American Sash & Door Co. v. Commerce Trust Co.

• Decision Date: 17 February 1930
• Docket Number: No. 16816.,16816.
• Citation: 25 S.W.2d 545
• Parties: AMERICAN SASH & DOOR CO. v. COMMERCE TRUST CO.
• Court: Missouri Court of Appeals

25 S.W.2d 545

AMERICAN SASH & DOOR CO. v. COMMERCE TRUST CO.

No. 16816.

Kansas City Court of Appeals. Missouri.

February 17, 1930.

Appeal from Circuit Court, Jackson County; A. Stanford Lyon, Judge.

Action by the American Sash & Door Company against the Commerce Trust Company. Judgment for defendant, and plaintiff appeals.

Reversed and remanded with directions, and cause certified and transferred to Supreme Court.

James G. Smart, of Kansas City, for appellant.

James E. Goodrich and Atwood, Wickersham, Hill & Chilcott, all of Kansas City, for respondent.

BLAND, J.

This is an action to recover from the defendant, in whose bank plaintiff was a depositor, the amount of fifty checks aggregating $2226.30, alleged to have been paid by the defendant and charged to plaintiff's account without its authority. The case was tried before the court without the aid of a jury. At the close of plaintiff's testimony both sides offered peremptory declarations of law, and in addition thereto plaintiff offered eight other declarations. The court refused plaintiff's peremptory declaration and all of its other declarations, except one which it gave as amended by it. The court gave defendant's peremptory declaration, resulting in the judgment in favor of defendant.

The petition contains two counts, one for money had and received to cover the balance of plaintiff's deposit after a demand and the other setting forth that plaintiff made various deposits in defendant bank and that plaintiff drew thereon various checks to persons which defendant paid upon proper endorsements, leaving a balance of $2226.30 for which plaintiff had made a demand for payment; that said sum represented the aggregate amount of fifty checks obtained from plaintiff upon each of which the endorsement of the name of the payee therein was forged; that the defendant paid the same to some person other than the owner and rightful holder of the checks and wrongfully charged the same against the account of plaintiff. Plaintiff then asked judgment against the defendant in the sum of $2226.30.

The answer contains a general denial and admits that plaintiff was a depositor in defendant but pleaded that it furnished plaintiff with monthly statements and vouchers on or about the first day of each month, showing, among other things, the amount of plaintiff's balance on deposit, debits and credits charged against said account during said month; that these statements had printed thereon the following: "Please examine this statement at once and report any error. If no error is reported in ten days the account will be considered correct. The items are credited subject to final payment." That the matter quoted constituted an agreement that plaintiff would immediately examine the cancelled checks, vouchers and monthly statements to determine whether any error had been committed and whether such checks or the endorsements thereon had been forged and that unless plaintiff reported an error within ten days after the receipt of the cancelled checks, vouchers and monthly statements that the statements rendered from month to month would be deemed correct and each of the same should constitute an account stated between the parties; that plaintiff carelessly and negligently failed and neglected to make the proper examination and to discover that the endorsements on any of the checks mentioned in the petition were forged, and negligently failed to make such report within ten days or within a reasonable time; that on account of the negligence of plaintiff defendant has been deprived of an opportunity to protect itself against loss and to proceed against the person alleged to have forged said endorsements.

In the reply plaintiff denies that it failed to exercise reasonable care in the examination of the checks and statements; that learning of the forgeries plaintiff gave notice thereof at once to defendant, and that defendant in paying the checks failed to exercise reasonable care to ascertain the rightful owner or holder thereof and failed to identify or take any steps toward the identification of the forger to whom the checks were paid.

The facts show that plaintiff did a banking business with defendant for a period commencing prior to August 31st, 1922 and ending sometime after January 1st, 1923; that plaintiff had in its service from January or February, 1922 to December 22nd, 1922, one Joseph Tschupp, who was employed as a "pay roll clerk and timekeeper"; that plaintiff did not have a time clock but used certain cards; that when an employee "went to lunch, those cards were turned a certain way, and when they came back, he would turn them the other way, and when the whistle blew, he would lock the safe and make the records from those cards and in turn recorded the time." "It was the cards, the same kind of cards that we used in the time clock, containing a record of the number of days and the timekeeper recorded on those cards the time, instead of having it done by a clock, he handled the cases."

Tschupp made out the pay roll from these cards. The company furnished Tschupp with a pay roll book in which he kept a record, obtained from the cards, of each employee. This record consisted of the name, the number of hours the employee had worked, the rate paid him per hour and the amount due him for the week. After Tschupp had prepared his weekly pay roll list in the book he turned the same over to a Mrs. Hubbard who was the "bookkeeper and assistant cashier." Mrs. Hubbard then examined the book to verify the multiplications made by Tschupp and prepared checks for the employees whose names appeared upon the pay roll for the amounts due each. She then turned the checks over to Mr. Simms, who was the secretary and treasurer of plaintiff, whose duty it was to sign the checks. Simms signed them as follows: "American Sash & Door Company, by B. E. Simms, Secretary." These checks were signed by Simms "by the hundred" and we take it from his testimony that they were perfunctorily signed by him; that he relied upon Tschupp and Mrs. Hubbard to properly make out the pay roll and prepare the checks for his signature. After the checks were signed by Simms either Tschupp would get them from him or they would be delivered over to Mrs. Hubbard from whom Tschupp would procure them (the evidence is conflicting upon this point but this conflict is immaterial) and he would then deliver them to a Mr. Miller who apparently would see that they reached the various payees.

In August, 1922, Tschupp began to insert in the pay roll list in his book the names of five former employees of plaintiff, to whom plaintiff owed nothing, and one present employee in another department who did not receive his pay through this method and whose name was improperly placed upon the pay roll, and another (a non-existing person) whose name was wholly invented by Tschupp. After the names of these persons Tschupp would insert the number of hours worked, the rate per hour, the amount due each and Mrs. Hubbard, upon receipt of the pay roll, would innocently make out checks in the names of these persons, as well as those who were properly upon the pay roll. Simms then signed the checks as usual without knowing of the fraud. When the checks in favor of the various persons whose names appeared on the pay roll properly and fraudulently were turned over to Tschupp he would extract the checks made in those names improperly upon the pay roll and endorse upon the checks the names appearing on the face of the checks as the payees and procure the money upon them, fifty in all, amounting to a total of $2226.30. Tschupp cashed 28 of these checks, amounting to $1154.45, at defendant bank and 22 of the checks, amounting to $1071.95, at other banks, which were later paid by the defendant.

Tschupp testified that he thus caused all fifty of these checks "to be issued by the American Sash & Door Company (plaintiff)" in the manner we have detailed. He testified that none of the payees named in the fraudulent checks had any interest whatever in them; that he did not intend that the payees therein named should have any interest whatever in the checks; that plaintiff did not owe any of the payees the amount named in the checks; that when the checks came into his possession he caused them all to be endorsed and cashed.

Over the objection of defendant Simms testified that in signing the checks it was his intention that the amounts named therein should go to the payees therein named and that he had "no suspicions with reference to the checks"; that he thought that each check was one "made in the usual course."

The discovery of Tschupp's fraudulent practise was made by plaintiff's cashier about December 20th or 21st, 1922, in checking the cards containing the list of employees with a view of determining those entitled, under the rules of the company, to certain "bonuses." Upon the discovery of the fraud plaintiff gave notice thereof to defendant.

The monthly statements furnished by defendant to plaintiff contained the following: "Please examine this statement at once and report any error. If no error is reported in ten days the account will be considered correct. The items are credited subject to final payment." Upon receipt of each monthly statement and the cancelled checks returned therewith Mrs. Hubbard went over them, checked the checks with the statement, and these with the check stub and made a record of the outstanding checks, thus reconciling the bank's statement with the records of plaintiff company. Plaintiff had over 300 employees and the account carried by it with the defendant was a large one. When the monthly statements were received plaintiff made no effort to find out whether the pay roll checks were properly drawn so far as the payees were concerned, but depended upon the pay roll as properly showing the persons to whom the money was actually due.

Plaintiff made demand for the sum involved in this controversy but defendant...