318 U.S. 363 (1943), 490, Clearfield Trust Co. v. United States

Docket NºNo. 490.
Citation318 U.S. 363, 63 S.Ct. 573, 87 L.Ed. 838
Party NameCLEARFIELD TRUST CO. et al. v. UNITED STATES.
Case DateMarch 01, 1943
CourtUnited States Supreme Court

Page 363

318 U.S. 363 (1943)

63 S.Ct. 573, 87 L.Ed. 838

CLEARFIELD TRUST CO. et al.

v.

UNITED STATES.

No. 490.

United States Supreme Court.

March 1, 1943

Argued and Submitted Feb. 5, 1943.

As Amended Mar. 15, 1943.

On Writ of Certiorari to the United States Circuit Court of Appeals for the Third Circuit.

Action by the United States of America against the Clearfield Trust Company torecover the amount of a check on which payee's name had been forged, wherein the J. C. Penney Company intervened. A judgment dismissing the complaint was reversed by the Circuit Court of Appeals, 130 F.2d 93, and the defendant and intervener bring certiorari.

Affirmed.

COUNSEL

Page 364

[63 S.Ct. 574] Mr. Paul A. Freund, of Washington, D.C., for respondent.

Mr. Roswell Dean Pine, Jr., of New York City, for petitioners.

OPINION

Mr. Justice DOUGLAS delivered the opinion of the Court.

On April 28, 1936, a check was drawn on the Treasurer of the United States through the Federal Reserve Bank of Philadelphia to the order of Clair A. Barner in the amount of $24.20. It was dated at Harrisburg, Pennsylvania and was drawn for services rendered by Barner to the Works Progress Administration. The check was placed in the mail addressed to Barner at his address in Mackeyville, Pa. Barner never received the check. Some unknown person obtained it in a mysterious manner and presented it to the J. C. Penney Co. store in Clearfield, Pa., representing that he was the payee and identifying himself to the satisfaction of the employees of J. C. Penney

Page 365

Co. He endorsed the check in the name of Barner and transferred it to J. C. Penney Co. in exchange for cash and merchandise. Barner never authorized the endorsement nor participated in the proceeds of the check. J. C. Penney Co. endorsed the check over to the Clearfield Trust Co. which accepted it as agent for the purpose of collection and endorsed it as follows: 'Pay to the order of Federal Reserve Bank of Philadelphia, Prior Endorsements Guaranteed.' 1 Clearfield Trust Co. collected the check from the United States through the Federal Reserve Bank of Philadelphia and paid the full amount thereof to J. C. Penney Co. Neither the Clearfield Trust Co. nor J. C. Penney Co. had any knowledge or suspicion of the forgery. Each acted in good faith. On or before May 10, 1936, Barner advised the timekeeper and the foreman of the W.P.A. project on which he was employed that he had not received the check in question. This information was duly communicated to other agents of the United States and on November 30, 1936, Barner executed an affidavit alleging that the endorsement of his name on the check was a forgery. No notice was given the Clearfield Trust Co. or J. C. Penney Co. of the forgery until January 12, 1937, at which time the Clearfield Trust Co. was notified. The first notice received by Clearfield Trust Co. that the United States was asking reimbursement was on August 31, 1937.

This suit was instituted in 1939 by the United States against the Clearfield Trust Co., the jurisdiction of the federal District Court being invoked pursuant to the provisions of s 24(1) of the Judicial Code, 28 U.S.C. s 41(1), 28 U.S.C.A. s 41(1). The cause of action was based on the express guaranty of prior endorsements made by the Clearfield Trust Co.

Page 366

J. C. Penney Co. intervened as a defendant. The case was heard on complaint, answer and stipulation of facts. The District Court held that the rights of the parties were to be determined by the law of Pennsylvania and that since the United States unreasonably delayed in giving notice of the forgery to the Clearfield Trust Co., it was barred from recovery under the rule of Market Street Title & Trust Co. v. Chelten T. Co., 296 Pa. 230, 145 A. 848. It accordingly dismissed the complaint. On appeal the Circuit Court of Appeals reversed. 3 Cir., 130 F.2d 93. The case is here on a petition for a writ of certiorari which we granted, 317 U.S. 619, 63 S.Ct. 258, 87 L.Ed. 502, because of the importance of the problems raised and the conflict between the decision below and Security-First Nat. Bank v. United States, 103 F.2d 188, from the Ninth Circuit.

We agree with the Circuit Court of Appeals that the rule of Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487, [63 S.Ct. 575] does not apply to this action. The rights and duties of the United States on commercial paper which it issues are governed by federal rather than local law. When the United States disburses its funds or pays its debts, it is exercising a constitutional function or power. This check was issued for services performed under the Federal Emergency Relief Act of 1935, 49 Stat. 115, 15 U.S.C.A. ss 721--728. The authority to issue the check had its origin in the Constitution and the statutes of the United States and was in no way dependent on the laws of Pennsylvania or of any other state. Cf. Board of Commissioners v. United States, 308 U.S. 343, 60 S.Ct. 285, 84 L.Ed. 313; Royal Indemnity Co. v. United States, 313 U.S. 289, 61 S.Ct. 995, 85 L.Ed. 1361. The duties imposed upon the United States and the rights acquired by it as a result of the issuance find their roots in the same federal sources. 2 Cf. Deitrick v. Greaney, 309 U.S. 190, 60 S.Ct. 480, 84 L.Ed. 694;

Page 367

D'Oench, Duhme & Co. v. Federal Deposit Ins. Corp., 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956. In absence of an applicable Act of Congress it is for the federal courts to fashion the governing rule of law according to their own standards. United States v. Guaranty Trust Co., 293 U.S. 340, 55 S.Ct. 221, 79 L.Ed. 415, 95 A.L.R. 651, is not opposed to this result. That case was concerned with a conflict of laws rule as to the title acquired by a transferee in Yugoslavia under a forged endorsement. Since the payee's address was Yugoslavia, the check had 'something of the quality of a foreign bill' and the law of Yugoslavia was applied to determine what title the transferee acquired.

In our choice of the applicable federal rule we have occasionally selected state law. See Royal Indemnity Co. v. United States, supra. But reasons which may make state law at times the appropriate federal rule are singularly inappropriate here. The issuance of commercial paper by the United States is on a vast scale and transactions in that paper from issuance to payment will commonly occur in several states. The application of state law, even without the conflict of laws rules of the forum, would subject the rights and duties of the United States to exceptional...

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690 practice notes
  • 112 B.R. 540 (S.D.N.Y. 1990), 85 Civ 1939 , City of New York v. Exxon Corp.
    • United States
    • Federal Cases United States District Courts 2nd Circuit United States District Courts. 2nd Circuit. Southern District of New York
    • March 30, 1990
    ...States v. Nicolet (Nicolet II ), 712 F.Supp. 1193, 1201 (E.D.Pa.1989) (citing Clearfield Trust Co. v. United States, 318 U.S. 363, 366-67, 63 S.Ct. 573, 574-75, 87 L.Ed. 838 (1943)). As one court In attempting to eliminate the dangers of hazardous wastes, CERCLA presents a national solution......
  • 23 B.R. 85 (Bkrtcy.N.D.Ohio 1982), B81-0813, In re White Farm Equipment Co.
    • United States
    • Federal Cases United States Bankruptcy Courts Sixth Circuit
    • September 9, 1982
    ...L.Ed. 1104 (1931). It is resorted to "(i)n absence of an applicable Act of Congress," Clearfield Trust, (318 U.S. 363) at 367, 63 S.Ct. 573 (575), 87 L.Ed. 838, and because the Court is compelled to consider federal questions "which cannot be answered from federal statutes al......
  • 269 F.Supp. 241 (S.D.N.Y. 1967), 93218, In re Anjopa Paper & Board Mfg. Co.
    • United States
    • Federal Cases United States District Courts 2nd Circuit United States District Courts. 2nd Circuit. Southern District of New York
    • April 6, 1967
    ...calling for the application of a wholly federal rule found in such cases as Clearfield Trust Co. v. United States, 318 U.S. 363, 366, 63 S.Ct. 573, 87 L.Ed. 838 (1943) and D'Oench, Duhme & Co. v. F.D.I.C., supra are in no wise present here. Rather, the rights underlying F.D.I.C.'s liqui......
  • 281 B.R. 782 (Bkrtcy.D.Mass. 2002), 02-43147, In re Lan Tamers, Inc.
    • United States
    • Federal Cases United States Bankruptcy Courts First Circuit
    • August 16, 2002
    ...United States v. Swiss Am. Bank, 191 F.3d 30, 42-43 (1st Cir.1999) citing to Clearfield Trust Co. v. United States, 318 U.S. 363, 63 S.Ct. 573, 87 L.Ed. 838 (1943) ("[S]ince Clearfield, courts have often looked to federal common law to protect various proprietary interests of the Unite......
  • Request a trial to view additional results
689 cases
  • 112 B.R. 540 (S.D.N.Y. 1990), 85 Civ 1939 , City of New York v. Exxon Corp.
    • United States
    • Federal Cases United States District Courts 2nd Circuit United States District Courts. 2nd Circuit. Southern District of New York
    • March 30, 1990
    ...States v. Nicolet (Nicolet II ), 712 F.Supp. 1193, 1201 (E.D.Pa.1989) (citing Clearfield Trust Co. v. United States, 318 U.S. 363, 366-67, 63 S.Ct. 573, 574-75, 87 L.Ed. 838 (1943)). As one court In attempting to eliminate the dangers of hazardous wastes, CERCLA presents a national solution......
  • 23 B.R. 85 (Bkrtcy.N.D.Ohio 1982), B81-0813, In re White Farm Equipment Co.
    • United States
    • Federal Cases United States Bankruptcy Courts Sixth Circuit
    • September 9, 1982
    ...L.Ed. 1104 (1931). It is resorted to "(i)n absence of an applicable Act of Congress," Clearfield Trust, (318 U.S. 363) at 367, 63 S.Ct. 573 (575), 87 L.Ed. 838, and because the Court is compelled to consider federal questions "which cannot be answered from federal statutes al......
  • 269 F.Supp. 241 (S.D.N.Y. 1967), 93218, In re Anjopa Paper & Board Mfg. Co.
    • United States
    • Federal Cases United States District Courts 2nd Circuit United States District Courts. 2nd Circuit. Southern District of New York
    • April 6, 1967
    ...calling for the application of a wholly federal rule found in such cases as Clearfield Trust Co. v. United States, 318 U.S. 363, 366, 63 S.Ct. 573, 87 L.Ed. 838 (1943) and D'Oench, Duhme & Co. v. F.D.I.C., supra are in no wise present here. Rather, the rights underlying F.D.I.C.'s liqui......
  • 281 B.R. 782 (Bkrtcy.D.Mass. 2002), 02-43147, In re Lan Tamers, Inc.
    • United States
    • Federal Cases United States Bankruptcy Courts First Circuit
    • August 16, 2002
    ...United States v. Swiss Am. Bank, 191 F.3d 30, 42-43 (1st Cir.1999) citing to Clearfield Trust Co. v. United States, 318 U.S. 363, 63 S.Ct. 573, 87 L.Ed. 838 (1943) ("[S]ince Clearfield, courts have often looked to federal common law to protect various proprietary interests of the Unite......
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1 books & journal articles
  • Table of Cases
    • United States
    • The Path of Constitutional Law Suplemmentary Materials
    • January 1, 2007
    ...662 Clay v. Texas Women's Univ., 728 F.2d 714 (5th Cir. 1984), 604 Clearfield Trust Co. v. United States, 318 U.S. 363, 318 U.S. 744, 63 S.Ct. 573, 87 L.Ed. 838 (1943), Cleburne, Tex., City of, v. Cleburne Living Center, 473 U.S. 432, 105 S.Ct. 3249, 87 L.Ed.2d 313 (1985), 181, 533, 566, 94......