Atlanta Nat. Bank v. Burke

• Decision Date: 08 October 1888
• Citation: 7 S.E. 738,81 Ga. 597
• Parties: ATLANTA NAT. BANK v. BURKE.
• Court: Georgia Supreme Court

7 S.E. 738

81 Ga. 597

ATLANTA NAT. BANK v. BURKE.

Supreme Court of Georgia

October 8, 1888

Error from superior court, Fulton county; MARSHALL J. CLARKE Judge.

Action by J. F. Burke, for use of Mrs. Francis L. Cotting, against the Atlanta National Bank, to recover the amount of a check drawn by plaintiff, and alleged to have been paid by defendant, on a forged indorsement. Judgment for plaintiff and defendant brings error.

Abbott & Smith, for plaintiff in error.

When the drawer of a check paid on a forged indorsement has so acted as to mislead or deceive the drawee bank, or throw it off its guard, or prevent its inquiries as to the validity of the instrument before payment; or when, by acquiescence, the drawer adopts the forgery, or by his laches and negligence fails to discover it within a reasonable time after such wrongful payment, thereby depriving the bank of its remedies against the forger and the genuine indorsers,--the liability of the bank is avoided. Story, Bills, §§ 263, 412, 451; 2 Daniel, Neg. Inst. § 1663; Bank v. Bank, 46 N.Y. 77; Price v. Neal, 3 Burrows, 1354; Bank v. Bank, 10 Wheat. 333; Lynch v. Bank, 107 N.Y. 179, 13 N.E. 775; Morse, Banks, 28 29; Tayl. Corp. § 672; Hardy v. Bank, 51 Md. 562; Bank v. Risley, 111 U.S. 125, 4 S.Ct. 322; Chapman v. White, 6 N.Y. 412; Young v. Grote, 4 Bing. 253; De Feriet v. Bank, 23 La. Ann. 310; Smith v. Bank, 6 La. Ann. 610; Levy v. Bank, 24 La. Ann. 220: Ellis v. Trust Co. 4 Ohio St. 628; Bank v. Bank, 17 Mass. 33; Cooke v. U.S. , 91 U.S. 397; Bank v. Tappan, 6 Kan. 456; McKleroy v. Bank, 14 La. Ann. 458; Bank v. Bangs, 106 Mass. 441, general note; Story, Partn. § 108; Bank v. Morgan, 117 U.S. 96, 6 S.Ct. 657; Frank v. Bank, 84 N.Y. 209; Whit. Smith, Neg 356, 357, 358, and notes; Bank v. Bank, 10 Vt. 141; Wiggins v. Burkham, 10 Wall. 129; 3 Rand. Com. Paper, § 1782; 2 Herm. Estop. 1202, 1214, 1222, and notes; Doubleday v. Kress, 10 Amer. Rep. 502.

Hillyer & Bro., for defendant in error.

A bank must pay a check only on the genuine indorsement of the payee. Morgan v. Bank, 11 N.Y. 404; Graves v. Bank, 17 N.Y. 208; Bank v. Bank, 1 Hill, 287; Welsh v. Bank, 73 N.Y. 424; Coggill v. Bank, 1 N.Y. 113; 2 Daniel, Neg. lnst. §§ 1369, 1618, 1663, note 5; 3 Rand. Com. Paper, §§ 1468, [7 S.E. 739] note 9, 1469; Robarts v. Tucker, 16 Q. B. 560; Bank v. Whitman, 94 U.S. 346; Bank v. Barnes, 65 Ill. 69; Bank v. Tappan, 6 Kan. 456; Bank v. Fearing, 16 Pick. 534, and cases cited; 2 Pars. Notes & B. 594-596. Lapse of time will not bar remedy of person injured by the wrongful payment. 3 Rand. Com. Paper, §§ 1468, 1469; Weisser v. Denison, 10 N.Y. 68; Bank v. Bank, 91 N.Y. 106; Herrick v. Whitney, 15 Johns. 240, and notes; Code Ga. § 2778, and cases cited; Merriam v. Wolcott, 3 Allen, 260; Bank v. Morton, 4 Gray, 156; Lobdell v. Baker, 1 Metc. 193; 2 Daniel, Neg. Inst. §§ 1354, 1356, 1662.

BLANDFORD J.

1. It is contended by counsel for the bank that, inasmuch as Knapp had palmed off on Burke a forged note and forged deed purporting to be signed by his wife, Mrs. Euphemia Knapp, Burke is precluded from complaining of the payment by the bank of the check drawn by Burke in favor of Mrs. Knapp, upon the forged indorsement of her name by Knapp; and it is further contended that, inasmuch as Knapp's indorsement was genuine, and he was the last indorser, the bank was not bound to look to the genuineness of any preceding indorsement. The cases of Smith v. Bank, 6 La. Ann. 610, and Levy v. Bank, 24 La. Ann. 220, are cited by counsel for the bank. As to the first of these, (Smith v. Bank,) it appears to us that the case was not well decided by the majority of the court; and the dissenting opinion of SLIDELL, J., appears to us to embody the correct law of the case. Yet that case has some features in it different from the case at bar, and may be distinguished from the latter. In the other case cited, the proposition is announced that, where the last indorsement is genuine, the bank is not bound to look to any prior indorsement. This proposition we cannot concur in. We do not think it is sustained by the decision of any other court in this country. No other case has been shown us in support of it; and yet that case is distinguishable from the present case in this: In that case the check was made payable to a fictitious person, by the depositor, and the person to whom the check was delivered was supposed by the drawer of the check to be the payee, and he obtained the money on the check at the bank; whereas, in the present case, the check was made payable to Mrs. Knapp, and Knapp forged her name as indorser, making the check payable to himself, and afterwards adding his own indorsement. There is nothing in the present case to take it out of the ordinary rule. Where one deposits money in a bank on general deposit, the bank immediately becomes the debtor of the depositor for the money deposited, and undertakes, impliedly, to pay that money either to tile depositor or to some person to whom he directs it paid; and, in order to discharge itself from this liability to the depositor, the bank must pay the money to the depositor, or as directed by him. The liability cannot be discharged in any other way. In the present case Burke, the depositor, drew a check in favor of Mrs. Knapp for a certain amount of money, and the bank did not pay the money to her or to her order; but paid the money to Knapp, upon a forged indorsement. How does the bank discharge its indebtedness to Burke? It has not paid the money to Burke, or to the person to whom he directed it to be paid, or to her order; and it is only in these ways that the bank can be discharged of its liability.

2. Again, it is insisted on the part of the bank that, inasmuch as the bank had made up the account of Burke with the bank and returned to him the book containing that account, showing the payment of this amount of money to Knapp, which book was retained by Burke for three years before any complaint was made by him, the bank was not put upon due notice of any forged indorsement, and that this was such laches on the part of Burke as relieved the bank of liability to him. We think, however, that the fact that the bank reported to Burke in this account that the check was paid to Mrs. Knapp, the payee, relieved Burke from any diligence whatever. He was then under no obligation to look to see whether the check was paid upon a forged indorsement or not. He had a right to accept this statement of the bank as true, and to rest upon it. The bank in its statement deceived him, and there was nothing in the account to put him on notice that there was a forged indorsement. On this point the counsel for the bank cites the case of Bank v. Morgan, 117...