Grubnau v. Centennial National Bank , 279 Pa. 501 ( 1924 )

Opinion by

Mr. Justice Kephart,

Grubnau Brothers were depositors in appellant’s bank. Healey, plaintiff’s employee, forged two checks, using his employer’s name: one on this appellant, the Centennial National Bank, for $4,000, the other on the Corn Exchange National Bank for $1,200. Both checks were paid. When the books were balanced and the forgeries discovered, the banks were duly notified. Grubnau Brothers carried insurance with the ¿Etna Casualty & Surety Company in the sum of $5,000 for loss arising from the misconduct of their employees. Claim was made against the Surety Company for loss for embezzlement under the policy. The ¿Etna Company paid the full amount of the policy, $5,000, in turn taking an assignment of all Grubnau Brothers’ claims against the banks. It brought this suit as use-plaintiff against the appellant, naming Grubnaii Brothers as plaintiff. Judgment was recovered in the court below, from which this appeal has been taken.

The case was left to the jury on the single issue of forgery, and decided against appellant. The court below overruled the other contentions, which may be stated thus: first, Grubnau Brothers had recourse against two persons to recover loss and as it could only be made whole, the extent of recovery from one must be accounted for in an action against the other; second, having elected to collect from the surety company for embezzlement, thereby adopting the forger’s act, and treating the money secured by him as Grubnau’s money, by so doing Grubnau Brothers invoked one of two inconsistent remedies, and it, with its assignees, cannot now proceed against the bank on the other remedy, both plaintiffs being barred from any further action; third, the equities of the bank are superior to those of the insurance company.

It is stated in Howes v. Scott, 224 Pa. 7, 12, and restated in Stern Mfg. Co. v. Geo. W. Smith & Co., 273 Pa. 39, 41: “The right to maintain this action does not depend upon the interest which the use-plaintiff may have in the result. It depends solely upon whether the legal plaintiff has a cause of action against the defendant. If he cannot maintain the action, the use-plaintiff cannot do so.” See also Blue Star Navigation Co. v. Emmons Coal Mining Corporation, 276 Pa. 352. The bank received plaintiff’s money for deposit, which it was under contract to return when called for. In honoring the forged check it used its own money, not the depositor’s, Grubnau’s. The insurance company indemnified the legal plaintiff against misconduct of its agents. Grubnau’s legal status was not that of the holder of a claim against two indemnitors, where payment of damages by the one may be offset in a suit against the other. It was a claim against, first, an insurer; second, a company refusing to pay money in violation of the terms of its contract. The remedies cannot surely be considered in the same right. The insurance was not in ease of the bank’s mistake. It would be a novel proposition to hold that an insurance contract could reach out to indemnify a stranger, in no way a party to the insurance, whose wrongful act caused the insurance company to pay loss to the insured which would not have occurred but for the wrongful act. Such protection would be given without cost or contractual relation,, merely because the person wronged chooses to collect from the insurance company first, rather than the bank which afterwards disputed the claim on this and other grounds connected with the forged check.

As to Grubnau’s deposit, the wrongdoer was the bank in placing and maintaining a forged check as a credit against Grubnau’s account. Whatever may have been the legal relations between the insurance company and Grubnau, they did not affect the debt owed by the bank to its depositor. The use-plaintiff, the insurance company, is now suing on an assignment of that debt or right in the legal plaintiff to collect from the bank its deposit. While ordinarily a double recovery for the same loss should not be permitted (and here it is not), the claim under which such rule is enforced must be in the same right, — so interrelated that a recovery from the one affects a hardship on the other which would not occur except for the recovery. No hardship was occasioned the bank by the insurance company paying. It has in its possession $4,000 of Grubnau’s money; it ought not to be a hardship to give it back.

It is urged, the charge of forgery involved the assertion of an inconsistent remedy. But a criminal action such as that cannot be so held in a civil action where, for the purpose of recovering money, or as relating to the claim against the bank, a suit similar to the one under consideration is brought. Nor would a demand on the insurance company, based on the charge of embezzlement, have that effect; neither, in law, would estop plaintiff from asserting his right under contract with the bank. Until the present one was entered, no suit had been brought testing that right.

As to the negotiation for settlement of the claim between Grubnau and the insurance company, and regardless of how they may have viewed the forgery or the money procured from the banks, it is sufficient, in final settlement, that the insurance company took a straight assignment of the legal plaintiff’s claim against the bank. The parties, by so doing, regarded the money obtained through the forged instrument as the property of the bank. They thus repudiated ratification of the forgery and its adoption by the legal plaintiff, if such thing were possible, and nothing in their conduct precluded this action.

Indeed, so far as the bank is concerned, we do not understand how it would be in a position to hinder Grubnau from following both remedies, regardless of supposed inconsistency of demand; nor are we sure the policy does not cover the precise misconduct here practiced. Had the insurance company permitted plaintiff to use both remedies, assuredly the bank could not have complained. If the insurance company had presented the money to Grubnau as a gift because of Healey’s act, the bank could not have taken advantage of it. If there was an election to be made, the insurance company was to make it. Instead of sending the parties to court to establish loss, it took over what might have been a debatable claim through purchase and assignment. The rights are not inconsistent, in that they are of the same quality or cover the same subject-matter. A mere statement of the facts shows this: National Union Fire Insurance Co. v. Mellon National Bank, 276 Pa. 212. What has been stated disposes of the question of mitigation of damages.

Nor is it a case of subrogation, wherein the equities of the bank may be said to exceed those of the insurer. Any person could have purchased the depositor’s right against the bank, and there was no reason why the insurance company should not do so. The court below was clearly right in directing judgment to be entered for appellee.

The judgment is affirmed.