Cunningham v. First National Bank , 219 Pa. 310 ( 1908 )

Opinion by

Mr. Justice Stewart,

The Bank of Pittsburg accepted a check for $2,TOO drawn by the plaintiff on the First National Bank of Indiana, the defendant, payable to the order of C. M. Johnston, and bearing what purported to be an indorsement by the payee and a subsequent indorsement by one McQuaide. The Bank of Pittsburg, having an open account on its books with the Delmont National Bank, presumably at the direction of the last indorser, credited the latter bank with the amount of the check, and, having indorsed it with an express guarantee of the genuineness of the prior indorsements, forwarded it to the Bank of Indiana, where it was charged up against the deposit account of the drawer. The check had never been in the hands of the payee ; it had been left by the drawer in the hands of his attorney to be delivered over to the payee for or upon the satisfaction of a certain mortgage. Instead of being so applied the check, with a forged indorsement of the payee’s name, was presented to the Bank of Pittsburg, and was by it accepted and credited to the account of the Delmont National Bank, of which McQuaide, the plaintiff’s attorney, was president. A year later, May 1, 1906, Johnston, the payee, told the plaintiff that ho had not indorsed the check. To assure himself that he had drawn the check payable to the order of Johnston and not to the order of his attorney, plaintiff the same day procured the check, and upon examination found that it was payable to Johnston’s order, and that it bore an indorsement purporting to be Johnston’s. Six weeks thereafter he exhibited the check to Johnston, who positively repudiated the indorsement. The same day the plaintiff notified the Indiana bank of the forgery, and made demand for reimbursement. This brief statement of the facts is sufficient for an understanding of the only assignments of error in the case which it is necessary to consider.

In view of plaintiff’s admission that he was informed by Johnston as early as May 1,1906, that he had not indorsed the check which plaintiff then knew was drawn payable to Johnston’s order, and that he had not notified the defendant bank of such denial for six weeks thereafter, defendant offered evidence to show, first, that the Delmont Bank is insolvent; second, that between May 1, 1906, when plaintiff was notified by Johnston that he had not indorsed the check, and June 15, following, when plaintiff notified the Indiana Bank of the forgery, the Bank of Pittsburg had in its hands funds of the Delmont National Bank sufficient to reimburse it on account of its acceptance of the forged check. The purpose of the offer was to afford ground for. the contention that the Bank of Pittsburg, which, because of its guarantee of the genuineness of the indorsements, was liable over to the defendant bank, had been prejudiced by negligence of the plaintiff in failing to promptly notify the defendant bank of the forgery ; this on the theory that the defendant bank, in order to hold the Pittsburg bank, was bound to interpose to plaintiff’s demand against it whatever equities the former had. The offer was rejected because, as stated in the opinion filed refusing a new trial, the effect of it would be to make the Delmont Bank an indorser of the check,' whereas in fact its name does not appear in connection with the check and it was a stranger to the transaction. But the liability of the Delmont Bank on the check was not a question in the case; whatever liability it was under to the Bank of Pittsburg was for money which had been paid or credited to it by mistake, and to which it had no claim. That-the. Pittsburg Bank would have the right to charge back on its books the credit given the Delmont Bank on this forged indorsement, cannot be questioned. .The latter had received á credit to which it was not entitled, for which it had given nothing, and the withholding of it by correction on the books of the Pittsburg Bank could not in any way have prejudiced the Delmont Bank. The latter was never in position to demand the credit; the Pittsburg Bank, on discovery of the forgery, could successfully have resisted any attempt to enforce such credit. With the evidence in, the question would have been for the jury to decide tinder proper instructions, whether facts necessary to establish negligence on the part of the plaintiff to the prejudice and loss of the Pittsburg Bank had been made out. Since the evidence should have been admitted, the fifth and sixth assignments of error must be sustained.

Judgment reversed, and venire facias de novo awarded.