25 F.2d 995 (N.D.Ga. 1928), 630, Philadelphia Nat. Bank v. Fulton Nat. Bank

Docket Nº:630.
Citation:25 F.2d 995
Party Name:PHILADELPHIA NAT. BANK v. FULTON NAT. BANK.
Case Date:March 28, 1928
Court:United States District Courts, 11th Circuit, Northern District of Georgia

Page 995

25 F.2d 995 (N.D.Ga. 1928)

PHILADELPHIA NAT. BANK

v.

FULTON NAT. BANK.

No. 630.

United States District Court, N.D. Georgia, Atlanta Division.

March 28, 1928

Page 996

Alston, Alston, Foster & Moise, of Atlanta, Ga., for plaintiff.

Brandon & Hynds, Little, Powell, Smith & Goldstein, and Hoke Smith, all of Atlanta, Ga., for defendant.

SIBLEY, District Judge.

Philadelphia National Bank sues Fulton National Bank at law, and a general demurrer challenges the right to recover. The facts pleaded are that, at stated intervals during 1917, the Insurance Company of North America drew drafts upon itself in favor of named payees, the drafts on their face to be presented through Philadelphia National Bank. Each draft came to Fulton National Bank under indorsement in the name of the payees, but really forgeries. Fulton National Bank indorsed each as follows: 'Pay to the order of any bank, banker, or trust company. All prior indorsements guaranteed'--presented them to the Philadelphia National Bank, and was paid the amount thereof on the faith of the guaranty of the indorsements. The Philadelphia National Bank then charged the drafts against the deposit account with it of the Insurance Company of North America. On discovery of the forgeries, the Philadelphia National Bank reimbursed the insurance company, apparently taking up the drafts, since copies are annexed to the suit, and made demand on Fulton National Bank for repayment.

The suit asserts no particular theory for recovery. The contentions of the defendant are (1) that as a suit for money had and received, or paid by mistake, it is barred; (2) that the indorsement of the defendant is a mere restrictive indorsement for collection, not involving the obligations incident to an indorsement for negotiation; (3) that the guaranty of indorsements is addressed to the drawee, and not to the indorsee for collection.

1. The period of limitation under the Georgia law applicable to obligations not in writing is four years. The cause of action for money paid by mistake, such as was upheld in White v. Miners' National Bank, 102 U.S. 658, 26 L.Ed. 250, arises at the time of payment, and not at the time of the discovery of the mistake, and making demand for repayment. Leather Manufactors' Bank v. Merchants' National Bank, 128 U.S. 26, 9 S.Ct. 3, 32 L.Ed. 342. More than four years having elapsed between the payment of the last draft and the filing of this suit, the entire suit is barred, unless sustained by some obligation in writing, for which a longer period, six years, is fixed.

2. Such an obligation would be that arising from the ordinary contract of indorsement for negotiation; the agreement being implied therein that the indorser will pay if the drawee does not. The form of indorsement, 'Pay to any bank or banker,' is commonly used by banks in forwarding paper for collection, so commonly used as fairly to put one on inquiry whether the indorsee is really the owner or only an agent for collection, and to charge all persons with the knowledge that would have been gotten by inquiry. First National Bank v. Weitzel (C.C.A.) 239 F. 497. If the truth be that the indorsee was not a purchaser, but only an agent for collection, of course the consequences follow that relate to an...

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