Bartlett v. First Nat. Bank of Chicago

• Decision Date: 21 December 1910
• Citation: 247 Ill. 490,93 N.E. 337
• Parties: BARTLETT et al. v. FIRST NAT. BANK OF CHICAGO.
• Court: Illinois Supreme Court

247 Ill. 490

93 N.E. 337

BARTLETT et al.

v.FIRST NAT. BANK OF CHICAGO.

Supreme Court of Illinois.

Dec. 21, 1910.

Appeal from Appellate Court, First District, on Appeal from Municipal Court of Chicago; Harry Olson, Judge.

Action by William H. Bartlett and others against the First National Bank of Chicago. From a judgment of the Appellate Court affirming a judgment for defendant, plaintiffs appeal pursuant to a certificate of importance. Affirmed.George P. Merrick (Louis M. Greeley, of counsel), for appellants.

H. K. & H. H. Wheeler, Custer & Cameron, and Timothy F. Mullen, for appellee.

HAND, J.

This was an action in assumpsit commenced by Bartlett, Frazier & Carrington against the First National Bank of Chicago, in the municipal court of Chicago, to recover the amount of 135 drafts drawn by the appellants, by their agent, R. L. Walsh, upon themselves, to the order of persons residing in the vicinity of Reddick, in Kankakee county, during the year 1906, and fraudulently indorsed by said R. L. Walsh in the names of the payees named in said drafts and paid to R. L. Walsh by the State Bank of Reddick, and to the State Bank of Reddick by the First National Bank of Chicago, and to the First National Bank of Chicago by the appellants. The declaration consisted of the common counts, and the general issue was filed, and upon a trial the jury returned a directed verdict in favor of the defendant, upon which the court rendered judgment, after overruling a motion for a new trial, in favor of the defendant for costs. Said judgment was affirmed, on appeal, by the Appellate Court for the First District, and, said court having granted a certificate of importance, a further appeal has been prosecuted to this court.

It appears from the record that Bartlett, Frazier & Carrington were engaged in the buying of grain in the city of Chicago and at numerous places in the country; that in 1904 they were running an elevator at Reddick; that R. L. Walsh was the manager of the Reddick elevator; that he bought grain from the farmers residing in that vicinity, and paid them for their grain by delivering to them drafts drawn upon blanks in the following form, which were furnished R. L. Walsh by Bartlett, Frazier & Carrington:

+----------------------------------------------+
                ¦“No. ... Bartlett, Frazier & Carrington,¦$    ¦
                +----------------------------------------------¦
                ¦“Pay to the order of                          ¦
                +----------------------------------------------¦
                ¦..... Dollars for ... bushels ... Lbs. of     ¦
                +----------------------------------------------¦
                ¦Bartlett, Frazier & Carrington.               ¦
                +----------------------------------------------¦
                ¦By..........                            ¦Agent¦
                +----------------------------------------------¦
                ¦To Bartlett, Frazier & Carrington, Chicago,   ¦
                +----------------------------------------------¦
                ¦Illinois.”                              ¦     ¦
                +----------------------------------------------+
                

The blanks were filled up by R. L. Walsh with the farmers' names, the amount due them for grain, and the kind of grain purchased. The drafts were cashed by the State Bank of Reddick, and by that bank forwarded to the First National Bank of Chicago, and by that bank collected of Bartlett, Frazier & Carrington. In the year 1905, to accommodate the farmers and to meet competition, R. L. Walsh would fill out the drafts, as above indicated, for grain and pay the farmers for their grain in cash, and then, without authority, indorse the drafts with the farmers' names and obtain the amounts of the drafts from Bartlett, Frazier & Carrington by petting the drafts through the banks. There is no evidence that the banks knew R. L. Walsh was indorsing the drafts without authority from the payees, but Bartlett, Frazier & Carrington must soon have received notice of the fact that R. L. Walsh was indorsing the drafts in the names of the payees and without authority, as on September 8, 1905, they wrote R. L. Walsh the following letter: ‘Chicago, Sept. 8th, 1905. Mr. R. L. Walsh, Reddick, Illinois-Dear Sir: Yours of the 7th inst. at hand. In reference to your endorsing the farmer's name, we do not approve of this, as we do not consider it businesslike, unless you have direct, written authority from the farmer to do so. When you want to draw money from the bank yourself to pay currency to the farmer, make the check read, ‘Pay to the order of currency account,’ and then give the name of the farmer; then when you draw the money at the bank, endorse your name, but not the farmer's name, on the back. This will make our records here show plainly to whom the money should be charged, and under our surety bond we will be protected in case any of our agents make a wrong use of the money. Very truly yours, B., F. & C. Dictated by H. J. P.'

On the same day appellants wrote the State Bank of Reddick, which had been in the habit of cashing grain drafts drawn by R. L. Walsh, the following letter: ‘Bartlett, Frazier & Carrington, Chicago, Sept. 8, 1905. State Bank of Reddick, Reddick, Illinois-Dear Sir: In future will you kindly cash drafts drawn on us which read, ‘Pay to the order of currency account,’ (name of farmer to be inserted,) and then endorsed on the back by Mr. R. L. Walsh, our agent at Reddick, and, of course, signed by him? This will enable Mr. Wahsh to draw all the currency necessary where the farmers wish payment in currency, and at the same time it will keep our records straight. Yours very truly, B., F. & C. Dictated by H. J. P.'

There is nothing in the record up to this time to show that R. L. Walsh had been guilty of any dishonesty in indorsing the names of the payees in the drafts. In the month of May, 1906, there was a shortage in the oats which should have been on hand in the Reddick elevator, and the appellants sent their agent at Kankakee to Reddick to investigate the business at this point, and R. L. Walsh seems to have been able to satisfy the appellants that he was honestly conducting their business, although it clearly appeared he had disobeyed their instructions by continuing to draw drafts to the order of the farmers from whom he bought grain and indorsing them in their names without authority from the farmers. No notice of the manner in which R. L. Walsh had been conducting the business of the appellants was given to the State Bank of Reddick or the First National...