United States Fidelity & Guaranty Co. v. Beall, Civ. No. 2482.

• Decision Date: 14 October 1947
• Docket Number: Civ. No. 2482.
• Citation: 73 F. Supp. 977
• Parties: UNITED STATES FIDELITY & GUARANTY CO. v. BEALL et al.
• Court: U.S. District Court — Northern District of Texas

73 F. Supp. 977

UNITED STATES FIDELITY & GUARANTY CO. v. BEALL et al.

Civ. No. 2482.

District Court, N. D. Texas, Dallas Division.

October 14, 1947.

Curtis White, of Dallas, Tex., for plaintiff.

Thomas G. Murnane, of Dallas, Tex., for First Nat. Bank in Dallas.

Eugene DeBogory, of Dallas, Tex., for the Republic Nat. Bank.

W. C. Gowan, of Dallas, Tex., for Highland Park State Bank.

George Cochran and John Touchstone, both of Dallas, Tex., for the Great Atlantic & Pacific Tea Co.

Biggers, Baker & Lloyd, of Dallas, Tex., for Hunt Grocery Co.

ATWELL, District Judge.

The American Liberty Pipe Line Company of Dallas, Texas, had approximately 75 employees and a blanket indemnity policy issued for the respective fidelity of each by the plaintiff United States Fidelity & Guaranty Company.

The bank in which the pipe line company kept its account was the First National Bank in Dallas. Defendant Beall, an employee of the pipe line company, had charge of writing a certain class of checks. Because of some inactivity with reference to certain leases, checks were not forwarded to certain lease customers of the pipe line company and were placed in a suspended column of that particular customer's account.

That situation being known to Beall, and, apparently, appealing to his cupidity, he issued checks payable to those particular customers at various times, and by forging their endorsements, secured for his own use the funds. Some of those checks bore his own endorsement as well as the forged endorsement of the payee. Most of such improperly endorsed checks passed through the hands of several other banks and several commercial houses before reaching the First National Bank. Each of those handlers placed its endorsement on the check.

When the forgeries were discovered, the checks aggregated $3,459.42. The insuring company, the plaintiff here, paid that amount to the pipe line company and took an assignment from that company of its right of action against Beall and the endorsers. It thereupon instituted this suit against Beall and the First National Bank. The various other parties were brought in under the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c.

The First National Bank and such impleaded parties as were brought in under the rules, call attention to the state statute of Texas which requires a depositor to make his claim against a bank for having paid out his money within 12 months. The exact wording is as follows: "A bank may notify a depositor by mail at his address as reflected by the records of the bank to call for cancelled items charged to his account, or may mail such cancelled items to the depositor at such address. No depositor shall be permitted to dispute any charge to his account on the ground that the same is based upon a forged, unauthorized, raised or altered item unless, within one (1) year from the time check was paid, he shall notify the bank in writing that the item in question is forged, unauthorized, raised, or altered." Art. 342—711, Act 1943, 48th Legislature of Texas, p. 154, ch. 97, sub-ch. VII, art. 11, Vernon's Ann.Civ. St. art. 342—711.

No Texas case upon this statute has been cited, nor have I found any.

The plaintiff answers that contention by claiming that that statute is for the benefit of the depositor. There are decisions which may be used as authority by both sides, some of which hold to the philosophy that what was done in this particular case was the payment by the bank of the face of...