First National Bank of Washington v. Whitman

• Citation: 94 U.S. 343,24 L.Ed. 229
• Parties: FIRST NATIONAL BANK OF WASHINGTON v. WHITMAN
• Decision Date: 01 October 1876
• Court: United States Supreme Court

94 U.S. 343

24 L.Ed. 229

FIRST NATIONAL BANK OF WASHINGTON v. WHITMAN.

October Term, 1876

ERROR to the Supreme Court of the District of Columbia.

The facts are stated in the opinion of the court.

Argued by Mr. A. G. Riddle and Mr. F. Miller for the plaintiff in error, and by Mr. S. Shellabarger and Mr. J. Daniels for the defendant in error.

Mr. JUSTICE HUNT delivered the opinion of the Court.

This action is brought against the First National Bank of Washington to recover the amount of a check drawn upon it by Mr. Spinner, Treasurer of the United States, for $3,414, dated March 9, 1867. The check is in this form, viz.:——

'Draft No. 9,243 on War Warrant No. 915.

'$3,414.] TREASURY OF THE UNITED STATES,

'WASHINGTON, March 9, 1867.

'Pay to the order of Mrs. E. S. Kimbro, three thousand three hundred and fourteen dollars. No. 9,243. Registered March 9, 1867.

'Issued on requisition No. ___. $3,414.

'S. B. COLBY,

'Register of the Treasury.

'F. E. SPINNER,

'Treasurer of the United States.

'To the First National Bank of Washington, D. C.'

It was indorsed in the name of Mrs. Kimbro without authority, and the amount of it was paid by the bank to an unauthorized holder. It appears from the testimony of Mr. Tayler, first comptroller of the treasury, that the funds of the government deposited by the Treasurer in a national bank are treated by the government, for the purposes of keeping accounts, as in the Treasurer's own charge and custody; that they are charged to him, and that payments made are credited to him, and that he is chargeable precisely as if the funds had been in his own office, and that he had power to make the check in question.

We may, therefore, simplify the case by eliminating from its consideration all reference to the United States, and consider the transaction as between Mr. Spinner, as an in ividual, and the bank, as his depositary, and Mrs. Kimbro, as the payee of his check.

The question is this: Can the payee of a check, whose indorsement has been forged or made without authority, and when payment has been made by the bank on which it was drawn, upon such unauthorized indorsement, maintain a suit against the bank to recover the amount of the check? We think it is clear, both upon principle and authority, that the payee of a check unaccepted cannot maintain an action upon it against the bank on which it is drawn. The careful and well-reasoned opinion of Mr. Justice Davis in delivering the judgment of this court in Bank of the Republic v. Millard, 10 Wall. 152, leaves little to add upon this subject by way of illustration or authority. In that case a paymaster of the army made his check on the Bank of the Republic to the order of Captain Millard for $859, due to him for arrears of pay as an officer of the army. The bank paid the amount of the check upon a forged indorsement of Millard's name. Recovering the check and exposing the forgery, Millard demanded payment to himself, and, upon refusal, brought his action against the bank. This court held that the action could not be maintained, upon the principle that there was no privity between the bank and Millard. The bank's contract was with the paymaster only, and to him only was its duty. It received no money from Millard. It never promised Millard to pay him any money. It had no money belonging to him. It received money from the paymaster, upon an agreement that it would return it to him when called for by him in person, or that it would pay it upon his checks. But it made no such agreement, or any agreement, with Millard. For a failure of duty in this respect it was responsible to the paymaster, with whom it made the contract, and to no one else. If the check was not paid, the arrears of pay to Millard were not paid, and his claim upon the government or the paymaster was not impaired by the giving of the check, which, being presented in due time, was not paid. He was still entitled to demand his arrears.

That case is a perfect and complete authority upon the question stated. See also Artuer v. Bank, 46 N. Y. 82.

Nor is this principle confined to checks or bills. Thus, in Ashley v. Dixon, 48 N. Y. 430, it was held that if A. be under a contract to sell property to B., and C. persuade A. to sell the property to him, no action lies by B. against C. There is no privity of contract between C. and B., but the remedy of the latter is against A. only.

It is not to be doubted, however, that it is within the power of the bank to render itself liable to the holder and payee of the check. This it may do by a formal acceptance written upon the check, in which case it stands to the holder in the position of a drawer and acceptor of a bill of exchange. Merchants' Bank v. State Bank, 10 Wall. 604; Espy v. Bank of Cincinnati, 18 id. 604.

It may accomplish the same result by writing upon it the word 'good,' or any similar words which indicate a statement by it that the drawer has funds in a bank applicable to the payment of the check, and that it will so apply them. Cook v. State Bank of Boston, 52 N. Y. 96. And such certificate, it is said, discharges the drawer. As to him it amounts to a payment. Bank v. Leach, 52 N. Y. 350; Meads v. Merchants' Bank, 25 id. 143; 9 Met. 311; 2 Duer, 121. Whether this certificate be obtained by the drawer before the check is delivered, and is thus made an...