| S.D. | Oct 30, 1906
This action, against G. A. Ford and the State' Banking & Trust Company of Sioux Falls, was to recover $475 alleged to' have been paid to them August 15, 1904, by plaintiff’s assignor, the Farmers’ State Bank of Preston, Neb., on a forged check purporting to have been drawn in favor of L. C. Gibson, or bearer, by E. Hoselton, whose checks the bank had full authority to pay and charge to the account of his employer, W. A. Margrave. Without introducing any evidence on the part of the defense or cross-examining respondent’s witnesses, and after both parties had rested, a motion was made for the direction of a verdict in favor of the defendants, on the ground that there is a failure of proof and that the facts in evidence do not correspond with the allegations of the complaint. Plaintiff having also moved that a verdict be directed in his favor against both defendants, the trial court announced that a verdict would be directed in favor of the State Banking & Trust Company, but in his opinion the defendant G. A. Foid was legally liable for th» amount of the check. Thereupon counsel for defendants 'xcjuested the court to let the jury determine, in response to a special interrogatory, whether such check, being Exhibit A, was forged; but this request was denied, and a verdict was directed, favorable to the State Banking & Trust Company and against the defendant Ford, for the full amount claimed by plaintiff. . . . .
On this appeal from a judgment accordingly entered and an order overruling a motion for a ne,w • trial, it -is .urged for a re
Appellant, Ford, called on the part of respondent, testified as follows: “I am one of the defendants. I received the check, Exhibit A, from this man L. C. Gibson some time during the last carnival here, somewhere within a few days of its date, I think. I do not know that I paid anything for it. I advanced him some money. I could not say whether it was the night before I received the check or the next morning. I gave him $50. He gave me the check to secure such sum. I indorsed and deposited it, and sent it through the bank, the State Banking & Trust Company, for collection. I could not say how long I had known Mr. Gibson. I had seen him around at different times, probably a month or two. I could not say whether or not I had met him more than twice, nor that I inquired concerning his business. I heard him speak of St. Paul, Minn., and supposed that was the place where he lived. I do not know Mr. Ploselton, and do^ not remember that I inquired of Mr. Gibson concerning him. It was somewhere within a day r two after I took the check that I deposited it. The bank took out $1 for collection and gave me a certificate for $474. I believe I was down in Sioux City or out in Bonesteel between the time I
The testimony of F. H. Holister, cashier of the State Banking & Trust Company, shows that when he received the check for collection he did not know E. C. Gibson or his. signature; that he paid G. A. Ford nothing for the check in the way of credit or otherwise, although it contained his indorsement and he was a customer of the bank, considered responsible. This check, thus deposited for collection some time between the 10th and 15th day of August 1904, was sent directly to’ the Farmers’ State Bank- of Preston, Neb., where it was paid by draft, marked Exhibit B at the trial, and the amount was charged to- the account on which E. Hoselton had authority to draw. Shortly after such remittance reached Mr. Plollister’s bank, and as soon as the forgery was discovered, he received a letter and the following telegram from the Farmers’ State Bank of Preston: “Stop payment of draft No. 3,212. Hoselton’s check forgery.” Mr. Hollister testified without objection that lie received this telegram, the- original of which had at the time of the
By way of deposition Clyde Thacker testified in respondent’s behalf as follows: “Since June I, 1904, I have been cashier of the Farmers’ State Bank of Preston, Neb., a corporation. About August 15, 1904, the defendant State Banking & Trust Company presented to the said Farmers’ State Bank the check, Exhibit A, by mail, for payment, with letters stating, ‘We enclose for returns.’ Exhibit A, when presented, had those indorsements on it. I paid Exhibit A by draft, Exhibit B, on St. Louis, which I sent on August 15th to the defendant State Banking & Trust Company. I had no notice or knowledge they were acting as agents for collection only. At that time I looked at the signature oí E. Hoselton to Exhibit A, and thought it was genuine. Q. Upon what other evidence, if any, did you act in making payment of the check? A. Upon the indorsement of G. A. Ford and the State Banking & Trust Company. . Q. Did you scrutinize the purported signature of E. Hoselton to this check as carefully as you would have done, had those indorsements not been upon the back of it? A. Well, I relied to a certain extent' upon the indorsement of the bank. I supposed it was all right, going through the regular channel of a bank. . I had no doubt whether of its being a regular transaction, but knew nothing about it. The draft, Exhibit B, was collected by the defendant State Banking & Trust Company and charged to our account. * * * The indorsement. ‘L C. Gibson’ on the back of Exhibit A is in the same handwriting as the body of the check. I do not knew the handwriting, and never had any knowledge of Mr. Gibson whatever. At .the time I paid this check, Exhibit A, I was somewhat familiar with Mr. Hoselton’s signature. Since then I have carefully examined the signature of Exhibit A, and have since frequently paid his checks, and I now know his signature. Q. Is that the genuine signature of E. Hoselton upon the check, Exhibit-A? A. It is not. On August 19th I discovered that this check did not bear the genuine signature of E. Hoselton. The Farmers’ State Bank then wired the State Banking & Trust
On behalf of respondent, E. Hoselton testified by deposition in substance that the checks offered in evidence for comparison and payable to different persons and for different amounts, and which bear date, respectively, August 2 and 30, 1905, and September 7, 9, and 13, of that year, each contain his signature; that he did not sign, make, or deliver the check in controversy, and never knew L.
L. W. Green, testifying on behalf of respondent by way of deposition, stated that he was cashier of the Farmers’ State Bank until June, 1904; that he was familiar with E. Hoselton’s signature, and that in his opinion the checks, Exhibits E, F, G, H, and I, bore the genuine signature of Mr. Hoselton, but that in his opinion Exhibit A did not; “that he resided at Reserve, Kan., and was engaged in farming; that he gave up his position as cashier in the Farmers’ State Bank in June, 1904; that during the time he was cashier he had paid numerous checks drawn by Mr. Hoselton on the account of Mr. Margrave; that he had seen Mr. Hoselton write, and knew his signature; that during the time he was cashier Hoselton drew on Margrave’s account from 25 to 50 checks per month; that he had known Hoselton between 15 and 20 years, and to his knowledge Hoselton had been employed by Margrave abmtt 20 years, and is now so employed.”
From appellant’s abstract we quote as follows: “Thereupon the plaintiff offered in evidence the deposition of W. A. Margrave, who testified: That during the year 1904, E. Hoselton was in his employ with authority to draw checks upon his account. Sometimes he drew as high as $3,000 a month. That he was acquainted with the signature of Mr. Hoselton, and did not believe it was his genuine signature to Exhibit A. Q. Do you furnish Mr. Hoselton with check books for drawing checks upon your account? A. Yes, sir. Q. In the form of checks shown in Exhibits E, F, G ,H, and I? A. Yes, sir; I have those printed. Mr. Hoselton constantly carried such check book with him, and was not in Kansas City on August 10th. He was with me at St. Joe, and came back the same day.’ Witness further testified: That he was 60 years old, and is a farmer and stock raiser more than anything else; lived on a farm near Preston. / That he had known E. Hoselton not less than 26 years. That during all that time Mr. Hoselton had been and now is in his employ. That Exhibits E, F, G, H, and I were checks
After laying ample foundation in the usual manner to enable respondent Greenwald-to testify from personal knowledge and as a handwriting expert, he was very properly permitted to state that he was personally acquainted with E. Hoselton and had seen him write; as cashier of the Falls City State Bank lie had cashed numerous checks signed by Mr. Hoselton, and knew his signature; that he had compared the signatures upon the checks of E. Hoselton offered in evidence for comparison with the purported signature of E. Hoselton on the check, Exhibit A, and that the signatures of E. Hoselton to the five instruments referred to are his genuine signatures, and that there is a material difference in such signatures from the one in litigation; 'and that in his opinion Exhibit A was never signed by Hoselton. While Mr. Hoselton is neither a party to the action nor, strictly speaking, an interested witness, the existence of such a relation may be assumed without justifying the application of the doctrine that the uncorroborated testimony of a party, or that of an interested witness, is not conclusive upon the jury, but may be disregarded, if deemed unworthy of belief. Although the abstract contains cumulative evidence bearing upon the question of forgery that has been considered unnecessary to quote, enough appears in this opinion to show that he was
Having found no error in the admission of evidence, nor in the refusal of the court to- let the jury determine whether the check was forged, we proceed to a more difficult question, the determination of which is conclusive as to the rights of the parties. Upon the
With reference to the proposition that a bank should not recover back money paid on a forged check, because the holder receiving payment is likely to be prejudiced thereby in the enforcement of his remedies against other parties, it is declared in the case of Ellis & Morton v. Ohio Eife Insurance Company, 4 Ohio St., at page 660, 64 Am. Dec. 610, that no such presumption should prevail, and in support of the view the court, quoting an eminent author, say: “And such is not only the opinion of Mr. Chitty, but he thinks it the fair result of the modern English cases. After alluding to the grounds of the contrary opinion, he says: ‘But, on the other hand, it may be observed that the holder who obtained payment cannot be considered as having altogether shown sufficient circumspection. He might, before he discounted or received the instrument in payment, have made more inquiries as to the signatures and genuineness of the instrument, even of the drawer or indorsers themselves, and, if he thought fit to rely on the bare representation of the party from whom he took it, there is no reason that lie should profit by the accidental payment, when the loss had already attached upon himself; and why should he be allowed to retain the money, when, by an immediate notice of the forgery, he is enabled to proceed against all other parties precisely the same as if the payment had not been made, and consequently the payment to him has not in th least altered his situation, or occasioned any delay or prejudice? It seems that, of late, upon questions of this nature, these latter considerations have influenced the court in determining whether or not the the money shall be recoverable back.’ ” In 5 Cyc. 546, the true rule by which to determine the rights of the parties in an action like the one before,us is stated thus: “When payment is made to the holder of paper who has come into possession of it without any fault on his part, and his situation would be rendered worse if compelled to refund than it was before receiving payment, the money cannot be recovered from him. If, however, he has been negligent in any regard, he cannot
Conformable to the foregoing rule we quote from People’s Bank v. Franklin Bank, 12 S. W. 716, 6 L. R. A. 724, as follows: “Notwithstanding some conflict of authority upon the subject, a careful investigation of the adjudged cases and the text-book leads us to the conclusion that the bank can recover of a party to whom payment is made on a forged check, indorsed by the party to whom paid, where the party to whom paid has been guilty of negligence in receiving and indorsing the check; for, notwithstanding the negligence to some degree that the paying bank has been guilty of in paying the forged check without detecting the forgery of its dedepositors signature, it often happens or may happen, that the party to whom payment is made has been guilty of the first negligence in purchasing and indorsing the forged paper. The bank upon whom the check is drawn, in the practical administration of hanking business, may well be lulled to a less careful scrutiny of its depositor’s signature of a check, where the same is indorsed by another bank with which it is in correspondence br interchange of business, than it would exercise in accepting and paying the same check, not so indorsed, to a stranger.” Discussing a case similar to this upon principle, but where the equities were conceded to be equal, the New York court say: “No doubt the parties were equally innocent in a moral point of view. The conduct of both was bona fide, and the negligence, or rather misfortune, of both the same. . It was the duty, or, more properly, a measure of prudence, in each to have inquired into the forgery, which both omitted. But this raises no preference at law or equity in favor of the defendants, but against them. They have obtained the plaintiff’s money without consideration; not as a gift, but under a mistake. For the very reason that the parties were equally innocent, the plaintiffs have the right to recover.” Canal v. Bank of Albany, 1 Hill (N. Y.) 287.
Bearing in mind the authoritative rule of action applied in the cases that have been thus noticed with approval, it becomes necessary to give the evidence most studious, examination, as a complete understanding of the facts and circumstances is vitally essential to
Moreover, the indorsement of the State Banking & Trust Company on the back of such check was of a character most likely to mislead, and the cashier of the Farmers’ State Bank of Preston, who was not then very familiar with the signature of E. Hoselton, was very properly allowed to testify that he measurably relied upon such indorsement and that of G. A. Ford, supposing that the check was going through the regular channel and had reached him in the ordinary course of the banking business. The maxim that, “Where one of two innocent persons must suffer by the act of the third, he by whose negligence it happened must be the sufferer,” was adopted as section 2442 of our Revised Civil Code, and no well-reasoned authority can ever militate against a precept so firmly grounded upon the principles of natural justice. Treating this as a case where money was pai'd by one party to another through a mutual mistake of fact in respect to which both were equally bound to inquire, the loss must be sustained by appellant as the party to the fault or negligence of whom it. is plainly traceable.
From a careful examination of the entire record,' which contains no errors of law, either in the admission of evidence or otherwise, we are satisfied that appellant is legally liable to respondent for the amount of the check; and the judgment appealed from is affirmed.