Compania de Aguaceros, SA v. First National City Bank
| Decision Date | 11 August 1966 |
| Docket Number | Civ. No. 5863. |
| Citation | 256 F. Supp. 658 |
| Parties | COMPANIA DE AGUACEROS, S. A., Plaintiff, v. The FIRST NATIONAL CITY BANK, Defendant. |
| Court | U.S. District Court — Panama Canal Zone |
Henry L. Newell, Balboa, Canal Zone, for plaintiff.
L. S. Carrington, Balboa, Canal Zone, Guillermo Jurado, Panama, Republic of Panama, for defendant.
FINDINGS OF FACT
1. The plaintiff, Compania de Aguaceros, S. A., is a Panamanian corporation engaged in the sale of airlines and airplanes and it was founded in 1958 by Gaston Faraudo, Joseph M. Silverthorne, and Heriberto Sanchez.
2. The defendant, The First National City Bank, is a national banking association organized and authorized to do business under the laws of the United States of America and has qualified to do business and is doing business in the Canal Zone and in the Republic of Panama. It maintains in both jurisdictions branch banks or offices where it transacts general and international banking business and accepts and maintains deposits and private accounts.
3. At the time of the formation of the plaintiff company in 1958, a bank account was opened in the name of Compania de Aguaceros, S. A. at the downtown branch in Panama City, Republic of Panama, on May 23, 1958, and the account was later transferred for convenience of the plaintiff to the Exposicion Branch in the same city.
4. Gaston Faraudo was the secretary of the plaintiff corporation and he was also sole owner of a company that was in the business of keeping the books and acting as resident agent under the law of Panama for other corporations. This company is Farca, S. A. (generally known as Farcasa.) Farcasa became the resident agent of the plaintiff and just before the death of Gaston Faraudo, he sold it to Carlos Echeverria who continued the relationship with plaintiff. Echeverria became the secretary of the plaintiff by vote of the corporation, but he had never been "protocolized" in compliance with Panama law during the events in question.
5. Farcasa's office was maintained in the same building as the defendant's "Exposicion Branch", where the account of plaintiff was kept, and the plaintiff had authorized the forwarding of its bank statements to post office box 6495 in Panama City, which was the same box number as that of Farcasa.
6. Mr. J. M. Silverthorne is the treasurer of the plaintiff company and was the only person authorized to sign checks withdrawing funds from the account during the time in question.
7. The duties of Farcasa were quite simple as plaintiff never did any business in Panama, and consisted of keeping records on the sale of an airline and the sale of about four aircraft in Latin America, plus the preparation of tax forms for plaintiff in various Latin countries. The records of plaintiff were not complicated and could be reviewed by J. M. Silverthorne in approximately fifteen or twenty minutes.
8. Mr. Silverthorne at all times pertinent to the issue was a resident of the Republic of Honduras and came to Panama from three to six times a year at which times he would visit the Farcasa office and examine the books and bank statements which were kept in that office.
9. Carlos Echeverria, as secretary, was not authorized to sign checks on the bank account of plaintiff, but the monthly statements, cancelled checks, reports of annual audits, and all correspondence from defendant to plaintiff were sent to the address of plaintiff recorded in the files of the bank, which was box 6495, Panama City.
10. On January 18, 1962, Carlos A. Echeverria wrote on the plaintiff's letterhead that plaintiff had entered into a contract in Honduras whereby it would receive $7,500.00 every month which would be turned over to the Banco Atlantida of Honduras for transmittal to defendant to be credited to the current account of plaintiff. The letter asked defendant to "give us notice of said credits" and the letterhead carried the address: P. O. Box 6495. The letter was signed "Compania de Aguaceros, S. A." with the handwritten signature of C. A. Echeverria below and "Carlos A. Echeverria" typed below the signature.
These funds were deposited to plaintiff's account regularly beginning on January 21, 1963 in the sum of $7,500.00 through April 20, 1964, with the exception that on November 21, 1963 the deposit was for $7,495.95 instead of $7,500.00. There were other funds in the account and another deposit was made for $29,482.57 on February 18, 1964, but no showing is made that Echeverria had anything to do with them.
Very few withdrawals were made from the account during 1963. In the months of January, March, May, June, July and August no checks were cashed against the account and there was little activity in the other months until the checks involved in this action were presented.
11. J. M. Silverthorne was in Panama and visited Farca, S. A. in October, 1963 and did not return until March 18, 1964. When he left in October, plaintiff's account was in good order but on March 19, 1964, he went to defendant's "Exposicion" branch to establish a letter of credit and while there asked for the balance in the account of Aguaceros. He found the account low and determined by examining copies of the checks maintained by the bank that nine of the checks were forgeries and that they had been issued beginning in October, 1963. On March 20, 1964, he wrote a letter to the Manager, First National City Bank, La Exposicion Branch, Panama, Republic of Panama, advising him that nine checks totaling $44,000.00 that were cashed on plaintiff's account on dates ranging from October 11, 1963 through February 25, 1963 (actually 1964 as shown by the checks) were not issued or signed by the writer and asking that an investigation be made.
12. The checks were as follows:
Amount Date Payable to
$7,500.00 October 7, 1963 Importaciones Exclusivas, S. A
$5,000.00 October 26, 1963 Importaciones Exclusivas, S. A
$2,500.00 November 17, 1963 Portador (bearer)
$3,500.00 November 30, 1963 Cash
$6,000.00 December 9, 1963 Importaciones Exclusivas, S. A
$2,500.00 December 30, 1963 Cash
$3,000.00 January 7, 1964 Cash
$5,000.00 February 10, 1964 Cash
$9,000.00 February 21, 1964 Importaciones Exclusivas, S. A
Four of the checks as shown were made payable to Importaciones Exclusivas, S. A., a company wholly owned by Carlos Echeverria and were endorsed with that company's stamp. Four were made payable to "Cash" and bore the signature of C. A. Echeverria as the endorsement and one was made payable to "Portador" (bearer) and bore the signature of Carmen I. Rodriguez as endorsement. Carmen I. Rodriguez was at the time secretary of Farca, S. A.
All of the checks had been honored and paid by the defendant and deducted from the plaintiff's account.
13. The checks were forged by Carlos Echeverria and the signatures of J. M. Silverthorne were so well done that they were passed as authentic by the bank's signature control personnel and even the experts at the trial were not in agreement. Echeverria confessed the forgeries to J. M. Silverthorne and burned the original checks. Photographs of the checks only were available to the handwriting experts and for this reason a proper determination by them was somewhat hampered. Silverthorne admitted that the signatures were excellent and very hard for him to distinguish from his own.
14. The signature control personnel who passed upon the validity of the checks were employees of the defendant of several years' standing and were customarily employed in the section which controls signatures.
15. Two of the forged checks were from check book # 7628. This book had been issued in 1958 at the request of Gaston Faraudo while he was secretary of plaintiff and six of the checks from the book in blank and unsigned had been kept in the office of Farca, S. A. The other seven forged checks were from book # 14607. This book had been ordered from defendant by Echeverria. Silverthorne had complained to members of the bank about the issuance of a check book to Echeverria but he had received check book # 12247 from Echeverria. Echeverria ordered and received three check books of 25 checks each, # 12247 in September, 1963; # 14607, October 23, 1963, and # 15697, February 21, 1964, and Silverthorne wrote checks from # 12247 and # 15697.
16. Silverthorne had seen Carlos Echeverria gambling and had remarked to Dick Warren Kuehl, Assistant Manager of defendant in Panama, when talking about the forged checks during March, 1964, that from the time he took over the Aguaceros business he had some doubts about Echeverria and that he had seen him gambling in September or October of 1963, and although Echeverria was winning, Silverthorne wondered "if he was using my money". Further, Silverthorne wrote a letter from Caracas requesting the bank to honor a check for $200.00 and another for $900.00 to Farcasa, issued March 18, 1964, and in that letter the defendant was advised not to honor any more checks "until further instructions". This letter was written because of Silverthorne's suspicions of Echeverria.
17. All statements of account sent to the plaintiff contain the following statement:
"If within 10 days from date no error or omission is reported, this statement will be considered as definitely approved, and the balance accepted as correct."
18. The plaintiff received all of the original statements sent to it by the defendants corresponding to the period between January 1, 1963 and December 14, 1965 (date of stipulation between counsel), but it made no protests as to the correctness of the account in any of the statements received by it prior to the 20th of March, 1964. The date of the receipt of the statement for the month of February, which was due about the first of...
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First National City Bank v. Compania de Aguaceros, SA
...proximate cause of Echeverria's success to be the Bank's negligence, and ruled for the Depositor. Compania de Aguaceros, S.A. v. First National City Bank, D.C. C.Z.1966, 256 F.Supp. 658. We find unequivocal and controlling sustance in said statute and The Depositor was a Panamanian corporat......