228 F. 601 | 3rd Cir. | 1916
During the first nine months of 1910 a trusted clerk in the New York office of the Postal Telegraph Company defrauded it of $3,722 in 17 installments differing in amount.' He lived in Netcong, N. J., and deposited the money obtained by the fraud in tile Citizens’ National Bank of that village, checking it out from time to time and applying it to his own use. The bank was sued on the theory that the circumstances of the various transactions unmistakably indicated their fraudulent character, and called for diligent inquiry into the genuineness of certain forged drafts by which the unlawful scheme was carried out. The case was submitted to the jury, and a verdict was found in favor of the bank. In order that the principal questions presented to us may be properly understood, the facts should be stated in somewhat fuller detail.
Among the local offices of the company throughout the United States, there are more than 300 from and to which the public may send money by telegraph. During the period in question the following method of transmission was followed: The sender, say, at Pittsburgh, Pa., signed a written application, requesting the company to pay. a specified sum of money to a designated person at, say, Petersburg, Va., and deposited the money with the Pittsburgh agent. Thereupon the Pittsburgh agent, using a private code, telegraphed these facts to the Petersburg agent, and the latter notified the person designated as payee. When the payee-appeared, the Petersburg agent gave him a draft on New York City for the sum named, signing the draft and making it payable to the-
During the period in question and for a good while before, the clerk in question was employed in the money transfer department, and was familiar with the system referred to. Evidence was offered to prove— and there is no reason to doubt — that he obtained some of the blank drafts on the money transfer department, and forged 17 of them, aggregating $3,722 so as to simulate genuine drafts from Petersburg, signing the name of V. H. Borst, the company’s agent at that place, making the drafts payable to one James Gouvas, and forging his name also as indorser thereon, and thereupon presenting them-to the bank at Netcong for deposit to his own credit. His duties in the office at New York were of such a nature that he was able to make misleading entries and: do other acts that covered up his thefts until they were brought to light by accident.
The form of the drafts is as follows;
3237
(Oiiice) (Date)
.........100 f. $..
Pay to the order of ..... .... dollars. being tlie sum placed to his credit by... .at ... receipt of which, on the-conditions under which the same has been transmitted, is acknowledged by indorsement hereon and charge same to account of money transfers.
To the Gen’l Agent Money Transfer -Dep’t,
Postal Telegraph-Oable Co.,
253 Broadway, New York.
No. .. Time paid..
Money Transfer Agent
Form 106 — Special D 759
This draft will be cashed by
.........Bank
at .........
Upon Identification of the Payee.
Identified by
When filled out, each draft purported to recite the transfer of money from Pittsburgh to James Gouvas at Petersburg, and each purported
March 7th, 1910.$112.00
“ 23d, “ .'. 250.00
“ “ “ -...258.00
“ 24th, “..'.125.00
“ “ “ . 212.00
“ 29th, “ 100.00
May 21st, “ 150.00
June 14th, “ 175^00
July 2d, “ 280.00
“ 26th, “ 250.00
“ 27th, “ .i_210.00
July 30th, “ 475.00
Aug. 1st, “ . 350.00
Aug. 5th, “ . 150.00
“ 12th, “ .i. 250.00 •
“ 27th, «. 250.00
Sept. 6th, “. 125.00
■- $3,722.00
These drafts were credited to the clerk by the Netcong bank, and were then forwarded for collection to the Chase National Bank of New York City to whom they were paid by the company’s checks.
The company contends that on the dates specified the Netcong bank knew, or should have known, numerous facts about the clerk — his youth (about 20 years); his financial resources; mode of living; environment, habits, and character.; that he had resided, fdr years in Netcong (a small town of perhaps 2,000 inhabitants); that he was, and for a long time had been, employed by the Postal Company; that he was a young man of slender means, living on ljis salary; and that Net-cong was not the place where the drafts were drawn, or were to be paid, or the place where the payee resided, and therefore was not the natural place for cashing such drafts. In a word, the argument is that the surrounding circumstances clearly suggested that the clerk had fraudulently issued the drafts, and was using them fraudulently, and that he had forged the signatures of Borst and of Gouvas, thus putting the bank on notice, and charging it with tire duty of diligent and careful inquiry and effort to ascertain whether the drafts and the signatures thereon were in fact genuine, and whether the clerk was in reality entitled to receive the money. Denying the exercise of such care and diligence, the company charges the bank with having cashed the drafts and credited the clerk with the proceeds, wrongfully and not in good faith or in due course of business, but carelessly, and recklessly, the circumstances being such as to visit the bank with notice that the drafts were fraudulent.
“To constitute notice of an infirmity in the instrument or defect in the title of the person negotiating the same, the person to whom it is negotiated must have had actual knowledge of the infirmity or defect, or knowledge of such facts that his action in taking the instrument amounted to bad faith.”
The bank did not have actual knowledge of the defect in the clerk’s, title, but there was evidence in the case to justify the inference that it knew some (but not all) of the facts contended for by the company. Qualifying these, however, there was evidence that in May or June the teller asked the clerk what he was doing with the money, and was told that he was acting as paymaster, and was forwarding the money to meet the pay roll of a man in West Virginia, who was extending the line. When the teller suggested calling up the company to inquire if everything was right, the clerk acquiesced; but it does not appear that any inquiry was made. And it was also proved that the company made no-objection to any of the drafts until the fraud was discovered early in October. Now, whether or not it was proper to permit the jury to draw an inference of the bank’s bad faith from the whole of this evidence, the fact remains that the question of bad faith was submitted to the jury, and has been found against the company. The objection made on this writ of error is, in effect, that the jury should' have been told that if the circumstances were suspicious, the bank was put upon notice and was charged with the duty of inquiry. It is scarcely necessary to say that this is not the prevailing rule. Section 56 distinctly provides to the contrary, and this is in harmony with the modern view. Goodman v. Simonds, 20 How. 343, 15 L. Ed. 934; King v. Doane, 139 U. S. 173, 11 Sup. Ct. 465, 35 L. Ed. 84; Swift v. Smith, 102 U. S. 444, 26 L. Ed. 193; Mee v. Carlson, 22 S. D. 365, 117 N. W. 1033, 29 L. R. A. (N. S.) 388; 7 Cyc. 943, VII, b, et seq. Moreover, the question was also submitted whether the company took the proper precautions to ascertain whether the signatures purporting to be the signatures of its agents had been forged, the jury being instructed that the company had a reasonable time to discover the forgery and to repudiate it. Naturally the company does not assign these instructions for error, and we refer to them to show (what indeed the charge expressly states) that the trial judge had in mind the unusual situation — a drawee accepting and paying a forged draft to a bona fide holder — and correctly applied the rules laid down in the leading case of Bank of U. S. v. Bank of Georgia, 10 Wheat. 333, 6 L. Ed. 334, and other decisions. Under the doctrine of that case, if the Net-cong bank took title to the drafts in good faith, it had a right to retain the proceeds.
The case was well tried, and the judgment is now affirmed.
