American Hominy Co. v. Millikin Nat. Bank
Decision Date | 17 April 1920 |
Docket Number | 15783. |
Citation | 273 F. 550 |
Parties | AMERICAN HOMINY CO. v. MILLIKIN NAT. BANK. |
Court | U.S. District Court — Southern District of Illinois |
[Copyrighted Material Omitted]
George B. Gillespie, of Springfield, Ill., and Vail, Pogue & Allen of Decatur, Ill., for plaintiff.
Le Forgee, Black & Samuels, of Decatur, Ill., and Barry & Morrissey, of Bloomington, Ill., for defendant.
FITZHENRY District Judge (after stating the facts as above).
It is not contended, in this case, that Meyer did not have authority to draw drafts in exactly the same form as the drafts sued upon. In fact, it is a fair inference that during the period covered by the fraudulent transactions involved here, June, 1914, to June, 1917, Meyer drew hundreds of drafts in identically the same form, so clearly so that plaintiff accepted and paid the bad ones with the good, throughout the entire three-year period. The series of frauds finally being discovered and the extent of them ascertained, suit was brought against defendant, the presenting holder, to recover the moneys of which plaintiff had been defrauded by its agent.
Much depends upon the legal effect of the acts or omissions of the several parties involved. Upon inquiry it has been established, and has been so stipulated, that Meyer, the drawer and maker of the several drafts in question, made each of the fraudulent drafts payable to the order of a person known to him to be fictitious or nonexistent, or of a living person not intended to have any interest in them. Each draft was drawn, negotiated, and paid in Illinois. So the legal effect of what Meyer did was, and must be so held, to make them and each of them payable to bearer. Illinois Negotiable Instrument Law, c. 98, Sec. 9, par. 3 (4 J. & A.Ill.Stat.Ann.par. 7648); Bartlett v. First National Bank, 247 Ill. 490, 93 N.E. 337; American Hominy Co. v. National Bank of Decatur, 215 Ill.App. 464; United States v. Chase National Bank, 250 F. 105, 162 C.C.A. 277; United States v. Chase National Bank (D.C.) 241 F. 535. The Illinois statute, prescribing when an instrument shall be payable to bearer, uses the words, 'known by the drawer or maker to be fictitious,' etc.; the Uniform Negotiable Instruments Law, in force in New York and many other states, uses the language, 'and such fact was known to the person making it so payable. ' Uniform Negotiable Instrument Law N.Y. Sec. 9, par. 3. The writers of the negotiable instruments statutes undoubtedly sought to avoid the controversy that had developed in England over the meaning of the corresponding provision in the English Bills of Exchange Act (Act of 1882, Sec. 7, subd. 3), where this language was used:
'Where the payee is a fictitious or nonexisting person, the bill may be treated as payable to bearer.'
It was contended in England:
'The word 'Vagliano Bros. v. Bank of England, L.R. 23 Q.B.Div. 243.
In a case arising in Illinois, prior to the enactment of the Negotiable Instrument Law, the Illinois Supreme Court followed the holding in the Vagliano Case, supra, and applied it. First Nat. Bank v. Northwestern Bank, 152 Ill. 296-309, 38 N.E. 739, 26 L.R.A. 289, 43 Am.St.Rep. 247. However, after the decision in the Vagliano Case, supra, that case was appealed to the House of Lords, and the holding of the lower court upon this question and the judgment were reversed. Bank of England v. Vagliano Bros., L.R. (1891) App. Cas. 107; while the holding of the Supreme Court of Illinois has been superseded by the enactment of the statute and reversed in principle by a later decision, Bartlett v. First National Bank, 247 Ill. 490, 93 N.E. 337.
The latter decision is sustained by the great weight of authority. United States v. Chase Nat. Bank, 250 F. 105, 162 C.C.A. 277 (C.C.A. 2d Cir.); Snyder v. Corn Exchange Nat. Bank, 221 Pa. 599, 70 A. 876, 128 Am.St.Rep. 780; Bank of England v. Vagliano Bros., L.R. (1891) App. Cas. 107; Trust Co. of America v. Hamilton Bank, 127 A.D. 515, 112 N.Y.Supp. 84; Phillips v. Mercantile Nat. Bank, 140 N.Y. 556, 35 N.E. 982, 23 L.R.A. 584, 37 Am.St.Rep. 596; Clutton v. Attenborough & Son, L.R. (1897) App. Cas. 90; Coggill v. American Exchange Nat. Bank, 1 N.Y. 113, 49 Am.Dec. 310; Phillips v. Thurn, 18 C.B. (18 J. Scott, N.S.) 694; Kohn v. Watkins, 26 Kan. 691, 40 Am.Rep. 336; Ort. v. Fowler, 31 Kan. 478, 2 P. 580, 47 Am.Rep. 501; Lane v. Krekle, 22 Iowa, 399; Farnsworth v. Drake, 11 Ind. 101; Blodgett v. Jackson, 40 N.H. 21; In re Assignment of Pendleton Hardware Co., 24 Or. 330, 33 P. 544.
It is contended very ably by counsel for the plaintiff that Meyer, the agent and drawer of the drafts in question, had no authority to draw bearer paper; that if the drafts were payable to bearer, having exceeded his authority as agent, that therefore his acts were void. If there was any limitation upon the power of Meyer as agent for the plaintiff at Garber, Ill., none is shown by the evidence in this case, and plaintiff is bound by the rule that, where an agency to deal with the particular subject of the inquiry is admitted, and a special limitation is relied upon to avoid liability for certain acts of the agent, the burden is on the party alleging the special limitation to prove it. J. L. Mott Iron Works v. Metropolitan Bank, 78 Wash. 294, 139 P. 36; Brett v. Bassett, 63 Iowa, 340, 19 N.W. 210; Lowry v. Atlantic Coast Line R. Co., 92 S.C. 33, 75 S.E. 278; Wedge Mines Co. v. Denver Nat.
Bank, 19 Colo.App. 182, 73 P. 873. Also the rule that whoever asserts a negative fact to shield himself from liability must establish the truth of the allegation, unless the means of proving the fact are peculiarly within the knowledge of the opposite party. Great Western R.R. Co. v. Bacon, 30 Ill. 347, 83 Am.Dec. 199; Abhau v. Grassie, 262 Ill. 636, 104 N.E. 1020, Ann. Cas. 1915B, 414; Harper v. Fay Livery Co., 264 Ill. 459, 106 N.E. 273.
For ten years prior to the commencement of this suit, Meyer, plaintiff's agent, was authorized to make successive purchases of grain in the locality of his agency, from those who desired to sell, and must be held to have been a general agent. Butler v. Mapes, 76 U.S. (9 Wall.) 766, 19 L.Ed. 822; Mechim, Sec. 6; 2 Kent, 620; United States Life Ins. Co. v. Advance Co., 80 Ill. 549. If an agent acts within the apparent scope of his authority, his principal is bound. Hodges v. Bankers' Surety Co., 152 Ill.App. 372-385.
But plaintiff also contends:
To concede the contention of plaintiff in this case, that the drawer's name in each instance was forged, is to bring the case clearly within the case of Price v. Neal, 3 Burrows, 1354 (decided in 1762). That case involved two forged bills of exchange which had been paid by the drawee. Upon discovery of the forgery, the drawee brought an action against the presenting holder, to recover the money so paid. Both parties being admitted to be equally innocent, it was held that the drawee could not recover. Lord Mansfield said:
The principle established in Price v. Neal, supra, has never been departed from by the courts of England, or the federal courts, and by but very few of the state courts. In United States v. Chase National Bank (D.C.) 241 F. 535, District Judge Learned Hand said:
It might as effectively be contended that a recovery should be permitted plaintiff for the reason that it had not authorized its agent to commit forgery.
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