4 P.2d 781 | Cal. | 1931
The plaintiff bank, as drawee, seeks to recover money paid to the defendant bank, a holder in due course, on a check certified by plaintiff in which the name of the payee had been altered prior to certification, and which check had been indorsed and negotiated by the substituted payee. Under the provisions of section
"This action was brought to recover a sum paid upon an altered check which the drawee certified and paid by mistake.
"On August 24, 1923, the McCormick Steamship Company, a depositor of the Wells Fargo Nevada National Bank of San Francisco, which was plaintiff's predecessor in interest, drew its check upon that bank for the sum of $1,425.88, payable to the order of Albert Meyer Company. Subsequently, without the consent of the drawer, the name of the payee was erased therefrom and the name of Harry W. Behling substituted. The alteration was made with such skill that it could not be detected and it was not detected by the drawee or by either of the defendants. The check was certified by the drawee and there was afterwards endorsed thereon the name of Harry W. Behling. This endorsement was not made by the original payee but by some person unknown. Thereafter the check was endorsed by defendant Popkin and presented to defendant Bank of Italy, which paid the amount thereof. The latter thereafter transmitted it in the usual course through the clearing house to the drawee which in turn credited or paid the amount of the check to the defendant bank. On or about September 1, 1923, this being the regular date upon which monthly accounts were rendered, the McCormick Steamship Company received from the drawee a statement showing that this check, among others, had been paid but did not receive the cancelled check. It was the custom of the drawee to retain all certified checks and forward to its depositors slips in lieu thereof which indicated by number the checks certified *159 and paid, but not the names of the payees. The steamship company did not discover the alteration until an inquiry was made by the original payee several months after the check had been paid. It notified the drawee of the facts about February 20, 1924, and on the 27th of that month the latter notified the defendants and demanded repayment of the amount of the check.
"The facts attending the certification and endorsement of the check, according to the testimony of defendant Popkin, were as follows: Harry W. Behling was at the time in the employ of the steamship company, and Popkin was the manager of a retail clothing concern in San Francisco. They had been acquainted for some years. On August 24, 1923, Behling purchased certain articles of clothing from Popkin and in the course of the transaction stated that he had a check drawn upon the Wells Fargo Bank and requested Popkin to identify him. The two went to the drawee bank, where Popkin introduced Behling and, by his statements and business card, established his own identity. The check was then presented and certified by the drawee, but, according to his testimony, Popkin did not endorse or examine the check at the time. Behling then requested payment, but it was suggested by an officer of the drawee bank that Popkin being a depositor of the defendant bank, the check should be cashed by the latter. Later at the banking house of defendant bank Behling was again identified by Popkin, who at this time at the request of the bank endorsed the check and the same was paid to Behling. The endorsement of the name of Behling preceded that of Popkin, but by whom it was made does not appear. Upon these facts judgment was entered for the defendant. The plaintiff, which has appealed, contends that certain findings are unsupported and that the court erred in its conclusions that the drawee by its certification admitted the genuineness of the body of the check, that the payee named therein had capacity to endorse and that the defendant bank was a holder in due course.
[2] "A check is a bill of exchange (Civ. Code, sec. 3265a) and where it is certified by a bank on which it is drawn the certification is equivalent to an acceptance (Civ. Code, sec. 3265c). Prior to the enactment of the Uniform Negotiable Instruments Act by the California Legislature *160
in 1917 (Stats. 1917, p. 1531) the code provided that `the acceptance of a bill of exchange admits the signature of the drawer, but does not admit the signature of any endorser to be genuine'. (Civ. Code 1915, sec. 3199.) According to the new act, Civil Code, section
[7] "We think the construction placed upon the section by the Illinois court is correct and that it was not the legislative intent that the obligation of the acceptor should be limited to the tenor of the instrument as drawn by the maker, as was the rule at common law, but that it should be enforceable in favor of a holder in due course against the acceptor according to its tenor at the time of its acceptance or certification."
The foregoing opinion and the Illinois decision which it follows give effect to the literal words of the Negotiable Instruments Law. As stated in the Illinois case, supra, page 107: "The court must take the act as it is written and should give to the words their natural and common meaning . . . if the language of the act conflicts with statutes or decisions in force before its enactment the courts should not give the act a strained construction in order to make it harmonize with earlier statutes or decisions." The wording of the act suggests that a change in the common law was intended. A careful reading thereof, independent of any common-law influence, requires that the words "according to the tenor of his acceptance" be construed as referring to the instrument as it was at the time it came into the hands of the acceptor for acceptance, for he accepts no other instrument than the one presented to him — the altered form — and it alone he engages to pay. This conclusion is in harmony with the law of England and the continental countries (14 Harvard Law Review, 241, 243; Langton v. Lazarus, (1839, Exch.) 5 M. W. 628; 1 Pardessus, Cours de Droit Commercial, 6th ed., 1856, 545). It makes for the usefulness and currency of negotiable paper (31 Yale Law Journal, 522, 527) without seriously endangering accepted banking practices, for banking institutions can readily protect themselves against liability on altered instruments either by qualifying their acceptance or certification or by relying on *166 forgery insurance and special paper which will make alterations obvious. All of the arguments advanced against the conclusion herein announced seem highly technical in the face of the practical facts that the drawee bank has authenticated an instrument in a certain form, and that commercial policy favors the protection of anyone who, in due course, changes his position on the faith of that authentication.
The judgment is affirmed.
Richards, J., Shenk, J., Curtis, J., and Seawell, J., concurred.