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

Docket Nº:No. 490.
Citation:318 U.S. 363, 63 S.Ct. 573, 87 L.Ed. 838
Party Name:CLEARFIELD TRUST CO. et al. v. UNITED STATES.
Case Date:March 01, 1943
Court:United States Supreme Court
 
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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

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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.

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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...

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