70 A. 891 (Pa. 1908), 223, McNeely Co. v. Bank of North America

Docket Nº:223
Citation:70 A. 891, 221 Pa. 588
Opinion Judge:MR. JUSTICE BROWN:
Party Name:McNeely Company, Appellant, v. Bank of North America
Attorney:G. W. Pepper, with him B. F. Pepper, for appellant. Alex. Simpson, Jr., of Simpson & Brown, for appellee.
Judge Panel:Before MITCHELL, C.J., FELL, BROWN, MESTREZAT, POTTER, ELKIN and STEWART, JJ.
Case Date:June 02, 1908
Court:Supreme Court of Pennsylvania
 
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Page 891

70 A. 891 (Pa. 1908)

221 Pa. 588

McNeely Company, Appellant,

v.

Bank of North America

No. 223

Supreme Court of Pennsylvania

June 2, 1908

Argued: January 9, 1908

Appeal, No. 223, Jan. T., 1907, by plaintiff, from order of C.P. No. 4, Phila. Co., June T., 1904, No. 1,846, dismissing exceptions to report of referee in case of McNeely Company v. Bank of North America. Affirmed.

Exceptions to report of John M. Gest, Esq., referee.

The facts are stated in the opinion of the Supreme Court.

Errors assigned were in dismissing exceptions to the report of referee.

The assignments of error are all overruled and the judgment is affirmed.

G. W. Pepper, with him B. F. Pepper, for appellant. -- An ordinary writing up of a bank book with a return of vouchers or a statement of accounts, precludes no one from ascertaining the truth and claiming its benefit. See also Leather Mfrs. Nat. Bank v. Morgan, 117 U.S. 96 (6 S.Ct. Repr. 657); First Nat. Bank of Washington v. Whitman, 94 U.S. 343.

If the depositor has not given notice to the bank as soon as he reasonably might, and if during the interim between the full discovery of the forgery and notice, the bank has lost rights over against other parties, the depositors will be estopped from recovering, but it is submitted that before a bank will be permitted to take refuge behind this defense facts must be proven upon which to base an estoppel. A rule imposing the duty of immediate notice upon a depositor in the absence of such proof, would be arbitrary, and based neither on sound legal theory nor upon business expediency: Third Nat. Bank v. Merchants' Nat. Bank, 76 Hun, 475; Critten v. Bank, 171 N.Y. 219 (63 N.E. Repr. 969); Bank of British North America v. Bank, 91 N.Y. 106; Janin v. Bank, 92 Cal. 14 (27 Pac. Repr. 1100); Murphy v. Bank, 77 N.E. Repr. 693; Hardy & Bros. v. Chesapeake Bank, 51 Md. 562; Pollard v. Wellford, 42 S.W. Repr. 23; Weinstein v. Bank, 69 Tex. 38 (6 S.W. Repr. 171).

Alex. Simpson, Jr., of Simpson & Brown, for appellee. -- A finding by the referee was approved by the court below, and like every other finding by a referee, so approved, is to be held conclusive in this court, unless it is without evidence to support it: Phila. Co. v. Gas Co., 180 Pa. 235; Ridge Ave. Pass. Ry. Co. v. Phila., 181 Pa. 592; Old Colony Trust Co. v. Transit Co., 192 Pa. 596.

The argument thus presented assumes that the conclusion reached is one of fact, and so it must be. The referee's inferences from the evidence are like the inferences of a jury, and are to be given the same weight: Bruch v. Phila., 181 Pa. 588; Newlin v. Ackley, 6 Pa. Superior Ct. 337; Van Schaack on Bank Checks, 190.

Good faith compels prompt notice when the fact becomes known, and the "settled rules of the law of negotiable paper" require care and diligence in the ascertainment of the fact, in this and all other matters within the law merchant: Price v. Neal, 3 Burr. 1354; Rick v. Kelly, 30 Pa. 527; Leather Mfrs. Nat. Bank v. Morgan, 117 U.S. 96 (6 S.Ct. Repr. 657); Robb v. Vos, 155 U.S. 13 (15 S.Ct. Repr. 4); Cooke v. United States, 91 U.S. 389; Lynch v. Smyth, 25 Colorado, 103 (54 Pac. Repr. 634); Weinstein v. Bank, 69 Texas, 38 (6 S.W. Repr. 171); United States v. Clinton Nat. Bank, 28 Fed. Repr. 357; United States v. Nat. Exchange Bank, 45 Fed. Repr. 163; Iron City Nat. Bank v. Ft. Pitt Nat. Bank, 159 Pa. 46; States v. Bank, 203 Pa. 69.

Upon the question now under consideration there is absolutely no distinction in principle between the cases of forged signatures and the present case of a forged indorsement. In the former the depositor is bound to inform the bank promptly after settlement of his account, for within a reasonable time thereafter he is conclusively presumed to know. In the latter he was bound to inform us as soon as he actually did know. In the former, as held in Myers v. Bank, 193 Pa. 1, and kindred cases, the depositor was refused recovery, irrespective of proof of actual loss, because of failure to promptly notify after he should have known; in the latter he should likewise be refused recovery, for failure to promptly notify the bank after he in fact knew, and for precisely the same reason. In each case the imaginary "last clear chance" to avoid the loss rested with the bank. In each case the account returned was an account stated simply. In the former case it was urged unsuccessfully that the bank was bound to show as a fact that it could have recouped itself had it known earlier; and no reason can be found in law, logic or common sense, why such a plea should be successful in the latter case, when, as here, there was a long and unnecessary delay after actual knowledge. Does anyone suppose that in the former case three months' delay and three settlements of the account would have been held reasonable after presumptive knowledge? Can anyone imagine a real reason why, in the latter case, it should be after actual knowledge?

Before MITCHELL, C.J., FELL, BROWN, MESTREZAT, POTTER, ELKIN and STEWART, JJ.

OPINION

[221 Pa. 591] MR. JUSTICE BROWN:

McNeely Company, a corporation, was a depositor with the appellee, the Bank of North America, and had in its employ one Charles S. Reber, who, between April 20, 1897, and February 24, 1903, forged the names of payees on ninety checks issued by it. Some of these checks were paid directly to him by...

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