Brixen v. Deseret National Bank , 5 Utah 504 ( 1888 )

Boreman, J.:

The plaintiff (respondent) sued the defendant (appellant) for $752, alleged to be on deposit in the bank to the credit of the plaintiff, and which defendant refused to pay to plaintiff. Defendant in its answer denied that said or any sum remained on deposit in the bank to the credit of plaintiff. Tlie district court gave judgment for the plaintiff for the amount claimed, and thereupon the defendant appealed to this court. The facts upon which the liability of the bank is claimed, are, in brief, as follows, The plaintiff was a customer and regular depositor at the bank. While he was so, on the 10th of November, 1884, a real estate agent named C. J. Smith, as other real estate agents in Salt Lake City, was acting as a broker in obtaining and making.loans of money upon real estate security. In that capacity he presented himself to plaintiff, and asked him if he had any money to loan upon such security; and, being answered in the affirmative, he took the plaintiff to see the property belonging to W. A. Dunbar, which was unimproved city property.' Plaintiff then went to the county recorder’s office to learn about the title. Being-satisfied with the title, he told the real estate agent that he would make the loan, and that the agent could have the papers made out and brought to him, and he would give his check for the amount. Nothing against the character of the real estate agent appeared up to this time, and the manner of transacting the business was not uncommon. The agent brought the note and’ mortgage to the plaintiff. They appeared to have been duly executed, and the plaintiff handed the real estate agent a check for $752, the amount of the loan, less six months’ interest deducted. The check was drawn payable to the order of W. A. Dunbar, the person to whom the drawer supposed he wa,s loaning the money. The bank, in accordance with its practice, as to all depositors, delivered to the plaintiff once each month all checks which had been paid up to that time. He received the check m question, among others, about the 1st of December, 1884. He continued to be a depositor and customer of the bank - until the 1st of May, 1885. In September, 1885, the interest being overdue on the loan, the plaintiff called at the residence of Dunbar, in Salt Lake City, in regard to the matter. Dunbar was absent in Idaho, and his wife, knowing nothing of the matter, said that she would write to Mr. Dunbar. Early in November following, Dunbar came home, and called to see the plaintiff about the matter. Upon the note and mortgage being shown him, Dunbar pronounced, both the note and mortgage to be forgeries. This was on November 7,1885. The plaintiff then brought out the check, and Dunbar pronounced his name indorsed thereon to be also a forgery. It appears from the evidence that Dunbar was not in the territory at the time the loan was effected, and knew nothing of the trahsaction. The plaintiff, immediately on the same day, November 7, went to the defendant bank, and asked if the signature of Dunbar was a forgery, and the cashier, after inspecting it, said that he believed it was. The plaintiff then went to his attorney, and they together went to the bank, and the plaintiff told the defendant that he would hold the bank responsible. But, at the suggestion of the cashier, he delayed action for some days. On the 1st of December, he went to the bank, and formally offered back the check, with the forged name upon it, and demanded the money claimed to be due him. The bank refused to receive back the check, and refused to pay him the sum claimed. He then brought this action to recover the amount. The defendant contends that the judgment is erroneous; that the bank is not liable to pay plaintiff the-amount claimed in this action, for the reason that the money had already been paid out upon a check of the plaintiff drawn in favor of W. A. Dunbar; that, although the payee’s name indorsed on the check was a forgery, the loss should fall upon the plaintiff, because it was through his negligence that the check was put into circulation — he having delivered it to a stranger, and not to the payee.

It is a well-recognized general rule that where a party has money in a bank, and draws his check therefor, payable to the order of a particular person, it gives authority to the bank to pay the money to such person or to his order, unless in due time notified not to do so. But the check so drawn does not'give authority to the bank to pay to any other person; and if the bank fails to follow the direction specified in the check, and assumes to pay to some one else, it does so at its own risk. When the payee’s name indorsed on the check is a forgery, and the check is paid on such forged indorsement, it is not a payment to the order of the payee. The general rule referred to is recognized by tlie defendant, but it contends that this case presents an exception to tlie rule, in that it shows such negligence on the part of the drawer as to preclude his recovery in this action. We have already noticed that the check was drawn payable to W. A. Dunbar, but wás handed to C. J. Smith, a real estate agent, who was assuming to represent Dunbar, although in fact, he had no authority whatever to do so. The party (Dunbar) for whom Smith was pretending to act, and the party (plaintiff) from whom the money was being obtained, were not brought together. They did not meet; but the negotiations were wholly between Smith, the real estate agent, on the one side, and the plaintiff, on the other. The making of loans in that manner was a common and ordinary practice in Salt Lake City. At the time of this transaction, nothing had appeared against the character of Smith, the real estate agent, and the plaintiff followed an ordinary course of business men. He used ordinary care. No greater care was required of him. He made the check payable to Dunbar. The fact that he handed it to Smith to be delivered to Dunbar was not, under the circumstances, negligence on his part. We see no reason whatever to say that the general rule should not apply in this case. The facts do not warrant us in saying that it is an exception thereto. In paying the money on the forged indorsement, it paid out its own money, not that of 'the drawer. The money of the drawer still remained in the bank subject to his order: Bank v. Whitman, 94 U. S., 347; Bank v. Morgan, 117 U. S., 112, 6 Sup. Ct. Rep., 657; Bank v. Bank, 91 N. Y., 111.

It is further contended by the defendant that the plaintiff was negligent in not discovering the forgery earlier than he did; that for such purpose he should have made an early and thorough examination of the pass-book and the returned checks. The supreme court of the United States on speaking upon this subject in the case of Bank v. Morgan, 117 U. S., 107, 6 Sup. Ct. Rep., 660, said: “The drawer was not presumed to know the signature of the payee. His examination of the account, would not necessarily have disclosed the forgery of the payee’s name. Therefore his failure to discover -that fact sooner than he did was not to be attributed to want of care.” And, again, in the same case, (page 117,) the court said: “As the depositor was not presumed to know, and as it did not appear that he in fact knew, the signature of the payee, it could not be said that he was guilty of negligence in not discovering, upon receiving his pass-book, the fact that his clerk, or some one else, had forged the payee’s name in the indorsement.” In' the case at bar there is nothing to show that the drawer knew the signature of the payee of the check; and, if not, an examination of the returned checks and the pass-book would not have disclosed to him the forgery. But the supreme court of the United States, in the same case, further said: “Of course, if the defendant’s officers, before paying the altered checks, could, by proper care and skill, have detected the forgeries, then it cannot receive a credit for the amount of those checks, even if the depositor omitted all examination of his account.” The evidence clearly shows, in .the present case, that the officers of the defendant before paying the check, could with proper care have discovered the forgery of the payee’s name on the check. They had Dunbar’s genuine signature in the bank, and accessible. From the evidence it is manifest that, had they made a comparison between the genuine signature in their possession and the signature on the check, the forgery would have been detected. A simple inspection satisfied the cashier of the forgery at a subsequent date, and no doubt would have done so at the time the check was presented.

It is further said that the plaintiff was negligent in not tendering back to the bank the check immediately upon the discovery of the forgery, instead of waiting 24 days thereafter. The evidence shows that the plaintiff immediately, upon the same day that the forgery was discovered, went-to the bank, and notified it of the discovery of the forgery, and that he would hold the bank responsible, and at the same time threatened suit; but, at the request of the bank, he delayed action. The bank having failed to pay, he, unwilling to longer delay, on the first of December made a formal offer of" the check to the bank. If it was necessary for plaintiff to. have tendered back the check, such tender within a reasonable time was sufficient. Cooke v. U. 8., 91 U. S., 402; Schroeder v. Harvey, 75 Ill., 639; Ellis v. Trust Co., 4 Ohio St., 662; 2 Daniel, Neg. Inst. sec. 1372. There could not be said to have been an unreasonable delay in this case, as whatever delay occurred was attributable to the defendant itself. If, however, the plaintiff was negligent in tendering back the check, the fact would not justify the defendant in refusing to pay the money to the plaintiff until it should show some actual damage caused thereby: U. S. v. Bank, 6 Fed. Rep., 853; Bank v. Bank, 91 N. Y., 110; Welch v. Goodwin, 123 Mass., 71. By the introduction of the evidence as to the solvency of Walker Bros., it was made clear that no damage could result to the defendant by reason of having lost his recourse, or the advantage of it. The introduction of that evidence was objected to as not upon any issue in the case. It was claimed that the defendant was injured by the negligence of the plaintiff in discovering the forgery and in notifying the bank. This evidence shows that they had lost nothing as to a recourse upon the parties to whom the bank had paid the money. We do not see that the evidence was improper.

It is objected that the testimony of L. S. Hills, as to the signature of Dunbar, was improperly admitted as evidence. The witness said that his experience in determining the genuineness of signatures, or in comparing of handwriting, from his duties in the bank, had gone to the extent that he could determine, from a comparison of handwritings, whether the signature was genuine or .not. We think sufficient foundation was laid for the introduction of the testimony. The evidence, however, was made immaterial by the subsequent testimony of Dunbar himself as to the signature being a forgery.

The sixth instruction asked by the defendant was properly refused. If it were proper for the court to give expression to an opinion of the facts, the expression evidently would have been to the contrary of that set forth in tbe instruction; but, upon the whole case, we think the law was properly submitted to the jury.

■ We see no error in the record, and the judgment and the order overruling the motion for a new trial are affirmed.

Zane. C. J., and Henderson, J., concurred.

The appellant thereupon filed a petition for rehearing, upon which the following opinion was delivered, denying the rehearing.

Boreman, J.:

This is an application for a rehearing based upon a variety of grounds. Much of the petition is devoted to a summary of facts given in the opinion filed a few days since. The petition sets forth that the court erred in saying that on the 10th of November, 1884, C. J. Smith “was acting as a broker in obtaining and making loans upon real estate security.” This was an incidental statement of fact, and one not at all necessary to a decision of the case. Indeed, it, and the whole statements of facts, might have been omitted entirely, and the omission would have not changed the ruling, or affected it in any way. The statement was not a finding of facts, but a mere summary. But, in truth, the whole evidence goes to show that, at that time, Smith was a real estate agent; and that real estate agents were in the habit of making loans upon real estate security. • The court cannot look at the case from a standpoint on the one side or the other, but must look at it from both sides; or, more correctly speaking, from neither side, but from the stand-point independent of both sides.

' The petition again says that there is no evidence that the way in which Smith transacted this business with Brixen “was a common and ordinary practice in Salt Lake City.” or that this “manner of transacting the business was not uncommon.” The testimony of Mr. Gillespie and Mr. Pomeroy, especially the latter, shows this statement to have been correct. Mr. Pomeroy says that very frequently the real estate agents conducted the transaction themselves, without tbe principals coming together. But whether there was such a custom or not is a question not vital to the case. Take the facts entirely aside from the matter of a custom, and we cannot see that Brixen was guilty of negligence in putting the check into the hands of Smith, who was assuming to act for Dunbar; and at that time Smith’s character was not known to be bad. Brixen acted as an ordinary prudent man would have done. The bank was completely guarded by the check being made payable to the order of Dunbar.

The appellant (defendant-) objects to the following language used in the opinion filed, in speaking of the note and mortgage: “They appeared to have been duly executed.” The court did not mean to say that the papers were “duly executed,” but simply Brixen found no objection to them; that to him they appeared to have been duly executed. Evidence is not alone what a witness may say, but sometimes his acts are aids. Brixen accepted the deed, and his actions cannot be explained upon any other assumption than that everything about the papers appeared to him to be regular. The court did not pretend to pass upon the question as to whether or not the note and mortgage were “duly executed,” and it is hard to understand how counsel could form such a conception from the language used.

The appellant urges, as a ground for the granting of a rehearing, that the court erred in holding “that, notwithstanding Brixen neglected to examine the accounts stated to him by the bank from time to time, he ought to recover, because the bank could have and should have discovered the forged signature of Dunbar.” It urges that the bank was under no obligation to the drawer to examine the payee’s name to ascertain whether it was .forged or not. This point was thoroughly considered upon the hearing of the case, and in the opinion-delivered. We have examined with some care the authorities cited by appellant, but they fail to convince us that the fault was not with the. bank. The bank was bound to know the signature of the payee. It was not authorized to pay to anybody but the payee or to his order. It paid without his order. The appellant conceives that “the court was wholly mistaken in bolding that the evidence in tbe record showed that the delay in returning the forged check by Brixen to the bank, and the delay in demanding payment by Brixen of the forged check from the bank, was caused by the bank.” We reiterate, after further examination, that the bank was wholly to blame for the delay. Brixen was frequently pressing his claims for a settlement of the matter — a payment of the amount due; told the bank, immediately upon a discovery of the forgery, that he held it responsible and threatened suit. The bank requested delay. Such requests for delay could not well be construed to mean anything else than a delay to take any action looking to a suit. If the delay had not been requested and granted, the suit itself, and consequently all preliminary steps thereto, would have been taken immediately upon the discovery of the forgery. They were not done, simply because the bank requested delay by plaintiff in taking action.

The appellant complains of the language used by the court in holding that, as Walker Bros, were shown to have been pecuniarily responsible, “no damage could result to defendant by reason of having lost its recourse, or the advantage of it,” against the forger, Smith. The court made no reference to recourse by the bank upon Smith. The bank could look to Walker Bros., who had indorsed it to the bank, and, Walker Bros., being solvent, the bank was not damaged. The law will not presume damage when it clearly appears that there could have been none.

The appellant asks for a rehearing upon the further ground that the court made use of language as follows: “The sixth instruction. asked by defendant was properly refused. If it were proper for the court to give expression to an opinion of the facts, the expression evidently would have been to the contrary of that set forth in the instruction.” The objection to this language is that it appeared therefrom that the court was under the impression that, in the sixth instruction asked by defendant, the defendant was asking the court to give an opinion upon matters of evidence from the witnesses, when the defendant was simply asking the court to state the admissions in the complaint, and. the effect-thereof, and that the instruction was correct, etc. The complaint stated facts sufficient to constitute a cause of action. This seems to be admitted; no point being pressed in regard thereto. There were no admissions in the pleadings that there was no good reason for delay in returning the forged check. The complaint simply failed to allege the reasons. The proof was made of the reasons for the delay, and no objections were made to such proof. Under that state of the case, it would not have been proper for the court to have told the jury that they must find a verdict for the defendant. It was not a case of facts being admitted by the pleadings. A failure to allege a fact in the complaint, especially if no exception is taken to such failure, will not authorize the court to tell the jury that the contrary is admitted, when the fact itself has been proved before the jury.

Upon the hearing of this case, we gave it a careful consideration. And this review, upon the points made by the petition for a rehearing, confirms the view we arrived at then. The application for a rehearing is denied.

Zane, C. J., and Hendeeson, J., concurred.