First State Bank v. Vogeli

The opinion of the court was delivered by

Porter, J.:

The instructions properly told the jury that the burden was upon the plaintiff to prove- that the signature was not genuine and that he must do so by a preponderance of the evidence. On this very material issue the jury were unable to agree, but for some reason, which is not apparent, the court refused to set aside the verdict and rendered judgment. This was error. If the signature was genuine the bank was obliged to pay, unless there was something in the appearance of the check to excite suspicion or there was some fact known to the bank sufficient to put it upon inquiry. True, the jury found that the bank was guilty of negligence in paying the check, but they also found in what the negligence consisted, and no one of the things, or all of them combined, would constitute negligence.

It is not negligence for a bank to pay a depositor’s check written on the form of another bank. There is no invariable rule by which customers of a bank are required to use a blank check prepared by the bank, and in the ordinary course of business it is of very common occurrence to use a check of another bank, erase the name and insert that of the bank in which the depositor’s account is kept. This occurs every day in all banks.

Nor did the fact that the chéck was for an amount in excess of the 400-dollar letter of credit tend to prove negligence or put the bank upon inquiry. The letter was given the plaintiff to establish credit with other banks or persons with whom he might have business. His account was subject to check, and he needed no letter of credit to oblige the bank to pay checks drawn by himself. Again, the fact that some days previously the bank had paid a check for $100 drawn by the plaintiff on a regular blank of the defendant was wholly immaterial and not sufficient to excite suspicion as to the genuineness of the check in controversy. The last circumstance found by the jury is that the check was not filled out by the plaintiff, but there was nothing unusual in this, even if the plaintiff had not been in the habit of having others fill out his checks.

“The rule requiring the bank to know the customer’s handwriting was always confined to requiring a knowledge of his signature. Neither any rule of law nor the ordinary course of business renders it a matter of suspicion that the body of the check or bill is not written in the handwriting of the maker or drawer.” (2 Morse, Banks & Banking, 4th ed., § 480.)

The rule is stated in volume 2 of the fourteenth edition of Daniel on Negotiable Instruments, section 1654a, as follows:

“But a bank is not bound to know more than the signature of the drawer of the check; for in the ordinary course of business the body of the check is as often as otherwise filled up by a clerk, and it is by no means a matter of suspicion that it is not filled up in the handwriting of the drawer. If the rule were otherwise, a bank could never safely pay a check filled up in a handwriting not the drawer’s until it had inquired of the drawer whether it was properly filled up. And to require this would greatly embarrass commercial transactions.”

(To the same effect see Redington v. Woods, 45 Cal. 406, 419, 13 Am. Rep. 190; Bank of Commerce v. Union Bank, 3 N. Y. 230, 234; National Park Bank v. Ninth National Bank, 55 Barb. [N. Y.] 87, 124.)

If this check had been genuine and the failure of the bank to pay it résulted in loss to the plaintiff the bank would have been liable to him for all damages resulting therefrom, and none of the circumstances mentioned by the jury would have relieved the bank from its liability. Of course, a false or fraudulent alteration in any material matter in the body of the check, after signature, would have constituted technical forgery, and the bank would have been liable to the plaintiff, unless by some act of negligence upon his part he furnished the opportunity for the fraud which deceived the bank, in which case he must suffer the just consequences of his own carelessness and bear the loss. The jury found that the plaintiff was guilty of negligence in signing his name to some blank or partly filled out paper in the hands of a stranger, and it is insisted that on the facts found judgment should be directed for the defendant. There was no motion or request for judgment notwithstanding the verdict, and it is unnecessary to consider the effect of this finding.

The motion to strike from the petition all allegations with reference to the payment of the 100-dollar check and the giving of the letter of credit should have been sustained, since .they were averments of immaterial facts which added nothing to the plaintiff’s cause of action. ' '

The failure of the jury to agree upon one of the most material, issues in the case, as well as the inconsistent findings as to the negligence of the bank, require that the judgment be reversed and a new trial ordered.