12 N.W.2d 608 | Minn. | 1943
Between July 11, 1936, and June 14, 1941, 69 such checks aggregating $1,852.55 were negotiated by Haley. In the action against Haley as sole defendant, plaintiff claims that during July and *317 August 1936 Haley forged her name as a drawer on two checks dated July 11 and 13 respectively for $15 each payable to Haley; that he endorsed the checks; that he obtained cash therefor from one McBride or McBryan, to whom the checks were returned by the bank on account of insufficient funds and that, because of threats to prosecute her for issuing checks with insufficient funds, she paid them through her attorney, Charles N. Dohs.
In the actions against Haley and the defendants other than the bank, plaintiff seeks to recover the amounts paid on checks in which she was named as payee and upon which she claims her endorsement was forged. In the Lux case she also seeks to recover upon three checks aggregating $65 upon which she claims her signature both as drawer and endorsee was forged.
In the bank case as it stood at the time of trial, plaintiff sought a declaratory judgment that the three checks held by Lux, upon which she claimed her name was forged as drawer and endorsee, were forgeries and that the bank was liable for having paid the same under the forged signature and endorsement and that Lux was liable for having received payment thereunder from the bank. The checks were charged back to Lux by the bank, and Lux counterclaimed on them. So far as plaintiff's account with the bank was concerned, it stood as though the checks had never been charged to it.
Numerous defenses were interposed, including denials of plaintiff's claims, estoppel, ratification, and negligence on the part of plaintiff with respect to Haley's acts which defendants claimed prevented recovery. We deem it necessary to discuss only one of them, viz., ratification, because an affirmance upon that ground requires an affirmance in all the cases.
The first two checks — those cashed by McBryan — were cashed in July 1936. The next check, which was a dividend check payable to plaintiff, was cashed about six months afterwards, some time after February 1, 1937. During the year 1938, between January 17 and November 15, 11 checks were cashed at intervals varying from one-half to one and one-half months. In 1939, four checks were *318 cashed at intervals of one, three, and seven months. During 1940, 20 checks, and during 1941, 22 checks were cashed at intervals generally of one-half to a month. The checks varied in amount from $10 to $50. Park Recreation Parlor, Inc. cashed 31 checks of the face value of $555; Lux, 20 checks of the face value of $695; Esslinger, Incorporated, 7 checks of the face value of $330.55; and Liberty State Bank, 8 checks of the face value of $207.
During the greater portion of the period from 1936 until the latter part of September 1941, Haley and his wife lived with plaintiff in her home without charge or payment of rent. Plaintiff furnished their meals. Haley and his wife did some work about the house in payment therefor and served as companions for plaintiff. During all this time, income due to plaintiff was collected by Charles N. Dohs, her attorney, acting as her agent, and later R. Edison Barr, and paid to her directly at the rate of $100 per month to defray her household expenses with checks varying in amount from $10 to $50. These checks were delivered by mail. Plaintiff received many checks other than those here involved. It is undisputed that Haley at the specific instance and direction of plaintiff cashed most of those checks.
Plaintiff's claim and her testimony in support thereof are to the effect that her name was forged on all the checks in dispute; that by means of the forged signatures Haley negotiated the checks and obtained payment thereof; and that he converted the proceeds of the checks to his own use. She claims that he obtained possession of the checks in dispute in which she was named as payee without her knowledge and consent and forged endorsements thereon for the purpose of negotiating them.
The evidence for defendants is to the effect that the checks in dispute, the same as the others, were endorsed by plaintiff as payee; that she delivered them to Haley so endorsed with directions to cash them, to purchase groceries, liquor, and beer for her and to pay the balance to her; that he carried out her directions explicitly and that she received from Haley the full proceeds of the checks in cash and merchandise purchased as she had directed. *319
During a considerable part of the time when the Haleys lived with plaintiff and when the checks in dispute were cashed, Haley was unemployed. He then had no income and no means of his own with which to make the purchases of merchandise or the payments of money in question. No reason is suggested in the evidence why he should have made such purchases or payments, if he were able to do so, with his own funds. On the contrary, the only reason suggested for such acts is that the merchandise was purchased with plaintiff's money and that the money turned over to her belonged to her.
Plaintiff was without means of support other than the checks received from her attorneys. She depended on getting the checks promptly, and if the checks did not arrive on the day they were due she promptly called her attorney on the telephone concerning the matter. She did not call him concerning any of the checks in question. She testified that she needed the proceeds of the checks to pay her living expenses and that she never had over $20 in cash on hand. Yet, the evidence shows that during 1938, 1940, and 1941 all the checks covering periods for as long as two months were cashed by Haley and that she managed to get along the same as if she had received them.
Both sides offered expert testimony relative to the genuineness of the signatures. As to the facts concerning Haley's getting possession of the checks, his acting as plaintiff's agent in cashing them and accounting to her for the proceeds thereof, plaintiff's case stands on her unsupported testimony. As to such facts, defendants' version was supported by the testimony of both Mr. and Mrs. Haley, by one of the slips written by plaintiff listing the merchandise to be purchased for her by Haley, by testimony to the effect that plaintiff on one occasion accompanied Haley to Esslinger's place, where she sat in the automobile while he went inside to cash a check and to purchase merchandise, and by the other facts which have been stated above.
Although the actions were for the recovery of money judgments and triable to a jury, the parties stipulated that the only issue to *320 be submitted to the jury was whether any, and if so which, signatures of plaintiff appearing on the checks were written by Haley. The verdict was that all the signatures of plaintiff on the checks in question were written by him. The court in each case adopted the finding so made and among other things made findings of its own to the effect that plaintiff received from Haley all the proceeds of the checks in the form of cash and merchandise; that all the cash and merchandise were received by plaintiff under such circumstances that she was charged with notice and knowledge that the same were the proceeds of the checks in question; that plaintiff accepted the merchandise and cash under such circumstances that the same were in full satisfaction and payment for the proceeds of all said checks; and that by her silence and conduct plainttiff ratified, affirmed, and accepted the actions of Haley in cashing the checks. Among others, the court found as a conclusion of law that the plaintiff had ratified Haley's actions and conduct in cashing the checks.
1. The first question is whether or not, assuming a ratification in fact, plaintiff is liable for Haley's acts. Where a signature on a check or other negotiable instrument is forged or unauthorized, the rights of the parties to the instrument are determined by N. I. L. § 23 (Minn. St. 1941, § 335.12 [Mason St. 1927, § 7066]), which provides:
"When a signature is forged or made without the authority of the person whose signature it purports to be, it is wholly inoperative, and no right to retain the instrument, or to give a discharge therefor, or to enforce payment thereof against any party thereto, can be acquired through or under such signature, unless the party against whom it is sought to enforce such right is precluded from setting up the forgery or want of authority."
The problem here is whether or not "precluded" includes cases of ratification. The authorities are in conflict, and consequently we must choose what appears to us to be the correct rule. The question is one of statutory construction. *321
The section in question, like many other provisions of N. I. L., is declaratory of prior law. Montgomery Ward Co. Inc. v. Central Co-op. Assn.
A party may be prevented as a consequence of ratification from asserting a right or a defense. In numerous cases decided both before and after the enactment of N. I. L. in 1913, the word "preclude" was used with such meaning. In Woodbury v. Larned,
"* * * Indeed, it is scarcely possible he could have taken away the interest note with the other, without an inquiry as to the facts of the transaction; and the authorities above cited, with others which might be adduced, show that by accepting a benefit accruing from the acts of the agent, he isprecluded from denying his authority." (Italics supplied.)
In Washburn v. Van Steenwyk,
Other courts and writers have used the word "preclude" with the same meaning. Henry v. Heeb,
Of course the word "precluded" also denotes the consequence of an estoppel. A party may be precluded by estoppel the same as by other acts. But "precluded" is not the equivalent of an estoppel, and its meaning should not be so limited. A formidable array of authorities hold that the word "precluded" in § 23 of the N. I. L. means "estopped." The leading case is Olsgard v. Lemke,
Cases holding that "precluded" as used in § 23 is equivalent to estoppel and excludes ratification, some of which cite Brannan, Negotiable Instruments Law (4 ed.), have been repudiated in a later edition of that work, where in speaking of cases that announce such a rule the text says: "It is submitted that they should not be followed. The word 'precluded' is broad enough to include ratification; * * *."Id. (6 ed.) p. 336.
The history of the statute shows that "precluded" was intended to apply to cases of ratification. N. I. L. is based upon and largely copies the English Bills of Exchange Act. The purpose of the English act, the same as N. I. L., was not to change the prior law, but was, as its title indicates, "to codify" it. See text of Bills of Exchange Act in Brannan, Negotiable Instruments Law (6 ed.) *324 p. 1229. N. I. L. § 23, is substantially the same as § 24 of the English act, except that the latter has a proviso "that nothing in this section shall affect the ratification of an unauthorized signature not amounting to a forgery." It is clear that under the English act "precluded" was broad enough to include cases of ratification.
The uniform law commissioners' original draft of N. I. L. § 23, contained a similar proviso; but it was dropped, and a footnote was added that a forged signature may be ratified, citing authorities to sustain that proposition. Brannan, Negotiable Instruments Law (6 ed.) p. 18. It is reasonably clear that there was reason for the proviso in the English act, but not in N. I. L., and that dropping the proviso in the latter did not indicate any intention to change the meaning. In 1882, when the English act was adopted, there was no authority in that country expressly holding that an unauthorized signature not amounting to a forgery could be ratified, but that such an unauthorized signature could be ratified seems to have been the generally accepted view. In 1871, Brook v. Hook, L. R. 6 Ex. 89 (cited in Wilson v. Hayes,
It is of course a common legislative practice, born out of abundance of caution, to add a proviso to prevent a possible misinterpretation of the language used, where such a result is feared. See State v. Twin City Tel. Co.
The situation in this country was different. At the time N. I. L. was drafted, the rule was thoroughly settled that an unauthorized signature not amounting to a forgery could be ratified so as to "preclude" a party. The only doubt was whether a forgery could be so ratified. Wilson v. Hayes,
We think that the cases holding that the word "precluded" as used in § 23 is equivalent to estoppel are unsound, because: (1) they are opposed to the evident intention of the framers of N. I. L.; (2) they are opposed to the prior law, which N. I. L. adopted, under which the word "precluded" included cases of ratification and particularly to our decisions to that effect; and (3) that a construction that the word "precluded" means "estopped" would defeat the apparent legislative intent by attaching to the word an unwarranted restriction on its meaning and scope. *326
On the contrary, we think that to construe the word "precluded" as including cases of ratification would accord with the intent of the lawmakers. After all, ratification is based upon universally accepted principles of justice. There is no more reason for precluding a party by estoppel than by ratification or election.
We adopt the view that "precluded" includes "ratification" and so construe our statute. A party may be precluded by a ratification under N. I. L. § 23 (Minn. St. 1941, § 335.12 [Mason St. 1927, § 7066]).
2. There is no finding that plaintiff authorized Haley to sign her name to any check. No particular form of authorization is necessary. "* * * the authority of the agent may be established as in other cases of agency." N. I. L. § 19 (Minn. St. 1941, § 335.115 [Mason St. 1927, § 7062]). Plaintiff's ratification of Haley's acts is a substitute for precedent authority. Ratification by a party of another's unauthorized acts occurs where the party with full knowledge of all material facts confirms, approves, or sanctions the other's acts. Farmers Co-op. Exch. Co. v. Fidelity Deposit Co.
3. By ratification, the principal absolves the agent from any liability to the principal which otherwise would result from the fact that the agent acted without authority. Triggs v. Jones,
4. There is a conflict in the authorities as to whether or not a forgery may be ratified. By a forgery is meant an unauthorized signature on an instrument or a material alteration thereof in violation of a criminal statute. Where the unauthorized signing of another's name to an instrument does not constitute the crime *327
of forgery, all the authorities agree that the party whose name was so signed may ratify the signature and become bound thereby. Wilson v. Hayes,
The unauthorized signatures in the instant case did not constitute the crime of forgery. Under our statutes, Minn. St. 1941, §§
An unauthorized signature on a note, check, or other instrument under circumstances not constituting the crime of forgery may be ratified. Theelke v. Northern States Power Co.
5. Where a principal accepts and retains the benefits of an unauthorized act of an agent with full knowledge of all the facts, he thereby ratifies the act. Johnson v. Ogren,
Here the evidence sustains the finding that plaintiff received the proceeds of the checks in cash and merchandise with full knowledge of all the facts. The finding is supported by Haley's testimony that he cashed the checks and delivered the cash and merchandise to her pursuant to her directions. The proceeds of the checks were as definitely identified and traced as were those to establish a constructive trust in Third Nat. Bank v. Stillwater Gas Co.
Our conclusion is that plaintiff ratified all the unauthorized signatures in these cases; that by reason of such ratification she is precluded from setting up the fact that her signatures were unauthorized in the actions against Haley and the other defendants and in her defense to Lux's counterclaim.
Affirmed.
