Goddard v. . the Merchants' Bank

Bronson, Ch. J. delivered the opinion of the court.

[149] The drawee of a hill is held bound to know the hand-writing of his correspondent, the drawer; and if he accepts or pays a bill in the hands of a bona fide holder for value, he is concluded by the act, although the bill turns out to be a forgery. If he has accepted, he must pay; and if he has paid, he can not recover the money back. This is an exception to the general rule, that money paid under a mistake of fact may be recovered back. The exception is fully established; but I do not see that it applies to this case. As the plaintiffs intervened and paid the bill for the honor of the supposed drawers, I do not doubt that the exception would have applied to them, as well as to the drawees, had they seen the bill before they parted with their money; but they had not seen it. They had had no opportunity of judging whether the bill was in the hand-writing of their correspondents, the drawers, or not; and consequently the argument which concludes the drawee when he pays after sight of the bill proves nothing against the plaintiffs. Their case is out of the exception, and within the general rule; and I see no reason why they should not recover.

But it is said that the plaintiffs are chargeable with negligence in paying the draft before they had seen it: also that they prevented the service of notices of protest on Monday the 20th of September, the last day for giving notice; and consequently they can not recover. How are the facts ? The plaintiffs were informed on the Monday morning in question that there was a draft for $1000 drawn by their correspondents, the Oanal Bank of Cleveland, on the American Exchange Bank; that it had been protested on Saturday, and was then in the hands of Notary Campbell. This information they got from the teller of the American Exchange Bank, the teller of the Mer • chants’ Bank, and from Mr. Biker, another notary, who occupied the same office with Mr. Campbell, and who received papers and answered questions for Mr. Campbell when he was absent from the office, as he was when Goddard, one of the plaintiffs, called to take up the draft. On this information God dard acted ; and supposing that the Canal Bank had by mistake [150] drawn on the Exchange Bank, with which it had just before kept an account, instead of drawing on the plaintiffs, and wishing to protect the credit of the drawers, he left a check with Hr. Biker for the amount of the draft and notary’s fees, for the purpose of taking up the draft, and requested to have it sent to the plaintiffs’ office on that day, which Mr. Biker said would be done, or that he would tell Mr. Campbell that the plaintiffs wanted the drafts sent down. Biker delivered the check and did the errand when Campbell came in. Campbell took the check and paid the money to the defendants ; but instead of sending the draft to the plaintiffs, he put it in his trunk and kept it until Tuesday morning, when Goddard called and inquired for it. On seeing the draft Goddard immediately pronounced it a forgery, and thereupon went to the defendants’ bank and demanded back the money. Mow in all this I am unable to see any thing like culpable negligence on the part of Goddard. He was told that there was such a draft—importing, of course, that it was a genuine draft. He got the information from '.the defendants’ teller, and also from Mr; Biker, who received papers and answered questions for Mr. Campbell, to whose hands the defendants had intrusted the draft. But it is not necessary to connect the defendants with the information. When Goddard went to the notary’s office, he told Mr. Biker he had been informed—not by the supposed drawers, but by persons in MewTork—that Mr. Campbell had a draft in his hands drawn by the Canal Bank of Cleveland; and he left a check to take up such a draft—meaning of course a genuine draft. Meither Campbell nor his principals, the defendants, had any right to the check, except for the purpose of taking up a genuine draft; and when Campbell received the check and paid it over to the defendants, both he and they tacitly affirmed that the draft was genuine. Independently of the implied obligation to send the draft to the plaintiffs on that day, it would have been an act of prudence on the part of the defendants, or their agent the notary, to send it. But when we take into consideration the request that the draft should be sent, which was communicated to the notary when he received the check, it is clear that whatever of negligence there was in the transaction was all on the [151] other side, and not on the side of the plaintiffs.

It is true that if the plaintiffs had not intervened, the notices would have been sent off on Monday, which was in time, instead of Tuesday, which was too late. But it is also true that had the notary performed the implied condition on which he received the check, and sent the draft to the plaintiffs on that day, he would either have learned that the draft was a forgery in time to give legal notice, or the plaintiffs would have concluded themselves by holding the draft, without declaring the forgery, until it was too late to give legal notice.

There was in truth no use in giving notice of the dishonor of the bill, with the view of charging any party to it. The defendants only had it for collection, and wanted no recourse. Notice to the supposed drawers could serve no purpose, because the bill was a forgery: and Moore, the payee, who forged the bill, was answerable to the Bank of ¡Rutland, which he had defrauded, without notice.

It is said that early notice would have increased the probability of catching the felon. Let us examine that suggestion. If the plaintiffs had not intervened, notice would have been sent on Monday; but it would have been notice of protest, and not of the forgery. The Bank of ¡Rutland would have heard nothing about a forgery, until it should have got a response from the notice of protest sent to the Canal Bank in Ohio. There would have been a delay of a week at the least. Whereas as the case was, notice of the forgery, as well as of protest, was sent off the next day, both to the Bank of Rutland, and the Canal Bank. From this view of the case it seems reasonable to believe, that what was in fact done was more likely to prove beneficial to the Bank of Rutland, which owned the bill, than the thing which would have happened if the plaintiffs had done nothing.

But whatever may be the probability, or whoever else may be in fault, I think the plaintiffs have neither done any wrong, nor neglected any duty; and am of opinion that the judgment should be afiirmed.