Citizens Bank of Darlington v. McDonald

• Decision Date: 11 February 1943
• Docket Number: 15503.
• Parties: CITIZENS BANK OF DARLINGTON v. McDONALD et al.
• Court: South Carolina Supreme Court

24 S.E.2d 369

202 S.C. 244

CITIZENS BANK OF DARLINGTON v. McDONALD et al.

No. 15503.

Supreme Court of South Carolina

February 11, 1943

Samuel Want, James Verner, and Sam Rogol, all of Darlington, for appellant.

McEachin & Townsend, of Florence, and Dargan & Paulling, of Darlington, for respondent.

BONHAM Chief Justice.

The action in this case was commenced by the service of the summons and complaint, dated July 25, 1940, of Citizens Bank of Darlington, as plaintiff, against Carl McDonald, D. Carl Cook, and Pilot Life Insurance Company, as defendants. The complaint alleges that on or about April 19, 1939, Pilot Life Insurance Company made and delivered to Carl McDonald its check on Guilford National Bank, Greensboro, North Carolina for $1,158.45, which bank was therefore required to pay that amount to Carl McDonald; that subsequently the check was endorsed by Carl McDonald and D. Carl Cook, and that the latter subsequently delivered it to the plaintiff, so endorsed, and received from the plaintiff the above named sum; that the check was endorsed by the plaintiff and was presented to and paid by Guilford National Bank, which was thereafter informed that the endorsement in the name of the payee was not genuine but had been forged, and that the payee denied liability thereon, and that Guilford National Bank thereupon demanded that the amount of the check be refunded to it, and that the plaintiff, as guarantor of prior endorsements complied with that demand and thereupon became the lawful owner of the check; that the plaintiff later presented the check to Carl McDonald and D. Carl Cook and demanded payment, which demand was refused; that the plaintiff is informed that the check represents a cash loan made by Pilot Life Insurance Company to Carl McDonald, which loan was secured by the pledge of a certain policy of insurance issued by that insurance company to Carl McDonald and the plaintiff alleges that it is entitled to subrogation to all securities and other rights possessed by that insurance company in relation to that loan. The prayer is for judgment against the defendants named for the above stated amount, with interest and costs, and that the plaintiff be subrogated to the above described rights and remedies of Pilot Life Insurance Company. To this complaint answers were filed by the defendants, Carl McDonald and Pilot Life Insurance Company, but no answer was filed by the defendant, D. Carl Cook. Pilot Life

Insurance Company also filed a cross complaint against Carl McDonald and D. Carl Cook, to which cross complaint, and to the two above described answers, an answer was filed by D. Carl Cook. It is not alleged in any of the pleadings by whom the forgery, if one existed, was committed.

For the purpose of saving time in proving certain matters, certain facts of the case were agreed upon between the parties, as follows: That Pilot Life Insurance Company made and delivered its check on Guilford National Bank in the amount, and at about the time named in the complaint; that the check was subsequently presented to the plaintiff by D. Carl Cook, with the names of Carl McDonald and D. Carl Cook written on the back thereof; that the plaintiff paid the amount of the check to the defendant, Cook; that the Guilford National Bank paid the check upon presentation, but was subsequently informed by Carl McDonald that he had not endorsed it and that his name was written on the back without his knowledge or consent; that the Guilford National Bank communicated that information to plaintiff and demanded the refund of the amount of the check; that the plaintiff made the refund and received the check which it now owns; that the check was issued pursuant to an application for a loan on a certain insurance policy, and that the application is signed with the name of Carl McDonald, the genuineness of which is denied by McDonald, and Pilot Life Insurance Company, and that when the amount of the check was refunded to Guilford National Bank, the insurance company received credit for the amount thereof.

The issues in the case arise out of the denial of the appellant, Carl McDonald, that he signed the application for the policy loan, or endorsed the check representing the proceeds of the loan. The case came on for trial in the Court of Common Pleas for Darlington County before the Honorable C. T. Graydon, Special Judge, and a jury, at the December term, 1941. By stipulation of counsel, the matter was submitted to the jury on the sole specific issue: "Is the signature of Carl McDonald on the check of Pilot Life Insurance Company a forgery? *** You answer that 'Yes' or 'No.' ***." The jury answered the issue "No," and thereupon judgment was entered in favor of the respondent, Citizens Bank of Darlington, against Carl McDonald and Pilot Life Insurance Company for the amount of the check with interest, and the judgment was adjudicated to be a lien upon the said policy of life insurance. The defendants, Carl McDonald and Pilot Life Insurance Company made a motion for a new trial, which motion was refused, whereupon notice of intention to appeal was duly served, and the appeal of the two last named defendants was presented to this Court upon the following ten exceptions:

"It is respectfully submitted that in the trial of this cause the Circuit Judge erred in the following particulars:

"I. In instructing the jury that the burden of proof on the issue of forgery was on the defendants, Carl McDonald and Pilot Life Insurance Company, the error being that the burden of establishing the genuineness of the signature on the check in question was on the plaintiff.

"II. In giving the jury conflicting instructions on the subject of the burden of proof as to the alleged forgery, some of such instructions putting the burden on the plaintiff, and some on the defendant.

"III. In erroneously instructing the jury on the burden of proof as follows:

"'Always realize that a person has to prove what he alleges by the preponderance of the evidence. If they don't prove it by the preponderance of the evidence, although you believe it, don't let it sway you,' the error being that the instruction is self-contradictory, since the belief of testimony by the jury constitutes such testimony a preponderance.

"IV. In instructing the jury that in answering the issue submitted to them they could take into consideration matters embraced within the doctrine of estoppel, and apply that doctrine, the error being that (a) the issue of estoppel was not presented by the pleadings or asserted or relied upon by counsel; (b) there is no testimony on the issue of estoppel; (c) the sole issue presented to the jury, and stated to them at the beginning of the case, was whether the signature of the endorser McDonald on the check in question was in fact a forgery; (d) the testimony in the case to which the said instruction was presumably directed related exclusively to incidents which occurred subsequent to the handling of the check by the plaintiff, and after it had paid the same and sustained the resulting loss.

"V. In instructing the jury that: '* * although you may not find that Carl McDonald actually signed the instrument in question, if you find he authorized, directed, empowered or consented to someone else signing his name, of course that would be just as effectually his signature as if he did it himself. *** that would not be forgery.' the error being that the sole issue before the jury was whether Cook or McDonald endorsed the check in question, and that the issue of endorsement by Cook under the authority or direction of McDonald was not presented by the pleadings or by counsel, or within the scope of the issue submitted to the jury.

"VI. In stating to the jury, in connection with the failure of the defendant Cook to answer the complaint, that they 'must not consider whether Cook is responsible to the bank or not,' thereby excluding from consideration by the jury the question whether the failure of Cook to answer the complaint could give rise to any inference as to whether the defendant Cook endorsed McDonald's name on the check.

"VII. In stating as a fact to the jury that when the alleged forgery was brought to the attention of the Citizens Bank, that bank 'had to protect its credit because it had guaranteed and warranted the endorsements,' thereby stating a conclusion of fact and commenting on the evidence.

"VIII. In refusing to permit the defendants McDonald and Pilot Life Insurance Company to put in evidence the judgment roll in the case of Albanie Frazier et al. v. D. Carl Cook, the same being Judgment Roll No. 11556 in the office of the Clerk of Court for Darlington County, and to produce other evidence for the purpose of establishing a general scheme and design on the part of Cook to obtain possession of funds belonging to his clients.

"IX. In refusing to permit the defendants, McDonald and Pilot Life Insurance Company to prove by a witness proffered to the Court that the defendant Cook, as attorney for such witness, had endorsed the name of the witness on a check payable to him, without authority, and had collected the proceeds thereof without accounting for the same until long afterwards upon demand made.

"X. In refusing to permit the defendants McDonald and Pilot Life Insurance Company to offer other evidence of other acts and transactions of the defendant Cook of a character similar to that charged against such defendant in the present case."

With reference to the question made by the first exception, the trial Judge charged the jury: "*** the plaintiff alleges that it holds a note or check, that the check was made and endorsed and properly endorsed. The defendant McDonald denies that. So at the outset it is the duty of the plaintiff to prove to you by...