refusing to honor his check. The bank at that time had refused payment of the check and assigned as its reason lack of funds to the credit of the plaintiff. It had done much more. It had undertaken to settle the controversy between him and the claimant of the fund, had paid that claimant the amount of his claim out of the funds standing to the credit of its customer, and had charged against the customer the amount thus paid. Under the authorities, plaintiff would have had an action against the bank for the amount thus appropriated, without previous demand upon the bank. Farmers’ & M. Bank v. Planters’ Bank, 10 Gill & J. 442; Bank of Missouri v. Benoist, 10 Mo. 519; Heard v. Lodge, 20 Pick. 53, 32 Am. Dec. 197; Miller v. Western Nat. Bank, 172 Pa. 197, 33 Atl. 684. The cashier of the bank informed the plaintiff that the bank had summarily taken from his account the amount of
As to the second suit, the facts and the situation of the parties are materially different. At the time plaintiff drew the check forming the basis of this suit, he had made no deposit for nearly a year, and about seven months prior to the date of said check he had asked for his balance, that is, the balance shown by the books of the bank, and had therexxpon withdrawn it. The plaintiff, therefore, temporarily at least, closed his account with the bank, arrested the relationship theretofore existing between them, and thereafter he had no reason to believe and no right to expect that the bank would honor checks drawn against the disputed amount. While he was not without remedy for the recovery of that amount, the right growing out of the relation which theretofore had existed between him and the bank to have his checks honored had ceased. In King v. British Linen Co. 1 Sc. Sess. Cas. 5th series, 928, the facts were briefly these: The bank, on the 22d of October, 1896, gave notice to a customer of its intention to retain the money at his credit pending settlement of a claim which the bank made against him. Thereafter, while there were sufficient funds to the customer’s credit, the bank refused payment of a check drawn prior to, though not presented until after, the date of the notice. The lord president in the course of his opinion said:
It is clear that when this second check was drawn the plaintiff knew that the bank denied that it held any funds to the credit of his account. In other words, that as to this amount the bank had expressly repudiated the relationship existing between banker and customer, out of which arises the right of the customer to have his checks honored to the extent of his credits. Had the plaintiff, prior to the withdrawing of the balance ad
The judgment must be reversed, with costs to the plaintiff in the first case, No. 2182, with directions to grant a new trial; the judgment in No. 2183 is affirmed, with costs to the defendant. Affirmed as to No. 2182 and reversed as to No. 2188.
A petition for a rehearing was denied.