Bank of St. Albans v. Farmers & Mechanics Bank , 10 Vt. 141 ( 1838 )

The opinion of the Court was delivered by

Phelps, J.

I am for myself fully satisfied, from the cases of Bree v. Holbech, Doug. 654, and Price v. Neal, Burr. 1354, that Lord Mansfield entertained the opinion, that there was no remedy against a person, who should innocently put off a forged security, but that, to enable the receiver to maintain an action in such case, something like fraud or mala fides must appear, or at least some culpable negligence on the part of the person putting oil the security. He seems to have held, that if both parties are equally innocent, there is no ground in equity for transferring the loss, from one to the other.

It must, however, be admitted, at this'day, that such is not to have the means of correct the law ; but on the contrary, it seems now well settled, that a person giving a security in payment, or procuring it to be discounted, vouches for its genuineness. This rule, however, has never, to our knowledge, been extended to the case, where the party, when receiving or discounting the paper, is presumed, from his relaji^H”" knowledge as to its gen""^&or where it has been kept for an unreasonable tim^BBHiut notice to the other party of its spurious character. The acceptor of a bill is holden to pay it, although the name of the drawer may be forged ; and it is for this reason, that, in an action against him, the hand-writing of the drawer need not be proved.

The case, of Price v. Neal is now understood to have proceeded upon the ground, that the drawee is bound to know the hand-writing of his correspondent, and, thus understood, its authority has never been questioned. It has often been commented upon, both in the English courts and those of this country, and, although its applicability to a transfer of a forged security, between' persons not parties to it, has been questioned, yet, its authority, ás applied to the case of such a bill, accepted or paid by the drawee, has been uniformly and fully sustained. That the rule there adopted extends as well to the case of a bill paid upon presentment, as to one., accepted and afterwards circulated] appears, not only from the case itself, but from subsequent decisions, in which the case itself has been approved, and its principle adopted.

There is good reason for the distinction, upon which the authority of that case rests, to be found in the intrinsic character of the transaction itself, The presentment of a bill tcT the drawee is a direct appeal to him to sanction or repudiate it. It is an inquiry as to its genuineness, addressed to the party, who, of all men, is supposed best able to answer it, and whose decision is most satisfactory. He is, moreover, j the person, to whom the bill itself points, as the legitimate * source of information to others, and if he were permitted to dishonor a bill, after having once honored it, the very foundation of confidence in commercial paper would be shaken. There is a wide difference between such a transaction, and the passing of paper as a representative of money, between persons equally strangers to it, in the ordinary course of business. In the latter case, the receiver relies, in a measure, upon the paper, while in the former, the case is reversed, and the holder relies, and has a right to rely, upon the decision of him, to whom the bill is addressed, and who alone is to determine whether it shall h^Nmored or not.

The same rule holds as or bank notes, and for precisely the same reasi""^Rris point I deem it unnecessary to cite authority^RH^cases are collected and reviewed by Mr. Justice Story, in the case of the Bank of the United States v. Bank of Georgia, 10 Wheaton 333, to which I may refer as abundantly satisfactory.

What then is this case ? A check upon the Bank of St. Albans, purporting to be drawn by Mr. Kingman, is presented at that Bank, which is accepted and paid. They now seek to recover back the money thus paid, by an action for money had and received, against the defendants, who were the holders of the check, upon the ground that the check is a forgery. If the authority of Price v. Neal is sustained, there is no longer any question in the case.

I have said that the check was accepted and paid. It was transmitted by the defendants to the plaintiffs, with a direction to credit the amount to the defendants in account. This was done, the check retained by the plaintiffs, and no notice given of the forgery, until more than two months had elapsed, although the two banks are situated within thirty miles of each other.

Upon the authority of the case in Wheaton, we may well treat this as a payment. Indeed the plaintiffs have so treated it, by bringing this action; and, unless we assume that the check was paid, this action cannot be sustained. The payment, of course, involves an acceptance.

But if it be not a payment, strictly speaking, yet, the detention of the bill for so long a lime, together with the credit given in account, are tantamount to an acceptance. At all events, the plaintiffs made the bill their own by this proceeding. If they chose to repudiate the check, they should have done so immediately. It was too late after the lapse of two months, to turn the plaintiffs round to their remedy against their endorser. If we suppose the endorser to be innocent, he certainly was entitled to immediate notice of the dishonor, and the defendants’ remedy against him is lost./ If we assume that he was privy to the forgery, and for that I reason not entitled to notice, yet, it is impossible to judge of j the various contingencies, which, at that late hour, n have rendered a remedy against him unavailing and unless we can pronounce judicially‘that the defendants could, at a future day, command the same facilities for redress, which existed when the cheek'was -fi»st’presented, we must pronounce that this unreasonable delay destroys the equity of the plaintiffs’ claim.

It is certainly true, that, in order to protect the defendants in this view of the case, it should appear that they received' the bill in the ordinary course of business, and in good faith. The former Gf these requisites is inferred as a matter of law, from the statement of the case, and the latter is found by the jury.

An exception, however, is taken to the charge of the court below, and it is insisted that Hockley should have communicated to the plaintiffs his after suspicions of the spurious character of the paper. Whether such was his duty, and whether the jury should have been so instructed, depends much upon the inquiry, whether there were anything to communicate. It does not appear that any facts, affording rational grounds of suspicion, came to his knowledge, after the purchase of the check. What is termed his suspicion, turns out, on inspection of the case, to be no more than his sense of the risk incurred in making the purchase of a stranger, which he very properly communicated fto his clerk. But of what service would a knowledge of this have been to the plaintiffs. Had facts come to his knowledge, which would have benefitted the plaintiffs, there would be ground for the argument that he was bound in good faith to communicate them. Whether, in such case, the omission would have subjected the defendants to this action, is a question, which we are not called upon to decide.

But the case discloses nothing, which could furnish to his mind any substantial ground of suspicion, and nothing which it would have been important to the plaintiffs to know. There was nothing, therefore, which called for a charge on this point, and the question, how far the defendants, or their agents, were bound to communicate such facts as came to jmowledge, after the purchase, is one not involved in the suit, and which will be seasonably decided, when a case arises which requires it.

The judgment of the County Court is affirmed.