O'Neil v. Manufacturers National Bank

The defendant bank was a holder of the original note in due course. From time to time a payment was made to the bank upon the loan, and a new note was given for what then remained due upon the original debt. The notes given subsequent to the original note were forgeries as to the names of the maker, William O'Neil, and the indorser, Dan O'Neil. These forged notes cannot be held to have ever paid in full or in part the original indebtedness. They were mere pieces of paper, in no wise affecting the liability of the original maker to the bank. His liability to the bank was evidence by the original note, and until the indebtedness so evidenced was paid or discharged it continued.

As we read the finding, it is that $150 of this original indebtedness was represented by the last forged note and was due and unpaid at the time of trial. It must follow, that the maker of the original note is still liable for this indebtedness unless the defendant bank has discharged him from liability directly, or by its course of conduct. The finding shows that there has been no direct discharge. The claim is made that the defendant bank, by negligently accepting this forged paper, has prejudiced the rights of the maker by preventing his successful action over against O'Keefe, the payee. The facts found do not support this claim. The maker was primarily liable to the bank, and, so far as we know, he has no action over against the payee, O'Keefe.

The appellee presses upon us his contention that there is a serious and irreconcilable conflict between the paragraphs of the draft and counter-finding marked "proven" and "not proven," and the finding as made. It is quite true that there is some conflict, arising, we presume, through inadvertence of the trial court in the marking of these paragraphs. But we do not think this conflict affects the substantial merits of the case. The appellee correctly interprets the situation: its case depends upon the finding of the existence of an obligation arising at the time of the making of the original note for $400; and on the immediate point of the existence of such obligation there is no conflict. The trial court marked "not proven" the paragraphs specifying the existence of an obligation on the part of the plaintiffs, who were not only the maker, but O'Keefe the payee and indorser as well. In all probability the trial court had in mind the fact that the liability of O'Keefe as indorser upon the original note no longer existed, since he received no notice of protest of this note, while the liability of the maker, William O'Neil, continued. He was under no obligation to pay the forged note for $150, and it is clear that he paid it under a mistake. It does not follow that he is entitled to recover the sum paid. At this time he in fact owed the bank the sum which this note purported to represent.

A condition precedent to the recovery of money paid by mistake is a finding that the receiver ought not in good conscience to retain it. The circumstances surrounding this payment do not make such a finding permissible. Mansfield v. Lynch, 59 Conn. 320, 327,22 A. 313. Since this amount is due on the indebtedness evidenced by the original note, the bank may at any time recover it. The folly of compelling the bank in this action to repay the maker the $150 paid on the forged note, and immediately pay back to the bank the sum, is apparent. The injustice of penalizing the bank with a bill of costs and the vexation and cost of maintaining another action, indicate the injustice of compelling it to now return the sum received upon the forged note.

The plaintiff William O'Neil has not suffered through the acceptance of this forged note by the bank, nor by his payment of the face of the note, since his payment liquidated his indebtedness due the bank created at the time of the making of the original note.

The appellee claims that the appeal should be dismissed, because the defendant failed to present, in its request for a finding, any questions of law which it desired to have reviewed. The trial court has made its finding without reference to this omission by the appellee, who has permitted the case to reach the argument upon the merits of the appeal before raising the point. It is a sufficient answer to the claim to point out that it is too late to make it.

There is error and the cause is remanded with direction to enter judgment for costs in favor of the defendant.

In this opinion the other judges concurred, except PRENTICE, C. J., and BEACH, J., who dissented.