Dedham Nat. Bank v. Everett Nat. Bank
| Decision Date | 04 January 1901 |
| Citation | 177 Mass. 392,59 N.E. 62 |
| Parties | DEDHAM NAT. BANK v. EVERETT NAT. BANK. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Brandeis, Dunbar & Nutter and Edward F. McClennen, for plaintiff.
Walter I. Badger and Sanford Robinson, for defendant.
This is an action to recover the amount of two forged checks on the plaintiff bank paid by it to the defendant. Both checks were drawn payable to cash, and were without indorsement. Both were presented for deposit to the account of Fenno, a depositor in the defendant bank, by the depositor's clerk, who is found to have been the forger, the first on July 31st, the second on September 4, 1897. At the time of depositing the first, which was for $150, the clerk asked for and received $50 cash for Fenno, as he said, and on depositing the second, which was for $200, he got $100 in the same way. The residue of the two checks was credited by the defendant to Fenno on his account. Fenno afterwards overdrew his account, but subsequently made the overdraft good, and his deposit has exceeded the amount of the credit on these checks since the defendant was notified of the forgery. Both checks were paid by the plaintiff through the clearing house and it is found that, if the plaintiff's servant who paid them had compared the signatures on the checks with a genuine signature of the supposed maker which it had on file, he would have discovered the forgery. Owing to an examination of Fenno's deposit, the defendant was led to inquire by telephone, shortly after the second check was paid, whether the signatures were genuine, and was answered that they were all right. The plaintiff did not demand repayment until February 25, 1898. The judge found and ordered judgment for the defendant. The plaintiff asked rulings in favor of its right to recover either the whole amount, or all but the sums actually paid out to the clerk and the case is here on exceptions to the refusal to give them.
The plaintiff's argument is directed to proving that we should not adopt the rule laid down in Price v. Neal, 3 Burrows, 1354, according to which a drawee paying a forged draft or check to a bona fide purchaser cannot recover back the money paid. We are aware that this rule has been questioned by some text writers. But it is of such universal, or nearly universal, acceptance that we shall go into no extended discussion. Gloucester Bank v. Salem Bank, 17 Mass. 42, 43; Bank v. Bangs, 106 Mass. 441, 444; Welch v. Goodwin, 123 Mass. 71, 77; First Nat. Bank of Danvers v. First Nat. Bank of Salem, 151 Mass. 280, 283, 24 N.E. 44; Bank of United States v. Bank of Georgia, 10 Wheat. 333, 348, 6 L.Ed. 334; 2 Daniel, Neg. Inst. (3d Ed.) §§ 1359-1361.
Probably the rule was adopted from an impression of convenience rather than for any more academic reason; or perhaps we may say that Lord Mansfield took the case out of the doctrine as to payments under a mistake of fact, by the assumption that a holder who simply presents negotiable paper for payment makes no representation as to the signature, and that the drawee pays at his peril. See Wilkinson v. Johnson, 3 Barn. & C. 428, 436; Bernheimer v. Marshall, 2 Minn. 78, 84 (Gil. 61); Bank of St. Albans v. Farmers' & Mechanics' Bank, 10 Vt. 141, 145, 146; Ellis v. Trust Co., 4 Ohio St. 628, 662.
The ground of a recovery for a payment under a mistake of fact is that the existence of the fact supposed was the conventional basis or tacit condition of the transaction. If parties are so far at arm's length that each takes the...
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