Commercial & Sav. Bank Co. of Bellefontaine, Ohio v. Citizens' Nat. Bank of Franklin

Decision Date08 November 1918
Docket NumberNo. 9658.,9658.
Citation120 N.E. 670,68 Ind.App. 417
CourtIndiana Appellate Court
PartiesCOMMERCIAL & SAVINGS BANK CO. OF BELLEFONTAINE, OHIO, v. CITIZENS' NAT. BANK OF FRANKLIN.

OPINION TEXT STARTS HERE

Appeal from Circuit Court, Johnson County; William Deupree, Judge.

Action by the Commercial & Savings Bank Company of Bellefontaine, Ohio, against the Citizens' National Bank of Franklin, Ind. From a judgment for defendant and an order denying a new trial, the plaintiff appeals. Affirmed.

R. M. Miller, H. C. Barnett, and O. S. Barnett, all of Franklin, for appellant. George I. White and Fred R. Owens, both of Franklin, for appellee.

FELT, P. J.

Appellant, the Commercial & Savings Bank of Bellefontaine, Ohio, brought this suit against appellee, the Citizens' National Bank of Franklin, Ind., to recover the amount paid by it to appellee on an alleged forged check.

The complaint was in four paragraphs, to which an answer was filed in six paragraphs. Demurrers for insufficiency of facts alleged to state a cause of action were filed and overruled to each paragraph of the complaint. Demurrers for insufficiency of the facts alleged to constitute a defense to the cause of action stated in the complaint were filed to each paragraph of the answer except the first, which was a general denial. Each of such demurrers was also overruled. Replies in general denial were filed to each paragraph of the special answers.

The parties made an agreement as to the evidence in the case. The court found for appellee and rendered judgment accordingly. Appellant's motion for a new trial was overruled, and it has assigned as errors relied on for reversal (1) the overruling of the demurrer to the 2d, 3d, 4th, 5th, and 6th paragraphs of answer, and (2) the overruling of the motion for a new trial.

A new trial was asked on the ground that the decision is not sustained by sufficient evidence and that such decision is contrary to law. Appellee contends that no question is duly presented by appellant's brief, under the rules of the court, because the pleadings are not set out in accordance with such rules, and because under points and authorities only abstract propositions of law are stated, without being specifically applied to any particular question presented by the record. The briefs are subject to criticism, but, considering them in their entirety, we are able to ascertain the principal questions presented by the issues and relied on for reversal, as they arise under the motion for a new trial, and shall consider the same from the standpoint of the sufficiency of the evidence to sustain the finding and judgment of the court.

The substance of the evidence, as far as material, is as follows:

Appellant was a banking corporation doing business in the state of Ohio, and appellee was a similar corporation doing business in the state of Indiana. On October 11, 1912, appellant received from appellee, through the U. S. mail, a check which was as follows:

“Bellefontaine, Ohio, Sept. 29, 1912.

The Commercial & Savings Bank Co.:

+------------------------------------+
                ¦“Pay to the order of Myself¦$320.00 ¦
                +---------------------------+--------¦
                ¦“Three hundred and twenty  ¦Dollars.¦
                +------------------------------------+
                

W. H. Kellison.”

The check was stamped on the face as paid by appellant October 11, 1912, and was indorsed on the back W. H. Kellison; and also, “Pay any bank or banker. All previous indorsements guaranteed. Citizens' National Bank, Franklin, Indiana. J. H. Tarlton, Cashier.”

That appellee sent with the check to appellant a slip reading as follows:

“The Citizens' National Bank, Franklin, Indiana, Oct. 10, 1912.

Commercial & Savings Bank Co., Bellefontaine, Ohio:

We enclose for collection and return Items marked X no protest.

Report by number.

No. on Amount.

X You $320.00.

Respectfully O. C. Dunn, Cashier.”

The name of W. H. Kellison as maker and indorser of said check was a forgery. Appellant, relying upon the guaranty of appellee, did on October 11, 1912, pay appellee the amount of said check, less its charges of 30 cents; but at that time had no notice that the check had been forged, or that the indorsement by Kellison was a forgery, and in paying the same relied wholly upon the indorsement of appellee. On October 16, 1912, appellant first discovered that said check was a forgery, and thereupon notified appellee by mail of that fact, and requested the return of the money. On the 19th of October, 1912, appellant again communicated with appellee by mail, in which reference is made to a conversation over the telephone, and mention is made that the letter of October 16th did not reach appellee. In the letter dated October 19th it is stated that the check had been forged by a negro who was then in jail at Anderson, Ind. Appellant also inclosed the check and asked appellee to remit the amount previously received from appellant in payment thereof.

On October 22, 1912, appellee returned the check by mail to appellant, and informed the latter that the check had been presented to it for payment; that the bank refused to pay the same, but took it for collection; that the check was thereupon sent direct to appellant for collection, was accepted by it as genuine, and a draft sent appellee for the amount, less charges for collection; that it is “presumed a banker knows the genuineness of his customers' checks before payment, and we disclaim any further responsibility in the matter.”

The agreement as to the evidence further shows that on October 10, 1912, a negro, who was a stranger to appellee, presented the check to the bank at Franklin, Ind., for payment and payment was refused; that appellee did not know the negro, but the check was taken for collection, and after it was collected by appellant, and the amount sent to appellee, it paid the same to the man who had so presented the check as aforesaid, who falsely represented himself to be W. H. Kellison; that it did not receive notice of the forgery until after the money had been so paid, and did not then know where said negro was, nor have any knowledge of his location until informed by appellant's letter of October 19th that he was in jail in Anderson; that said negro represented himself to be W. H. Kellison, but appellee did not know W. H. Kellison nor the negro who so represented himself to be Kellison, nor did it know the handwriting of W. H. Kellison; that when appellee so indorsed the check as aforesaid and sent it to appellant it accompanied the same with a slip, a copy of which is above set out, and thereby intended to place upon appellant the whole responsibility of determining the genuineness and value of the check; that when appellee received the money collected by appellant on said check it believed appellant had ascertained the check to be genuine, and thereafter paid the money over to the presenter of the check as aforesaid; that when appellee refused in the first instance to cash the check, and offered to take the same for collection, said colored man showed no hesitancy or unwillingness, but readily assented thereto, and later on called and inquired if the bank had received payment on the check; that W. H. Kellison was a depositor in appellant's bank, but appellee had never known nor heard of him before the transaction in controversy; that appellant gave the check only ordinary examination before paying the same, and was at the time acquainted with the usual and customary method of banks in widely separated places in forwarding checks from the holding bank to the drawer bank, and knew that it is the usual and ordinary practice to send the same through a correspondent bank for collection and credit, by mail, each receiving bank in turn crediting the bank sending the check to it and charging the bank to which it is sent with the amount thereof, and indorsing the check, all without charge to one another, and that such method is called forwarding “for collection and credit”; that in some instances, where prompt return is desired, the holding bank sends check by mail direct to the drawer bank for honor, and such plan is designated “for collection and return,” and in such instances the drawer bank, if it honors the check, remits the amount by draft or otherwise by mail direct to the holder; that the forwarding of checks “for collection and return” as aforesaid is infrequent in proportion to those sent for “collection and credit,” and in actual practice the checks so sent are not more than three or four out of one hundred, and this was the only transaction of the kind between appellant and appellee; that appellant was at the time familiar with the signature and handwriting of W. H. Kellison; that appellee has never received from said colored man or from any one the amount so paid him as aforesaid or any portion thereof.

[1] Appellant asserts that it is entitled to recover in this case under the general proposition of law that money paid under a mistake of fact may be recovered by the person making such payment. While there is no dispute as to such general principle or rule of law, and its application to many transactions, text-writers and courts have expressed widely different views as to how far the rule is applicable where drawees of bills and checks and especially banks of deposit are involved.

It is universally held that an exception to the general rule aforesaid obtains as to drawees of bills by which they are charged with knowledge of the signatures of the drawers of such instruments, and as a general rule must bear the loss, if any, resulting from a failure on their part to detect forgeries until after payment has been made. The principle underlying such rule or exception is applied to banks of deposit, and they are charged with the responsibility of knowing the signatures of their depositors. Where a check purporting to have been drawn by one of such depositors is presented to the bank by a bona fide holder thereof for value, and is paid by the bank, the latter cannot compel such holder...

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3 cases
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    • United States
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    • December 16, 1926
    ...N. Y. S. 325;National Bank of Rolla v. First National Bank of Salem, 141 Mo. App. 719, 125 S. W. 513;Commercial & Savings Bank Co. v. Citizens' National Bank, 68 Ind. 417, 120 N. E. 670;Farmers' etc., Bank v. Bank of Rutherford, 115 Tenn. 64, 88 S. W. 939, 112 Am. St. Rep. 817. Payment by t......
  • McCornack v. Central State Bank
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  • Commercial and Savings Bank Company v. Citizens National Bank
    • United States
    • Indiana Appellate Court
    • November 8, 1918
    ... ... by the Commercial and Savings Bank Company of Bellefontaine, ... Ohio, against the Citizens' National Bank of ... National Bank, of Franklin, Indiana, to recover the amount ... paid by it to appellee ... discovers the check to have been forged. First Nat. Bank ... of Crawfordsville v. First Nat. Bank of ... ...

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