Edgerly v. Schuyler

• Decision Date: 26 June 1959
• Docket Number: No. 58-123,58-123
• Parties: R. J. EDGERLY and Elizabeth Edgerly, Appellants, v. Samuel SCHUYLER, Belle Schuyler, Ned Schuyler, Beatrice Schmukler and Louis Schmukler and Miami Beach First National Bank, a banking corporation organized under the laws of the United States, Appellees.
• Court: Florida District Court of Appeals

Page 737

113 So.2d 737

R. J. EDGERLY and Elizabeth Edgerly, Appellants, v. Samuel SCHUYLER, Belle Schuyler, Ned Schuyler, Beatrice Schmukler and Louis Schmukler and Miami Beach First National Bank, a banking corporation organized under the laws of the United States, Appellees.

No. 58-123.

District Court of Appeal of Florida, Third District.

June 26, 1959.

Rehearing Denied Aug. 14, 1959.

Anderson & Nadeau, Miami, for appellants.

Blackwell, Walker & Gray and Melvin T. Boyd, Miami, for appellees.

PEARSON, Judge.

The plaintiffs appeal from a summary final judgment for the defendant-bank. The plaintiffs first sued only the defendants, Samuel Schuyler and Belle Schuyler upon a promissory note for $20,000. The Schuylers answered and denied the execution of the note. It then was developed by discovery that the plaintiff had made previous loans to the Schuylers and that in the course of business the plaintiffs received in the mail a note purporting to be signed by these defendants-Schuylers, and a latter requesting that a check be mailed to Sam Schuyler at a certain address. Thereafter, plaintiffs drew such a check upon the defendant-bank and delivered the same as requested. The check was cashed, but defendants, Schuylers, identified the signature on the note and the endorsement on the check as a forgery. The plaintiffs moved for permission to file an amended complaint and to bring in the bank as a party defendant. The court granted the motion and the plaintiff filed an amended complaint in which the third count was against the bank. It was as follows:

'The plaintiff, R. J. Edgerly, in complaining against the Miami Beach First National Bank, a banking corporation organized under the laws of the United States, says that:

'1. The aforesaid note dated January 8, 1952, was mailed to the plaintiff at his residence in Albany, Georgia, and upon receipt of said note the plaintiff, R. J. Edgerly, drew his check on his account at the Miami Beach First National Bank payable to the order of Sam Schuyler. A photostatic copy of said check is attached hereto as Exhibit 'C'.

'2. The Miami Beach First National Bank, upon an endorsement, charged the account of the plaintiff, R. J. Edgerly, with the sum of $20,000.00, and delivered to some person whose identity is unknown, a cashier's check issued by the Miami Beach First National Bank, payable to Sam Schuyler. The said cashier's check was thereafter presented for payment to the Mercantile National Bank of Miami Beach by some person unknown to the plaintiffs, and said cashier's check was duly honored and paid.

'3. When the aforementioned note dated January 8, 1952, was not paid, the plaintiffs instituted suit against the makers and the endorsers, and in said proceeding took the depositions of all of the individual defendants, with the exception of Ned Schuyler. The defendants, Samuel Schuyler and Belle Schuyler, denied that they had executed said note as makers, and Samuel Schuyler denied that he had ever received, seen or endorsed the check drawn by the plaintiffs upon their account Bank, payable to the order of Bank, payable to theorder of Sam Schuyler.

'4. The plaintiffs, upon such information and belief, allege that the Miami Beach First National Bank honored and paid said check on a forged endorsement. Plaintiffs have made demand that said bank credit their account with the sum of $20,000.00, which said bank has failed and refused to do.

'Wherefore, plaintiffs claim judgment of the Miami Beach First National Bank in the sum of $20,000.00, together with interest and costs.'

The bank filed its answer setting up as a defense a general denial and as an affirmative defense, the failure of the appellant to give notice of a forged endorsement as required by statute, ¹ and also, the failure of the appellants to commence their suit until after the running of the applicable statute of limitations. ² The court, upon hearing, granted the bank's motion for summary judgment, and denied plaintiffs' motion to strike the affirmative defenses. The summary final judgment was correct if the facts revealed that the cause of action alleged was barred by either section 659.37, supra, or section 95.11, supra.

The appellants first advance the argument that neither of the above quoted sections are applicable to a forged endorsement because the Uniform Negotiable Instruments Act ³ makes its own provision for actions involving forged instruments, and that this special statute ⁴ in regard to forged instruments supersedes the general statute of limitations. A reading of the cited section reveals no inconsistency between this section and the application of a pertinent statute of limitations. The section cited by appellants deals with the effect of, and enforceability of, negotiable instruments when a signature is forged, without reference to any time limitation for the bringing of an action. We must therefore reject the reasoning of the appellants upon this point. However we also must reject the contention of the appellees that appellants' failure to given notice of the forged endorsement within one years as required by statute ⁵ bars them from bringing this cause of action. This is not the case, for the statute in question, which relieves a bank from liability to a depositor for payment of a forged or raised check unless the depositor notifies the bank of the forgery or raising within one year after return of the voucher representing payment, is not applicable to forged endorsements. ⁶ It is also apparent that this statute promulgates a rule of substantive law and not of limitation within which an action must be brought. Thus a depositor under this statute must notify his bank within a year that his signature has been forged in order to hold the bank liable, but the depositor still has the right to bring suit at any time within the period fixed by the applicable statute of limitations. ⁷

The appellants next contend that notwithstanding which statute of limitation is applicable, if any are, then the period specified could not begin to run until the forgery was discovered. This presents the question: When does a cause of action accrue to a depositor against his bank for the wrongful payment of a check upon a forged endorsement? Although by the common law and now by statute a bank depositor is under the duty of detecting forgeries of his own signatures from the returned vouchers, the same duty is not imposed upon a depositor to discover forged endorsements on his checks, since a drawer is not expected to know the signatures of the endorsers. ⁸ There can be no doubt but that the primary responsibility is upon the bank to detect a forgery of a payee's signature and that a bank paying a check upon the unauthorized endorsement of the payee becomes liable to the payee. ⁹ The same responsibility rests upon the bank in its relationship with its depositor. ¹⁰

The case of Peppas v. Marshall & Ilsley Bank, 2 Wis.2d 144, 86 N.E.2d 27, follows a line of cases which hold that a statute of limitations starts to run against the depositor's cause of action, to recover the amount of the check bearing the forged endorsement, as of the date the bank renders its statement of the depositor showing the charging of the check to depositor's account. The reasoning for this view is that the act of a bank in returning to the depositor, as a cancelled voucher, a check bearing a forged endorsement, together with a statement showing the charging of the amount of such check to the depositor's account, is a denial of liability which dispenses with the necessity of a demand as a condition precedent for the depositor suing the bank to recover the amount of such check. ¹¹ To the contrary is City of New York v. Fidelity Trust Co., 243 App.Div. 46, 276 N.Y.S. 341, 345. This latter court gives as the basis for its decision the following:

'We are of opinion that the plaintiff's cause of action was not barred by the statute of limitations. The defendant had no specific moneys of the plaintiff in its possession, but became a debtor to the plaintiff for all moneys deposited with it by the plaintiff. The law is settled beyond dispute that the debt on account of the moneys so deposited does not become due until demand actually made, and that a depositor has no cause of action for such debt until after actual demand. * * *

'When the defendant paid the check upon the forged indorsement, it paid its own money, and discharged no part of its indebtedness to the plaintiff. It still remained indebted to the plaintiff for the sum of $17,500; and the plaintiff lost none of its rights by receiving, under a mistake as to the facts, the check as one properly paid and charged to its account by the defendant. When it discovered the mistake it had the right to repudiate the charge, return the check and claim payment of the sum really unpaid to it or upon its order.'

It further reasoned as follows:

'If the statute were to run as applied by the Trial Term, it might be that before the party owning the deposit knew anything about the forgeries, the claim would be barred. * * *

'The wisdom of the rule of law that requires a demand before the statute of limitations begins to run is well illustrated by this litigation, otherwise a party whose money is paid out from time to time without his knowledge would be without a remedy. Payments by the bank upon forged indorsements afford no protection to the bank unless it can show negligence or plead and prove facts...