Second National Bank v. Guarantee Trust & Safe Deposit Co.

206 Pa. 616 | Pa. | 1903

Opinion by

Mr. Justice Potter,

This is an appeal from the order of the court below discharging a rule for judgment for want of a sufficient affidavit of defense.

On, or about October 6, 1900, the Supreme Tent of the Knights of Maccabees of the World drew a draft upon the Second National Bank of Pittsburg, payable to the order of John Davis, a brother and beneficiary of Benjamin Davis, of Tent No. 175, Shamokin, Pa. The draft, however, seems not to have been paid to John Davis, the payee, or to his order. His name was, however, forged by some one and appears upon the back of the draft. It is followed by the indorsement of O. J. Reed, Record Keeper of Tent No. 175, Shamokin, Pa. This indorsement is again followed by that of the Guarantee Trust & Safe Deposit Company, Shamokin, Pa., which also guarantees the previous indorsements.

The draft bearing these indorsements was presented to the plaintiff bank for payment on October 12, 1900, and was paid by it. Afterwards upon the last day of the same month, the plaintiff was notified not only that the indorsement of the name of John Davis, the payee of the said draft, was a forgery, but that a fraud had been perpetrated upon the beneficial order by falsely representing that Benjamin Davis, a member of the order, was dead, and that his beneficiary, John Davis, was therefore entitled to receive the amount of the death benefit. Plaintiff at once notified the defendant of the fraud and shortly after-wards demanded repayment of the money for the draft. This was refused and this suit was brought to recover from the defendant as indorser.

The • defendant in its affidavit of defense admits all the facts of the transaction, but endeavors to avoid liability by averring that the draft was issued by the order of the Knights of Maccabees without proper precaution having been taken to ascertain whether or not the person insured was alive. It then imputes this alleged negligence of the beneficiary order to the plaintiff bank, by reason of its being the depository of the funds of the said order. The matter which it is thus sought to inject into the case as a defense has no proper place there.

The liability of the defendant here is that of an indorser. The form in which its indorsement ¿was placed upon the back of the draft, was not the mere writing of its name there, which of itself would create an implied warranty of the genuineness of the previous indorsements, but it was more; the defendant expressly guaranteed the previous indorsements. What reason then is there for excusing it from complying with the terms of its contract? None that we can discover in the affidavit of defense. This action is between the bank and the last previous indorser. The drawer of the draft is not a party. The duty of the defendant is to take up the draft, as it agreed to do in case anything was found wrong with the previous indorsements, and then it in turn can fall back upon the party from whom it received the draft, and who indorsed to it. We fail to see any relevancy whatever in the suggestion that the beneficial order was negligent in issuing a draft to pay a death benefit for a member who was yet alive. That is not the point in this case. Whether or not it failed to make due inquiry matters not in this proceeding. That would go only to the question of consideration as between the order and the beneficiary. Upon what it considered satisfactory proof, the order drew its draft upon the bank for a sum of money, payable to the order of John Davis. It had a right to require that its direction in this respect should be carried out. The draft was payable only upon the order of John Davis. And until John Davis did actually order or direct the payment of a draft to some one else, the title to the instrument remained in him, and never properly passed from him. When the defendant therefore took the draft without knowing whether or not the signature of J ohn Davis, which appeared upon the back of the draft, was genuine, it took the instrument at its own peril. Its liability in this respect was expressly recognized by its volunteering to guarantee the previous indorsements. The form in which the defendant indorsed the draft, makes clear its intention not only to transfer, but to be bound as indorser, and as guaranteeing the validity of the prior indorsements. The defendant is, therefore, clearly liable in this case. To hold otherwise would be to deny to the plaintiff the benefit of the general rule that one who has paid a bill or draft to one holding it under a forged indorsement may recover back the amount if he proceed with due diligence.

The order discharging the rule is reversed, and the record is remitted to the court below with directions to enter judgment for the plaintiff unless other legal or equitable cause be shown to the court below why such judgment should not be entered.