249 Pa. 375 | Pa. | 1915
Opinion by
This was an action in assumpsit, instituted January 26, 1912, by the Union National Bank of Philadelphia against the Franklin National Bank of the same city, to recover $3,000, the amount of a forged check purporting to have been drawn by the Everett Bank of Everett, Pa., a depositor of the plaintiff. This check, dated November 2, 1911, was deposited on Novémber 15,1911, in the United States National Bank of Portland, Oregon, and credited to the amount of its depositor; the check was then transmitted to the Franklin Bank “for collection and credit,” received by that institution November 20, 1911, and credited on a running account kept with the United States Bank. The last endorsement upon the check is that of the United States Bank, and the fact that the Franklin Bank was merely acting as a collecting agent for the former is conceded in the paper books on both' sides. After payment of the check through the clearing house to the Franklin Bank, the Union Bank, without making any comparison of the signature thereon, or other special examination, held it until November 29, 1911, and then, in accordance with a usual business custom, returned the check with others then in its possession to the Everett Bank. On December 5, 1911, the Everett Bank discovered that the signature on the check, purporting to be that of its cashier, was a forgery, and
The Negotiable Instrument Act of May 16, 1901, P. L. 194, Sec. 62, provides: “The acceptor, by accepting the instrument, engages .that he will pay it according to the tenor of his acceptance, and admits.: the existence of the drawer, the genuineness of his signature, and his capacity and authority to draw the instrument”; the ap^
When the Act of 1901, supra, was passed, we had upon our statute books the Act of April 5, 1849, P. L.. 424, which provides by section 10: “That whenever any value or amount shall be received......in payment of any ......check......or other instrument negotiable within this Commonwealth by the holder thereof, from the endorsee or endorsees, or payer, or payers of the same, and the signature..... ...of any person or persons, represented to be parties thereon, whether as drawer, acceptor or endorser, shall have beén forged thereon, and such value or amount by reason thereof erroneously given or paid, such endorsee or endorsees, as well as such payer or payers, respectively, shall be legally entitled to recover back from the person or persons previously holding or negotiating the same the value or amount so as aforesaid given or paid by such endorsee, or endorsees, or payer or payers, respectively, to such person or persons-----
In Colonial Trust Co. v. Nat. Bk. of Western Penna., 50 Pa. Superior Ct. 510, it was decided that Sec. 62 of the Act of 1901, supra, did not repeal the section of the Act of 1849 just quoted, that court, by Head, J., saying (p. .513): “The concrete question.......is whether the Act of 1901 has repealed the Act of 1849; in short,
Prior to the foregoing decision by the Superior Court, this court (1908), by Mestbezat, J., in Wisner v. First Nat. Bk. of Gallitzin, 220 Pa. 21, had construed the Act of 1901, supra, and decided that, under section 185, a check must be viewed as a bill of exchange, and, under section 137, “Where a drawee to whom a bill is delivered for acceptance......refused within twenty-four hours ......to return the bill accepted or nonaccepted to the holder he will be deemed to have accepted the same,” further, that failure or neglect to return a check (p. 33) to the holder or the collecting bank within twenty-four hours after delivery to the drawee bank was a refusal within the meaning of Sec. 137 of the Act of 1901, tantamount to an acceptance, the same as though the check had been formally accepted in writing, and finally (p. 31), that such a constructive acceptance was effective to charge the drawee under Sec. 132 of the Act of 1901, supra; citing with approval State Bank v. Weiss, 91 N. Y. Sup. 276, and saying (p. 32), in reference thereto, “It was an action on a check drawn on a branch bank of the plaintiff and was paid by plaintiff......It was after-wards discovered that the drawer had no funds in the bank, and suit was brought to recover from the endorsers six days later. It was held there could be no recovery; that á check was a bill of exchange, payable on demand, and that under the Negotiable Instrument Law a drawee will be deemed to have accepted a bill when he does not return it within twenty-four hours after it is delivered for acceptance.” Also see Provident Securities & Banking Co. of Boston v. First N. Bk. of Gallitzin, 37 Pa. Superior Ct. 17.
Our decision in the Wisner case was promptly followed by the Act of April 27,1909, P. L. 260, amending Sec. 137 of the Act of 1901, supra, and providing that the mere retention of a bill by the drawee, unless its return has been demanded, will not amount to an accept
The query just put brings us to a consideration of some of the cases decided under the Act of 1849, supra, and other relevant decisions. The appellant contends that the plaintiff had no right of recovery, even under the act in'question, because of negligence on its part in delaying notice of the forgery, to the prejudice of the defendant. In Iron City Nat. Bk. v. Fort Pitt Nat. Bk., 159 Pa. 46, a leading case under the Act of 1849, supra, we held that the payment of a forged check was not, per se, a bar to recovery by the party paying; that, although the payer was not required to give notice of the forgery on the very day of payment, as at common law, yet, he must give prompt notice “according to the circumstances and usage of the business” (Concerning this phrase, see Me
The query last stated necessitates a further examination of the case we have been discussing, and others. The Iron City Bank case differs from the one at bar in this respect : there the plaintiff did not attempt to pursue the collecting bank, but went directly against its principal, the depositary bank, thereby, at least impliedly admitting, for the purposes of the case, that the money had been paid to such principal; whereas, the present suit is against the agent, or collecting bank, on the theory that, in point of fact, it still had on hand the money with which to recoup itself, and, therefore, had suffered no prejudice. In other words, here we have what Mr. Justice Mitchell designates in the Iron City Nat. Bk. case “mere book entries”; for there was no pretence of actual payment of the very money received from the forged check, nor did the Franklin Bank claim that it had transmitted any funds designated as those received from this check. It is plain that there were no actual remittances to the United States Bank by the Franklin Bank, for the latter’s vice-president testified: “Q.—You have never actually paid over the cash to the United States Bank? You have never paid this or any other cash? It has been a system of bookkeeping showing balances?” “A.—Simply a matter of debits and credits, as is customary.” As previously shown in our recital of the facts, although the book entries of the Franklin Bank show debits between the given dates, from which, by application of the strict rule as to the appropriation of items of discharge to extinguish the earliest items of charge, in theory, it could be reasoned that the $3,000 from the forged check had passed from the Franklin Bank to the United States Bank; yet, on the
On its facts, the case at bar is much more nearly akin to Tradesmen’s Nat. Bk. v. Third Nat. Bk., 66 Pa. 435, referred to in the Iron City Bank opinion, where, at page 51, Mr. Justice Mitchell states: “In Tradesmen’s N. Bk. v. Third N. Bk.,......the defendant had collected the money as agent for another bank, and had credited it on the other’s account; under Levy v. Bank of United States (1 Binn. 27), this would have been equivalent to actual payment.,....., but it was held that the Act of 1849, supra, now prevented the mere book entry from being conclusive, and as the defendant could pay the money back to the plaintiff without loss to itself, it was bound to do so.......” In this Tradesmen’s Bank case (p. 437), the defendant was a collecting agent which had received the money from the plaintiff bank, and, before the latter sent notice that the draft was a forgery, the former had transferred the amount on its books to the credit of its principal; this, the defendant contended, remitted the money and placed the fund from the transaction beyond its control. The trial court refused the defense, and, in affirming, we said (p. 439): “The defendants being the holders of this draft, presented it at the clearing house, on the 18th August, and it was paid by the plaintiffs. The plaintiffs having discovered the draft was forged, immediately on the 20th August notified the defendants of the forgeries, and demanded repayment of them; and this was renewed on the 22d and 23d August. These facts would seem to bring the case within the purview of the Act of Assembly (Act 1849), and to entitle the plaintiffs to a repayment of the amount erroneously paid to the defendants. If the truth had been known, the defendants never could have presented
We have read with interest National Park Bk. v. Seaboard Bk., 114 N. Y. 28, cited by appellant, and agree that this case recognizes book entries as the equivalent of actual payments, and rules that “each item of credit is to be applied in extinguishment of the earliest, item of debit until it is exhausted,” and so on, in order to determine, in cases of this character, whether such a fund as here in controversy actually had been paid by a collecting bank to its principal; but, as highly as we regard the New York Court of Appeals, we cannot follow its opinion when in antagonism to one of our own decisions, and the case cited to us is in material conflict with Tradesmen’s N. Bk. v. Third N. Bk., supra. Most of the cases dealing with the rule relating to the automatic appropriation of credits to extinguish the earliest items of debit recognize that, when the rights of others besides the debtor and creditor may be affected, the rule is not an invariable one to be applied under any and all circumstances, and National Park Bk. v. Seaboard Bank is the only case to which we have been referred where
In the absence of prejudicial negligence, the general principle is that when a check left for collection has been credited to a depositor as cash, it may be charged back in case it turns out to be a forgery (Michie on Banks and Banking, Vol. 2, p. 1500), and in Pennsylvania we have held that, if the forgery is not discovered until after the amount of the check is paid by the drawee bank to the collecting bank, the latter may return the money and charge the amount against the funds standing to the credit of its depositor; see Eapp v. National Security Bk., 136 Pa. 426. In event of no funds in the hands of the bank against which to charge the amount paid on a forged instrument, under cases like Little v. Derby, 7 Mich. 325, the person to whom the money was paid becomes a debtor to the paying bank, and the latter may forthwith recover against him, on the theory of a debt due; and, under Commercial N. Bk. v. Henninger, 105 Pa. 496, 501, 502, in the absence of a special agreement to the contrary, a debt due to a bank can always be set off against deposits in its hands. It is unnecessary to discuss the application of these cases, however, for in the case at bar the court below rendered its decision in favor of the plaintiff on the ground that the defendant bank was always in a position legally to recoup itself by charging its principal, the United States Bank, with the amount of the forged check, because, even at receipt of notice of the forgery, the defendant had the fund from the check on hand, and hence was not prejudiced by the delay in giving such notice—the court saying the defend- . ant’s testimony shows that “when the Union Bank gave notice......there was on hand $36,000......in the Franklin Bank to protect it from this payment.” This being the case, and the appellant having the legal right to reimburse itself, it was not hurt by the alleged negligence of the plaintiff, and, therefore, the trial judge
Monongahela N. Bk. v. First N. Bk. of California, 226 Pa. 270, in no way controls the case before us; there the instrument did not contain a forgery, and the Act of 1849, supra, had no application. The contentions were that the check in question had been fraudulently issued by a bank cashier, in that it represented no indebtedness of his bank, and that the principal of the collecting bank was not an innocent bona fide holder for value. The agent bank, after collecting the check from the payer bank, on. notice of the fraud, returned the money; we held, in a suit by the principal against the agent, that the latter could not deny the title of the former, saying (p. 275): “It is never a defense to an action by principal for money collected by the agent, for the latter to show that in equity and good conscience the money belonged to a third party......; nothing but payment to the plaintiff, or what would be its equivalent, payment to another under legal compulsion, could acquit the defendant of liability.” Rapp v. National Security Bk., 136 Pa. 426, is more like the case at bar; there the check had been fraudulently raised from a small to a much larger •amount, and upon discovery of this fact, after payment, the collecting bank returned the money to the payer bank. We held, in a suit against the principal who had deposited the check in the defendant (the collecting) bank, that the latter was not a mere volunteer in returning the money to the payer bank, but that it “was bound to restore” the fund upon discovery of the fraud.
In McNeely Co. v. Bank of North America, 221 Pa. 588, which was a suit by a depositor against the bank to recover the amount of a check paid on a forged endorsement, we recently said (p. 593) : “The right of a bank to recover from a forger, or from those to whom it may have paid a check bearing the forged signature of one of its depositors, or a forged endorsement, is its only remedy for the .fraud practiced upon it by the forgery”;
The assignments of error are overruled and the judgment is affirmed.