87 Neb. 351 | Neb. | 1910
This is an action by the drawee of a forged draft to recover from a holder thereof money paid to satisfy that instrument. The plaintiff prevailed upon the defendant’s demurrer to the petition. The defendant appeals.
The plaintiff alleges in its petition that the defendant, through its agent, the Continental National Bank of Chicago, on November 29, 1907, caused to be presented to the plaintiff through the Chicago clearing house a certain draft of which the following is a copy: “$800. The German Bank. No. 9638. Eureka, South Dakota, Nov. 23, 1907. Pay to the order of Chas. Viterna, $800.00, eight hundred dollars. E. Moog, A. Cashier. To the State Bank of Chicago, Chicago, Ill.” The instrument was indorsed: “Chas. Viterna.” “Pay to the order of Continental National Bank, Chicago, Ill., First National Bank, Omaha, Neb. L. L. Kountze, Cashier.” The plaintiff further alleges that, believing the instrument to be the genuine draft of said E. Moog, it accepted the same and paid it to the defendant through the Continental National Bank; “that the defendant, prior to the presentation, acceptance and payment of said draft as hereinbefore alleged, paid to Charles Viterna named in said draft as payee, knowing him to be said Viterna, eight hundred dollars ($800.00), the amount named in said draft, without any knowledge or information as to whether said draft would be accepted or paid by the plaintiff, and without taking any steps to ascertain whether or not said draft was a genuine draft of the above named E. Moog, assistant cashier of the German Bank of Eureka, South Dakota.” The plaintiff also alleges the draft was forged, but its true character did not become known until December 12, 1907. Immediately thereafter the plaintiff advised the defendant of said fact and demanded repayment of the $800, which demand was refused. Counsel for the respective litigants* stated at the bar that the negotiable instrument statute does not
•The great weight of authority sustains the proposition that, as between the drawee and a good faith holder of a draft, the drawee bank is to be deemed the place of final settlement, where all prior mistakes and forgeries shall be corrected and settled once for all; and, if not noticed and payment is made, the money cannot be recovered back. Price v. Neal, 3 Bur. (Eng.) 1354; Germania Bank v. Boutell, 60 Minn. 189. The cases are annotated in a note to First Nat. Bank v. Bank of Wyndmere, 10 L. R. A. n. s. 49 (15 N. Dak. 299). Courts and text-writers generally recognize that the preponderance of authority is in favor of the rule, but it seems to conflict with a well-established principle of law that money paid by mistake may be recovered back, and has not been accepted without qualification by all of the American courts. North Dakota refuses to follow Price v. Neal, supra, and has held that the principles of equity should control a transaction between the drawee and a holder of a forged check or draft. First Nat. Bank v. Bank of Wyndmere, supra. The position assumed by North Dakota is in harmony with suggestions made by many text-writers, but, so far as we are advised, is not sustained by the opinion of any other court. Intermediate the cases adhering to the ancient rule and First Nat. Bank v. Bank of Wyndmere, one may find cases qualifying the broad rule promulgated in Price v. Neal, supra.
The Massachusetts supreme court hold that the failure of the drawee to detect the forgery at the time the draft is presented and paid will not preclude it from recovering the money from a holder “who took the check under circumstances of suspicion without proper precaution, or whose conduct has been such as to mislead the drawee or induce him to pay the check without the usual security against fraud.” First Nat. Bank v. First Nat. Bank, 151 Mass. 280. In the cited case the cashing bank received a check from an unknown person payable to bearer, and
The plaintiff relies upon our decision in First Nat. Bank of Orleans v. State Bank of Alma, 22 Neb. 769. That case was decided upon a statement of facts to the effect that B. R. Olaypool maintained a deposit in each of said banks. A stranger presented to the Orleans bank a check upon the Alma bank bearing the name of Olaypool as drawer, and payable to A. J. Gype, or bearer. The Orleans cashier compared the signature to the check with Claypool’s genuine signature upon the bank’s book, and, without requiring the holder to identify himself or to account for the manner in which he secured possession of the check, paid it. In due course, through a bank Avherein the litigants each maintained a deposit, the check was paid and charged to the account of the Alma bank, and later was delivered to Olaypool, who denounced the instrument as a forgery. We held the drawee should recover the money paid. Some remarks in the argument of our late chief justice, taken apart from the facts in the case, lend color to the plaintiff’s argument in the instant one. At the bar it was argued that, since the check on the Alma bank was payable to bearer, identification of the holder was an immaterial fact, and the entire argument in the opinion should be considered with relation to the obligation of the cashing bank to ascertain at its peril that the check was a genuine instrument. The principle underlying the opinion is that the cashing bank was negligent in not availing itself of all means at its command to ascertain whether the check was genuine. Business
In Ellis & Morton v. Ohio Life Ins. & Trust Co., 4 Ohio St. 628, a local custom obtained among the banks of Cincinnati requiring the cashing bank, before purchasing a check presented by a stranger and drawn upon another bank, to make careful inquiry concerning his identity, and to ascertain whether the paper was genuine and the holder was the owner thereof. The opinion turns upon the holder’s negligence in failing to comply with this local custom.
In the case at bar, Viterna was payee of the forged draft, and was known to the defendant at the time it purchased the bill. , The draft purports to be a foreign bill of exchange, an instrument that for many purposes is intended to circulate as money for a limited period of time; 1 lie forgery consisted in forging the name of the drawer, and not in raising the amount of a genuine bill, and the (!rawer maintains its place of business in a neighboring
In the Orleans case the cashing bank had the drawer’s genuine signature to compare with the name attached to the check, and it also had the power to demand that the holder should identify himself; it availed itself of but one safeguard against fraud,, and we are entirely satisfied with our opinion holding that under the circumstances the Orleans bank was guilty of negligence. But in the case at bar it. is not alleged the. defendant had any means other
The plaintiff also cites First Nat. Bank v. First Nat. Bank, 4 Ind. App. 355, but it should not be seriously considered as an authority in the case at bar because it refers to a forged school order which the learned judge writing that opinion states, at page 363 of the report, is not negotiable according to the law merchant. The court also hold the indorsement “for collection” by the holder of the oi'der tended to divert scrutiny by the drawee of the drawer’s signature because such an indorsement would indicate the instrument was not circulating as negotiable paper.
The plaintiff further Cites First Nat. Bank v. Northwestern Nat. Bank, 40 Ill. App. 640. This case was appealed to the supreme court of that state and is reported in 152 Ill. 296. In that case checks purporting to have been drawn by the Central Union Telephone Company upon the Northwestern National Bank of Chicago, payable in four instances to “F. P. Boss, Manager,” and in one case to “C. H. Wilson, A. G. Supt,” were received by
Ford & Co. v. People’s Bank, 74 S. Car. 180, 10 L. R. A. n. s. 63, is cited by the plaintiff. In that case the plaintiff’s drawee paid a forged draft, and charged in his petition to recover back the money: “That the plaintiff paid the said draft upon presentation, upon the faith and credit of the indorsement of the said defendant.” A general demurrer to the petition was sustained, and the supreme court of that state hold that a general indorsement of a forged bill by the holder thereof is a representation that the drawer’s signature is genuine upon which the drawee may rely, and, in case the instrument is forged, may recover back money paid the holder. The opinion is against the weight of authority, and is not supported by any of the cases cited by that court upon this point, except the case of Woods & Malone v. Colony Bank, 114 Ga. 683, and the opinion filed in the last named case cites National Bank of North America v. Bangs, supra, in support of the principle announced by it and later by the South Carolina court.
In the Massachusetts case the cashing bank was named as payee in a forged check payable to its order, so the instrument could not become current except by the
First Nat. Bank v. Bank of Wyndmere, supra, cited by plaintiff, does sustain its argument, but we are of opinion that the Orleans case, supra, commits this court to the doctrine that the drawee must establish the cashing bank’s negligence, or bad faith, to justify a recovery. Since the drawee should only recover in this suit in case the cashing bank was negligent or has acted in bad faith, the burden is upon the former to plead such negligence or mala fides. The pleader in the instant case in our opinion has not stated in his petition facts sufficient to establish that the defendant was negligent or that it acted in bad faith in purchasing from Vitema the forged draft in question.
The judgment of the district court, therefore, is reversed and the cause remanded for further proceedings.
Reversed.